[Federal Register Volume 81, Number 8 (Wednesday, January 13, 2016)]
[Proposed Rules]
[Pages 1688-1759]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-33062]



[[Page 1687]]

Vol. 81

Wednesday,

No. 8

January 13, 2016

Part II





Department of Energy





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10 CFR Part 430





Energy Conservation Program: Energy Conservation Standards for Ceiling 
Fans; Proposed Rule

  Federal Register / Vol. 81 , No. 8 / Wednesday, January 13, 2016 / 
Proposed Rules  

[[Page 1688]]


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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2012-BT-STD-0045]
RIN 1904-AD28


Energy Conservation Program: Energy Conservation Standards for 
Ceiling Fans

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

ACTION: Notice of proposed rulemaking (NOPR) and announcement of public 
meeting.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
ceiling fans. EPCA also requires the U.S. Department of Energy (DOE) to 
periodically determine whether more-stringent, amended standards would 
be technologically feasible and economically justified, and would save 
a significant amount of energy. In this notice, DOE proposes amended 
energy conservation standards for ceiling fans, and also announces a 
public meeting to receive comment on these proposed standards and 
associated analyses and results.

DATES: Comments: DOE will accept comments, data, and information 
regarding this notice of proposed rulemaking (NOPR) before and after 
the public meeting, but no later than March 14, 2016. See section VII, 
``Public Participation,'' for details.
    Comments regarding the likely competitive impact of the proposed 
standard should be sent to the Department of Justice contact listed in 
the ADDRESSES section before February 12, 2016.
    Meeting: DOE will hold a public meeting on Wednesday, Feburary 3, 
2016 from 9:00 a.m. to 4:00 p.m., in Washington, DC. The meeting will 
also be broadcast as a webinar. See section VII, ``Public 
Participation,'' for webinar registration information, participant 
instructions, and information about the capabilities available to 
webinar participants.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585.
    Instructions: Any comments submitted must identify the NOPR on 
Energy Conservation Standards for ceiling fans and provide docket 
number EE-2012-BT-STD-0045 and/or regulatory information number (RIN) 
1904-AD28. Comments may be submitted using any of the following 
methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: [email protected]. Include the docket 
number and/or RIN in the subject line of the message. Submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and 
avoid the use of special characters or any form of encryption.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue 
SW., Washington, DC 20585-0121. If possible, please submit all items on 
a compact disc (CD), in which case it is not necessary to include 
printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
[email protected].
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] 
before February 12, 2016. Please indicate in the ``Subject'' line of 
your email the title and Docket Number of this rulemaking notice.
    No telefacsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section VII of this document (``Public 
Participation'').
    Docket: The docket, 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, some documents listed in the index may not be publicly 
available, such as those containing 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/65. This Web page contains a link to the docket for this notice 
on the www.regulations.gov site. The www.regulations.gov Web page 
contains simple instructions on how to access all documents, including 
public comments, in the docket. See section VII, ``Public 
Participation,'' for further information on how to submit comments 
through www.regulations.gov.
    EPCA requires the Attorney General to provide DOE a written 
determination of whether the proposed standard is likely to lessen 
competition (42 U.S.C. 6295(o)(2)(B)(i)(V). The U.S. Department of 
Justice Antitrust Division invites input from market participants and 
other interested persons with views on the likely competitive impact of 
the proposed standard. Interested persons may contact the Division at 
[email protected] before February 12, 2016. Please 
indicate in the ``Subject'' line of your email the title and Docket 
Number of this rulemaking notice.

FOR FURTHER INFORMATION CONTACT: Lucy DeButts, 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) 287-1604. Email: 
[email protected].
    Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the 
General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 586-7796. Email: 
[email protected].
    For further 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].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
II. Introduction
    A. Authority
    B. Background
    1. Current Standards

[[Page 1689]]

    2. History of Standards Rulemaking for Ceiling Fans
III. General Discussion
    A. Product Classes and Scope of Coverage
    1. Scope of Coverage
    2. Product Classes
    B. Test Procedure
    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
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Product Classes
    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Baseline and Max-Tech Models
    2. Manufacturing Cost Analysis
    3. Installed Costs
    D. Markups Analysis
    E. Energy Use Analysis
    1. Inputs for Standard, Hugger, and VSD Ceiling Fans
    2. Inputs for Large-Diameter and High-Speed Small-Diameter 
Ceiling Fans
    3. Impact on Air Conditioning or Heating Equipment Use
    F. Life-Cycle Cost and Payback Period Analysis
    1. Purchase Price
    2. Electricity Prices
    3. Electricity Price Trends
    4. Repair Costs
    5. Product Lifetime
    6. Discount Rates
    7. Efficiency and Blade Span Distribution in the No-Standards 
Case
    8. Payback Period Analysis
    G. Shipments Analysis
    1. Shipments Demand Model
    2. Stock-Accounting Model
    3. Market-Share Projections
    4. Price Trend
    5. Impact of a Standard on Shipments
    H. National Impact Analysis
    1. National Energy Savings
    2. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis and Key Inputs
    3. Discussion of Comments
    4. Manufacturer Interviews
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    2. Social Cost of Other Air Pollutants
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    2. Economic Impacts on Manufacturers
    3. National Impact Analysis
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    8. Summary of National Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Ceiling Fan 
Standards
    2. Summary of Annualized Benefits and Costs of the Proposed 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description on Estimated Number of Small Entities Regulated
    2. Description and Estimate of Compliance Requirements
    3. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    4. Significant Alternatives to the Rule
    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
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291, et seq.), 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles.\2\ These products include ceiling fans, which are the 
subject of this document. (42 U.S.C. 6295(ff))
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (Apr. 30, 2015).
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    Pursuant to EPCA, any new or amended energy conservation standard 
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)) EPCA also provides that not later than 6 years after 
issuance of any final rule establishing or amending a standard, DOE 
must publish either a notice of determination that standards for the 
product do not need to be amended, or a notice of proposed rulemaking 
including new proposed energy conservation standards. (42 U.S.C. 
6295(m)(1))
    In accordance with these and other statutory provisions discussed 
in this document, DOE proposes amended energy conservation standards 
for ceiling fans. The proposed standards, which are expressed for each 
product class as the maximum allowable airflow efficiency in terms of 
cubic feet per minute per watt (CFM/W), as a function of ceiling fan 
diameter in inches, are shown in Table I-1. These proposed standards, 
if adopted, would apply to all ceiling fans listed in Table I-1 and 
manufactured in, or imported into, the United States on and after the 
date 3 years after the publication of the final rule for this 
rulemaking.

   Table I-1--Proposed Energy Conservation Standards for Ceiling Fans
------------------------------------------------------------------------
                                            Maximum  airflow  efficiency
              Product class                       equation CFM/W *
------------------------------------------------------------------------
Very Small-Diameter (VSD)................  3.17D-16.75
Hugger...................................  0.05D + 56.41
Standard.................................  0.30D + 60.61
High-Speed Small-Diameter (HSSD).........  4.22D + 0.02
Large Diameter...........................  1.16D-24.38
------------------------------------------------------------------------
* D is the ceiling fan diameter, in inches.

A. Benefits and Costs to Consumers

    Table I-2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of ceiling fans, as measured by the 
average life-cycle cost (LCC) savings and the simple payback period 
(PBP).\3\ The average LCC savings are positive for each product class, 
and the PBP is less than the average lifetime of ceiling fans, which is 
estimated to be 13.8 years for all product classes (see section IV.F).
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    \3\ The average LCC savings are measured relative to the no-
standards case efficiency distribution, which depicts the market in 
the compliance year in the absence of standards (see section 
IV.F.7). The simple PBP, which is designed to compare specific 
efficiency levels, is measured relative to the baseline model (see 
section IV.F), which corresponds to the least efficient model 
available to purchase.

[[Page 1690]]



     Table I-2--Impacts of Proposed Energy Conservation Standards on
                        Consumers of Ceiling Fans
------------------------------------------------------------------------
                                                     Average     Simple
                                                       LCC      payback
                   Product class                     savings     period
                                                     (2014$)    (years)
------------------------------------------------------------------------
Standard..........................................       8.47        1.5
Hugger............................................       5.59        1.6
Very Small-Diameter...............................       3.01        7.7
High-Speed Small-Diameter.........................      27.63        5.2
Large-Diameter....................................      27.26        4.4
------------------------------------------------------------------------

    DOE's analysis of the impacts of the proposed standards on 
consumers is described in section IV.F of this notice.

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 (2015 to 2048). Using a real discount rate of 7.4 
percent, DOE estimates that the INPV for manufacturers of CFs in the 
no-standards case is $1,308.7 million in 2014$. Under the proposed 
standards, DOE expects that manufacturers may lose up to 12.7 percent 
of this INPV, which is approximately $166.3 million. Additionally, 
based on DOE's interviews with the ceiling fan manufacturers, DOE does 
not expect significant impacts on manufacturing capacity or loss of 
employment for the industry as a whole to result from enacting the 
proposed standards for ceiling fans.
    DOE's analysis of the impacts of the amended standards on 
manufacturers is described in section IV.J of this notice.

C. National Benefits and Costs \4\
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    \4\ All monetary values in this section are expressed in 2014 
dollars and, where appropriate, are discounted to 2015 unless 
explicitly stated otherwise. Energy savings in this section refer to 
the full-fuel-cycle savings (see section IV.H for discussion).
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    DOE's analyses indicate that the proposed energy conservation 
standards for ceiling fans would save a significant amount of energy. 
Relative to the case where no energy efficiency performance standard is 
set (the ``no-standards case''), the lifetime energy savings for 
ceiling fans purchased in the 30-year period that begins in the 
anticipated year of compliance with any amended standards (2019-2048) 
amount to 0.758 quadrillion Btu (quads).\5\ This represents an energy 
savings of 10.9 percent relative to the energy use of these products in 
the case without amended standards (referred to as the ``no-standards 
case'').
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    \5\ 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 the proposed standards for ceiling fans ranges from $0.813 
billion (at a 7-percent discount rate) to $2.760 billion (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 ceiling fans purchased in 2019-2048.
    In addition, the proposed standards for ceiling fans would have 
significant environmental benefits. DOE estimates that the proposed 
standards would result in cumulative emission reductions of 45.7 
million metric tons (Mt) \6\ of carbon dioxide (CO2), 24.5 
thousand tons of sulfur dioxide (SO2), 84.2 thousand tons of 
nitrogen oxides (NOX), 199.6 thousand tons of methane 
(CH4), 0.51 thousand tons of nitrous oxide (N2O), 
and 0.09 tons of mercury (Hg).\7\ The cumulative reduction in 
CO2 emissions through 2030 amounts to 8.53 Mt, which is 
equivalent to the emissions resulting from the annual electricity use 
of almost 778,000 homes.\8\
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    \6\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \7\ DOE calculated emissions reductions relative to the no-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2015 (AEO 2015) Reference case. AEO 2015 generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2014.
    \8\ The conversion from cumulative CO2 emissions 
reductions to electricity use emissions from homes is based on the 
U.S. Environmental Protection Agency's Greenhouse Gas Equivalencies 
Calculator: http://www.epa.gov/cleanenergy/energy-resources/calculator.html#results.
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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.\9\ The derivation of the SCC values is discussed 
in section IV.L. Using discount rates appropriate for each set of SCC 
values (see Table I-3), DOE estimates the present monetary value of the 
CO2 emissions reduction (not including CO2 
equivalent emissions of other gases with global warming potential) is 
between $0.3 billion and $4.4 billion, with a value of $1.4 billion 
using the central SCC case represented by $40.0/t in 2015. DOE also 
estimates the present monetary value of the NOX emissions 
reduction to be $0.11 billion at a 7-percent discount rate and $0.27 
billion at a 3-percent discount rate.\10\
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    \9\ 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 July 2015) (Available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
    \10\ DOE estimated the monetized value of NOx emissions 
reductions using benefit per ton estimates from the Regulatory 
Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for 
Existing Power Plants and Emission Standards for Modified and 
Reconstructed Power Plants,'' published in June 2014 by EPA's Office 
of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) 
See section IV.L.2 for further discussion. Note that the agency is 
presenting a national benefit-per-ton estimate for particulate 
matter emitted from the Electricity Generating Unit sector based on 
an estimate of premature mortality derived from the ACS study 
(Krewski et al., 2009). If the benefit-per-ton estimates were based 
on the Six Cities study (Lepuele et al., 2011), the values would be 
nearly two-and-a-half times larger. Because of the sensitivity of 
the benefit-per-ton estimate to the geographical considerations of 
sources and receptors of emissions, DOE intends to investigate 
refinements to the agency's current approach of one national 
estimate by assessing the regional approach taken by EPA's 
Regulatory Impact Analysis for the Clean Power Plan Final Rule. Note 
that DOE is currently investigating valuation of avoided 
SO2 and Hg emissions.
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    Table I-3 summarizes the national economic benefits and costs 
expected to result from the proposed standards for ceiling fans.

 Table I-3--Summary of National Economic Benefits and Costs of Proposed
        Energy Conservation Standards for Ceiling Fans (TSL 4) *
------------------------------------------------------------------------
                                        Present value    Discount rate
               Category                 Billion 2014$         (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings......             2.2              7
                                                  5.2              3
CO2 Reduction Monetized Value ($12.2/            0.31              5
 t case) **..........................
CO2 Reduction Monetized Value ($40.0/             1.4              3
 t case) **..........................
CO2 Reduction Monetized Value ($62.3/             2.3              2.5
 t case) **..........................

[[Page 1691]]

 
CO2 Reduction Monetized Value ($117/t             4.4              3
 case) **............................
NOX Reduction Monetized Value                    0.11              7
 [dagger]............................            0.27              3
                                      ----------------------------------
    Total Benefits[dagger][dagger]...             3.8              7
                                                  6.9              3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs.             1.4             7%
                                                  2.4             3%
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction                     2.3             7%
 Monetized Value[dagger].............             4.5             3%
------------------------------------------------------------------------
* This table presents the costs and benefits associated with ceiling
  fans shipped in 2019-2048. These results include benefits to consumers
  which accrue after 2048 from the products purchased in 2019-2048. The
  results account for the incremental variable and fixed costs incurred
  by manufacturers due to the standard, some of which may be incurred in
  preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
  2014$, 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 incorporate an
  escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L.
  DOE estimated the monetized value of NOX emissions reductions using
  benefit per ton estimates from the Regulatory Impact Analysis titled,
  ``Proposed Carbon Pollution Guidelines for Existing Power Plants and
  Emission Standards for Modified and Reconstructed Power Plants,''
  published in June 2014 by EPA's Office of Air Quality Planning and
  Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 for further
  discussion. Note that the agency is presenting a national benefit-per-
  ton estimate for particulate matter emitted from the Electric
  Generating Unit sector based on an estimate of premature mortality
  derived from the ACS study (Krewski et al., 2009). If the benefit-per-
  ton estimates were based on the Six Cities study (Lepuele et al.,
  2011), the values would be nearly two-and-a-half times larger. Because
  of the sensitivity of the benefit-per-ton estimate to the geographical
  considerations of sources and receptors of emissions, DOE intends to
  investigate refinements to the agency's current approach of one
  national estimate by assessing the regional approach taken by EPA's
  Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived
  using the series corresponding to average SCC with 3-percent discount
  rate ($40.0/t case).

    The benefits and costs of the proposed standards, for ceiling fans 
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 consumer operation of 
products that meet the new or amended standards (consisting primarily 
of operating cost savings from using less energy, minus increases in 
product purchase prices and installation costs, which is another way of 
representing consumer NPV), and (2) the annualized monetary value of 
the benefits of emission reductions, including NOX and 
CO2 emission reductions.\11\
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    \11\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2015. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I-4. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year, that yields the same present value.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 emission reductions is relevant to DOE's determination, 
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, 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 ceiling fans shipped in 
2019-2048. Because CO2 emissions have a very long residence 
time in the atmosphere,\12\ the SCC values after 2050 reflect future 
climate-related impacts resulting from the emission of CO2 
that continue beyond 2100.
---------------------------------------------------------------------------

    \12\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ (2005), ``Correction to 
`Control of fossil-fuel particulate black carbon and organic matter, 
possibly the most effective method of slowing global warming,''' J. 
Geophys. Res. 110. pp. D14105.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
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 average SCC series that has a 
value of $40.0/t in 2015), the estimated annualized cost of the 
standards proposed in this rule is $140 million per year in increased 
equipment costs, while the estimated annualized benefits are $220 
million in reduced equipment operating costs, $80 million in 
CO2 reductions, and $10 million in reduced NOX 
emissions. In this case, the annualized net benefit amounts to $170 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the average SCC series that has a value of $40.0/t in 2015, 
the estimated annualized cost of the proposed ceiling fans standards is 
$136 million per year in increased equipment costs, while the estimated 
annualized benefits are $290 million in reduced operating costs, $80 
million in CO2 reductions, and $15 million in reduced 
NOX emissions. In this case, the annualized net benefit 
amounts to $248 million per year.

[[Page 1692]]



                       Table I-4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Ceiling Fans (TSL 4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     (Million 2014$/year)
                                                                     -----------------------------------------------------------------------------------
                                           Discount rate  (%)                                      Low net benefits estimate  High net benefits estimate
                                                                          Primary  estimate *                  *                           *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7...............................  220.......................  195.......................  253.
                                    3...............................  290.......................  255.......................  341.
CO2 Reduction Monetized Value       5...............................  23........................  21........................  26.
 ($12.2/t case)**.
CO2 Reduction Monetized Value       3...............................  80........................  71........................  90.
 ($40.0/t case)**.
CO2 Reduction Monetized Value       2.5.............................  117.......................  105.......................  132.
 ($62.3/t case)**.
CO2 Reduction Monetized Value       3...............................  243.......................  217.......................  274.
 ($117/t case)**.
NOX Reduction Monetized             7...............................  10........................  9.........................  26.
 Value[dagger].                     3...............................  15........................  13........................  37.
    Total Benefits                  7 plus CO2 range................  254 to 473................  225 to 421................  305 to 553.
     [dagger][dagger].
                                    7...............................  310.......................  275.......................  369.
                                    3 plus CO2 range................  328 to 547................  289 to 485................  404 to 652.
                                    3...............................  384.......................  340.......................  467.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Installed      7...............................  140.......................  177.......................  155.
 Product Costs.                     3...............................  136.......................  182.......................  152.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total [dagger]................  7 plus CO2 range................  114 to 333................  47 to 243.................  150 to 398.
                                    7...............................  170.......................  98........................  214.
                                    3 plus CO2 range................  192 to 411................  107 to 303................  251 to 499.
                                    3...............................  248.......................  157.......................  315.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with ceiling 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 Primary Estimate assumes the Reference case
  electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the
  electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend
  for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the
  same product price decrease for ceiling fans with DC motors as in the Primary Estimate.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 incorporate an escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L. DOE estimated the monetized value of NOx emissions reductions using benefit per
  ton estimates from the Regulatory Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
  Modified and Reconstructed Power Plants,'' published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 I.A.2 for further discussion. For DOE's Primary Estimate and Low
  Net Benefits Estimate, the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit
  sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the
  benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the
  ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE
  intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's
  Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
  rate ($40.0/t case). 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.

    DOE's analysis of the national impacts of the proposed standards is 
described in sections IV.H, IV.K and IV.L of this notice. DOE has 
tentatively concluded that the proposed standards represent the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified, and would result in the significant 
conservation of energy. DOE further notes that products achieving these 
standard levels are already commercially available for all product 
classes covered by this proposal. Based on the analyses described 
above, DOE has tentatively concluded that the benefits of the proposed 
standards to the Nation (energy savings, positive NPV of consumer 
benefits, consumer LCC savings, and emission reductions) would outweigh 
the burdens (loss of INPV for manufacturers and LCC increases for some 
consumers).
    DOE also considered more- and less-stringent energy efficiency 
levels as potential standards, and is still considering them in this 
rulemaking. However, DOE has tentatively concluded that the potential 
burdens of the more-stringent energy efficiency levels would outweigh 
the projected benefits and that the proposed standard achieves the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified. Based on consideration of the 
public comments DOE receives in response to this notice and related 
information collected and analyzed during the course of this rulemaking 
effort, DOE may adopt energy efficiency levels presented in this notice 
that are either higher or lower than the proposed standards, or some 
combination of level(s) that incorporate the proposed standards in 
part.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this proposed rule, as well

[[Page 1693]]

as some of the relevant historical background related to the 
establishment of standards for ceiling fans.

A. Authority

    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, et seq.) 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles, a program covering most major household appliances 
(collectively referred to as ``covered products''), which includes the 
ceiling fans that are the subject of this rulemaking. (42 U.S.C. 
6295(ff)) EPCA, as amended, prescribed energy conservation standards 
for these products and authorized DOE to consider energy efficiency or 
energy use standards for the electricity used by ceiling fans to 
circulate air in a room. Id.
    Under 42 U.S.C. 6295(m), DOE must periodically review its already 
established energy conservation standards for a covered product. Under 
this requirement, the next review that DOE would need to conduct must 
occur no later than 6 years from the issuance of any final rule 
establishing or amending a standard for a covered product.
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists 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 to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product. (42 U.S.C. 6293, 6295(o)(3)(A)) 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 ceiling fans appear at title 10 of 
the Code of Federal Regulations (CFR) part 430, subpart B, appendix U.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including ceiling fans. Any new 
or amended 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 ceiling 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 proposed 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 statutory 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))
    Further, EPCA 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. (42 U.S.C. 6295(o)(2)(B)(iii))
    EPCA also contains what is known as an ``anti-backsliding'' 
provision, which prevents the Secretary from prescribing any amended 
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 in 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))
    Additionally, 42 U.S.C. 6295(q)(1) 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 or class of 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 the 
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))
    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)).
    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

[[Page 1694]]

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)) In this rulemaking, DOE proposes to incorporate 
such energy use into any amended energy conservation standards it 
adopts in the final rule.

B. Background

1. Current Standards
    The Energy Policy and Conservation Act of 1975 (EPCA) defined and 
established design standards for ceiling fans. EPCA defined a ``ceiling 
fan'' as ``a nonportable device that is suspended from a ceiling for 
circulating air via the rotation of fan blades.'' (42 U.S.C. 6291(49)) 
In a final rule technical amendment published in the Federal Register 
(FR) on October 18, 2005, DOE codified the statutorily-prescribed 
design standards for ceiling fans. 70 FR 60407, 60413. These standards 
are set forth in DOE's regulations at 10 CFR 430.32(s), and require all 
ceiling fans manufactured on or after January 1, 2007, to have the 
following features:
    (i) Fan speed controls separate from any lighting controls;
    (ii) adjustable speed controls (either more than one speed or 
variable speed); and
    (iii) the capability for reverse action (other than fans sold for 
industrial or outdoor application or where safety would be an issue)).
    (42 U.S.C. 6295(ff)(1)(A) and (6))
2. History of Standards Rulemaking for Ceiling Fans
    EPCA established energy conservation standards for ceiling fans as 
described in Section II.B.1 and authorized DOE to consider, subject to 
the requirements of 42 U.S.C. 6295(o) and (p), establishing energy 
efficiency or energy use standards for the electricity used by ceiling 
fans to circulate air in a room. (42 U.S.C. 6295(ff))
    As noted in section II.B.1, DOE codified the statutorily-prescribed 
design standards for ceiling fans in the CFR at 10 CFR 430.32(s). 70 FR 
60407, 60413 (Oct. 18, 2005). DOE also adopted test procedures for 
ceiling fans at 10 CFR part 430, subpart B, appendix U. 71 FR 71340, 
71366-67 (Dec. 8, 2006).
    On March 15, 2013, DOE published a notice announcing the 
availability of the framework document, ``Energy Conservation Standards 
Rulemaking Framework Document for Ceiling Fans and Ceiling Fan Light 
Kits,'' and a public meeting to discuss the proposed analytical 
framework for the energy conservation standards rulemaking. 76 FR 
56678. DOE also posted the framework document on its Web site, in which 
it described the procedural and analytical approaches it anticipated 
using to evaluate amended energy conservation standards for ceiling 
fans and ceiling fan light kits.
    DOE held the public meeting for the framework document on March 22, 
2013,\13\ to present the framework document, describe the analyses DOE 
planned to conduct during the rulemaking, seek comments from interested 
parties on these subjects, and inform them about and facilitate their 
involvement in the rulemaking. At the public meeting, and during the 
comment period, DOE received many comments that both addressed issues 
raised in the framework document and identified additional issues 
relevant to this rulemaking.
---------------------------------------------------------------------------

    \13\ The framework document and public meeting information are 
available at regulations.gov under docket number EERE-2012-BT-STD-
0045-0001.
---------------------------------------------------------------------------

    DOE published the preliminary analysis for the ceiling fan energy 
conservation standards rulemaking on September 29, 2014. 79 FR 58290. 
DOE posted the preliminary analysis, as well as the complete 
preliminary technical support document (TSD), on its Web site.\14\ The 
preliminary TSD includes the results of the following DOE preliminary 
analyses: (1) Market and technology assessment; (2) screening analysis; 
(3) engineering analysis; (4) markups analysis; (5) energy use 
analysis; (6) LCC and PBP analyses; (7) shipments analysis; (8) 
national impact analysis (NIA); and (9) preliminary manufacturer impact 
analysis (MIA).
---------------------------------------------------------------------------

    \14\ The preliminary analysis, preliminary TSD, and preliminary 
analysis public meeting information are available at regulations.gov 
under docket number EERE-2012-BT-STD-0045-0066
---------------------------------------------------------------------------

    DOE held a public meeting on November 19, 2014, to present the 
preliminary analysis, which included presenting preliminary results for 
the engineering and downstream economic analyses, seek comments from 
interested parties on these subjects, and facilitate interested 
parties' involvement in the rulemaking. At the public meeting, and 
during the comment period, DOE received comments that addressed issues 
raised in the preliminary analysis and identified additional issues 
relevant to this rulemaking.

III. General Discussion

    DOE developed this proposal after considering comments, data, and 
information from interested parties that represent a variety of 
interests. The following discussion addresses issues raised by these 
commenters.

A. Product Classes and Scope of Coverage

1. Scope of Coverage
    EPCA defines a ``ceiling fan'' as ``a nonportable device that is 
suspended from a ceiling for circulating air via the rotation of fan 
blades.'' (42 U.S.C. 6291(49))
    In the ceiling fan light kit test procedure final rule published on 
December 24, 2015. 80 FR 80209, DOE reinterpreted the statutory 
definition of a ceiling fan to include hugger fans, which are fans that 
are mounted close to the ceiling, and are safe to use in environments 
with low ceilings, and also clarify that ceiling fans that produce 
large volume of airflow also meet the definition. DOE research 
indicates that all ceiling fans currently on the market, including 
hugger ceiling fans and ceiling fans that produce a large volume of 
airflow, appear to meet the EPCA design standards.
    The changes in interpretation of the ceiling fan definition 
discussed above result in the applicability of the design standards set 
forth in EPCA at 42 U.S.C. 6295(ff)(1) to these fan types 30 days after 
the publication of the ceiling fan light kit final rule test procedure. 
DOE is also proposing efficiency standards for these fan types in this 
ceiling fan NOPR.
    During the preliminary analysis public meeting, Southern Company 
expressed concern over including larger ceiling fans, generally used in 
commercial and industrial settings under 10 CFR 430. Southern Company 
suggested that it would be more appropriate for larger ceiling fans to 
be considered as an ASHRAE product, and not subject to standards 
established in this rulemaking. (Southern Company, Public Meeting 
Transcript, No. 83 at p. 188) \15\ DOE interprets Southern Company's 
comments to recommend that DOE exclude larger ceiling fans from this 
rulemaking and allow ASHRAE to include efficiency requirements for 
these products in ASHRAE 90.1 standard.
---------------------------------------------------------------------------

    \15\ A notation in this form provides a reference for 
information that is in the docket of DOE's rulemaking to develop 
energy conservation standards for ceiling fans (Docket No. EERE-
2012-BT-STD-0045), which is maintained at www.regulations.gov. This 
notation indicates that the statement preceding the reference is 
document number 83 in the docket for the ceiling fan energy 
conservation standards rulemaking, and appears at page 188 of that 
document.
---------------------------------------------------------------------------

    Pursuant to EPCA, ceiling fans are defined as a nonportable device 
that is

[[Page 1695]]

suspended from a ceiling for circulating air via the rotation of fan 
blades. (42 U.S.C. 6291(49)) EPCA also defines a ``consumer product'', 
which includes ceiling fans, as any article of a type that consumes 
energy and, ``to any significant extent, is ``distributed in commerce 
for personal use or consumption by individuals.'' Because ceiling fans 
are considered a consumer product under this definition, and because 
the definition of ceiling fan does not have a threshold for size, DOE's 
authority to consider energy conservation standards for ceiling fans 
includes the larger ceiling fans generally used in commercial and 
industrial settings referred to by Southern Company. In a separate 
rulemaking proceeding, DOE is currently negotiating energy conservation 
standards for commercial and industrial fans and blowers.\16\ DOE 
encourages Southern Company and other interested parties to comment on 
any proposed standards for this equipment as well, to ensure that DOE's 
standards for ceiling fans and for commercial and industrial fans and 
blowers do not overlap.
---------------------------------------------------------------------------

    \16\ All information for this rulemaking is available at 
regulations.gov, under docket number EERE-2013-BT-STD-0006 (http://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0006).
---------------------------------------------------------------------------

2. Product Classes
    When 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 differing 
standards. In making a determination whether a performance-related 
feature justifies a different standard, DOE must consider such factors 
as the utility of the feature to the consumer and other factors DOE 
determines are appropriate. (42 U.S.C. 6295(q))
    Currently there are no product classes for ceiling fans, because 
the previous final rule for ceiling fans published on October 18, 2005 
set design standards, but did not establish product classes. 70 FR 
60407. In this NOPR, DOE is proposing six product classes, which 
include highly-decorative, very small-diameter, hugger, standard, high-
speed small-diameter and large-diameter product classes. For further 
details on product classes, see section IV.A.1 of this notice.

B. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product. Similarly, 
DOE must use these test procedures to determine compliance with its 
energy conservation standards. (42 U.S.C. 6295(s)) As noted, the test 
procedures for ceiling fans are provided in appendix U. DOE published a 
NOPR to amend these test procedures on October 17, 2014. 79 FR 62521, 
and published a supplemental NOPR (SNOPR) to provide further amendments 
to the published NOPR on June 3, 2015. 80 FR 31487.
    Currently no energy efficiency performance standards exist for 
ceiling fans. DOE proposes to set energy efficiency performance 
standards in terms of an airflow efficiency equation as proposed in the 
test procedure NOPR and subsequent SNOPR. 79 FR 62521 (Oct. 17, 2014); 
80 FR 31487 (June 3, 2015). The metric used to evaluate performance in 
this NOPR calculates ceiling fan efficiency as the average of airflows 
and power consumption at different speeds weighted by hours of 
operation in each speed, including standby power.
    In the test procedure SNOPR, DOE proposed to test all ceiling fans 
with blade spans less than or equal to 7 feet according to a modified 
version of the ENERGY STAR[supreg] ``Testing Facility Guidance Manual: 
Building a Testing Facility and Performing the Solid State Test Method 
for ENERGY STAR Qualified Ceiling Fans,'' version 1.1 test procedure, 
for any representations with respect to energy use or efficiency of 
these ceiling fans. DOE also proposed to test all ceiling fans with 
blade spans less than or equal to 7 feet mounted to the real ceiling. 
Additionally, DOE proposed to test all ceiling fans with blade spans 
less than or equal to 7 feet at high and low speeds, with the exception 
that high-volume small-diameter ceiling fans, which would only be 
tested at high speed. 80 FR 31489-31490.
    In the test procedure NOPR, DOE proposed to test all high-volume 
ceiling fans according to a modified version of the test procedure in 
American National Standards Institute/Air Movement and Control 
Association International, Inc. (ANSI/AMCA) Standard 230-12, 
``Laboratory Methods of Testing Air Circulating Fans for Rating and 
Certification'' (AMCA 230 \17\). DOE also proposed that these ceiling 
fans be tested only at high speed. 79 FR 62532. However, in the test 
procedure SNOPR, DOE modified the proposed test methods for high-volume 
ceiling fans. Specifically, instead of testing at only high speed, DOE 
proposed to test all ceiling fans with blade spans greater than 7 feet 
at five speeds spaced equally over the range of available speeds: 20%, 
40%, 60%, 80%, and 100%. 80 FR 31490.
---------------------------------------------------------------------------

    \17\ Air Movement and Control Association International, Inc. 
ANSI/AMCA Standard 230-12: Laboratory Methods of Testing Air 
Circulating Fans for Rating and Certification. 2010. Arlington 
Heights, IL. (Last accessed February 24, 2014) https://www.amca.org/store/item.aspx?ItemId=37.
---------------------------------------------------------------------------

    Additionally, in the test procedure NOPR, DOE also proposed to 
reinterpret the statutory definition of a ceiling fan to include hugger 
ceiling fans. DOE also proposed to clarify that multi-mount ceiling 
fans meet the statutory definition of a ceiling fan. During the public 
meeting, several manufacturers commented on how the requirements 
proposed in the ceiling fan test procedure NOPR would affect how they 
represent the performance of their ceiling fans in the market. DOE also 
received comments regarding the test procedure and metric in response 
to the Preliminary Analysis technical support document. DOE will 
respond to all comments on the proposed test procedure, ceiling fan 
representations and the proposed metric in the concurrent test 
procedure rulemaking.

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 technology options 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

[[Page 1696]]

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 notice discusses the results of the screening analysis for 
ceiling fans, particularly the designs DOE considered, those it 
eliminated (screened out), and those that are the basis for the 
standards considered in this rulemaking. For further details on the 
screening analysis for this rulemaking, see section IV.B of this notice 
and chapter 4 of the NOPR TSD.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended 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 ceiling 
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.1 
of this proposed rule and in chapter 5 of the NOPR TSD.

D. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the ceiling fans 
that are the subject of this rulemaking purchased in the 30-year period 
that begins in the year of compliance with any amended standards (2019-
2048).\18\ The savings are measured over the entire lifetime of ceiling 
fans purchased in this 30-year period. DOE quantified the energy 
savings attributable to each TSL as the difference in energy 
consumption between each standards case and the no-standards case. The 
no-standards case represents a projection of energy consumption in the 
absence of amended energy conservation standards, and it considers 
market forces and policies that may affect future demand for more-
efficient products.
---------------------------------------------------------------------------

    \18\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from potential amended standards for ceiling 
fans. 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 calculates national energy savings on an annual basis 
in terms of primary energy savings, which is the savings in the energy 
that is used to generate and transmit the site electricity. To 
calculate primary energy savings from site electricity savings, DOE 
derives annual conversion factors from data provided in the Energy 
Information Administration's (EIA) most recent Annual Energy Outlook 
(AEO).
    In addition to primary energy savings, DOE also calculates full-
fuel-cycle (FFC) energy savings. As discussed in DOE's statement of 
policy, the 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 conservation standards. 76 FR 51282 (August 18, 
2011), as amended at 77 FR 49701 (August 17, 2012). DOE's approach is 
based on the calculation of an FFC multiplier for each of the energy 
types used by covered products or equipment. For ceiling fans, the 
primary fuel is electricity. For more information on FFC multipliers, 
see section IV.H.1.
2. Significance of Savings
    To adopt any new or amended standards for a covered product, DOE 
must determine that such action would result in ``significant'' energy 
savings. (42 U.S.C. 6295(o)(3)(B)) Although the term ``significant'' is 
not defined in the Act, the U.S. Court of Appeals for the District of 
Columbia Circuit, in Natural Resources Defense Council v. Herrington, 
768 F.2d 1355, 1373 (D.C. Cir. 1985), opined that Congress intended 
``significant'' energy savings in the context of EPCA to be savings 
that were not ``genuinely trivial.'' The energy savings for all of the 
TSLs considered in this rulemaking, including the proposed standards 
(presented in section IV.H.1), are nontrivial, and, therefore, DOE 
considers them ``significant'' within the meaning of section 325 of 
EPCA.

E. Economic Justification

1. Specific Criteria
    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 discuss how 
DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 
discussed in section IV.J. DOE first uses an annual cash-flow approach 
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation--and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include: (1) INPV, which 
values the industry on the basis of 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 impacts on different types of manufacturers, including impacts on 
small manufacturers. Third, DOE considers the impact of standards on 
domestic manufacturer employment and manufacturing capacity, as well as 
the potential for standards to result in plant closures and loss of 
capital investment. Finally, DOE takes into account cumulative impacts 
of various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and 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 consumer costs and benefits expected to result from particular 
standards. DOE also evaluates the impacts of potential standards on 
identifiable subgroups of consumers that may be affected 
disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analyses.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating expense (including energy, 
maintenance, and repair expenditures) discounted over

[[Page 1697]]

the lifetime of the product. The LCC analysis requires a variety of 
inputs, such as product prices, product energy consumption, energy 
prices, maintenance and repair costs, product lifetime, and consumer 
discount rates. 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.
    The PBP is the estimated amount of time (in years) it takes 
consumers to recover the increased purchase cost (including 
installation) of a more efficient product through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
due to a more stringent standard by the change in annual operating cost 
for the year that standards are assumed to take effect.
    For its LCC and PBP analyses, DOE assumes that consumers will 
purchase the covered products in the first year of compliance with 
amended standards. The LCC savings for the considered efficiency levels 
are calculated relative to a no-standards case that reflects projected 
market trends in the absence of amended standards. DOE's LCC and PBP 
analyses are discussed in further detail in section IV.F.
    Southern Company encouraged DOE to pursue an efficiency standard 
that keeps incremental fan price increases minimal while also having a 
small payback period. (Southern Company, Public Meeting Transcript, No. 
83 at p. 271) In assessing a proposed energy conservation standard, DOE 
considers not only PBP, but also the other factors discussed in section 
III.E. Section V.B.1 contains the calculated PBPs for the proposed 
standard levels.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA 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)) As 
discussed in section III.D.1, DOE uses the NIA spreadsheet models to 
project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards proposed in this notice would not 
reduce the utility or performance of the products under consideration 
in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General that is 
likely to result from a proposed standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V)) It also directs the 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)(ii)) DOE will transmit a copy of this proposed 
rule to the Attorney General with a request that the Department of 
Justice (DOJ) provide its determination on this issue. DOE will publish 
and respond to the Attorney General's determination in the final rule.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the 
proposed standards are likely to provide improvements to the security 
and reliability of the nation's energy system. Reductions in the demand 
for electricity also may result in reduced costs for maintaining the 
reliability of the nation's electricity system. DOE conducts a utility 
impact analysis to estimate how standards may affect the nation's 
needed power generation capacity, as discussed in section IV.M.
    The proposed standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with energy production and use. DOE 
conducts an emissions analysis to estimate how potential standards may 
affect these emissions, as discussed in section IV.K; the emissions 
impacts are reported in section V.C.2 of this notice. DOE also 
estimates the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L.
g. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
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)) 
To the extent interested parties submit any relevant information 
regarding economic justification that does not fit into the other 
categories described above, DOE could consider such information under 
``other factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption 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. DOE's LCC and PBP 
analyses generate values used to calculate the effects that proposed 
energy conservation standards would have on the payback period for 
consumers. These analyses include, but are not limited to, the 3-year 
payback period contemplated under the rebuttable-presumption test. In 
addition, 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 this analysis 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 proposed rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to ceiling fans. Separate subsections address 
each component of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards proposed in this document. The first tool is a spreadsheet 
that calculates the LCC and PBP of potential amended or new energy 
conservation standards. The national impacts analysis uses a second 
spreadsheet set that provides shipments forecasts and calculates 
national energy savings and net present value resulting from potential 
energy conservation standards. DOE uses the third spreadsheet tool, the 
Government Regulatory Impact Model (GRIM), to assess manufacturer 
impacts of potential

[[Page 1698]]

standards. These three spreadsheet tools are available on the DOE Web 
site for this rulemaking: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/66. Additionally, DOE used 
output from the latest version of EIA's AEO, a widely known energy 
forecast for the United States, for the emissions and utility impact 
analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
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. (See chapter 3 of the NOPR TSD for further discussion of 
the market and technology assessment.) DOE received comments regarding 
product classes, and the technology options DOE identified that can 
improve the efficiency of ceiling fans.
1. Product Classes
    DOE divides covered products into classes by: (a) The type of 
energy used; (b) the capacity of the product; or (c) other performance-
related features that justify different standard levels, considering 
the consumer utility of the feature and other relevant factors. (42 
U.S.C. 6295(q))
    In the ceiling fan test procedure NOPR, DOE proposed test methods 
for two major categories of ceiling fans; low-volume ceiling fans and 
high-volume ceiling fans. 79 FR 62521. DOE defined a low-volume ceiling 
as a ceiling fan that: (1) Is less than or equal to 7 feet in diameter, 
and has a blade thickness greater than or equal to 3.2 mm at the edge 
and a maximum tip speed less than or equal to the limit in the 
Underwriters Laboratory (UL) Standard 507-1999, ``UL Standard for 
Safety for Electric Fans;''; or (2) has a maximum airflow volume less 
than or equal to 5,000 CFM. DOE defined a high-volume ceiling as a 
ceiling fan that: (1) is greater than 7 feet in diameter, or has a 
blade thickness of less than 3.2 mm at the edge or a maximum tip speed 
that exceeds the threshold in the UL 507 table; and (2) has a maximum 
airflow volume greater than 5,000 CFM. 79 FR 62526. In the test 
procedure NOPR, DOE also proposed definitions for hugger and standard 
fans. DOE proposed that a hugger ceiling fan is a ceiling fan where the 
lowest point on the fan blades is no more than 10 inches from the 
ceiling based on the distance between the lowest point of the fan blade 
and the ceiling. DOE proposed that a standard ceiling fan is a ceiling 
fan where the lowest point on the fan blades is more than ten inches 
from the ceiling. 79 FR 62526.
    In the preliminary analysis, DOE further differentiated low-volume 
and high-volume ceiling fans into five ceiling fan product classes 
based on capacity and performance-related features that affect consumer 
utility. The product classes considered in the preliminary analysis 
were: Hugger, standard, highly-decorative, high-volume small-diameter, 
and high-volume large-diameter.\19\ Table IV-1 provides the product 
class definitions considered in the preliminary analysis.
---------------------------------------------------------------------------

    \19\ The preliminary analysis TSD is available at 
regulations.gov under docket number EERE-2012-BT-STD-0045.

            Table IV-1--Preliminary Analysis Product Classes
------------------------------------------------------------------------
                                     Product class        Definition
------------------------------------------------------------------------
Low-volume......................  Hugger............  Lowest point on
                                                       fan blades is
                                                       <=10 inches from
                                                       the ceiling.
                                  Standard..........  Lowest point on
                                                       fan blades >10
                                                       inches from the
                                                       ceiling.
                                  Highly- decorative  Rotational speed
                                                       <=90 RPM and
                                                       airflow <=2,000
                                                       CFM at high
                                                       speed.
High-volume.....................  Small-diameter      High-volume
                                   (HVSD).             ceiling fan with
                                                       diameter <=7
                                                       feet.
                                  Large-diameter      High-volume
                                   (HVLD).             ceiling fan with
                                                       diameter >7 feet.
------------------------------------------------------------------------

    DOE received several comments regarding the ceiling fan categories 
proposed, and the product classes being considered.
    Stakeholders provided a variety of recommendations on how to define 
``low-volume'' and ``high-volume'' ceiling fans. MacroAir suggested 
that CFM be the only distinguishing factor between low-volume (max 
airflow is less than or equal to 5000 CFM) and high-volume (max airflow 
is greater than 5000 CFM) ceiling fans, and to exclude blade thickness 
as it may impede innovation. (MacroAir, No. 89 at p. 12) Minka Group 
suggested that the cutoff airflow for low-volume ceiling fans be 
increased to 10,000 CFM. (Minka, Public Meeting Transcript, No. 83 at 
p. 58)
    Alternatively, manufacturers recommended differentiating fans based 
on blade diameter instead of air volume. BAS recommended that all fans 
less than or equal to 7 feet be considered small-diameter fans, and all 
fans greater than 7 feet be considered large-diameter fans. (BAS, No. 
88 at p. 2) The American Lighting Association (ALA) echoed BAS's 
recommendation. ALA added that the ``low-volume'' and ``high-volume'' 
terms can be confusing and misleading and imply that the ``low-volume'' 
product classes are somehow less effective from a consumer utility 
perspective than the ``high-volume'' product classes. (ALA, No. 91 at 
p. 8)
    In the test procedure NOPR, DOE proposed separate test methods for 
low-volume and high-volume ceiling fans because some large-diameter 
ceiling fans (i.e., those ceiling fans with blade spans greater than 7 
feet) are too large to be tested in current low-volume ceiling fan test 
facilities. Additionally, testing with a single load cell is more 
practical for large-diameter ceiling fans than testing with numerous 
air velocity sensors as is typically done for small-diameter ceiling 
fans. In the test procedure NOPR, DOE proposed to test high-volume 
small-diameter ceiling fans according to the same procedure as large-
diameter ceiling fans (i.e., using a load cell), even though they are 
less than 7 feet in diameter.
    In response to the test procedure NOPR, several stakeholders 
disagreed with DOE's proposal to test high-volume small-diameter 
ceiling fans differently than low-volume ceiling fans. BAS stated that 
there may be instances in which a small-diameter ceiling fan has a 
large enough measured airflow under the test procedure NOPR low-volume 
test procedure to qualify it as a high-volume ceiling fan, but when 
tested according to the high-volume test procedure proposed in the 
NOPR, the measured airflow would be too low for the fan to qualify as a 
high-volume fan. (BAS, Public Meeting Transcript, No. 83 at pp. 63-64) 
According to ALA, manufacturers are already accustomed to testing all 
ceiling fans with blade spans less than or equal to 7 feet, including 
high-volume small-diameter fans, according to the current ENERGY STAR 
test procedure, regardless of airflow volume. (Docket No. EERE-2013-BT-
TP-0050, ALA, No. 8 at pp. 7-8)
    On June 3, 2015, DOE published a test procedure SNOPR that modified 
some of the proposals from the test procedure NOPR. 80 FR 31487. In the 
test procedure SNOPR, DOE proposes that all ceiling fans 7 feet or less 
in diameter be tested using version 1.1 of the ENERGY STAR test 
procedure, while all ceiling fans greater than 7 feet be tested using a 
version of the AMCA 230 test procedure. DOE proposed this change to

[[Page 1699]]

harmonize the DOE test procedure with accepted industry testing 
practices. Consequently, definitions for ``low-volume'' and ``high-
volume'' ceiling fans are no longer needed, because the test methods 
proposed are based only on ceiling fan diameter. For this NOPR, DOE 
accordingly did not adopt the airflow cutoff threshold recommendations 
from Macro Air and Minka Group because DOE is no longer proposing an 
airflow volume approach to determine ceiling fan categories.
    DOE proposes to define a ``small-diameter ceiling fan'' as ``a 
ceiling fan that is less than or equal to 7 feet in diameter'', and a 
``large-diameter ceiling fan'' as ``a ceiling fan that is greater than 
7 feet in diameter.'' DOE is no longer proposing definitions to 
differentiate product classes as ``low-volume'' and ``high-volume'' 
ceiling fans.
    DOE also received multiple stakeholder comments regarding the 
product classes considered in the preliminary analysis. In the 
preliminary analysis, DOE presented product classes that follow the 
Underwriters Laboratory (UL) ceiling fan safety standards (UL Standard 
507-1999, ``UL Standard for Safety for Electric Fans'' (UL 507)) to 
differentiate between classes. The UL 507 standard uses both blade 
thickness and tip speed to differentiate fans (See Table IV-3).
    BAS commented that the classification of ceiling fans based on 
blade thickness limits innovation, and therefore recommended a tip 
speed of 680 feet per minute (fpm) paired with a diameter and distance 
from blades to ceiling to determine fan classification. (BAS, No. 88 at 
p. 4) BAS recommended 680 fpm assuming a 52-inch standard fan and a 50 
rpm maximum speed. (BAS, No. 88, p. 12) BAS's recommended fan 
classification, however, defined only the standard, hugger, highly-
decorative and large-diameter product classes, and eliminated the HVSD 
product class. (BAS, No. 88 at p. 4) MacroAir commented that blade 
thickness is not applicable to define low-volume and high-volume 
ceiling fans, because it confuses the definition and may impede 
innovation. (Docket No. EERE-2013-BT-TP-0050, MacroAir, No. 6 at p. 6) 
ALA, on the other hand, provided comments on product classes that 
included both blade thickness and tip speed. (ALA, No. 96, p. 8)
    Neither BAS nor MacroAir provided specific examples on how 
incorporating blade thickness in the product class definitions would 
limit innovation. Additionally, BAS's recommendation on using 680 fpm 
tip speed to differentiate product classes eliminated the HVSD product 
class. Instead, HVSD ceiling fans were included as part of the standard 
or hugger ceiling fan class. However, DOE finds that HVSD ceiling fans 
provide different utility to the consumer than standard or hugger 
ceiling fans, and therefore warrant a separate product class. HVSD 
ceiling fans generally operate at much higher speeds (in terms of RPM) 
than standard or hugger ceiling fans. In addition, DOE observes that 
HVSD fans are generally applied in commercial buildings whereas 
standard fans are installed in residential buildings. Further 
discussion on the HVSD ceiling fan product class is in section 
IV.A.1.d.
    Based on BAS and MacroAir's comments, DOE considered whether the 
product class structure presented in the preliminary analysis could be 
simplified by removing blade thickness criteria. DOE investigated 
differentiating standard and hugger ceiling fans from HVSD ceiling fans 
using tip speed, but was unable to determine an appropriate tip speed 
threshold. In general, DOE had limited tip speed specifications for 
ceiling fans on the market. However, DOE looked at a database of 1400 
ceiling fans, applied three different tip speed thresholds (680, 1200 
and 2400 fpm), and calculated the percent of misclassifications of 
standard and hugger ceiling fans as HVSD ceiling fans. DOE found that 
between 40 and 100 percent of models were misclassified at these tip 
speed thresholds. (The lower the tip speed thresholds, the higher the 
rate of misclassification.) Therefore, DOE proposes to continue to use 
blade thickness to determine ceiling fan product classes.
    DOE prefers to harmonize with existing industry standards and 
practices to the extent possible. Using the blade thickness limits from 
the UL 507 standard in the product class definition allows for DOE to 
harmonize with existing safety standards. All manufacturers will have 
to comply with the existing UL 507 standard for applications in which 
the distance between the fan blades and the floor is 10 feet or less, 
regardless of whether DOE's use of blade thickness in its product class 
definition. Consequently, including blade thickness in the product 
class definitions does not introduce new constraints for these 
applications.\20\ However, for ceiling fans in applications in which 
the distance between the fan blades and the floor is greater than 10 
feet, DOE's product class structure allows for manufacturers to 
consider blade thickness and maximum tip speeds outside the range of 
the UL 507 standard. Additionally, for high-volume large-diameter 
(HVLD) ceiling fans, DOE does not include any blade thickness or 
maximum tip speed requirements.
---------------------------------------------------------------------------

    \20\ Underwriters Laboratories Inc. UL Standard for Safety for 
Electric Fans, UL 507. 1999. Northbrook, IL. (Last accessed February 
24, 2014) http://www.comm-2000.com/ProductDetail.aspx?UniqueKey=8782.
---------------------------------------------------------------------------

    In the preliminary analysis, the product class structure also 
incorporated a 5,000 CFM maximum airflow volume cutoff to differentiate 
between HVSD ceiling fans and low-volume ceiling fans, as described 
previously in this section. DOE found in the preliminary analysis that, 
without the CFM cutoff, low-volume ceiling fans were inadvertently 
being placed in the HVSD product class because some low-volume ceiling 
fans operate at high RPMs and high airflows. For this NOPR, however, 
DOE is proposing to analyze a separate product class for very small-
diameter (VSD) ceiling fans. (See section IV.A.1.c for further 
discussion on the VSD product class.) VSD ceiling fans are fans with 
one or more heads, each of which has a blade span of 18 inches or less 
and operate at high RPMs (generating high volumes of airflow). VSD 
ceiling fans provide consumers targeted airflow that can be directed, 
unlike the airflow of a traditional ceiling fan. Also VSD fans can be 
mounted in small, awkward spaces where traditional fans will not fit. 
The low-volume ceiling fans that DOE had identified as being 
inadvertently placed in the HVSD product class in the preliminary 
analysis were VSD fans. As part of analyzing VSD fans as a separate 
product class, DOE is proposing a definition for VSD fans that will 
avoid misclassifying them as HVSD fans based on diameter (18 inches or 
less). Consequently, the 5,000 CFM cutoff is no longer necessary. DOE 
proposes to eliminate the 5,000 CFM cutoff from the product class 
definitions.
    Table IV-2 provides the new product classes that DOE is proposing 
for all ceiling fans. DOE also proposes new product class names based 
on updates to the ceiling fan categories and product class definitions. 
Specifically, DOE is updating product class names based on the 
elimination of the concept of ``low-volume'' or ``high-volume'' ceiling 
fans. Therefore, the naming convention for HVSD ceiling fans is changed 
to high-speed small-diameter (HSSD) ceiling fans, and HVLD ceiling fans 
to large-diameter ceiling fans. In addition, all airflow criteria are 
as measured by the test procedure as proposed in the test procedure 
NOPR and modified by the test procedure SNOPR. 80 FR 31487 (June 3, 
2015). DOE requests comment

[[Page 1700]]

on the product class structure proposed. See issue 1 in section VII.E.

                                Table IV-2--Proposed Ceiling Fan Product Classes
----------------------------------------------------------------------------------------------------------------
                                                Product classes                Product class definitions
----------------------------------------------------------------------------------------------------------------
Small-Diameter (7 feet or less).........  Highly-decorative..........  A ceiling fan with a maximum rotational
                                                                        speed of 90 RPM and less than 1,840 CFM
                                                                        airflow at high speed.
                                          Belt-driven................  A ceiling fan with a series of one or
                                                                        more fan heads, each driven by a belt
                                                                        connected to one or more motors.
                                          Very Small-Diameter (VSD)..  A ceiling fan that is not a highly-
                                                                        decorative ceiling fan or belt-driven
                                                                        ceiling fan; and has one or more fan
                                                                        heads, each of which has a blade span of
                                                                        18 inches or less.
                                          Hugger.....................  A ceiling fan that is not a very small-
                                                                        diameter ceiling fan, highly-decorative
                                                                        ceiling fan or belt-driven ceiling fan;
                                                                        and where the lowest point on fan blades
                                                                        is <=10 inches from the ceiling; and has
                                                                        a blade thickness of >=3.2 mm at the
                                                                        edge and a maximum tip speed <= the
                                                                        applicable limit in Table IV-3.
                                          Standard...................  A ceiling fan that is not a very small-
                                                                        diameter ceiling fan, highly-decorative
                                                                        ceiling fan or belt-driven ceiling fan;
                                                                        and where the lowest point on fan blades
                                                                        is >10 inches from the ceiling; and has
                                                                        a blade thickness of >=3.2 mm at the
                                                                        edge and a maximum tip speed <= the
                                                                        applicable limit in Table IV-3.
                                          High-speed small-diameter    A ceiling fan that is not a very small-
                                           (HSSD).                      diameter ceiling fan, highly-decorative
                                                                        ceiling fan or belt-driven ceiling fan;
                                                                        and has a blade thickness of <3.2 mm at
                                                                        the edge or a maximum tip speed > the
                                                                        applicable limit in Table IV-3.
Large-Diameter..........................  Large-diameter.............  A ceiling fan that is greater than 7 feet
                                                                        in diameter.
----------------------------------------------------------------------------------------------------------------


                         Table IV-3--UL 507 Blade Thickness and Maximum Tip Speed Limits
----------------------------------------------------------------------------------------------------------------
                                      Thickness (t) of edges of blades          Maximum speed at tip of blades
                              ----------------------------------------------------------------------------------
     Airflow direction *                                                                            (feet per
                                         Mm                    (inch)                m/s             minute)
----------------------------------------------------------------------------------------------------------------
Downward-Only................  4.8 > t >= 3.2........  (3/16 > t >= 1/8)....              16.3            (3200)
Downward-Only................  t >= 4.8..............  (t >= 3/16)..........              20.3            (4000)
Reversible...................  4.8 > t >= 3.2........  (3/16 > t >= 1/8)....              12.2            (2400)
Reversible...................  t >= 4.8..............  (t >= 3/16)..........              16.3            (3200)
----------------------------------------------------------------------------------------------------------------
* The ``downward-only'' and ``reversible'' airflow directions are mutually exclusive; therefore, a ceiling fan
  that can only produce airflow in the downward direction need only meet the ``downward-only'' blade edge
  thickness and tip speed requirements and a ceiling fan that can produce airflow in the downward and upward
  directions need only meet the ``reversible'' requirements.

    The following sections provide further details on each product 
class proposed, and the methodology DOE is using to determine these 
product classes.
a. Highly-Decorative Ceiling Fans
    In the preliminary analysis, DOE defined highly-decorative ceiling 
fans as ceiling fans with a rotational speed of 90 RPM or less, and an 
airflow of 2,000 CFM or less at high speed, as tested using the current 
DOE test procedure, because the primary utility of highly-decorative 
ceiling fans is not airflow.\21\ Consequently, highly-decorative 
ceiling fans typically produce less airflow.
---------------------------------------------------------------------------

    \21\ The preliminary analysis TSD is available at 
regulations.gov under docket number EERE-2012-BT-STD-0045.
---------------------------------------------------------------------------

    BAS stated that using a combination of CFM and RPM to define 
highly-decorative ceiling fans is better than simply using RPM. BAS 
also commented that it would be hard to measure CFM for some of these 
highly-decorative ceiling fans using the ENERGY STAR test procedure. 
BAS recommended using tip speed as the defining characteristic for 
highly-decorative ceiling fans, and stated that assuming a 52-inch fan 
and a 50 rpm speed, a maximum tip speed of less than or equal to 680 
fpm would be appropriate. (BAS, No. 79 at p. 33)
    On the other hand, Matthews Fan Company suggested that CFM, 
possibly as a function of fan diameter, be used to define highly-
decorative ceiling fans because some of their smaller fans run at 
higher than 90 RPM speeds and would not fall under the proposed 
definition. (Matthews, Public Meeting Transcript, No. 83 at p. 176) 
Matthews Fan Company stated that if the RPM was used to define these 
fans, that a 1,100 RPM minimum cutoff would be appropriate because 
their small-diameter fans include high-speed blower motors. Matthews 
added that these fans are designed to provide directional airflow into 
a space directly underneath or across the room. (Matthews, Public 
Meeting Transcript No. 83 at p. 177)
    ALA recommended that within the small diameter fans, the highly-
decorative product class is (i) maximum rotational speed of 90 RPM and 
less than 2,000 CFM airflow at high speed; or (ii) belt-driven fans. 
(ALA, No. 91 at p. 8)
    DOE first considered using only a maximum tip speed to define 
highly-decorative ceiling fans. DOE investigated which ceiling fans on 
the market would be categorized as highly-decorative using a tip speed 
of 680 fpm, as suggested by BAS. BAS did not provide any supporting 
information as to why the suggested maximum speed is appropriate for 
the assumed diameter. In general, relatively few decorative ceiling 
fans advertise rpm or tip speed in their specifications. In addition, 
DOE found that relatively few ceiling fans advertise that they operate 
entirely below the 680 fpm threshold recommended by BAS. Therefore, DOE 
could not endorse BAS's tip speed recommendation. DOE also looked into 
tip speeds slightly higher than 680 fpm that could potentially be used 
to define the highly-decorative product class. DOE looked at a database 
of 1,400 ceiling fans, and the next tip speed closest to 680 fpm was 
803 fpm.

[[Page 1701]]

However, this ceiling fan was advertised as a ``traditional'' standard 
ceiling fan, not a highly-decorative ceiling fan. Hence, DOE concluded 
that any tip speed that is 803 fpm and above could not be used to 
define highly-decorative ceiling fans, as this would inadvertently 
place traditional ceiling fans into the highly-decorative ceiling fan 
product class. Thus, DOE could not definitively identify a tip speed 
that could be used to define highly-decorative ceiling fans. Therefore, 
DOE does not propose to define highly-decorative ceiling fans using 
only tip speed, to avoid misclassifying fans based on limited tip speed 
data.
    DOE also considered using only a maximum CFM cutoff for the highly-
decorative ceiling fans, per Matthews Fan Company's comments. DOE 
analyzed published CFM results of ceiling fans sold in the market, and 
observed which ceiling fans would be classified as highly-decorative 
using only a maximum CFM cutoff. DOE observed that some fans advertised 
and designed primarily to provide directed airflow in a small space--
characteristics of VSD fans for which DOE proposes to set standards--
were misclassified as highly-decorative ceiling fans. Further 
discussion on VSD ceiling fans is provided in IV.A.1.c.
    DOE also considered using only the 1,100 RPM cutoff for the highly-
decorative ceiling fans suggested by Matthews Fan Company. DOE 
performed market research on ceiling fans specifications and identified 
only three ceiling fans that had RPMs greater than the 1,100 RPM 
suggested by Matthews Fan Company. DOE confirmed, however, that these 
ceiling fans would be classified as VSD ceiling fans, because they are 
advertised for use when air circulation needs to be directed, or if 
space is tight. In addition, Matthews Fan Company stated in its 
comments that these high RPM ceiling fan are designed to provide 
directional airflow into a space directly underneath. (Matthews, Public 
Meeting Transcript No. 83 at p. 177) Therefore, DOE does not propose to 
define highly-decorative ceiling fans using only RPM, to avoid 
misclassifying fans based on limited data.
    After finding that using only tip speed, RPM, or airflow to define 
highly-decorative ceiling fans may result in misclassifications, DOE 
proposes to use a definition based on both a CFM and RPM cutoff, 
similar to what was analyzed and considered in the preliminary 
analysis. DOE expects that this approach will minimize 
misclassifications. DOE is proposing this definition based on both CFM 
and RPM because relatively low maximum RPM may indicate that a ceiling 
fan was not designed primarily to provide airflow, as would relatively 
low maximum airflow. However, criteria for a low maximum RPM by itself 
might misclassify some larger ceiling fans that operate at relatively 
low RPM, but provide high volumes of airflow, as highly decorative 
ceiling fans. Conversely, criteria for low maximum CFM by itself might 
incorrectly misclassify some VSD ceiling fans as highly decorative 
category. ALA supports an RPM and CFM cutoff for highly decorative 
ceiling fans. (ALA, No. 91 at p. 8) DOE requests comment on the 
approach to use both fan speed and an airflow threshold to delineate 
highly-decorative ceiling fans. See issue 2 in section VII.E.
    In the preliminary analysis, DOE used a 2,000 CFM (as tested per 
the current DOE test procedure) cutoff for highly-decorative fans. For 
this document, DOE is updating the CFM cutoff value from 2,000 CFM to 
1,840 CFM because the test procedure SNOPR updates the method of test 
to mounting ceiling fans directly to the real ceiling, which yields a 
different airflow measurement. DOE determined the percentage reduction 
in CFM from the current DOE test procedure to mounting directly to the 
ceiling by performing tests on ceiling fans in both configurations and 
calculating a scaling factor. Applying this scaling factor, DOE 
proposes that a highly-decorative ceiling fan is a ceiling fan with a 
maximum rotational speed of 90 RPM and less than 1,840 CFM airflow at 
high speed.
b. Belt-Driven Ceiling Fans
    DOE did not include a separate product class for belt-driven 
ceiling fans in the preliminary analysis. According to ALA, a belt-
driven ceiling fan is a series of one or more fan heads suspended from 
the ceiling, each driven by a belt connected to one or more motors that 
are independently suspended from the ceiling. (ALA, No. 91 at p. 11)
    ALA suggested including belt-driven fans within the highly-
decorative product class. (ALA, No. 91 at p. 11) ALA also commented 
that belt-driven ceiling fans are purchased by consumers principally 
for their aesthetic qualities. Typically, a belt-driven fan will use 
one or two motors to power multiple fan heads--up to seven or eight--
that rotate at low speed. The fan heads may rotate at very slow speeds, 
with maximum speeds under 90 rpm, if there are many fan heads attached 
to the same motor. (ALA, No. 91 at p. 11)
    DOE's research on belt-driven ceiling fans indicates that the 
market share is less than 1 percent. DOE has observed that these fans 
are used in bars and restaurants that have decorative ceilings with 
limited electrical boxes on the ceiling to mount multiple conventional 
ceiling fans. Belt-driven ceiling fans use one or two motors to power 
multiple fan heads, eliminating the need for many electrical boxes. 
Additionally, belt-driven ceiling fans are highly customizable, in that 
consumers can decide number of fan heads and the kind of fan belts to 
use in their belt-driven ceiling fans, for example.
    ALA suggested including belt-driven ceiling fans within the highly-
decorative ceiling fan product class. (ALA, No. 91 at p. 11) EPCA 
requires that if DOE sets energy efficiency standards for ceiling fans, 
it must consider ``establishing separate exempted product classes for 
highly decorative fans for which air movement performance is a 
secondary design feature.'' (42 U.S.C. 6295(ff)(6)(B)(ii)) Because 
belt-driven ceiling fans can have up to seven to eight fan heads, DOE 
has determined that the total airflow that these ceiling fan heads will 
provide indicates that air movement performance is not a secondary 
design feature for these fans.
    Instead, DOE proposes to separate belt-driven ceiling fans into 
their own product class because they provide a distinct utility for 
consumers. DOE proposes to define belt-driven ceiling fans as a ceiling 
fan with a series of one or more fan heads, each driven by a belt 
connected to one or more motors.
    In the NOPR, DOE agrees with manufacturers' that the market share 
for belt-driven ceiling fans is small. Due to the limited number of 
basic models for belt-driven ceiling fans, DOE did not have data to 
directly analyze and establish standards for this additional product 
classes. As a result, DOE does not propose standards for belt-driven 
ceiling fans in this rulemaking.
c. Very Small-Diameter Ceiling Fans
    In the preliminary analysis, DOE did not have a separate product 
class for ceiling fans less than or equal to 18 inches in diameter. DOE 
received comments on the preliminary analysis that these ``very small-
diameter fans'' require special consideration.
    ALA expressed concerns with DOE's proposed treatment of ceiling 
fans with very small diameters. ALA defines a ``very small-diameter 
ceiling fan'' as a ceiling fan with one or more fan heads, each of 
which has a blade span of 18 inches or less. ALA estimated that very 
small-diameter fan sales represent between 0.3 and 0.5 percent of the 
U.S.

[[Page 1702]]

ceiling fan market. ALA added that these fans would be 
disproportionately penalized under DOE's candidate standard levels for 
low-volume standard and hugger ceiling fans, which do not appear to 
have been based on testing of any ceiling fan smaller than 44 inches in 
diameter. According to ALA, very small-diameter fans would be 
disadvantaged because very small diameter ceiling fans use high-
velocity AC motors to operate at high speeds, and there is no DC motor 
on the market, or currently in development, that would provide an 
acceptable substitute for this functionality. (ALA, No. 91 at p. 9) ALA 
requests that DOE consider very small-diameter ceiling fans to be 
outside the scope of this rulemaking or otherwise exempt them from 
energy efficiency standards. (ALA, No. 91 at p. 9) ALA commented that 
if DOE does not determine that very small-diameter ceiling fans are 
outside the scope of the rulemaking or otherwise exempt them from 
standards, DOE should establish a separate product class for very 
small-diameter ceiling fans because of the unique utility that they 
provide to consumers. (ALA, No. 91 at p. 9) ALA commented that very 
small-diameter fans could also be multi-head or orbital fans that also 
provide consumers a distinct utility from traditional ceiling fans. 
(ALA, No. 91 at p. 10) These ceiling fans provide consumers targeted 
airflow that can be directed, unlike the airflow of a traditional 
ceiling fan. Also VSD fans can be mounted in small, awkward spaces 
where traditional fans will not fit. (ALA, No. 91 at p. 10) Therefore, 
ALA proposed to define very small-diameter fans as ``a ceiling fan with 
one or more fan heads, each of which has a blade span of 18 inches or 
less.'' (ALA, No. 8 at p. 6)
    In response to the comments received on very small-diameter ceiling 
fans, DOE conducted testing of ceiling fans with blade spans of 18 
inches or less to obtain data on their performance. DOE determined from 
testing that very small-diameter ceiling fans have much lower airflow 
capacity and airflow efficiency than standard and hugger fans. Further 
discussion on airflow capacity and efficiency results for VSD ceiling 
fans are in chapter 5 of the NOPR TSD. Additionally, very small-
diameter fans provide a different utility to consumers, in that these 
fans can be mounted in small places where traditional ceiling fans will 
not fit. DOE concluded that for these reasons, a separate product class 
for very small-diameter ceiling fans is warranted.
    Therefore, DOE proposes to adopt the very small-diameter fan 
definition suggested by ALA. DOE proposes that very small-diameter 
ceiling fans be defined as a ceiling fan that is not a highly-
decorative ceiling fan or belt-driven ceiling fan; and has one or more 
fan heads, each of which has a blade span of 18 inches or less.
d. Standard and Hugger Ceiling Fans
    In the test procedure NOPR, DOE proposed standard and hugger 
ceiling fan definitions based on the distance between the lowest point 
of the fan blades and the ceiling. For standard ceiling fans, DOE 
proposed that the lowest point of the fan blades is more than 10 inches 
from the ceiling. For hugger ceiling fans, DOE proposed that the lowest 
point of the fan blades is no more than 10 inches from the ceiling. 79 
FR 62526 (October 17, 2014). With the current proposal to classify fans 
as ``small-diameter'' and ``large-diameter'', instead of ``low-volume'' 
and ``high-volume'', DOE proposes to update the standard and hugger 
ceiling fan definitions to differentiate them from other small-diameter 
product classes, such as VSDs.
    Several manufacturers commented on the proposed definition of 
hugger ceiling fans in the test procedure NOPR, and on how they 
characterize their own hugger ceiling fans. Emerson stated that its 
hugger ceiling fans are designed to be mounted 11 to 12-inches from the 
ceiling, instead of 9 to 10 inches to avoid turbulent air, which causes 
the fan to vibrate, wobble, and make noise. (Emerson, Public Meeting 
Transcript, No. 83 at p. 73) The Minka Group stated that it classifies 
hugger ceiling fans as fans that are mounted directly to the ceiling 
without a downrod. Minka Group added that they measure the distance 
between the top of the blade instead of the bottom. Minka Group also 
stated that there was no advantage to including tri-mount fans to this 
category. (Minka, Public Meeting Transcript, No. 83 at p. 74) DOE 
understands tri-mount to mean a fan that can be mounted flush to the 
ceiling, with a standard downrod, or on a slope. Hunter Fan stated that 
it calls a fan a hugger ceiling fan when it's directly bolted to the 
ceiling. (Hunter, Public Meeting Transcript, No. 83 at p. 93) BAS 
mentioned that defining hugger ceiling fans as just mounted to the 
ceiling without a downrod would be problematic because, with the 
exception of their multi-mount ceiling fans, all of its fans are 
mounted to the ceiling without a downrod but still have 16 inches 
between the blades and ceiling. (BAS, Public Meeting Transcript, No. 83 
at p. 94)
    DOE recognizes that the ceiling fan industry does not have a 
standardized definition for hugger ceiling fans. While some ceiling fan 
manufacturers define hugger ceiling fans based on how they are mounted 
to the ceiling, others find this definition problematic. For the 
purposes of promulgating standards, DOE definitions, to the extent 
possible, are based on product specifications to provide verifiable 
methods of determining product class. Consequently, DOE proposes to 
base the hugger ceiling fan product class definition on the distance 
between the lowest point of ceiling fan blade and the ceiling, as 
specified by the manufacturer in the product literature shipped with 
the product. DOE proposes that the lowest point of the fan blades is no 
more than 10 inches from the ceiling for hugger fans.
    While BAS stated that the 10-inch height is appropriate for the 
hugger definition, they also stated that CFM numbers would not drop 
dramatically when using the 10-inch specification, so the hugger 
classification has the potential to be eliminated entirely. (BAS, 
Public Meeting Transcript, No. 83 at p. 82)
    DOE tested a multi-mount fan in both standard and hugger 
configurations based on the test methods presented in the test 
procedure NOPR, which assumes testing ceiling fans to a false ceiling, 
to evaluate relative performance. DOE observed a 16 percent decrease in 
CFM for a hugger configuration compared to a standard configuration. 
DOE did not observe any change in power consumption. DOE assumes, based 
on ceiling fan testing in multiple configurations that the relative 
performance between standard and hugger configurations would be the 
same even under the test procedure SNOPR, which assumes testing ceiling 
fans mounted directly to ceiling. Additionally, as described in the 
preliminary analysis, DOE determined that hugger fans offer a different 
functionality to the consumer because hugger fans can be safely used in 
rooms with lower ceilings. DOE concludes that these reasons warrant a 
separate product class for hugger ceiling fans.
    DOE also received comments regarding the hugger definition in 
response to the test procedure NOPR. (DOE used the same definition for 
hugger fans in the preliminary analysis and in the test procedure 
NOPR.) ALA requested that DOE use the term ``close to ceiling'' instead 
of ``hugger.'' ALA mentioned that ``hugger'' ceiling fan can cause 
confusion with its commonly understood meaning in the industry. ALA 
proposed to define close to ceiling fans as: Not VSD or highly-
decorative; and the lowest point on the fan blades

[[Page 1703]]

is less than or equal to 10 inches from the ceiling; and has a blade 
thickness of greater than or equal to 3.2 millimeters at the edge, and 
having a maximum tip speed less than or equal to the applicable limit 
in the UL 507 table. (ALA, No. 96 at p. 8) BAS recommended that within 
the small-diameter fans (7 feet or less), hugger fans are those that 
have a tip speed greater than 680 fpm and have a blade to ceiling 
distance less than or equal to 10 inches. (BAS, No. 88 at p. 2)
    DOE received no adverse comments from interested parties on its 
proposal to include in the definition of a hugger ceiling fan a 
distance of less than or equal to 10 inches from the lowest point of 
the fan blade to the ceiling. Thus, DOE proposes to include this 
criterion for the hugger fan product class in this NOPR.
    DOE expects that keeping the name ``hugger'' is less costly and 
disruptive for manufacturers than changing to ``close to ceiling'' per 
ALA's suggestion. The majority of ceiling fans for which the lowest 
point of the fan blade is less than or equal to 10 inches from the 
ceiling are already referred to as ``hugger'' ceiling fans by 
manufacturers and no change in marketing material would likely be 
required. For fans where the blade is less than or equal to 10 inches 
from the ceiling and mounted on a downrod, some manufacturers would 
need to make changes to marketing material that to meet the proposed 
definition where the products are not already referred to as hugger 
ceiling fans by the industry. Based on online research on ceiling fans 
sold in the market, DOE estimates that these fans are in the minority. 
DOE proposes to continue to use the term ``hugger'' to remain 
consistent with the majority of the market.
    After considering the elements of the hugger definition discussed 
above, DOE proposes that a hugger ceiling fan is a ceiling fan that is 
not a very small-diameter ceiling fan, highly-decorative ceiling fan or 
belt-driven ceiling fan; and where the lowest point on fan blades is 
<=10 inches from the ceiling; and has a blade thickness of >=3.2 mm at 
the edge and a maximum tip speed <= the applicable limit in Table IV-3.
    DOE also received comments on the standard ceiling fan definition 
proposed in the test procedure NOPR. ALA suggested defining small-
diameter standard ceiling fans as: Not VSD or highly decorative; and 
lowest point on fan blades is greater than 10 inches from the ceiling; 
and has a blade thickness of greater than or equal to 3.2 millimeters 
at the edge and a maximum tip speed less than or equal to the 
applicable limit in the UL 507 table. (ALA, No. 96 at p. 8) BAS 
recommended that within the small-diameter fans (7 feet or less), the 
standard fans are those that have a tip speed greater than 680 fpm, and 
have a blade to ceiling distance greater than 10 inches. (BAS, No. 88 
at p. 2)
    DOE received no adverse comments from interested parties on its 
proposal to include the distance from the lowest point of the fan blade 
to the ceiling to be greater than 10 inches in the definition of 
standard ceiling fans. DOE continues to include this distance in the 
standard ceiling fan proposal in this document. Additionally, as 
discussed previously, DOE proposes to adopt the UL 507 standard blade 
thickness and maximum tip speed limits when defining product classes, 
so as to not misclassify ceiling fans. Therefore, DOE proposes to use 
the same definition for standard ceiling fans as was used in the 
preliminary analysis and presented in the previous paragraph.
e. High-Speed Small-Diameter Ceiling Fans
    In the preliminary analysis, DOE analyzed the HVSD product class, 
which included ceiling fans with a blade span less than or equal to 7 
feet and an airflow greater than or equal to 5,000 CFM. As discussed in 
section IV.A.1, DOE proposes to classify fans as ``small-diameter'' and 
``large-diameter'', instead of ``low-volume'' and ``high-volume'' for 
this NOPR. Consequently, DOE proposes to rename the HVSD ceiling fans 
product class analyzed in the preliminary analysis to high-speed small-
diameter (HSSD), ceiling fans for this document. DOE also proposes to 
exclude the 5000 CFM cutoff from the HVSD definition in the HSSD 
ceiling fan definition. DOE proposes to define HSSD ceiling fans as 
fans that are not VSD or highly-decorative; and have a blade thickness 
of less than 3.2 millimeters at the edge or a maximum tip speed greater 
than the applicable limit in Table IV-3.
    DOE received several comments on the HVSD definition presented in 
the preliminary analysis. BAS's suggested product class structure no 
longer included HVSD ceiling fans, and instead incorporates HVSD 
ceiling fans into standard or hugger ceiling fans. (BAS, No. 88, p. 4) 
ALA proposed defining industrial fans (formerly HVSD) as fans that are 
not VSD or highly decorative; and have a blade thickness of less than 
3.2 millimeters at the edge or a maximum tip speed greater than the 
applicable limit in the UL 507 table. (ALA, No. 96 at p. 8)
    DOE finds that HSSD ceiling fans provide different utility to the 
consumer than standard or hugger ceiling fans. HSSD ceiling fans 
generally operate at much higher speeds (in terms of RPM) than standard 
or hugger ceiling fans, and are installed in commercial applications. 
HSSD ceiling fans are available in a blade span range similar to 
standard and hugger ceiling fans, but an HSSD fan typically provides 
more airflow at a given blade span because it runs at much higher RPMs. 
DOE observes that HSSD fans are generally applied in commercial 
buildings whereas standard fans are installed in residential buildings. 
These factors indicate that HSSD ceiling fans provide a different 
utility to consumers compared to standard fans that warrants a separate 
product class for these ceiling fans. DOE proposes to define HSSD 
ceiling fans as suggested by ALA as a ceiling fan that is not a very 
small-diameter ceiling fan, highly-decorative ceiling fan or belt-
driven ceiling fan; and has a blade thickness of less than 3.2 mm at 
the edge or a maximum tip speed greater than the applicable limit in 
Table IV-3.
f. Large-Diameter Ceiling Fans
    In the preliminary analysis, DOE defined HVLD ceiling fans as fans 
that have a blade span greater than 7 feet. DOE proposes to rename HVLD 
ceiling fans as large-diameter ceiling fans for this document to be 
consistent with the proposal to establish product classes for ceiling 
fans primarily by diameter and not airflow. All fans categorized as 
HVLD in the preliminary analysis will be categorized as large-diameter 
in this document.
    DOE received no comments on the HVLD definition described in the 
preliminary analysis. DOE proposes to use the HVLD definition from the 
preliminary analysis to define large-diameter ceiling fans for this 
NOPR. Therefore, DOE proposes to define large-diameter ceiling fans as 
a ceiling fan that is greater than 7 feet in diameter.
2. Technology Options
    In the preliminary analysis market and technology assessment, DOE 
identified and assessed several technology options that were expected 
to improve the efficiency of ceiling fans, as measured by the DOE test 
procedure. These technologies fall into three main categories: (1) More 
efficient motors, which included direct-drive single phase induction 
motors, geared motors, brushless direct current (DC) motors, and three-
phase induction motors; (2) more efficient blades, which included fewer 
fan blades, twisted blades, airfoil blades, beveled blades, curved 
blades, blade attachments and blade material;

[[Page 1704]]

and (3) ceiling fan controls, which include occupancy sensors. DOE then 
evaluated these technology options in the screening analysis to 
determine which would be screened out, and which would be retained and 
incorporated as design options in the engineering analysis.
    In the preliminary analysis, DOE also requested comments on 
technology options that it had not identified that could be 
incorporated into the analysis. This section provides a discussion of 
newly considered technology options, and a list of the technology 
options DOE then analyzed in the screening analysis. DOE considered 
capacitor start induction run (CSIR) motors, capacitor start capacitor 
run (CSCR) motors, startup energy, wind and temperature sensors, fan 
optimization and gearless direct current (DC) motors as new technology 
options in this section. The new technology options were provided in 
response to DOE's request for comments to the preliminary analysis, and 
DOE also conducted additional research of new technologies.
a. CSIR and CSCR Motors
    In the preliminary analysis, DOE specifically requested comment on 
whether there are other single-phase alternating current motor options, 
like CSIR and CSCR motors, which can be incorporated into ceiling fans 
and increase ceiling fan efficiency. ALA commented that CSIR and CSCR 
motors have been researched for ceiling fan applications and were found 
to be problematic. These motors create audible noise, high blade tip 
speeds and excessive motor temperatures when enclosed within ceiling 
fan housings. (ALA, No. 91 at p. 16) DOE also did not find any CSIR or 
CSCR motors that are incorporated in commercial products or working 
prototypes. DOE did not include CSCR and CSIR motors as technology 
options for these reasons.
b. Startup Energy
    In its written comments, MacroAir suggested that DOE consider 
designs that reduce startup energy. MacroAir suggested DOE study 
various fans comparing their moment of inertia with startup power. 
(MacroAir, No. 89 at p. 7)
    DOE recognizes that certain fan designs that reduce ceiling fan 
startup energy may have energy savings potential. However, MacroAir did 
not provide data on the magnitude of the savings potential. In 
addition, DOE is not aware of any industry test methods for measuring 
fan startup energy. Furthermore, the industry test procedure for small-
diameter and larger-diameter ceiling fans requires that the airflow or 
thrust (for small-diameter or large-diameter ceiling fans, 
respectively) be measured only after the ceiling fan reaches steady 
state. Therefore, startup power, or reduction of startup power, is not 
reflected in the proposed metric. DOE did not include designs that 
reduce ceiling fan startup energy in the engineering analysis for this 
reason.
c. Wind and Temperature Sensors
    Wind and temperature sensors detect temperature changes in the 
surrounding space, or potential wind speed reductions below certain 
thresholds. Ceiling fans could potentially adjust fan speed based on 
the wind and temperature in the space the ceiling fan is located when 
coupled with these sensors. This type of modulation could enable the 
ceiling fan to better match demand and reduce energy consumption. DOE 
received several comments on this potential technology option.
    BAS commented that it is the only manufacturer of a ceiling fan 
with a temperature sensor. (BAS, Public Meeting Transcript, No. 83 at 
p. 194) MacroAir stated that implementing wind and temperature sensors 
in ceiling fans could lead to energy savings and suggested that DOE 
investigate this technology further. (MacroAir, No. 89 at p. 12) 
However, ALA stated that it is not aware of any ceiling fans or working 
prototypes that include integrated wind or temperature sensors, or data 
that would indicate that these products could lead to energy savings in 
real world applications. (ALA, No. 91 at p. 15)
    DOE investigated the applications of wind and temperature sensors 
in ceiling fans. To DOE's knowledge, only one manufacturer incorporates 
temperature sensors in its ceiling fans. Qualitative data on how wind 
and temperature sensors reduce energy consumption of a ceiling fan is 
not available because this technology is new. Therefore, DOE is unable 
to fully evaluate whether these sensors reduce energy consumption in 
ceiling fan applications at this time. Consequently, DOE did not 
consider wind and temperature sensors as technology options for this 
rulemaking. DOE requests data on how wind and temperature sensors could 
reduce energy consumption in a ceiling fan. See issue 3 in section 
VII.E.
d. Fans With Fewer Blades and Fan Optimization
    In the preliminary analysis, DOE observed that large-diameter fans 
with fewer blades are generally more efficient because they are subject 
to less air resistance, so DOE evaluated fewer blades as a design 
option. DOE requested comment in the preliminary analysis on how 
manufacturers choose the number of blades to use for large-diameter 
fans and how it affects efficiency.
    BAS commented that isolating the number of blades as a design 
option ignores many factors and that fewer fan blades by itself does 
not affect efficiency. BAS suggested that a combination of factors such 
as cord width, angle of attack, and blade attachments, paired with 
number of blades, are considered by manufacturers in a more holistic 
approach when optimizing fan designs for efficiency. (BAS, No. 79 at p. 
38; BAS, Public Meeting Transcript, No. 83 at p. 211) Additionally 
MacroAir stated that reducing the number of fan blades from eight to 
six is limiting to the market and may impede future innovations. 
(MacroAir, No. 89 at p. 7)
    After further investigation, DOE agrees with BAS and MacroAir and 
proposes to replace reducing the number of fan blades for large-
diameter ceiling fans as a design option with a fan optimization design 
option. Fan optimization represents the increase in the efficiency of a 
fan by adjusting or optimizing the design features that already exist 
in the fan. These adjustments could include changing blade pitch, fine-
tuning motor RPM, and changing internal motor characteristics like the 
diameter of the wire, number of windings, skew angle, stack height and 
capacitors. DOE observed that ceiling fans with the same blade span, 
blade material, number of blades, type of motor and size of motor have 
a range of performances, indicating that some ceiling fans are 
optimized, whereas others are not. Fan optimization provides 
manufacturers more flexibility in making design changes to improve 
ceiling fan efficiency. DOE included fan optimization as a design 
option for standard and hugger fans in the preliminary analysis. DOE is 
now considering the fan optimization technology option for all ceiling 
fan product classes.
e. Gearless DC Motors
    MacroAir commented that direct drive by itself should be uncoupled 
from any motor type and included as a design feature, because any 
transfer of energy is a loss in efficiency. MacroAir stated that 
gearbox losses are between 5 percent and 35 percent. (MacroAir, No. 89 
at p. 5) MacroAir specifically suggested incorporating a gearless DC 
motor technology option in the analysis,

[[Page 1705]]

which it considers max-tech. (MacroAir, No. 89 at p. 5)
    DOE researched gearless ceiling fan designs in response to 
MacroAir's comment. DOE found several large-diameter ceiling fans on 
the market that use gearless DC motor designs. This indicates that the 
gearless DC motor technology option is technologically feasible in 
ceiling fans. Gearboxes have losses that may reduce overall ceiling fan 
efficiency, as MacroAir commented. Eliminating the gearbox and 
associated losses could, in turn, improve overall ceiling fan 
efficiency. DOE included gearless motors as a technology option for 
consideration in the screening analysis for these reasons. Further 
details on this technology option can be found in section IV.B.
    DOE is no longer considering the following technology options from 
the preliminary analysis for this NOPR: Three-phase induction motors, 
twisted blades, beveled blades, and alternate blade material. DOE 
screened out these technology options in the preliminary analysis based 
on the four screening criteria, outlined in section IV.B. Additionally, 
DOE received no comments from interested parties about including these 
technology options for the NOPR. Therefore, DOE continues to screen out 
the above technology options.
    For this NOPR, DOE proposes to analyze the technology options 
listed in Table IV-4. The technology options for this NOPR include a 
subset of the technology options from the preliminary analysis, in 
addition to new technology options based on interested party feedback 
and additional DOE research. The screening analysis provides further 
discussion on which of these technology options DOE retained as design 
options for the engineering analysis.

             Table IV-4 Technology Options and Descriptions
------------------------------------------------------------------------
            Technology  option                       Description
------------------------------------------------------------------------
Fan optimization..........................  This represents increasing
                                             the efficiency of a fan by
                                             adjusting existing design
                                             features. These adjustments
                                             could include changing
                                             blade pitch, fine-tuning
                                             motor RPM, and changing
                                             internal motor
                                             characteristics such as the
                                             diameter of the wire,
                                             number of windings, skew
                                             angle, stack height, and
                                             capacitors.
More efficient motors:
  Larger direct drive motors..............  This represents increasing
                                             the efficiency of a fan by
                                             increasing the size of (or
                                             the quality of steel used
                                             in) the stator and rotor
                                             stack, improving the
                                             lamination design,
                                             increasing the cross
                                             section of copper wiring,
                                             or operating the fan at
                                             reduced speed through
                                             capacitor speed control.
  Brushless DC motor......................  DC motors are permanent
                                             magnet synchronous AC
                                             motors driven by a
                                             converter plus inverter
                                             combination control system.
                                             In this configuration, the
                                             motor displays
                                             characteristics of direct
                                             current motors; thus, they
                                             are called brushless direct
                                             current motors. Because
                                             there is no electrical
                                             current flowing in the
                                             rotor of a DC motor, there
                                             are no rotor energy losses,
                                             thereby resulting in
                                             greater efficiency than
                                             standard AC motors.
  Geared DC motor.........................  DC motor fans with geared
                                             motors have fan blades
                                             attached to the motor via a
                                             geared mechanism, which
                                             allows the fan blades to
                                             rotate at a different speed
                                             from the motor.
  Gearless DC motor.......................  Fans with a DC motor that
                                             drive the fan blades
                                             directly without the use of
                                             a geared mechanism.
More efficient blades
  Curved blades...........................  Curved blades are blades for
                                             which the centerline of the
                                             blade cross section is
                                             cambered. Curved blades
                                             generally have uniform
                                             thickness and no
                                             significant internal
                                             volume.
  Airfoil blades..........................  Airfoil blades use curved
                                             surfaces to improve
                                             aerodynamics, but the
                                             thickness is not uniform
                                             and the top and bottom
                                             surfaces do not follow the
                                             same path from leading edge
                                             to trailing edge.
  Blade attachments.......................  Blade attachments refer to
                                             upswept blade tips or other
                                             components that can be
                                             fastened to a fan blade to
                                             potentially increase
                                             airflow or reduce drag.
Ceiling fan controls
  Occupancy sensors.......................  Occupancy sensors use
                                             technologies that detect
                                             the presence of people
                                             through movement, body
                                             heat, or other means.
                                             Ceiling fans used with an
                                             occupancy sensor could
                                             power down if they sense
                                             that a room is unoccupied.
------------------------------------------------------------------------

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 
projected 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

[[Page 1706]]

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 excluded from further consideration in the engineering 
analysis. The reasons for excluding technology options for this NOPR 
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 screened out based on 
the screening criteria. DOE requests comment on the screened out and 
remaining technology options for each product class. See issue 4 in 
section VII.E.
1. Screened-Out Technologies
a. Standard and Hugger Ceiling Fans
    In the preliminary analysis, DOE screened out the following 
technologies for standard and hugger fans: Occupancy sensors, geared 
motors, three-phase induction motors; and blade design elements 
including twisted blades, airfoil blades and beveled blades, fans with 
fewer blades, blade attachments, and alternative blade materials. In 
line with the technologies DOE screened out, Hunter Fan stated in 
comments on the preliminary analysis that the aesthetic appeal of 
ceiling fans must be considered because it can affect consumer utility. 
(Hunter, Public Meeting Transcript, No. 83 at p. 197)
    In the preliminary analysis, DOE screened out the occupancy sensors 
technology option because DOE did not have enough information to 
determine whether occupancy sensors are technologically feasible for 
use in all ceiling fans. DOE requested comments on sensors as a 
technology option. See issue 5 in section VII.E.
    In response to DOE's request for comment on sensors, ALA, Hunter, 
Westinghouse, and Lutron on behalf of Westinghouse commented to support 
DOE's decision to screen out occupancy sensors from the analysis. 
(Hunter, Public Meeting Transcript, No. 83 at p. 193) ALA and 
Westinghouse stated that occupancy sensors would be problematic for 
ceiling fans installed in bedrooms. Many consumers operate the ceiling 
fan continuously while sleeping, but the occupancy sensor would not 
detect the movement necessary to continuously operate through the 
night. (ALA, No. 91 at p. 16; Westinghouse, Public Meeting Transcript, 
No. 83 at p. 206) BAS, however, stated that a schedule can be included 
in the occupancy sensor to get around the issue of the ceiling fan 
turning off in the bedroom. (BAS, Public Meeting Transcript, No. 83 at 
p. 206)
    Westinghouse also commented that occupancy sensors can be difficult 
to manage in a residential space. It stated that to include an 
occupancy sensor to the ceiling fan, the room might have to have one as 
well to meet local building codes. (Westinghouse, Public Meeting 
Transcript, No. 83 at p. 195)
    Occupancy sensors have the potential to save energy by reducing the 
number of ceiling fan operating hours. DOE did not find or receive 
enough data to evaluate any potential tradeoff between consumer utility 
and the energy savings of reduced operating hours. DOE also researched 
the option of introducing occupancy sensor schedulers in ceiling fans. 
DOE did not find data to show that occupancy sensor schedulers can be 
installed reliably in all ceiling fans. At this time, DOE proposes to 
continue to screen out occupancy sensors because DOE cannot 
satisfactorily evaluate the energy savings potential, technological 
feasibility and impact on consumer utility of implementing sensors or 
schedule controls. DOE requests comment and data to evaluate these 
factors. See issue 5 in section VII.E.
    DOE did not receive comments on the decision to screen out three-
phase induction motors or blade design elements including twisted 
blades, airfoil blades and beveled blades, fans with fewer blades, 
blade attachments, and alternative blade materials for standard and 
hugger ceiling fans. DOE continues to screen out these technology 
options for this NOPR.
b. Very Small-Diameter Ceiling Fans
    As discussed in section IV.A.1, DOE proposes to analyze a new 
product class for ceiling fans with blade spans of 18 inches or less. 
DOE proposes to screen out the same technologies for very small-
diameter fans as for standard and hugger fans as described in section 
IV.B.1.a. DOE did not receive any feedback on the decision to screen 
out these technologies.
    VSD ceiling fans are used in residential applications, similar to 
standard and hugger ceiling fans. Thus, as discussed for standard and 
hugger ceiling fans, DOE proposes to screen out blade technology 
options that could affect appearance of VSD ceiling fans.
    During manufacturer interviews, DOE asked whether the same design 
options considered in the preliminary analysis for the standard and 
hugger fans could be considered for VSD ceiling fans. These design 
options included fan optimization, larger direct drive motor, and DC 
motors. DOE has not received any objections from manufacturers 
regarding its consideration of these design options for VSD ceiling 
fans. One manufacturer pointed out that there are no VSD ceiling fans 
with DC motors currently available in the market, but speculated that 
DC motors in VSD ceiling fans could be technologically feasible because 
they are used in more traditional ceiling fans (standard and hugger 
ceiling fans). The manufacturer also acknowledged that there is limited 
data on efficiency improvements of these design options specifically 
for VSD ceiling fans. Further discussion on how these design options 
were incorporated is provided in chapter 5 of the NOPR TSD.
    DOE requests comment on the technologies that it screened out for 
VSD ceiling fans. See issue 4 in section VII.E.
c. High-Speed Small-Diameter Ceiling Fans
    In the preliminary analysis, DOE screened out the following eight 
technologies for HVSD ceiling fans: More efficient direct-drive single-
phase induction motors, geared motors, three-phase induction motors, 
fans with fewer blades, twisted blades, blade attachments, alternative 
blade materials, and occupancy sensors. In line with the technologies 
that DOE screened out, BAS commented that that they do not use geared 
motors with variable frequency drives in acoustically sensitive places. 
(BAS, Public Meeting Transcript, No. 83 at p. 214)
    DOE received no comments objecting to screening out these 
technology options in the preliminary analysis. DOE does not expect 
that these technology options or the applicability of the screening 
criteria to them will be affected by the proposed change in name and 
definition of the HVSD product class to the HSSD product class analyzed 
in this document. Therefore DOE proposes to continue to screen out 
these technology options for HSSD fans in this NOPR.
d. Large-Diameter Ceiling Fans
    In the preliminary analysis, DOE screened out the following 
technologies for large-diameter fans: More efficient direct-drive 
single-phase induction

[[Page 1707]]

motors, twisted blades, blade attachments, alternative blade materials 
and occupancy sensors.
    In the preliminary analysis, DOE described blade attachments as an 
attachable clip that can be added to a fan blade to increase airflow or 
reduce drag. DOE asked for comment in the preliminary analysis about 
blade configurations and blade designs as technology options to improve 
ceiling fan efficiency.
    BAS commented that more than half of the large-diameter 
manufacturers use some form of blade attachment and that winglets are 
the most common type of blade attachment. BAS stated that a properly 
designed winglet can increase the efficiency of a ceiling fan and 
provided articles to show that blade attachment are used to increase 
fuel efficiency in aircrafts. (BAS, No. 79 at p. 17) MacroAir stated 
that it does not use blade attachments and does not consider blade 
attachments to provide performance or efficiency gains. (MacroAir, No. 
89 at p. 13)
    There is disagreement in the industry whether blade attachments 
improve fan efficiency. Because DOE has not received sufficient 
information to conclude that blade attachments increase the efficiency 
of large-diameter fans, DOE continues to screen out blade attachments.
    DOE did not receive comment on the decision to screen out more 
efficient direct-drive single-phase induction motors, twisted blades, 
alternative blade materials, and occupancy sensors for large-diameter 
fans. DOE continues to screen out these technology options for large-
diameter fans for this NOPR.
2. Remaining Technologies
    DOE tentatively concludes that the technology options not screened 
out meet all four screening criteria to be examined further as design 
options in DOE's NOPR analysis. DOE determined that these technology 
options are technologically feasible because they are being used in 
commercially available products or working prototypes. DOE also finds 
that all of the remaining technology options meet the other screening 
criteria (i.e., practicable to manufacture, install, and service and do 
not result in adverse impacts on consumer utility, product 
availability, health, or safety). In summary, DOE did not screen out 
the following technology options:
a. Fan Optimization
    In the preliminary analysis, DOE screened in fan optimization for 
standard and hugger ceiling fans. DOE observed that ceiling fans with 
the same blade span, blade material, number of blades, type of motor 
and size of motor have a range of performances indicating that some 
ceiling fans are optimized, whereas others are not. DOE research since 
the preliminary analysis indicated that ceiling fans in all product 
classes can be optimized.
    Matthews Fan stated that increasing the angle of the blade causes 
heat rise on the motor and the fan might not continue to meet the UL 
safety requirements and therefore adjusting the blade pitch is not 
possible. (Matthews, Public Meeting Transcript, No. 83 at p. 227)
    Increasing the blade pitch can increase the heat rise on the motor 
and that blade pitch optimizing needs to be done within the UL safety 
requirements. The fan optimization design option, as proposed, includes 
other adjustments that manufacturers can make to improve efficiency. 
Consequently, manufacturers do not have to adjust blade pitch, but have 
the flexibility to determine which adjustments to existing designs are 
cost-effective and comply with UL safety requirements. DOE continues to 
consider fan optimization as a viable technology option for improving 
fan efficiency that meets DOE's screening criteria. Consequently, DOE 
considered fan optimization in its analysis for all product classes.
b. Larger Direct-Drive Motor
    DOE screened in larger-direct drive motors as a technology option 
in the preliminary analysis. In response, ALA commented that DOE has 
not accounted for the difficulties associated with motor redesign that 
is required for larger AC motors. ALA stated that a significant 
constraint on ceiling fans is the maximum internal temperature 
permitted by UL 507. According to ALA, using a larger AC motor could 
create higher internal temperature and lead to failure in UL testing. 
(ALA, No. 91 at p. 5)
    DOE recognizes ALA's concerns but proposes to continue to screen in 
larger direct-drive motors for analysis in this NOPR. DOE identified 
several commercially-available ceiling fan model series that use larger 
direct-drive single-phase induction motors and still adhere to existing 
safety standards. For example, the 52-inch Monte Carlo Homeowner Max 
uses a 153 x 15 mm motor \22\ and the 52-inch Monte Carlo Designer Max 
uses a 188 x 15 mm motor.\23\ DOE conducted testing to evaluate the 
impact on performance of using larger direct-drive motors. DOE's 
internal test data shows that the efficiency of low-volume ceiling fans 
can be improved through the use of a larger AC direct-drive motor. 
Discussions with manufacturers confirmed that ceiling fan efficiency 
can be improved by increasing the size of the motor, but that the 
improvement may be small and increases production cost. Based on these 
findings, DOE continues to consider larger direct-drive motors as a 
viable technology option for improving fan efficiency that meets DOE's 
screening criteria. Consequently, DOE considered larger direct-drive 
motors in its analysis for standard and hugger fans. DOE accounts for 
costs associated with implementing a larger-direct drive motor in the 
engineering and MIA analyses. DOE also screened in larger direct-drive 
motors for very small-diameter ceiling fans based on information 
received during manufacturer interviews and requests comments on the 
inclusion of this design option for VSD ceiling fans. See issue 4 in 
section VII.E.
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    \22\ Monte Carlo. 52'' Homeowner Max, http://www.montecarlofans.com/38090/52-Homeowner-Max-5HM52BPN.html.
    \23\ Monte Carlo. 52'' Designer Max, http://www.montecarlofans.com/37831/52-Designer-Max_5DM52RZW.html.
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c. DC Motor
Brushless DC Motors in Standard, Hugger, and HSSD Product Classes
    In the preliminary analysis, DOE screened in brushless DC motors 
for standard, hugger and HVSD ceiling fans. These ceiling fans 
typically use AC induction motors. In AC induction motors, current 
flowing through copper wire windings in the stator induce a current in 
the motor rotor to create a magnetic field. There are energy losses 
associated with this process. In DC motors, the rotor is a permanent 
magnet that generates a magnetic field without the need for induced 
current. Therefore, the energy losses associated with inducing current 
in the rotor in an AC motor are not present in DC motors. Consequently, 
DC motors are typically more efficient than AC induction motors. 
Another advantage of DC motors is that they tend to be smaller and make 
less noise than AC induction motors. However, DC motors require 
additional controls to enable them to function on power sources typical 
in a home. Implementing DC motor technology in ceiling fans may 
increase manufacturing and product retail cost. These cost impacts are 
analyzed in the engineering and downstream analyses. DOE requested 
comment on the motor

[[Page 1708]]

technology options in the preliminary analysis.
    ALA commented that brushless DC motors should be screened out of 
DOE's analysis, because they have only been available in the market for 
a short time, and therefore not enough data exists to fully evaluate 
the long-term reliability of ceiling fans with DC motors. (ALA, No. 91 
at p. 16) However, the California Investor Owned Utilities (CA IOUs) 
supported the inclusion of DC motors as a technology option and urged 
DOE to incorporate only the assumptions regarding manufacturing, 
warranty, maintenance, and repair costs based on recent and accurate 
data or research from manufacturers rather than more informal 
assumptions. CA IOUs recommended that DOE conduct research regarding DC 
motors through direct outreach with manufacturers. (CA IOUs, No. 91 at 
p. 2) BAS commented that the latest generation of DC motor controllers 
don't require a power converter and can drive the motor directly from 
line voltage inverter. This eliminates one power conversion stage, 
reducing cost, and improving efficiency and reliability. According to 
BAS, DC motors are manufactured using similar techniques as AC motors 
and share many critical components. Therefore the reliability and the 
control system is not different for a DC motor compared to an AC motor. 
(BAS, No. 79 at p. 29) Similarly, the Appliance Standards Awareness 
Project (ASAP) noted that it is not aware that DC motors are less 
reliable than AC motors. (ASAP, et al., No. 92 at p. 2) In their 
submitted comments, ASAP stated several instances of manufacturers 
indicating that there should not be any concerns related to reliability 
of DC motors, including manufacturer responses to the preliminary TSD, 
and comments during the preliminary analysis public meeting. (ASAP, et 
al., No. 92 at pp. 2-3)
    ALA commented that quiet fan speed controls and variable speed 
controls are not compatible with brushless DC motors. ALA stated that 
requiring DC motors in small-diameter ceiling fans would lead to the 
elimination of existing wall-mounted controls for AC motor fans and 
associated light kits. (ALA, No. 91 at p. 7)
    In consideration of the above comments, DOE investigated DC motor 
impacts on consumer utility and product availability. Through market 
research, DOE found that most manufacturers offer ceiling fans with DC 
motors. DOE is also aware of ceiling fans that use DC motors and have 
wall mounted controls such as the BAS Haiku models that come with 
optional wall controls.\24\ However, DC motors are a relatively new 
technology and that reliability issues may become apparent as ceiling 
fans using these motors in the field mature. However, their 
availability in the market indicates to DOE that manufacturers have 
deemed DC motors technologically feasible, practicable to manufacture, 
install, and service and have acceptable impacts on utility (including 
reliability and product availability). Consequently, DOE screened in DC 
motors for this NOPR. DOE accounted for differences in reliability 
between DC and AC motors in downstream analyses in section IV.F.4.
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    \24\ Big Ass Solutions. Haiku, http://www.bigassfans.com/for-home/haiku/.
---------------------------------------------------------------------------

Brushless DC Motors in Very Small-Diameter Ceiling Fans
    For this NOPR, DOE analyzed a new product for very small-diameter 
ceiling fans that have blade spans of 18 inches or less. Currently 
there is no very small-diameter ceiling fan on the market that uses a 
DC motor; however conversations with one VSD manufacturer indicated 
that DC motors are technologically feasible in very small-diameter 
ceiling fans. Therefore DOE screens in the DC motor technology option 
for very small-diameter ceiling fans. DOE requests comment on including 
DC motors as a technology option. See issue 4 in section VII.E.
Geared and Gearless DC Motors for Large-Diameter Ceiling Fans
    In the preliminary analysis, DOE screened in brushless DC motors 
for large-diameter fans. DOE requested comment on whether brushless DC 
motors meet the screening criteria for large-diameter ceiling fans.
    In response to the preliminary analysis, MacroAir requested that 
DOE include gearless DC motors as a new technology option (see section 
IV.A.2). It stated that gearbox losses are between 5 and 35 percent. 
(MacroAir, No. 89 at p. 5)
    DOE found two manufacturers with large-diameter ceiling fans using 
a gearless DC motor, including MacroAir's newly released AirVolution-D 
model. (MacroAir, No. 89 at p. 10) Market availability of fans using 
gearless DC motors indicates to DOE that this technology option is 
technologically feasible and meets the other three screening criteria. 
Thus, DOE screened in gearless DC motors for large-diameter ceiling 
fans for consideration in the engineering analysis.
    DOE did not receive any comments objecting to the consideration of 
brushless DC motors as a design option analyzed in the preliminary 
analysis for large-diameter ceiling fans. Thus, DOE screened in this 
technology option for consideration in the engineering analysis for 
this NOPR. Note, DOE refers to this design option as a geared DC motor 
to make a clear distinction between fans with a gearbox and fans 
without a gearbox.
d. Curved Blades and Airfoil Blades
    In the preliminary analysis, DOE screened in curved and airfoil 
blade technology options for high-speed small-diameter and large-
diameter ceiling fans. DOE requested comment about the blade technology 
options, but did not receive any comments opposing the inclusion of 
curved and airfoil blades in the analyses for these fan product 
classes. Therefore, DOE continues to screen in curved and airfoil 
blades for HSSD and large-diameter ceiling fans in this NOPR.

C. Engineering Analysis

    In the engineering analysis, DOE established the relationship 
between the manufacturer production cost (MPC) and improved ceiling 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 associated efficiency of various 
efficiency-improving design changes to the baseline product to model 
different levels of efficiency. The efficiency-level approach uses 
estimates of costs and efficiencies of products available on the market 
at distinct efficiency levels to develop the cost-efficiency 
relationship. The reverse-engineering approach involves testing 
products for efficiency and determining cost from a detailed bill of 
materials (BOM) derived from reverse engineering representative 
products. The efficiency ranges from that of the least-efficient 
ceiling fans sold today (i.e., the baseline) to the maximum 
technologically feasible efficiency level. At each efficiency level 
examined, DOE determines the MPC; this relationship is referred to as a 
cost-efficiency curve.
    For this analysis, DOE structured its engineering analysis for 
ceiling fans using a combination of the design-option approach and the 
reverse-engineering approach. The analysis is performed in terms of 
incremental increases in efficiency due to the implementation of 
selected design

[[Page 1709]]

options, while the estimated MPCs for each successive design option are 
based on product teardowns and a bottom-up manufacturing cost 
assessment. Using this hybrid approach, DOE developed the relationship 
between MPC and ceiling fan efficiency. DOE welcomed comments on an 
alternative approach in the preliminary analysis.
    DOE used the design option approach in the engineering analysis and 
selected representative sizes for each product class to account for 
differences in ceiling fan utility and efficiency based on blade 
diameter. DOE selected representative sizes based on the available 
range of sizes in each product class and based on the number of sales 
per size. For each representative size in each proposed product class, 
DOE identified a baseline efficiency as a reference point from which to 
measure changes resulting from each design option. Efficiency is 
represented in terms of the metric proposed in the test procedure NOPR 
(i.e., aggregate airflow efficiency). The baseline represents the most 
common, least efficient ceiling fan in the market for each product 
class and representative size. DOE then developed separate cost-
efficiency relationships for each product class analyzed. The following 
is a summary of the method DOE used to determine the cost-efficiency 
relationship for ceiling fans:
     Perform airflow efficiency tests on a representative 
sample of ceiling fans in each product class.
     Develop a detailed BOM for the tested ceiling fans through 
product teardowns, and construct a ceiling fan cost model.
     Use a combination of test data, data from spec sheets, the 
cost model, and feedback from manufacturers to calculate the 
incremental increase in efficiency and cost increase of adding specific 
design options to a baseline model.
    In the 2014 test procedure NOPR, DOE proposed to test standard 
ceiling fans mounted to an artificial ceiling. ALA commented that the 
candidate standard levels in the preliminary analysis were based on 
airflow measurements made without an artificial ceiling. ALA 
recommended that DOE adjust the analysis to adhere to the final test 
procedure. (ALA, No. 91 at p. 2)
    Since the preliminary analysis, DOE published a test procedure 
SNOPR on June 3, 2015, in which DOE proposes to test all ceiling fans 
mounted directly to the ceiling. DOE used test data for standard 
ceiling fans mounted directly to the ceiling to update the engineering 
analysis for this NOPR.
    In response to the approach taken by DOE, MacroAir stated it 
doesn't understand why a design approach was used for the efficiency 
levels and a performance approach was taken in the candidate standard 
levels (CSL). MacroAir suggested a consistent approach should be 
maintained throughout the analysis process. (MacroAir, No. 89 at p. 13)
    Typically, DOE structures an energy conservation standard in terms 
of a performance requirement, i.e., a maximum level of energy 
consumption or a minimum level of energy efficiency, often as a 
function of some form of capacity or size. For this rulemaking, DOE is 
structuring the standard using a minimum level of airflow efficiency 
(CFM/W) as a function of diameter. The various levels of efficiency 
being considered for the standard, or candidate standard levels, were 
developed using efficiency levels described in the engineering 
analysis. See chapter five of the NOPR TSD. In the engineering 
analysis, DOE developed efficiency levels using design-options, which 
are technologies that exist in the market that have passed the 
screening criteria. See chapter four of the NOPR TSD. The efficiency 
levels examined represent a certain path, or combination of design 
options, that demonstrate how various levels of efficiency can be 
achieved. While this analysis is meant to show one way of achieving 
certain levels of efficiency, the actual structure of the standards (in 
the form of equations defining a minimum level of air flow efficiency 
(CFM/W) as a function of diameter) allows any design path to be used. 
Also, establishing standards in this manner, as opposed to requiring 
specific design requirements be used (e.g., a standard specifying one 
type of motor), allows manufacturers freedom in meeting a standard and 
avoids limiting innovation. Manufacturers may choose to use any 
technologies and designs they desire to achieve the specified CFM/W 
standard.
    In written comments, ASAP noted that DOE evaluated efficiency 
levels that are structured as a function of ceiling fan diameter. ASAP 
expressed concern that standards as a function of diameter may not be 
directly related to the performance of the fan. (ASAP, et al., No. 92 
at p. 3)
    In response to ASAP's comment, DOE examined how fan efficiency 
behaves as a function of both fan diameter and airflow to evaluate 
whether standards as a function of one or the other are more 
appropriate. DOE collected data for airflow, blade diameter and airflow 
efficiency for all the ceilings fans found on Web sites of ten 
retailers, including, among others, Home Depot, Lowe's, Walmart and 
Menards. DOE then plotted ceiling fan efficiency as a function of both 
diameter and airflow and compared the correlation coefficient, or R\2\ 
value, for each relationship. DOE found that both airflow and fan 
diameter have similar correlation coefficients as a function of airflow 
efficiency and neither is statistically better than the other. Because 
of this, DOE next examined which characteristic could be considered a 
better indicator, or proxy, for utility.
    DOE sets standards that are technologically feasible and 
economically justified without diminishing utility to consumers. 
Neither airflow nor diameter is a perfect proxy for utility, because 
consumers make purchasing decisions based on both. However, DOE 
believes that blade diameter is a better proxy for utility than 
airflow. The size of a fan determines the cooling area, impacts room 
aesthetics, and determines if a fan physically fits into a room. 
Literature published by manufacturers clearly indicates that blade span 
is an important criteria for consumer fan selection. Manufacturers 
include sizing guides in published product literature to instruct 
consumers on how to properly size a fan for a given room size. These 
fan sizing guides specify the affected square footage of a room based 
on fan blade diameter. DOE did not find such guides for other ceiling 
fan characteristics such as airflow. Furthermore, DOE believes that 
standards as a function of airflow instead of fan diameter could result 
in substitution issues. For example, two ceiling fans of different 
sizes but similar airflow might not fit into the same space, will not 
have airflow produced over the same area, and have different room 
aesthetics. However, DOE believes that standards as a function of 
diameter would not result in substitution issues, because the 
substitute fan would fit into the same space, produce airflow over the 
same area and the room aesthetics would not be affected. This indicates 
to DOE that ceiling fan blade diameter is a primary characteristic 
considered by consumers when selecting a fan and a better proxy for 
consumer utility than airflow. Consequently, DOE proposes standards as 
a function of fan diameter to ensure that fans at a given diameter 
(and, by proxy, fans that provide a similar utility to the consumer) 
are subject to the same standard.
    ASAP also stated that two fans of the same diameter could provide 
different airflows. ASAP stated that

[[Page 1710]]

manufacturers could simply meet the standard by reducing the speed of 
the fan, which would reduce airflow and fan utility. (ASAP, et al., No. 
92 at p. 3)
    Ceiling fans of the same size can produce different airflows, and 
slowing down a fan can significantly reduce energy consumption. While 
manufacturers may opt to do so to meet the levels proposed, DOE did not 
include slowing down the fan as a design option; manufacturers can meet 
the levels proposed without reducing speed. Also, DOE expects that 
manufacturers will not reduce airflow to levels that are unacceptable 
when other cost-justified pathways to compliance are available. DOE 
requests comment on what an acceptable reduction of fan speed is such 
that it does not affect consumer utility. See issue 6 in section VII.E.
1. Baseline and Max-Tech Models
    To analyze technology options for energy efficiency improvements, 
DOE defined a baseline and a max-tech model for each ceiling fan 
product class. Typically, the baseline model is a model that just meets 
current energy conservation standards, whereas a max-tech model is the 
highest efficiency model in the market. DOE set the baseline and max-
tech efficiencies for each product class based on test data and 
certified airflow efficiency data from manufacturer Web sites and 
brochures. Further details can be found in chapter 5 of the TSD.
a. Standard and Hugger Ceiling Fans
    In the preliminary analysis, DOE combined the cost efficiency 
curves of flat-blade fans and unconventional-blade fans in the standard 
and hugger product classes to create an aggregate curve for all 
standard ceiling fans and all hugger ceiling fans. DOE used the maximum 
efficiency of the unconventional-blade fans as the max-tech for the 
aggregate curve to ensure that even at max-tech, all types of ceiling 
fans, including designs with unconventional-blades, can achieve this 
level of efficiency.
    In response to this approach, the CA IOUs expressed concern that 
the max-tech efficiency for the combined conventional and 
unconventional class is significantly lower than the conventional blade 
fan class. Therefore, the CA IOUs commented, DOE should consider 
conventional blade fan model efficiency for the max-tech level instead 
of the unconventional blade fan model. (CA IOUs, No. 91 at p. 1)
    DOE appreciates the comment from the CA IOUs to use the max-tech 
level of the flat-blade fan for the aggregate curve instead of the max-
tech level of the unconventional-blade fan. However, doing so could 
result in a standard that cannot be met by unconventional blade fans, 
eliminating them from the market. DOE considers the elimination of 
unconventional blade fans from the market a loss of consumer utility 
and a reduction in product availability because, while these fans are 
functionally indistinguishable from flat-blade ceiling fans, a majority 
of consumers purchase unconventional-blade fans because of their 
aesthetic appeal. Overly stringent ceiling fan standards could force 
manufacturers to reduce the aesthetic quality of some ceiling fans to 
comply with energy conservation standards, therefore reducing consumer 
utility. Thus, DOE continued to use the max-tech efficiency level of 
the unconventional-blade fans as the max-tech efficiency level for the 
aggregate curve in this NOPR.
b. Very Small-Diameter Ceiling Fans
    After the preliminary analysis DOE decided to introduce a separate 
product class for very small-diameter ceiling fans based on feedback 
from interested parties (see section IV.A.1.c for more details on the 
very small-diameter product class). DOE used publicly available market 
data and test data to identify the baseline very small-diameter ceiling 
fans for all representative sizes.
c. High-Speed Small-Diameter Ceiling Fans
    In the preliminary analysis, DOE chose a baseline airflow 
efficiency of 211 cfm/W for the 56-inch HSSD ceiling fans. DOE selected 
this efficiency based on information listed in manufacturer 
specification sheets because DOE did not have any test results for this 
product class.
    During the preliminary analysis public meeting, Westinghouse and 
ALA commented that 211 cfm/W is too high for the baseline efficiency 
for 56 inch high-speed small-diameter fans. Westinghouse stated that 
the baseline 56-inch high-speed small-diameter airflow efficiency 
should be 95 cfm/W. (Westinghouse, Public Meeting Transcript, Public 
Meeting Transcript, No. 83 at p. 250) ALA provided published data to 
support its statement showing baseline fans with airflow efficiencies 
ranging between 90 and 115 cfm/W, and airflow ranging from 6,118 to 
9,154 cfm. Additionally, ALA stated that it is aware that HSSD fan 
manufacturers list extremely high cfm levels on their manufacturer 
specification sheets. These models will have cfm levels similar to the 
baseline models recommended by ALA when tested according to the DOE 
test procedure. (ALA, No. 91 at p. 4)
    Since the preliminary analysis, DOE tested baseline 56-inch HSSD 
ceiling fans. Those tests confirmed comments received from interested 
parties that the value used in the preliminary analysis is too high. 
DOE reduced the baseline airflow efficiency for a 56 inch HSSD ceiling 
fan from 211 cfm/W to 91 cfm/W, which corresponded to the lowest 
efficiency of the HSSD ceiling fans tested.
d. Large-Diameter Ceiling Fans
    In the preliminary analysis DOE described the baseline for the 
large-diameter ceiling fan product class as having curved blades, a 
three-phase induction motor with a gearbox, and an exposed motor with 
no housing. DOE described a max-tech large-diameter ceiling fan as a 
ceiling fan with airfoil blades and a DC motor.
    MacroAir commented on the baseline and max-tech levels for the 
large-diameter ceiling fan product class. MacroAir stated that geared 
motors are a typical component of baseline large-diameter fans. 
MacroAir also suggested that the max-tech unit has a brushless DC motor 
and a direct drive (without gears). (MacroAir, No. 89 at p. 5)
    DOE agrees with MacroAir because DOE found that large-diameter 
ceiling fans with a brushless DC motor have the highest efficiency. 
Therefore, for its analysis, DOE assumes that the max-tech efficiency 
level for large-diameter ceiling fans includes a gearless DC motor.
2. Manufacturing Cost Analysis
    DOE estimated the manufacturing costs using a reverse-engineering 
approach, which involves a bottom-up manufacturing cost assessment 
based on a detailed BOM derived from teardowns of the product being 
analyzed. The detailed BOM includes labor costs, depreciation costs, 
utilities, maintenance, tax, and insurance costs, in addition to the 
individual component costs. These manufacturing costs are developed to 
be an industry average and do not take into account how efficiently a 
particular manufacturing facility operates.
    For the reverse-engineering approach, DOE purchased off-the-shelf 
ceiling fans available on the market with a range of efficiencies and 
dismantled them component by component to determine what technologies 
and designs manufacturers use to increase airflow efficiency. DOE then 
used independent costing methods, along with component-supplier data, 
to estimate

[[Page 1711]]

the costs of the components. DOE derived detailed manufacturing cost 
estimates based on its reverse engineering analysis, which include the 
cost of the product components, labor, purchased parts and materials, 
and investment. The testing and teardown results indicated that the 
manufacturing costs among different units from different manufacturers 
can vary based on the type of material, amount of material, and/or 
process used.
a. Standard and Hugger Ceiling Fans
    In the preliminary analysis, DOE developed a single, aggregated 
cost-efficiency curve for unconventional-blade and flat-blade fans for 
both standard and hugger product classes. The MPC for the max-tech 
(efficiency level 4, or EL 4) reflected a shipment weighted average of: 
(1) The full cost of an unconventional-blade fan with a DC motor, and 
(2) the full cost of a flat-blade fan with an AC motor.
    ALA commented that the preliminary analysis costs for the EL 4 
design option for standard and hugger fans are much too low. (ALA, No. 
91 at p. 6) ALA stated that the aggregate curve would effectively 
require DC motors for all ceiling fans. For flat-blade fans, the 
minimum efficiencies required to comply with DOE's EL 4 would require 
either DC motor technology or some combination of a larger AC motor and 
other technologies that DOE has already screened out from 
consideration. Westinghouse stated that if a DC motor with flat blade 
is required to achieve EL 4, then the costs should also mirror that. 
(Westinghouse, Public Meeting Transcript, No. 83 at p. 245)
    DOE acknowledges that to comply with the EL 4 efficiency for both 
flat-blade fans and unconventional-blade fans, DC motors is the only 
remaining screened-in design option. Therefore, DOE adjusted the costs 
at EL 4 to represent a shipment weighted average of the full cost of an 
unconventional-blade fan and flat-blade fan that both use a DC motor.
b. Very Small-Diameter and High-Speed Small-Diameter Ceiling Fans
    DOE used the reverse engineering approach described in section 
IV.C.2 to estimate the manufacturing costs of very small-diameter and 
HSSD ceiling fans. DOE received some feedback on the high-speed small-
diameter manufacturing costs. DOE used this feedback together with the 
results from the reverse engineering to estimate the manufacturing 
costs for HSSD ceiling fans. DOE did not receive any feedback from 
interested parties on the manufacturing costs of very small-diameter 
ceiling fans. Therefore DOE relied on the manufacturing cost results 
from the reverse engineering approach.
c. Large-Diameter Ceiling Fans
    In the preliminary analysis, DOE found that large-diameter fans 
have a wide variety of motor horsepower. For consistency, DOE assumed 
that all the large-diameter fans analyzed use a 1-horsepower motor 
because they are available in 8-, 12-, and 20-foot fans. DOE estimated 
the cost of 1-horsepower motors by evaluating the average price of a 1-
horsepower motors available on the market. DOE requested comment on the 
assumption to use a 1-horsepower motor for all representative sizes.
    BAS stated that a 1-horsepower motor is not representative of the 
entire large-diameter market. BAS suggested that 20-foot fans should 
have a 2-horsepower motor, 12-foot fans should have a 1-horsepower 
motor, and 8-foot fans should have a 0.5-horsepower motor. (BAS, No. 79 
at p. 4) MacroAir agreed with BAS stating that the 1-horsepower motor 
is a poor assumption for all large-diameter fans. MacroAir provided a 
breakdown in the percentage of sales based on motor horsepower, which 
shows 36 percent of their large-diameter fans are sold with a 1-
horsepower motor, 23 percent are sold with a 2-horsepower motor and 13 
percent are sold with a 0.5-horsepower motor. All other motor sizes 
that MacroAir sells have sales of 13 percent or less. (MacroAir, No. 89 
at p. 10)
    Based on the feedback from BAS and MacroAir, DOE assumed that 20-
foot fans use 2-horsepower motors, 12-foot fans use 1-horsepower 
motors, and 8-foot fans use 0.5-horsepower motors. DOE tore down two 
20-foot large-diameter ceiling fans to estimate the manufacturing costs 
for the fans and their subassemblies, including the fan motors. DOE 
adjusted its assumptions regarding motor costs based on input received 
during manufacturer interviews and these teardowns.
    Chapter 5 of the NOPR TSD discusses the baseline efficiencies for 
each product class, the design options DOE considered, the methodology 
used to develop manufacturing production costs, and the cost-efficiency 
curves. The LCC and PBP analyses uses the cost-efficiency relationships 
developed in the engineering analysis.
3. Installed Costs
    During the preliminary analysis public meeting, DOE received 
comments on the installed costs for standard ceiling fans. The 
installed costs are a function of MPC, manufacturer markup and retail 
markup. In the preliminary analysis, DOE presented baseline and EL 4 
installed costs of $107 and $149, respectively, for standard fans.
    During the public meeting, Westinghouse and Fanimation stated that 
the installed cost for the baseline is too high and the installed costs 
for EL 4 is too low. (Westinghouse, Public Meeting Transcript, No. 83 
at p. 242; Fanimation, Public Meeting Transcript, No. 83 at p. 243)
    In response to Westinghouse and Fanimation, DOE re-evaluated its 
MPC estimates. As stated, MPC is one of the factors DOE used to 
calculate installed costs. (See sections IV.D and IV.F for discussion 
of the other factors). In the preliminary analysis, DOE calculated the 
MPC as the product of factory costs and factory markup. This approach 
was used to calculate MPC, because standard and hugger ceiling fans are 
typically outsourced by U.S. manufacturers to factories in China. DOE 
calculated baseline and max-tech (EL 4) MPCs for 52 inch standard 
ceiling fans of $41.33 and $65.56, respectively, in the preliminary 
analysis.\25\
---------------------------------------------------------------------------

    \25\ In the preliminary analysis, DOE presented MSPs instead of 
MPCs. The MPCs were marked up to the MSP using the distribution 
channel markups. The MSP for the baseline 52-inch ceiling fan was 
$56.62 and for the MSP for the max-tech 52-inch ceiling fan was 
$89.82.
---------------------------------------------------------------------------

    DOE revisited all the assumptions in the cost model from the 
preliminary analysis and updated all the inputs to the cost model to 
reflect the costs in 2015$. Additionally, DOE increased the 
manufacturing purchase volume to reflect manufacturers' comments. DOE 
presented the updated factory costs to manufacturers during interviews, 
who generally agreed with the updated costs.
    During manufacturer interviews, DOE also received feedback that the 
overhead burden, shipping costs and tariffs should be included in the 
MPC. In this NOPR, DOE included these costs in the MPC to be more 
representative of the manufacturer cost structure described by 
manufacturers.
    During the interviews, DOE attempted to gather more information 
about the factors it used to derive the MPC. Manufacturers generally 
agreed with the factory markup of 1.2 used in the preliminary analysis. 
Manufacturers also agreed with the overhead burden of $2.50 per unit 
and the shipping tariff of 4.7 percent. DOE increased the shipping 
costs from China from $2.50 per unit to $3.60 per unit based on 
feedback received during interviews.
    After reevaluating its installed costs and considering manufacturer 
feedback, DOE increased the baseline MPC from $41.33 to $54.93. DOE 
increased the

[[Page 1712]]

costs for the 52-inch standard ceiling fan for EL 4 from $65.56 to 
$90.93. More details about the factory costs and the MPC can be found 
in chapter 5 of the NOPR TSD. DOE requests comments on the new baseline 
MPC of $54.93 for 52-inch standard ceiling fans. See issue 7 in section 
VII.E.
    DOE did not receive any comments about the installed costs that 
were presented in the preliminary analysis for all the other product 
classes. However the installed costs for these product classes changed 
with updates in manufacturing costs and the distribution channel.

D. Markups Analysis

    DOE uses distribution channel markups and sales taxes (where 
appropriate) to convert the manufacturer production cost estimates from 
the engineering analysis to consumer prices, which are then used in the 
LCC, PBP, and the manufacturer impact analyses. The markups are 
multipliers that are applied to the purchase cost at each stage in the 
distribution channel.
    DOE characterized four distribution channels to describe how 
standard, hugger and VSD ceiling fans pass from manufacturers to 
consumers. These four distribution channels can be characterized as 
follows:

Manufacturer [rarr] Home Improvement Center [rarr] Consumer
Manufacturer/Home Improvement Center (in-store label) [rarr] Consumer
Manufacturer [rarr] Wholesaler [rarr] Contractor [rarr] Consumer
Manufacturer [rarr] Showroom [rarr] Consumer

    DOE developed separate markups for home improvement centers that 
have their in-store label ceiling fans and for those that sell 
independent-label ceiling fans. As indicated in the market assessment, 
Hampton Bay and Harbor Breeze ceiling fans, which are two of the top 
three ceiling fan brands in the market, are the in-store brands for 
Home Depot and Lowe's, respectively. In this case, Home Depot and 
Lowe's serve as both in-store brand manufacturer and home improvement 
center that carry both store-brand and independent-brand ceiling fans. 
For in-store label ceiling fans, DOE developed an overall markup that 
encompasses the margins for manufacturing as well as selling the 
product. For the independent-label ceiling fans sold through home 
centers, separate markups were developed for the brand manufacturer and 
for the home improvement centers which serve only as a retailer.
    For large-diameter and HSSD ceiling fans, the two distribution 
channels that DOE considered can be characterized as follows:

Manufacturer [rarr] Dealer [rarr] Customer
Manufacturer [rarr] In-house Dealer [rarr] Customer

    The second distribution channel for large-diameter and HSSD ceiling 
fans is a direct sale channel where the manufacturer sells the product 
directly to a customer through its in-house dealer. DOE is assuming the 
markup for in-house dealers is the same as the conventional dealer 
markup; therefore, the overall markup for these two distribution 
channels is the same.
    To account for manufacturers' non-production costs and profit 
margin, DOE applies the manufacturer markup to the full MPC derived in 
the engineering analysis. The resulting manufacturing selling price 
(MSP) is the price at which the manufacturer can recover all production 
and non-production costs and earn a profit. To meet new or amended 
energy conservation standards, manufacturers typically introduce design 
changes to their product lines, which increases manufacturer production 
costs. As production costs increase, manufacturers typically incur 
additional overhead.
    To calculate the manufacturer markups, DOE reviewed 10-K reports 
\26\ submitted to the U.S. Securities and Exchange Commission (SEC) by 
publicly-owned ceiling fan companies. The financial figures necessary 
for calculating the manufacturer markup are net sales, costs of sales, 
and gross profit. Few ceiling fan manufacturing companies are publicly 
owned, and most of the publicly-owned ceiling fan manufacturing 
companies are subsidiaries of more diversified parent companies, so the 
financial information summarized may not be exclusively for the ceiling 
fan portion of their business and can also include financial 
information from other product sectors. DOE discussed the manufacturer 
markup with manufacturers during interviews, and used product specific 
feedback on market share, markups and cost structure from manufacturers 
to adjust the manufacturer markup calculated through review of SEC 10-K 
reports.
---------------------------------------------------------------------------

    \26\ U.S. Securities and Exchange Commission, Annual 10-K 
Reports (various years between 2007 and 2013), available at http://sec.gov.
---------------------------------------------------------------------------

    To develop markups for the market participants involved in the 
distribution of ceiling fans, DOE utilized several sources, including: 
(1) The SEC 10-K reports and U.S. Census Bureau's annual retail trade 
survey for building material and supplier dealer industry \27\ (to 
develop home improvement center markups); (2) the U.S. Census Bureau's 
annual wholesale trade report for electrical and electronic appliance, 
television, and radio set merchant wholesaler industry \28\ (to develop 
wholesaler markups); (3) 2014 RSMeans Electrical Cost Data \29\ (to 
develop contractor markups); and (4) the SEC 10-K reports (to develop 
dealer markups).
---------------------------------------------------------------------------

    \27\ U.S. Census Bureau. 2012 Annual Retail Trade Survey. 
Building Material and Supplier Dealer. 2012 (Last Accessed April 22, 
2015) http://www.census.gov/retail/arts/historic_releases.html.
    \28\ U.S. Bureau of the Census. 2012 Annual Wholesale Trade 
Report, NAICS 423620: Electrical and Electronic Appliance, 
Television and Radio Set Merchant Wholesaler. 2012. Washington, DC. 
(Last Accessed April 22, 2015) http://www.census.gov/wholesale/index.html.
    \29\ RS Means Company Inc. Electrical Cost Data: 36th Annual 
Edition. 2014. Kingston, MA.
---------------------------------------------------------------------------

    To develop the markups when home centers serve as both brand 
manufacturer and retailer, DOE relied upon input from an industry 
expert.\30\
---------------------------------------------------------------------------

    \30\ Mehta, V. Personal communication. Email to Colleen Kantner, 
LBNL. November 24, 2013.
---------------------------------------------------------------------------

    For each of the market participants, DOE developed baseline and 
incremental markups based on the product markups at each step in the 
distribution chain. The baseline markup relates the change in the MSP 
of baseline models to the change in the consumer purchase price. The 
incremental markup relates the change in the MSP of higher-efficiency 
models (the incremental cost increase) to the change in the consumer 
purchase price.
    In addition to the markups, DOE derived state and local taxes from 
data provided by the Sales Tax Clearinghouse.\31\ These data represent 
weighted average taxes that include county and city rates. DOE derived 
shipment-weighted average tax values for each region considered in the 
analysis.
---------------------------------------------------------------------------

    \31\ Sales Tax Clearinghouse Inc., State Sales Tax Rates Along 
with Combined Average City and County Rates (2014) available at 
http://thestc.com/STrates.stm (last accessed May 27, 2014).
---------------------------------------------------------------------------

    Chapter 6 of the NOPR TSD provides further detail on the estimation 
of markups.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of ceiling fans at different efficiency levels in 
representative U.S. homes and commercial buildings, and to assess the 
energy savings potential of increased ceiling fan efficiency. To 
develop annual energy use estimates, DOE multiplied ceiling fan input 
power by the number of hours of use (HOU) per

[[Page 1713]]

year. The energy use analysis estimates the range of operating hours of 
ceiling fans in the field (i.e., as they are actually used by 
consumers). The energy use analysis provides the basis for other 
analyses that DOE performed, particularly assessments of the energy 
savings and the savings in consumer operating costs that could result 
from adoption of amended standards.
1. Inputs for Standard, Hugger, and VSD Ceiling Fans
a. Sample of Purchasers
    As in the preliminary analysis, DOE has included only residential 
applications in the energy use analysis of standard, hugger, and VSD 
ceiling fans. DOE used the Energy Information Administration (EIA) 2009 
Residential Energy Consumption Survey (RECS) \32\ to choose a random 
sample of households in which new ceiling fans could be installed. RECS 
is a national sample survey of housing units that collects statistical 
information on the consumption of, and expenditures for, energy in 
housing units, along with data on energy-related characteristics of the 
housing units and occupants. RECS collected data on 12,083 housing 
units, and was constructed by EIA to be a national representation of 
the household population in the United States.
---------------------------------------------------------------------------

    \32\ U.S. Department of Energy-Energy Information 
Administration. 2009 RECS Survey Data. (Last accessed October 10, 
2014.) http://www.eia.gov/consumption/residential/data/2009/.
---------------------------------------------------------------------------

    In creating the sample of RECS households, DOE used the subset of 
RECS records that met the criterion that the household had at least one 
ceiling fan. DOE chose a sample of 10,000 households from RECS to 
estimate annual energy use for standard, hugger, and VSD ceiling fans. 
Because RECS provides no means of determining the type of ceiling fan 
in a given household, DOE used the same sample for the standard, 
hugger, and VSD product classes.
b. Operating Hours
    As in the preliminary analysis, DOE used data from a study \33\ 
that surveyed ceiling fan owners to estimate the operating hours for 
each sampled RECS household. In that study, the authors asked a 
nationally representative sample of more than 2,500 ceiling fan users 
to report their ceiling fan operating hours for high, medium, and low 
speeds. The LBNL study reported a distribution of operating hours, with 
an average of 6.45 hours of operation per day. The operating hour for 
each sample used is drawn from the distribution of operating hours 
reported in the LBNL study, and further apportioned into operating 
hours at different fan speeds.
---------------------------------------------------------------------------

    \33\ Kantner, C. L. S., S. J. Young, S. M. Donovan, and K. 
Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.--
Results of a Survey on Amazon Mechanical Turk. 2013. Lawrence 
Berkeley National Laboratory: Berkeley, CA. Report No. LBNL-6332E. 
http://www.escholarship.org/uc/item/3r67c1f9.
---------------------------------------------------------------------------

    In the preliminary analysis, DOE used the results from the LBNL 
study to estimate that consumers run their standard, hugger, and VSD 
ceiling fans at high speed 41 percent of the time, at medium speed 37 
percent of the time, and low speed 22 percent of the time. ALA 
submitted the results of an AcuPOLL survey \34\ showing that consumers 
most often operate their standard, hugger, and VSD ceiling fans on 
medium speed, not high speed, and asked DOE to adjust its assumptions 
regarding hours of use at low, medium, and high speeds in light of 
these results. (ALA, No. 8 at p. 6) Hunter Fan Company also asked DOE 
to review the standard, hugger, and VSD ceiling fan hours of use 
assumptions in light of the AcuPOLL survey results, especially because 
energy consumption at medium speed is typically less than the mid-point 
in energy consumption between high and low speeds. (Hunter Fan Company, 
Public Meeting Transcript, Public Meeting Transcript, No. 83 at pp. 15, 
104)
---------------------------------------------------------------------------

    \34\ AcuPOLL[supreg] Precision Research, Inc. Survey of Consumer 
Ceiling Fan Usage and Operations. 2013.
---------------------------------------------------------------------------

    In light of ALA's and Hunter's comments and the AcuPOLL survey 
results, DOE compared the LBNL and AcuPOLL survey results and takes 
both into account in determining the fraction of time spent at each fan 
speed. In the NOPR analyses, DOE estimated that the fraction of time 
that standard, hugger, and VSD ceiling fans were operated at each speed 
was equal to the simple average of the fractions reported by the LBNL 
and AcuPOLL surveys: 33 percent on high speed, 38 percent on medium 
speed, and 29 percent on low speed. DOE then used these fractions were 
used to apportion the total hours of use into hours of use at high, 
medium and low speeds.
c. Power Consumption at Each Speed and Standby
    DOE determined the power consumption at high, medium, and low speed 
for each representative fan size in the engineering analysis. These 
values are shown in chapter 5 of the NOPR TSD. DOE estimated that all 
ceiling fans with DC motors expend standby power, and that 7 percent of 
standard, hugger, and VSD ceiling fans with AC motors come with a 
remote, and therefore consume power while in standby mode. DOE further 
estimated 0.7 watts as the power consumption value for standby for all 
representative fans belonging to the standard, hugger, and VSD product 
classes, based on testing conducted in association with developing the 
engineering analysis.
2. Inputs for Large-Diameter and High-Speed Small-Diameter Ceiling Fans
a. Sample of Purchasers
    As in the preliminary analysis, DOE has included only commercial 
and industrial applications in the energy use analysis of large-
diameter and HSSD ceiling fans. Although some large-diameter and HSSD 
fans are used in residential applications, they represent a very small 
portion of the total market for large-diameter and HSSD ceiling fans. 
Similar to standard, hugger, and VSD ceiling fans, DOE developed a 
sample of 10,000 fans to represent the range of large-diameter and HSSD 
ceiling fan energy use. The sample captured variations in operating 
hours.
b. Operating Hours
    In the preliminary analysis, DOE used feedback from manufacturers 
to estimate total hours of operation for large-diameter and HSSD 
ceiling fans. Manufacturers suggested a range of possible hours of 
operation, depending on industry and application, with 12 hours per day 
as a representative value. To represent a range of possible operating 
hours around this representative value, DOE drew 10,000 samples from a 
uniform distribution between 6 hours per day and 18 hours per day when 
calculating the energy use of large-diameter and HSSD fans. DOE also 
used manufacturer feedback to determine the proportion of operating 
time spent at each speed, estimating that, on average, large-diameter 
and HSSD fans spend approximately 10 percent of the time at high or low 
speed, and the rest of their time (approximately 80 percent) at a 
medium speed.
    BAS used DOE's preliminary analysis assumptions to conduct an 
analysis of large-diameter ceiling fan operation by month for a 
specific consumer in the sample of consumers used in DOE's LCC 
analysis. (BAS, No. 88 at pp. 37-38) BAS ultimately concluded that DOE 
must have assumed the consumer operated the fan in reverse during the 
winter months; or else, the consumer would have experienced a draft by 
operating the ceiling fan in the forward direction at medium speed. 
(BAS, No. 88 at p. 38) BAS suggested that DOE assume a 7 percent 
increase in energy consumption for all hours (if any) that

[[Page 1714]]

a large-diameter ceiling fan is assumed to be operating in reverse, 
because an airfoil operating in reverse does not move as efficiently 
through the air. BAS also recommended conducting the analysis assuming 
a large-diameter ceiling fan operates slowly in the forward direction 
during the winter (heating) months, which will prevent the consumer 
from experiencing a draft and also reduce overall energy consumption 
relative to operating the ceiling fan at medium speed in reverse. (BAS, 
No. 88 at p. 39) The analysis proposed by BAS--which used DOE's 
assumption of 12 hours per day in active mode and assumes the fan 
operates very slowly in the forward direction during the heating 
months--resulted in the following hours of use per day by speed 
setting: 0.6 hours per day at max speed, three hours at 80 percent of 
max speed, 1.2 hours at 60 percent of max speed, 7.2 hours at 25 
percent of max speed, and 12 hours in standby mode. (BAS, No. 88 at pp. 
45, 47) MacroAir also provided suggested hours of use for large-
diameter ceiling fans at different settings: three hours per day at max 
speed, four hours at 80 percent of max speed, six hours at 60% percent 
max speed four hours at 40 percent max speed, one hour at 20 percent 
max speed, and six hours in standby mode. (MacroAir, No. 89 at pp. 9-
10)
    To clarify, in the energy use analysis from the preliminary 
analysis, DOE did not consider any direction of rotation other that the 
forward direction. The analysis assumed that once a large-diameter 
ceiling fan's hours of use were sampled from the distribution, that 
ceiling fan operated in the forward direction over three speeds every 
day for that many hours. DOE assumed that 80 percent of that time the 
fan operated at medium speed (intermediate RPM), 10 percent of the time 
at low speed (at or near minimum RPM) and 10 percent at high speed (at 
or near maximum RPM).
    DOE appreciates BAS' comment regarding the induced draft from 
operating a large-diameter ceiling fan at medium speed during the 
winter (heating) months. For the NOPR analyses, DOE continued to assume 
that large-diameter ceiling fans only operated in the forward 
direction.\35\ However, DOE assumed different hours of use by setting 
than in the preliminary analysis. DOE calculated the hours of use at 
each speed using a simple average of the values provided by BAS and 
MacroAir, resulting in: 1.8 hours at max speed, 3.5 hours at 80 percent 
speed, 3.6 hours at 60 percent speed, 2 hours at 40 percent speed, and 
4.1 hours at 20 percent speed.\36\ Modeling large-diameter ceiling fan 
operating hours based on fraction of time spent at each of five speeds 
aligns with the ceiling fans test procedure SNOPR, which proposes to 
test all large-diameter ceiling fans at max speed, 80 percent speed, 60 
percent speed, 40 percent speed, and 20 percent speed. 80 FR 31487 
(June 3, 2015).
---------------------------------------------------------------------------

    \35\ DOE is not aware of any information on how frequently these 
fans might be used in reverse, nor did it have any data to support a 
different energy consumption when operating in reverse, compared to 
the energy consumption in the forward direction, for an equivalent 
speed.
    \36\ In calculating the average, DOE assumed that the 7.2 hours 
attributed by BAS to 25% speed correspond to the 20% speed setting. 
In addition, BAS assumed large-diameter ceiling fans are operated 12 
hours per day, whereas MacroAir assumed large-diameter ceiling fans 
are operated 18 hours per day. The calculation of the average hours 
of use at each setting therefore results in large-diameter ceiling 
fans operating for 15 hours per day.
---------------------------------------------------------------------------

    DOE did not receive any comments in response to the operating hours 
distribution for HSSD fans in the preliminary analysis, and has 
therefore maintained the same approach. This approach assumes a uniform 
distribution for daily operating hours of between 6 and 18 hours per 
day and that such fans spend approximately 10 percent of the time at 
each of high and low speed, and approximately 80 percent of the time at 
a medium speed. DOE requests data on operating hours for HSSD ceiling 
fans. See issue 8 in section VII.E.
c. Power Consumption at Each Speed and Standby
    For the large-diameter ceiling fan product class, the power 
consumption for a given representative fan was determined by the 
weighted average of power consumption at the five speeds discussed 
previously, where each speed was weighted by the fraction of time spent 
at that speed.
    For the HSSD ceiling fan product class, as in the preliminary 
analysis, DOE determined power consumption at high speed for each 
representative fan in the engineering analysis. To estimate the power 
consumption at medium speed, DOE multiplied the high-speed power by the 
average ratio between high-speed power and medium-speed power in the 
standard, hugger, and VSD fans engineering analysis. DOE used the same 
approach for low-speed power, using the average ratio between high-
speed power and low-speed power from the standard, hugger, and VSD fans 
engineering analysis.
    In the preliminary analysis, DOE considered all HSSD fans at the 
efficiency levels with a DC motor to have standby power, assuming a 
remote control was included for all such fans. DOE estimated 0.7 watts 
as the standby power value for all representative fans in the HSSD 
product class. Because these fans also have standby power as a result 
of a remote control receiver, this is the same value used for standard, 
hugger and VSD fans, as discussed in section IV.E.1.c. DOE also 
considered all large-diameter fans to have standby power, because 
available information indicated that all large-diameter ceiling fans in 
the market use a variable-frequency drive that consumes standby power. 
BAS indicated that there are a number of large-diameter ceiling fans 
without variable-frequency drives (VFDs) that have standby power 
consumption. (BAS, Public Meeting Transcript, No. 83 at p. 285) DOE 
appreciates this clarification and has not made the assumption in the 
NOPR analyses that all large-diameter ceiling fans have VFDs, but 
retains the assumption from the preliminary analysis that all large-
diameter ceiling fans have standby power. For HSSD and large-diameter 
ceiling fans with standby power consumption, DOE calculated the number 
of standby hours as the total annual hours not spent in active mode. 
The standby power for large-diameter ceiling fans (with fan blades 
exceeding 7 feet in diameter) was estimated to be 7 watts in the 
engineering analysis (see chapter 5 of the NOPR TSD).
3. Impact on Air Conditioning or Heating Equipment Use
    In response to comments on the framework document, DOE issued a 
Request for Information (RFI) regarding the potential interaction 
between ceiling fans and air conditioning usage. 78 FR 62494. While RFI 
commenters were generally in agreement on the theoretical energy 
savings potential from substituting ceiling fan usage for air 
conditioning usage, no clear evidence was presented indicating that 
ceiling fans are actually used in this manner. Therefore, DOE did not 
account for any impact on air conditioning or heating equipment use in 
response to an amended ceiling fan energy conservation standard in the 
preliminary analysis.
    In response, MacroAir commented that DOE should consider several 
possible sources of savings in air conditioning use in its analyses, 
including: savings from air conditioning usage being displaced by 
ceiling fan use, savings from reduction in the required size of air 
conditioning units, and savings related to consumers using their 
ceiling fan rather than air conditioning

[[Page 1715]]

unit (as a result of increased future electricity prices combined with 
changing consumer behavior to save money). (MacroAir, No. 89 at pp. 8-
9) BAS agreed, indicating that air conditioning units use more power 
than ceiling fans for the same level of perceived cooling. (BAS, No. 88 
at p. 42) ALA added that the LBNL study cited by DOE in the preliminary 
analysis shows that approximately 25 percent of ceiling fan owners 
reduce their air conditioning usage when using a ceiling fan; 
therefore, ALA requested DOE conduct a sensitivity analysis to 
understand how a ceiling fan price increase would affect air 
conditioning usage. (ALA, No. 90 at p. 13) Other interested parties--
including Hunter Fan Company, Southern Company, Moshe Pardo, and Norman 
Kennedy--cited the likelihood of increased air conditioning use from an 
energy conservation standard for ceiling fans. (Hunter Fan Company, 
Public Meeting Transcript, No. 83 at p. 256; Southern Company, Public 
Meeting Transcript, No. 83 at pp. 263-264; Moshe Pardo, No. 85 at p. 1; 
Norman Kennedy, No. 87 at p. 1)
    DOE agrees that ceiling fans can be an inexpensive and effective 
replacement for air conditioning use. The savings identified by 
MacroAir are associated with ceiling fans in general. It seems unlikely 
that consumers would substantially increase air conditioning use, or 
forego purchasing a ceiling fan in lieu of an air conditioning unit, 
due to a modest increase in the initial cost of a ceiling fan due to an 
amended energy conservation standard. Because the interaction between 
ceiling fan use and air conditioning use is unlikely to be different in 
the case of amended standards than it would be in the no-standards 
case, DOE did not account for such interaction for the NOPR analyses. 
DOE requests specific information and any relevant data on how the 
proposed standards could affect the operation of air conditioners. See 
issue 9 in section VII.E.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducts LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards. 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:
     The LCC (life-cycle cost) is the total consumer expense of 
an appliance or product over the life of that product, consisting of 
total installed cost (manufacturer selling price, distribution chain 
markups, sales tax, and installation costs) plus operating costs 
(expenses for energy use, maintenance, and repair). To compute the 
operating costs, DOE discounts future operating costs to the time of 
purchase and sums them over the lifetime of the product.
     The PBP (payback period) is the estimated amount of time 
(in years) it takes consumers to recover the increased purchase cost 
(including installation) of a more-efficient product through lower 
operating costs. DOE calculates the PBP by dividing the change in 
purchase cost at higher efficiency levels by the change in annual 
operating cost for the year that amended or new standards are assumed 
to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of ceiling fans in the absence of new 
or amended energy conservation standards. In contrast, the PBP for a 
given efficiency level is measured relative to the baseline product.
    DOE calculated the LCC and PBP for each considered efficiency level 
for a nationally representative consumer sample for each of the product 
classes. DOE developed consumer samples that account for variation in 
factors such as geographic location. Two types of consumer samples were 
created: one for the standard, hugger and VSD group of fans and another 
for the HSSD and large-diameter group. This was done to capture the 
variability in energy consumption, discount rates and energy prices 
associated with the different groups of ceiling fans.
    For VSD, hugger, and standard ceiling fans, DOE created a sample in 
a manner similar to that outlined in section IV.E.1. Due to a lack of 
data on the location of HSSD and large- diameter fans, DOE assumed that 
the geographic distribution of HSSD and large- diameter fan purchasers 
is similar to that of standard, hugger, and VSD ceiling fan purchasers. 
Therefore, DOE chose the location of HSSD and large-diameter fan 
purchasers according to the geographic distribution of households in 
RECS. For each consumer in the sample used for HSSD and large-diameter 
fans, DOE determined the energy consumption of ceiling fans and the 
appropriate electricity price for the location and sector.
    The calculation of the total installed cost includes MPCs, 
manufacturer markups, retailer and distributor markups, and sales 
taxes. Installation costs were assumed not to vary by efficiency level, 
and therefore were not considered in the analysis. DOE welcomes 
comments on this assumption. See issue 10 in section VII.E.
    Inputs to the calculation of operating expenses include annual 
energy consumption, energy prices and price projections, repair and 
maintenance costs, product lifetimes, and discount rates.
    DOE created distributions of values for product lifetime, discount 
rates, and sales taxes, with probabilities attached to each value, to 
account for their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations randomly sample input 
values from the probability distributions and ceiling fan user samples. 
The model calculated the LCC and PBP for products at each efficiency 
level for a sample of 10,000 consumers per simulation run.
    DOE calculated the LCC and PBP for all consumers as if each were to 
purchase a new product in the expected year of compliance with amended 
standards. For this NOPR, DOE estimated publication of a final rule in 
the first half of 2016. For purposes of its analysis, DOE assumed a 
compliance date three years after publication of any final amended 
standard (i.e., 2019), consistent with the approach taken in the 
concurrent ceiling fan light kits energy conservation standards 
rulemaking.
    Table IV-5 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
and its appendices of the NOPR TSD. DOE requests comments on the 
methodology of the LCC and PBP analyses for ceiling fans. See issue 11 
in section VII.E.

[[Page 1716]]



                     Table IV-5--Summary of Inputs and Methods for the LCC and PBP Analyses*
----------------------------------------------------------------------------------------------------------------
                              Inputs                                               Source/Method
----------------------------------------------------------------------------------------------------------------
Purchase Price...................................................  DOE estimated the purchase price of ceiling
                                                                    fans (CF) by combining the different cost
                                                                    components along the production, import,
                                                                    distribution and retail chain.
                                                                   DOE further used a price trend to project
                                                                    prices of CF with DC motors to the
                                                                    compliance year.
Sales Tax........................................................  Derived 2019 population-weighted-average tax
                                                                    values for each reportable domain based on
                                                                    Census population projections and sales tax
                                                                    data from Sales Tax Clearinghouse.
Energy Use.......................................................  Derived in the energy use analysis, and takes
                                                                    into account variations in factors such as
                                                                    operating hours. Variation in geographic
                                                                    location is taken into account for certain
                                                                    product classes.
Energy Prices....................................................  Electricity: Based on 2014 marginal
                                                                    electricity price data from the Edison
                                                                    Electric Institute.
                                                                   Variability: Electricity prices vary by
                                                                    season, U.S. region, and baseline
                                                                    electricity consumption level.
Energy Price Trends..............................................  Based on AEO 2015 price forecasts.
Product Lifetime.................................................  Derived a mean ceiling fan life time of 13.8
                                                                    years from a best-fit model based on the
                                                                    Weibull distribution.
Discount Rates...................................................  Approach involves identifying all possible
                                                                    debt or asset classes that might be used to
                                                                    purchase the considered appliances, or might
                                                                    be affected indirectly. Primary data source
                                                                    was the Federal Reserve Board's Survey of
                                                                    Consumer Finances.
Efficiency Distribution..........................................  Current efficiency distribution is based on
                                                                    in-store and online model counts. Efficiency
                                                                    distribution for the compliance year is
                                                                    estimated by the market-share module of
                                                                    shipments model. See chapter 9 of the NOPR
                                                                    TSD for details.
Assumed Compliance Date..........................................  2019.
----------------------------------------------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided in the sections following the table and
  in chapter 8 of the NOPR TSD.

1. Purchase Price
    DOE estimates the purchase price by combining manufacturing and 
production cost, manufacturer markups, tariffs, import costs, retail 
markups, and sales tax. Section IV.D provides the details of the 
markups analysis.
    DOE used a price trend to account for changes in the incremental DC 
motor price that are expected to occur between the time for which DOE 
has data for DC motor prices (2014) and the assumed compliance date of 
the rulemaking (2019). DOE estimated a 6 percent price decline rate 
associated with the electronics used to control DC motor fans based on 
an analysis of the Producer Price Index (PPI) of semiconductor 
components.\37\ This rate is only applied to the incremental cost 
between a DC motor and an AC motor and not to the price of the entire 
ceiling fan. For details on the price trend analysis, see section IV.G.
---------------------------------------------------------------------------

    \37\ PCU334413334413
---------------------------------------------------------------------------

    DOE applied sales tax, which varies by geographic location, to the 
total product cost. DOE collected sales tax data from the Sales Tax 
Clearinghouse \38\ and used population projections from the Census 
bureau \39\ to develop population-weighted-average sales tax values for 
each state in 2019.
---------------------------------------------------------------------------

    \38\ https://thestc.com/STRates.stm. Last accessed April 27th 
2015.
    \39\ U.S. Census Bureau, Population Division, Interim State 
Population Projections, 2005. Table A1: Interim Projections of the 
Total Population for the United States and States: April 1, 2000 to 
July 1, 2030.
---------------------------------------------------------------------------

    Southern Company suggested DOE allow for some percentage of low-
income consumers to have zero installation cost, as they would install 
the ceiling fan themselves. (Southern Company, Public Meeting 
Transcript, No. 83 at p. 296) DOE notes that in the NOPR analyses, as 
in the preliminary analysis, DOE assumed that installation costs are 
the same regardless of efficiency level and do not affect the LCC or 
PBP.
2. Electricity Prices
    In the preliminary analysis, DOE used average retail electricity 
prices to conduct its analyses. In response to this methodology, ALA 
suggested DOE use marginal electricity prices, rather than average 
electricity prices, for its LCC and PBP analyses in order to remove 
fixed monthly charges and demand charges from the analysis. (ALA, No. 
90 at p. 12) Because marginal electricity price captures more 
accurately the small, incremental cost or savings associated with a 
change in energy use relative to the consumer's bill in the reference 
case, it may provide a better representation of consumer costs than 
average electricity prices. Therefore, DOE used average electricity 
prices to characterize the baseline efficiency level and marginal 
electricity prices to characterize incremental energy costs associated 
with the other efficiency levels considered. In the LCC analysis, the 
marginal electricity prices vary by season, region, and baseline 
household electricity consumption level. DOE estimated these prices 
using data published with the Edison Electric Institute (EEI) Typical 
Bills and Average Rates reports for summer and winter 2014.\40\ DOE 
assigned seasonal marginal prices to each LCC sample based on the 
location and the baseline monthly electricity consumption for an 
average summer or winter month associated with that sample. DOE 
approximated the electricity prices for the industrial sector using the 
commercial sector prices. This approximation was made as the type of 
industrial facility that uses ceiling fans typically occupies a regular 
building, rather than a heavy industrial complex. For a detailed 
discussion of the development of electricity prices, see appendix 8B of 
the NOPR TSD.
---------------------------------------------------------------------------

    \40\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014. See http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------

3. Electricity Price Trends
    To arrive at average and marginal electricity prices in future 
years, DOE multiplied the average and marginal electricity prices in 
the reference year (2014) by the forecast of annual residential or 
commercial electricity price changes for each Census division from 
EIA's AEO 2015, which has an end year of 2040.\41\ To estimate the 
trends after 2040, DOE used the average rate of change during 2025-
2040.
---------------------------------------------------------------------------

    \41\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2015 with Projections to 2040 
(Available at: http://www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------

    For each fan purchase sampled, DOE applied the projection for the 
Census division in which the purchase was located. The AEO electricity 
price trends do not distinguish between marginal and average prices, so 
DOE used the AEO 2015 trends for the marginal prices. DOE reviewed the 
EEI data for the years 2007 to 2014 and determined that there is no 
systematic

[[Page 1717]]

difference in the trends for marginal vs. average electricity prices in 
the data.
    DOE used the electricity price trends associated with the AEO 
Reference case scenarios for the nine Census divisions. The Reference 
case is a business-as-usual estimate, given expected market, 
demographic, and technological trends. DOE also included prices from 
AEO high-growth and AEO low-growth scenarios in the analysis. The high- 
and low-growth cases show the projected effects of alternative economic 
growth assumptions on energy markets.
4. Repair Costs
    In the preliminary analysis, DOE used information on repairs and 
installation from manufacturer interviews to estimate the cost to 
consumers of repairing a ceiling fan. DOE also assumed that 2.5 percent 
and 9 percent of AC-motor and DC-motor ceiling fans incurred repair 
costs, respectively. DOE based these assumptions on repair rate 
estimates provided by a ceiling fan technical expert.\42\ Westinghouse 
Lighting stated that low-price ceiling fans are more likely to be 
replaced by consumers rather than repaired; therefore, Westinghouse 
Lighting suggested DOE only include a replacement cost and not a repair 
cost. (Westinghouse Lighting, Public Meeting Transcript, No. 83 at p. 
299) While DOE understands Westinghouse's point that many consumers of 
low-cost ceiling fans will not find it economically justified to repair 
their ceiling fan, DOE does not have data to support revising the 
assumptions used in the preliminary analysis, and DOE has continued to 
use the same assumptions in the NOPR analyses.
---------------------------------------------------------------------------

    \42\ Mehta, V. Personal communication. Email to Mohan 
Ganeshalingam, LBNL. January 14, 2014.
---------------------------------------------------------------------------

    ASAP requested DOE use the same repair costs and assumptions for 
both AC and DC motors, because ASAP is unaware of any data supporting 
an increased repair rate for DC motors, and because ASAP projects that 
any reliability issues that manufacturers are currently experiencing 
with DC motors will be eliminated by 2019 as more ceiling fans with DC 
motors are sold and the technology matures. (ASAP, et al., No. 92 at 
pp. 1-2) BAS agrees with ASAP, and the CA IOUs encouraged DOE to 
research specific DC motor issues to determine the magnitude of 
reliability issues and whether these issues are prevalent currently. 
(BAS, No. 88 at p. 27; CA IOUs, No. 91 at pp. 2-3) On the other hand, 
ALA commented that the intensity of use can be a limiting factor for 
the lifetime of ceiling fans with DC motors, which is not the case for 
fans with AC motors. (ALA, No. 90 at p. 14)
    As mentioned previously, in the preliminary analysis, DOE assumed a 
higher repair rate for ceiling fans with DC motors (9 percent) as 
compared to ceiling fans with AC motors (2.5 percent). This assumption 
was based on an estimate provided by a ceiling fan technical 
expert.\42\ DOE appreciates the feedback provided on the prevalence of 
repairs for ceiling fans with DC motors; however, DOE has looked into 
the issue further and has found no suitable data with which to update 
its assumption that the excess rate of failure for DC motors, above the 
repair rate for AC motors, is 6.5 percent of purchases. While DOE is 
unaware of any data illuminating the magnitude of the excess repair 
rate for DC motors, because DC motors incorporate electronics that AC 
motors do not have, the reliability of AC motors is likely to exceed DC 
motors. DOE invites comment, input, and data that can improve the 
estimate of repair costs, particularly repair costs associated with DC 
motors. See issue 12 in section VII.E.
5. Product Lifetime
    DOE estimated ceiling fan lifetimes by fitting a survival 
probability function to data of historical shipments and the 2012 age 
distributions of installed stock. Data on the age distribution for the 
installed standard, hugger, and VSD ceiling fan stock in 2012 was 
available from the LBNL study.\43\ By combining data from the LBNL 
study with historic data on standard, hugger, and VSD ceiling fan 
shipments from NPD, ENERGY STAR and Appliance Magazine (see chapter 3 
for more information on historical shipments), DOE estimated the 
percentage of appliances of a given age that are still in operation. 
This survival function, which DOE assumed has the form of a cumulative 
Weibull distribution,\44\ provides a mean of 13.8 years and a median of 
13.0 years for ceiling fan lifetime and is the same distribution 
employed in the preliminary analysis. DOE welcomes comment on these 
estimates. See issue 13 in section VII.E.
---------------------------------------------------------------------------

    \43\ Kantner, et al. (2013), op. cit.
    \44\ Weibull distributions are commonly used to model appliance 
lifetimes.
---------------------------------------------------------------------------

    Shipment data were only available for standard, hugger, and VSD 
ceiling fans, so DOE assumed the survival probability function of 
large-diameter and HSSD ceiling fans is the same as that for standard, 
hugger, and VSD ceiling fans. DOE requests comments and data on product 
lifetimes of large-diameter and HSSD ceiling fans. See issue 14 in 
section VII.E.
    Hunter Fan Company agreed with DOE's assumed standard, hugger, and 
VSD ceiling fan life of 13.8 years, and ALA agreed with DOE's lifetime 
assumptions for all ceiling fan types. (Hunter Fan Company, Public 
Meeting Transcript, No. 83 at p. 301; ALA, No. 90 at p. 14) MacroAir 
reports that large-diameter ceiling fans typically have longer 
lifetimes than standard, hugger, and VSD ceiling fans, but it cannot 
provide data to support this as large-diameter fans have only been 
manufactured and sold in the United States for about 13 years. MacroAir 
did cite its warranties for two product lines--12 years (prorated) for 
their AC motor line and 50,000 hours of operation for its DC motor 
line--as evidence of lifetimes longer than the 13.8 years DOE assumed 
in its analyses. (MacroAir, No. 89 at p. 11)
    While the warranty information provided by MacroAir is informative, 
it does not provide a representative basis for modifying DOE's 
assumption on lifetime of large-diameter ceiling fans. Thus, DOE has 
maintained an average lifetime of 13.8 years in the NOPR analyses for 
all ceiling fan product classes.
6. Discount Rates
    In calculating the LCC, DOE applies discount rates appropriate to 
consumers to estimate the present value of future operating costs. To 
identify appropriate discount rates for purchasers, DOE estimated the 
percentage of HSSD and large-diameter fan purchasers in the commercial 
and industrial sectors. For HSSD fans, DOE estimated the ratio in floor 
space between likely building types where a fan would be installed in 
commercial settings to that in industrial settings. Manufacturer 
interviews informed DOE of the likely locations of CF installations. 
Floor space estimates by building type were taken from the 2010 U.S. 
Lighting Market Characterization,\45\ which extrapolates estimates for 
commercial floor space from the 2003 Commercial Buildings Energy 
Consumption Survey (CBECS) and industrial floor space from the 2006 
Manufacturing Energy Consumption Survey (MECS) to 2010 values using 
measured growth trends. The ratio suggests that 80 percent of HSSD 
installations are in the commercial sector and 20 percent are in the 
industrial sector. For large-diameter

[[Page 1718]]

fans, DOE used manufacturer feedback about common applications for 
these fans. DOE estimated that 20 percent of large-diameter ceiling fan 
installations are in the commercial sector and 80 percent are in the 
industrial sector.
---------------------------------------------------------------------------

    \45\ Navigant Consulting, Inc. Final Report: 2010 U.S. Lighting 
Market Characterization. January 2012. (Last Accessed March 27, 
2014.) http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2010-lmc-final-jan-2012.pdf.
---------------------------------------------------------------------------

    For residential consumers, DOE estimated a distribution of discount 
rates for ceiling fans based on consumer financing costs and 
opportunity cost of funds related to appliance energy cost savings and 
maintenance costs. First, DOE identified all relevant household debt or 
asset classes to approximate a consumer's opportunity cost of funds 
related to appliance energy cost savings. It estimated the average 
percentage shares of the various types of debt and equity by household 
income group using data from the Federal Reserve Board's Survey of 
Consumer Finances \46\ (SCF) for 1995, 1998, 2001, 2004, 2007, and 
2010. Using the SCF and other sources, DOE developed a distribution of 
rates for each type of debt and asset by income group to represent the 
rates that may apply in the year in which amended standards would take 
effect. DOE assigned each sample household a specific discount rate 
drawn from one of the distributions. The average rate across all types 
of household debt and equity and income groups, weighted by the shares 
of each type, is 4.4 percent. See chapter 8 of the NOPR TSD for further 
details on the development of residential discount rates.
---------------------------------------------------------------------------

    \46\ Board of Governors of the Federal Reserve System. Survey of 
Consumer Finances. 1995, 1998, 2001, 2004, 2007, and 2010. (Last 
accessed October 10, 2014.) http://www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------

    To establish discount rates for commercial and industrial users, 
DOE estimated the cost of capital for companies that purchase ceiling 
fans. The weighted average cost of capital is commonly used to estimate 
the present value of cash flows to be derived from a typical company 
project or investment. Most companies use both debt and equity capital 
to fund investments, so their cost of capital is the weighted average 
of the cost to the firm of equity and debt financing, as estimated from 
financial data for publicly traded firms in the sectors that purchase 
ceiling fans. For this analysis, DOE used Damodaran online \47\ as the 
source of information about company debt and equity financing. The 
average rate across all types of companies, weighted by the shares of 
each type, is 5.0 percent. See chapter 8 of the NOPR TSD for further 
details on the development of commercial and industrial sector discount 
rates.
---------------------------------------------------------------------------

    \47\ Damodaran, A. Cost of Capital by Sector. January 2014. 
(Last accessed September 25, 2014.) http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm
---------------------------------------------------------------------------

7. Efficiency and Blade Span Distribution in the No-Standards Case
    To accurately estimate the share of consumers that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (market shares) of product efficiencies in the no-
standards case (i.e., the case without new efficiency performance 
standards).
    For standard, hugger, and VSD ceiling fans, DOE developed the 
current efficiency market share distributions by product class using 
online data from Hansen Wholesale \48\ and data obtained from in-store 
visits of major retailers. Ceiling fan models were binned according to 
their efficiency to arrive at the current distributions. To estimate 
the efficiency distributions in 2019, DOE applied a consumer-choice 
model sensitive only to the first cost of options representative of 
each efficiency level given by the engineering analysis. The consumer-
choice model is discussed in detail in section IV.G.1.
---------------------------------------------------------------------------

    \48\ http://www.hansenwholesale.com/.
---------------------------------------------------------------------------

    For HSSD and large-diameter ceiling fans, DOE developed the current 
efficiency distributions using model counts available on HSSD and 
large-diameter fan manufacturer Web sites. DOE assumed the current 
distribution observed in 2015 would also be representative of the 
efficiency distribution in 2019.
    The estimated market shares for the no-standards case for all 
ceiling fans are shown in Table IV-6. See chapter 8 of the NOPR TSD for 
further information on the derivation of the efficiency distributions.
[GRAPHIC] [TIFF OMITTED] TP13JA16.000

    Westinghouse Lighting suggested that EL 0 and EL 1 in the no-
standards case should have larger market shares compared to higher 
efficiency levels due to the lower price point associated with these 
levels. (Westinghouse Lighting, Public Meeting Transcript, No. 83 at 
pp. 293-294, 310) As discussed in section IV.G.1, DOE investigated the 
effect of prices on the efficiency distribution, and did not find a 
basis to modify the distribution based on model counts.
    DOE also developed size distributions within each product class to 
determine the likelihood that a given purchaser would select each of 
the representative fan sizes from the engineering analysis. In the 
preliminary analysis, DOE assumed that the current market share for 56-
inch HSSD ceiling fans is 66.7 percent. Westinghouse Lighting and BAS 
indicated that the current market share for 56-inch HSSD ceiling fans 
is likely higher--potentially closer to 85 percent--than DOE assumed in 
the preliminary analysis. (Westinghouse Lighting, Public Meeting 
Transcript, No. 83 at p. 290; BAS, Public Meeting Transcript, No. 83 at 
p. 290)
    For the NOPR, DOE estimated the distribution of diameters for 
standard, hugger, HSSD and large-diameter ceiling

[[Page 1719]]

fans using the distribution of models currently seen on the market. A 
limited pool of available VSD fan models indicated a rough split of 
market share between the two representative blade spans, so DOE assumed 
that the VSD market was evenly split between the two blade spans. Table 
IV-7 presents the blade span distribution of each of the product 
classes. DOE's updated model count data show that 7.0 percent of HSSD 
models are 36-inch and the other 93.0 percent of models are 48-inch or 
larger (these were assigned to the 56-inch category). (For the NIA, DOE 
assumed that blade size distribution remains constant over the years 
considered in the analysis.)

                                       Table IV-7--Blade Span Distribution
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Product class                       Standard
                                 Hugger
                                   VSD
                                  HSSD
                                 Large-Diameter
----------------------------------------------------------------------------------------------------------------
Blade Span inches...........     44     52     60     44     52     13     16     36     56     96    144    240
Market Share %..............   21.1   72.5    6.5   46.2   53.8   50.0   50.0    7.0   93.0   23.0   27.0   49.0
----------------------------------------------------------------------------------------------------------------

8. Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    Westinghouse Lighting found the PBP estimated for standard ceiling 
fans from DOE's preliminary analysis to be reasonable, but pointed out 
that the underlying first cost assumptions need to be updated to obtain 
a more accurate PBP. (Westinghouse Lighting, Public Meeting Transcript, 
No. 83 at pp. 272-273) Discussion of updates to the first cost can be 
found in section IV.F.7. Updated PBP results can be found in section 
V.B.1.
    EPCA, as amended, 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 first year's energy savings resulting from the standard, 
as calculated under the applicable test procedure. (42 U.S.C. 
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE 
determined the value of the first year's energy savings by calculating 
the energy savings in accordance with the applicable DOE test 
procedure, and multiplying those savings by the average energy price 
forecast for the year in which compliance with the amended standards 
would be required.

G. Shipments Analysis

    DOE uses projections of product shipments to calculate the national 
impacts of potential amended energy conservation standards on energy 
use, NPV, and future manufacturer cash flows. Historical shipments data 
are used to build up an equipment stock, and to calibrate the shipments 
model to project shipments over the course of the analysis period based 
on the estimated future demand for ceiling fans. Details of the 
shipments analysis are described in chapter 9 of the NOPR TSD.
    The shipments model projects total shipments and market-share 
efficiency distributions in each year of the 30-year analysis period 
(2019-2048) for the no-standards case and each of the standards cases 
calibrated using historical shipments. The shipments model consists of 
three main components: (1) A shipments demand model that determines the 
total demand for new ceiling fans in each year of the analysis period, 
(2) a stock model that tracks the age distribution of the stock over 
the analysis period, and (3) a model that determines the market shares 
of purchased ceiling fans across efficiency levels. For standard, 
hugger, and VSD ceiling fans, DOE used a consumer-choice model 
sensitive to ceiling fan first cost to estimate market shares across 
efficiency level. For HSSD and large-diameter ceiling fans, DOE used a 
roll-up approach to estimate the efficiency distribution in each 
standards case.
1. Shipments Demand Model
    DOE used historical shipment data of hugger, standard, and VSD fans 
from Appliance Magazine's Statistical Review from 1991 to 2006,\49\ 
data from ENERGY STAR annual reports from 2003 to 2013,\50\ and data 
purchased from NPD Research group from 2007-2011.\51\ Figure 9.3.1 in 
Chapter 9 of this NOPR TSD displays the historical time series used for 
DOE's shipments analysis.
---------------------------------------------------------------------------

    \49\ Appliance[supreg] Statistical Review, Annual Report, 
Appliance Magazine (1991-2006).
    \50\ United States Environmental Protection Agency, ENERGY 
STAR[supreg] and Other Climate Protection Partnerships: Annual 
Report (2003-2013).
    \51\ NPD Group, 2007-2011.
---------------------------------------------------------------------------

    As the data were not disaggregated by product class, DOE estimated 
the relative split between standard, hugger, and VSD product classes. 
In the preliminary analysis, DOE used model counts of ceiling fans 
available in-store and online to estimate the market share split 
between hugger and standard ceiling fans. DOE estimated that hugger 
ceiling fans constitute 21 percent of the standard, hugger, and VSD 
ceiling fan market, with standard (26 percent) and multi-mount (53 
percent) ceiling fans making up the rest of the market. Furthermore, 
DOE assumed 27 percent of multi-mount ceiling fans are installed in the 
hugger configuration, with the remaining 73 percent installed in the 
standard configuration.\52\ This resulted in market shares of 35 
percent and 65 percent for hugger and standard fans, respectively.
---------------------------------------------------------------------------

    \52\ AcuPOLL[supreg] Precision Research, Inc. Survey of Consumer 
Ceiling Fan Usage and Operations. 2013.
---------------------------------------------------------------------------

    Westinghouse Lighting and Hunter Fan Company indicated that the 
distribution for standard, hugger, and VSD ceiling fans used in the 
preliminary analysis should be more heavily weighted toward hugger 
ceiling fans, because hugger fans are generally less expensive than 
standard fans. (Westinghouse Lighting, Public Meeting Transcript, No. 
83 at pp. 291-292; Hunter Fan Company, Public Meeting Transcript, No. 
83 at p. 292)
    For the NOPR analyses, DOE used updated online and in-store ceiling 
fan data, and applied a price-weighting approach based on market share 
data as a function of retail price for ceiling fans collected by the 
NPD Group from 2007 to 2011. These data inform the price-weighting 
scheme, which apportions more market share to ceiling fans with lower 
first costs. Using the updated, price-weighted data, DOE calculated 
48.7 percent and 51.3 percent current

[[Page 1720]]

market shares for hugger and standard ceiling fans, respectively. (This 
calculation retained the 27 percent/73 percent installation split used 
in the preliminary analysis for multi-mount fans.) Using these same 
data, DOE found that price-weighting did not significantly affect the 
relative market shares at each EL for hugger and standard ceiling fans. 
Therefore, DOE did not take price into account in developing these 
estimates. DOE welcomes comment, data, or information on its estimates 
for the relative split between hugger, standard, and VSD product 
classes. See issue 15 in section VII.E.
    DOE was unable to obtain historical shipment data for HSSD and 
large-diameter ceiling fans. DOE's estimate for HSSD historical 
shipments is based on scaling historical shipments of standard, hugger, 
and VSD ceiling fans using a scaling factor estimated from feedback 
from manufacturer interviews. DOE's estimate for large-diameter fans is 
based on matching a linear shipments trend to an estimate of 2013 
installed stock assuming large-diameter fans were introduced to the 
market in 2000. DOE requests data and information on current and 
historical shipments for HSSD and large-diameter ceiling fans. See 
issue 16 in section VII.E.
    Shipments for standard, hugger, and VSD ceiling fans are calculated 
for the residential sector. Shipments for HSSD and large-diameter fans 
are calculated for the commercial and industrial sectors. As all of the 
inputs used in the downstream analyses are the same for both sectors, 
DOE does not distinguish between shipments to the commercial or 
industrial sector. DOE requests comments on the assumed ceiling fan 
usage by sector for all product classes. See issue 17 in section VII.E.
    The ceiling fan shipments demand model considers four market 
segments that affect the net demand for total shipments: replacements 
for retired stock, additions due to new building construction, 
additions due to expanding demand in existing buildings, and reductions 
due to building demolitions, which erodes demand from replacements and 
existing buildings.
2. Stock-Accounting Model
    The stock accounting model tracks the age (vintage) distribution of 
the installed ceiling fan stock. The age distribution of the stock 
impacts both the national energy savings (NES) and NPV calculations, 
because the operating costs for any year depend on the age distribution 
of the stock. Older, less efficient units may have higher operating 
costs, while newer, more efficient units have lower operating costs. 
The stock accounting model is initialized using historical shipments 
data and accounts for additions to the stock (i.e., shipments) and 
retirements. The age distribution of the stock in 2012 is estimated 
using results from the LBNL survey of ceiling fan owners.\53\ The stock 
age distribution is updated for subsequent years using projected 
shipments and retirements determined by the stock age distribution and 
a product retirement function.
---------------------------------------------------------------------------

    \53\ Kantner, et al. (2013), op. cit.
---------------------------------------------------------------------------

3. Market-Share Projections
    The consumer-choice model used for standard, hugger, and VSD 
ceiling fans estimates the market shares of purchases in each year in 
the analysis period for each efficiency level presented in the 
engineering analysis. DOE assumed that each of these product classes 
provides a specific utility and consumers do not choose between options 
in different product classes. The consumer-choice module selects which 
ceiling fans are purchased within a product class in any given year 
based on consumer sensitivity to first cost, as well as on the ceiling 
fan options available, which were determined in the engineering 
analysis. Deviations from purely cost-driven behavior are accounted for 
using factors found by calibrating the model to observed historical 
data. DOE requests comments on its approach for estimating the market 
share distribution by efficiency level using a consumer-choice model 
sensitive to first cost for standard, hugger, and VSD ceiling fans. See 
issue 18 in section VII.E.
    For HSSD and large-diameter ceiling fans, in the no-standards case 
the efficiency distribution over the shipments analysis period is 
assumed to remain fixed to the current distribution estimated for 2015. 
In the standards cases, market shares for those levels that do not meet 
the standard roll-up to the standard level, and shares above the 
standard level are unchanged. As in the preliminary analysis, DOE 
assumed no product class switching between the HSSD and large-diameter 
product classes. DOE welcomes comments on its use of the roll-up 
approach to estimate market-shares by efficiency levels for HSSD and 
large-diameter ceiling fans. See issue 19 in section VII.E.
    In the preliminary analysis, DOE assumed no product class switching 
between standard and hugger ceiling fans. Hunter Fan Company suggested 
that some fraction of consumers may switch among product classes; 
however, Hunter did not expect the overall market share of standard and 
hugger ceiling fans to change substantially. (Hunter Fan Company, 
Public Meeting Transcript, No. 83 at pp. 318-320) Westinghouse Lighting 
agreed with the possibility of product class switching, because first 
cost is the main consumer choice point, not whether the fan is standard 
or hugger. (Westinghouse Lighting, Public Meeting Transcript, No. 83 at 
p. 320) ALA added that because the ceiling fan market is highly 
dependent on aesthetics, consumers may choose to switch between product 
classes. (ALA, No. 90 at p. 18)
    Although DOE agrees that consumers are primarily sensitive to first 
cost when purchasing a ceiling fan, the difference in retail price 
between comparable efficiency levels in each product classes is 
relatively small and unlikely to drive a significant fraction of the 
market to switch product classes. There will be some fraction of 
consumers that cannot switch product classes due to room-size 
constraints. For example, only hugger fans can adequately fit in rooms 
with low ceilings. Therefore, for the NOPR analysis, DOE assumed no 
product class switching between standard and hugger ceiling fans. Thus, 
the relative fraction of standard and hugger ceiling fans remains fixed 
in the no-standards case shipments. In a standards case, the relative 
fraction of hugger and standard fans could potentially change because 
standards-case shipments for each product class are calculated based on 
the change in price relative to the no-standards case shipments for 
that product class using a relative price elasticity (see discussion 
below).
4. Price Trend
    The consumer-choice model uses ceiling fan prices, which change 
over time in some cases. There is considerable evidence of learning-by-
doing lowering the cost of new technologies along with increases in 
production of the new technology. The concept behind this empirical 
phenomenon is that as the new technology is produced in greater 
numbers, employees and firms will find ways to lower costs. Brushless 
DC motors are a relatively new technology for use in ceiling fans, and 
thus DOE expects comparable price declines. Given the absence of data 
on shipments of DC motors, DOE models learning lowering costs, and thus 
prices, with time. In the preliminary analysis, DOE adopted a price 
decline rate of 6 percent applied to the incremental (not total) cost 
associated with a brushless DC motor, based on information from a 
technical expert for standard, hugger, and VSD ceiling fans.\42\ ASAP

[[Page 1721]]

supported DOE's use of a price trend for DC motor components, and 
believes that the price of DC motors and their controls will decline 
more quickly than the total price of ceiling fans. (ASAP, et al., No. 
92 at p. 2) ALA also agrees with DOE's price trend approach, but ALA 
states that this price decline will cease at some point during the 
analysis period and requested that DOE identify the year at which the 
price decline would cease to occur. (ALA, No. 90 at p. 18)
    In the NOPR analyses, DOE continued to use the 6 percent price 
decline rate assumption. DOE is not able to specify a year at which the 
price decline would cease for DC motors; instead, DOE's approach 
resulted in the cost of DC motors asymptotically approaching the cost 
of AC motors. DOE requests input on the validity of its price trend 
methodology as applied to the incremental cost of a DC motor. See issue 
20 in section VII.E.
    In the preliminary analysis, DOE's application of a price trend to 
DC motor ceiling fans in its reference case was independent of the 
composition of the magnet used in DC motors over the course of the 
analysis period. This assumption is predicated on the magnets used in 
DC motor ceiling fans being easily available to manufacturers and not 
subject to price fluctuations based on limited supply, as in the case 
of rare-earth materials. DOE requested comment from manufacturers on 
the composition and price of magnets used in DC motor fans to assess 
whether rare-earth materials are used to construct DC motor magnets.
    BAS provided a table comparing the relative performance and 
relative price of the three main types of magnets used in DC ceiling 
fan motors (ferrite, bonded neodymium, and sintered neodymium) and also 
provided a table of information showing that bonded neodymium and 
sintered neodymium magnets are approximately 3.5 and 10 times more 
expensive than ferrite magnets, respectively. (BAS, No. 88 at p. 26) 
Hunter Fan Company stated that it mainly uses ferrite magnets in its DC 
motor fans, MacroAir noted that they use sintered neodymium magnets in 
its new DC motor ceiling fan, and BAS indicated that neodymium magnets 
are not used in their residential fans. (Hunter Fan Company, Public 
Meeting Transcript, No. 83 at p. 317; MacroAir, No. 89 at p. 10; BAS, 
No. 88 at pp. 26-27) BAS indicated that the price of a ferrite magnet 
manufactured to fit within the frame size of an existing AC motor may 
only cost $1-$2 per motor, and also suggested that as more DC ceiling 
fans enter the market, ferrite magnets will be used more commonly. 
(BAS, No. 88 at pp. 26-27)
    The price of the permanent magnet may fluctuate based on the 
pricing of the raw material used to construct the magnet. As a 
sensitivity scenario in the NOPR analysis, DOE also analyzed the case 
in which the cost of a DC motor does not undergo price decline and 
remains fixed at its 2014 price over the course of the analysis period.
5. Impact of a Standard on Shipments
    To estimate the impacts of potential standards on shipments, in the 
preliminary analysis, DOE used a relative price elasticity of demand of 
-0.34, which is the value DOE has typically used for residential 
appliances. Because it is relatively easy to replace the cooling 
provided by ceiling fans with other means, ALA requested DOE use a 
higher relative price elasticity of demand for ceiling fans in its 
analyses. (ALA, No. 90 at pp. 12-13) Hunter Fan Company also expressed 
concern that DOE's analysis did not show a significant drop in 
shipments resulting from moving from a no-standards case to efficiency 
level 1. (Hunter Fan Company, Public Meeting Transcript, No. 83 at p. 
256)
    In the absence of data necessary to estimate a price elasticity 
specific to ceiling fans, DOE continued to use a relative price 
elasticity of -0.34 in its NOPR analysis. In addition, DOE notes that a 
standard at EL 1, EL 2, or EL 3 would affect a relatively small portion 
of the ceiling fan market, as a majority of the hugger and standard 
ceiling fan market is at EL 3 or above. The incremental cost associated 
with EL 1, EL 2, and EL 3 compared to the baseline is relatively small 
in relation to the total price of the ceiling fan. For example, the 
installed cost of EL 1 and EL 2 is the same as that of the baseline for 
hugger and standard ceiling fans. Thus, even if DOE were to use a 
higher price elasticity, the shipments model would project only a 
modest decrease in shipments relative to the no-standards case in the 
event of an efficiency standard set at EL 1, EL 2, or EL 3. DOE 
requests data to more accurately estimate a price elasticity of demand 
specific to ceiling fans. Specifically, DOE requests concurrent data on 
industry-wide shipments-weighted retail price and efficiency and 
average household income. See issue 21 in section VII.E.
    As was noted in the preliminary analysis, an increase in the price 
of ceiling fan light kits due to a ceiling fan light kit standard will 
also impact the shipments of ceiling fans sold with ceiling fan light 
kits. The ceiling fan NOPR analysis includes the impact on ceiling fan 
shipments from the ceiling fan light kit price change due to the 
proposed ceiling fan light kit standard [CITATION to be added]. The 
impact from a ceiling fan light kit standard to ceiling fan shipments 
is applied to both the no ceiling fan standards case and the ceiling 
fan standards case shipments.

H. National Impact Analysis

    The NIA assesses the national energy savings (NES) and the net 
present value (NPV) from a national perspective of total consumer costs 
and savings that would be expected to result from new or amended 
standards at specific efficiency levels. (``Consumer'' in this context 
refers to consumers of the product being regulated.) DOE calculates the 
NES and NPV based on projections of annual product shipments, along 
with the annual energy consumption, total installed cost, and repair 
costs. For the NOPR analysis, DOE projected the energy savings, 
operating cost savings, product costs, and NPV of consumer benefits 
over the lifetime of ceiling fans shipped from 2019 through 2048.
    DOE evaluates the impacts of potential standards by comparing a no-
standards case projection with standards-case projections. The no-
standards case projection characterizes energy use and consumer costs 
in the absence of amended energy conservation standards. The standards-
case projections characterize energy use and consumer cost for the 
market distribution where ceiling fans that do not meet the TSL being 
analyzed are excluded as options available to the consumer. As 
described in section IV.G of this notice, DOE developed market share 
distributions for ceiling fans at each EL in the no-standards case and 
each of the standards cases in its shipments analysis.
    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses typical values 
(as opposed to probability distributions) as inputs.
    Table IV-8 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR TSD for further details.

[[Page 1722]]



    Table IV-8--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
               Inputs                               Method
------------------------------------------------------------------------
Shipments..........................  Annual shipments from shipments
                                      model.
Assumed Compliance Date of Standard  2019.
No Standard-Case Forecasted          Estimated by market-share module of
 Efficacies.                          shipments model.
Standards-Case Forecasted            Estimated by market-share module of
 Efficacies.                          shipments model.
Annual Energy Consumption per Unit.  Annual weighted-average values are
                                      a function of energy use at each
                                      EL.
Total Installed Cost per Unit......  Annual weighted-average values are
                                      a function of cost at each EL.
Annual Energy Cost per Unit........  Annual weighted-average values as a
                                      function of the annual energy
                                      consumption per unit and energy
                                      prices.
Repair and Maintenance Cost per      DC motor fans have a 6.5% higher
 Unit.                                failure rate compared to AC motor
                                      fans.
Energy Prices......................  AEO 2015 forecasts (to 2040) and
                                      extrapolation thereafter.
Energy Site-to-Primary Conversion..  A time-series conversion factor
                                      based on AEO 2015.
Discount Rate......................  Three and seven percent.
Present Year.......................  2015.
------------------------------------------------------------------------

1. National Energy Savings
    The NES analysis involves a comparison of national energy 
consumption of the considered products in each potential standards case 
(TSL) with consumption in the 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). DOE 
calculated annual NES based on the difference in national energy 
consumption for the no-standards case and for the case where a standard 
is set at each TSL. Cumulative energy savings are the sum of the NES 
for each year over the timeframe of the analysis.
    DOE estimated energy consumption and savings based on site energy 
and converted the electricity consumption and savings to primary energy 
(i.e., the energy consumed by power plants to generate site 
electricity) using annual conversion factors derived from AEO 2015.
    In 2011, 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 Sciences, 
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 which DOE 
explained its determination that EIA's National Energy Modeling System 
(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). 
NEMS is a public domain, multi-sector, partial equilibrium model of the 
U.S. energy sector that EIA uses to prepare its Annual Energy 
Outlook.\54\ The approach used for deriving FFC measures of energy use 
and emissions is described in appendix 10B of the NOPR TSD.
---------------------------------------------------------------------------

    \54\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb. 1998) 
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------

    The rebound effect accounts for increased usage of an appliance by 
consumers after the implementation of a standard, reducing the energy 
savings attributed to a standard. DOE generally accounts for the direct 
rebound effect in its estimates of the national energy savings. In 
principle, the rebound effect can reduce expected savings in energy 
costs to consumers in the standards case. However, the take-back in 
energy consumption associated with the rebound effect can also be 
expected to provide benefits to consumers. These benefits from an 
incremental increase in appliance usage are challenging to monetize, 
but by definition must be similar to the costs. Therefore, DOE assumed 
that if it were able to monetize the increased value to consumers of 
the rebound effect, this value would be similar in value to the forgone 
energy savings. Accordingly, the economic impacts on consumers with or 
without the rebound effect are approximately the same, so DOE does not 
adjust operating cost savings in the NIA based on rebound. 
Nevertheless, DOE performed a sensitivity scenario assuming a rebound 
of 3-percent to examine the implications of the rebound. This choice is 
based on the judgment that in most cases, consumers do not often adjust 
ceiling fans. The results of this sensitivity analysis can be found in 
appendix 10C of this NOPR TSD.
2. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are: (1) Total annual installed cost; (2) 
total annual savings in operating costs; and (3) a discount factor to 
calculate the present value of costs and savings. DOE calculates net 
savings each year as the difference between the no-standards case and 
each standards case in terms of total savings in operating costs versus 
total increases in installed costs. DOE calculates operating cost 
savings over the lifetime of each product shipped during the forecast 
period.
    The operating cost savings are primarily energy cost savings, which 
are calculated using the estimated energy savings in each year and the 
projected price of electricity. To estimate electricity prices in 
future years, DOE multiplied the average regional electricity prices by 
the forecast of annual national-average residential or commercial 
electricity price changes in the Reference case from AEO 2015, which 
has an end year of 2040. To estimate price trends after 2040, DOE used 
the average annual rate of change in prices from 2025 to 2040. As part 
of the NIA, DOE also analyzed scenarios that used inputs from the AEO 
2015 low economic growth and high economic growth cases.
    DOE estimated the range of potential impacts of amended standards 
by considering three sensitivity scenarios: A high-benefit scenario, a 
low-benefit scenario, and a scenario that includes a 3-percent rebound 
effect. In the high benefits scenario, DOE used the AEO 2015 high 
economic growth case estimates for new housing starts and electricity 
prices along with its reference price trend for DC motor fans.

[[Page 1723]]

As discussed in section IV.G, price trend is only applied to the price 
premium between a DC motor and a direct drive AC motor. In the low 
benefits scenario, DOE used the low economic growth AEO 2015 estimates 
for housing starts and electricity prices, along with no price trend. 
In the 3-percent rebound scenario, DOE assumed that there would be 
increased ceiling fan usage due to the decreased operating cost savings 
associated with a standard. The NIA results based on these alternative 
scenarios are presented in appendix 10C of the NOPR TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
NOPR, DOE estimated 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.\55\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. The 7-percent real value 
is an estimate of the average before-tax rate of return to private 
capital in the U.S. economy. The 3-percent real value represents the 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \55\ United States Office of Management and Budget. ``Circular 
A-4: Regulatory Analysis,'' (Sept. 17, 2003), section E (Available 
at: www.whitehouse.gov/omb/memoranda/m03-21.html).
---------------------------------------------------------------------------

    DOE requests comments on the overall methodology used to develop 
shipment forecasts and estimate NES and the NPV of those savings. See 
issue 22 in section VII.E.

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers that may be disproportionately affected by a new or amended 
national standard. DOE evaluates impacts on particular subgroups of 
consumers by analyzing the LCC impacts and PBP for those particular 
consumers at alternative standard levels.
    ALA requested DOE consider the impact of energy conservation 
standards on low-income consumers. (ALA, No. 90 at p. 18) For this 
NOPR, DOE analyzed the impacts of the considered standard levels on 
low-income households and small businesses that purchase ceiling fans.
    DOE calculated the LCC and PBP results for standard, hugger, and 
VSD fans based on a sample of low-income households or consumers who 
were identified in the RECS 2009 survey as being at or below the 
``poverty line.'' The poverty line varies with household size, head of 
household age, and family income.
    In the case of the HSSD and large-diameter fans, DOE conducted a 
subgroup analysis based on small businesses that purchase ceiling fans 
by applying the small company discount rate distributions for each 
sector in the LCC and PBP calculation, instead of the discount rate 
associated with the entire industry.
    Chapter 11 of the NOPR TSD describes the consumer subgroup 
analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE conducted an MIA for ceiling fans to estimate the financial 
impact of proposed standards on manufacturers of ceiling fans. The MIA 
has both quantitative and qualitative aspects. The quantitative part of 
the MIA relies on the GRIM, an industry cash-flow model customized for 
the ceiling fans covered in this rulemaking. The key GRIM inputs are 
data on the industry cost structure, manufacturer production costs 
(MPCs), shipments, and assumptions about manufacturer markups, and 
conversion costs. The key MIA output is INPV. DOE used the GRIM to 
calculate cash flows using standard accounting principles and to 
compare changes in INPV between a no-standards case and various TSLs 
(the standards cases). The difference in INPV between the no-standards 
case and standards cases represents the financial impact of amended 
energy conservation standards on ceiling fan manufacturers. Different 
sets of assumptions (scenarios) produce different INPV results. The 
qualitative part of the MIA addresses factors such as manufacturing 
capacity; characteristics of, and impacts on, any particular subgroup 
of manufacturers; and impacts on competition.
    DOE conducted the MIA for this rulemaking in three phases. In the 
first phase, DOE prepared an industry characterization based on the 
market and technology assessment, preliminary manufacturer interviews, 
and publicly available information. In the second phase, DOE estimated 
industry cash flows in the GRIM using industry financial parameters 
derived in the first phase and the shipment scenarios used in the NIA. 
In the third phase, DOE conducted interviews with a variety of ceiling 
fan manufacturers that account for more than 30 percent of domestic 
ceiling fan sales covered by this rulemaking. During these interviews, 
DOE discussed engineering, manufacturing, procurement, and financial 
topics specific to each company, and obtained each manufacturer's view 
of the ceiling fan industry as a whole. The interviews provided 
information that DOE used to evaluate the impacts of amended standards 
on manufacturers' cash flows, manufacturing capacities, and direct 
domestic manufacturing employment levels. See section V.B.2.b of this 
NOPR for the discussion on the estimated changes in the number of 
domestic employees involved in manufacturing ceiling fans covered by 
standards. See section IV.J.3 of this NOPR for a description of the key 
issues that manufacturers raised during the interviews.
    During the third phase, DOE used the results of the industry 
characterization analysis in the first phase and feedback from 
manufacturer interviews to group manufacturers that exhibit similar 
production and cost structure characteristics. DOE identified one 
manufacturer subgroup for a separate impact analysis--small businesses. 
DOE determined that ceiling fan manufacturing falls under the North 
American Industry Classification System (NAICS) code 335210, small 
electrical appliance manufacturing. The U.S. Small Business 
Administration (SBA) defines a small business as having less than 750 
total employees for manufacturing operating under this NAICS code. This 
threshold includes all employees in a business' parent company and any 
other subsidiaries. Based on this classification, DOE identified up to 
37 ceiling fan manufacturers that could potentially qualify as small 
businesses. ALA commented that many of the manufacturers in the ceiling 
fan industry are small businesses. (ALA, No. 91, Public Meeting 
Transcript, pp. 18) DOE agrees that small ceiling fan manufacturers 
hold a significant share of the ceiling fan market. DOE analyzed the 
impact on the small business subgroup in the complete MIA, which is 
presented in chapter 12 of this NOPR TSD, and in the Regulatory 
Flexibility analysis required by the Regulatory Flexibility Act, 5 
U.S.C. 601, et. seq., presented in section VI.B of this NOPR.
2. GRIM Analysis and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flows over time 
due to

[[Page 1724]]

amended energy conservation standards. These changes in cash flows 
result in either a higher or lower INPV for the standards case compared 
to the no-standards case. The GRIM analysis uses a standard annual 
cash-flow analysis that incorporates MPCs, manufacturer markups, 
shipments, and industry financial information as inputs. It then models 
changes in MPCs, investments, and manufacturer margins that may result 
from analyzed amended energy conservation standards. The GRIM uses 
these inputs to calculate a series of annual cash flows beginning with 
the base year of the analysis, 2015, and continuing to 2048. DOE 
computes INPV by summing the stream of annual discounted cash flows 
during the analysis period. DOE used a real discount rate of 7.4 
percent for ceiling fan manufacturers. Initial discount rate estimates 
were derived from industry corporate annual reports to the Securities 
and Exchange Commission (SEC 10-Ks). DOE initially derived a real 
discount rate of 5.9 percent from publicly available SEC 10-Ks of 
ceiling fan manufacturers. During manufacturer interviews, DOE asked 
ceiling fan manufacturers to provide feedback on this discount rate. 
Based on manufacturer feedback that the 5.9 percent discount was too 
low for the ceiling fan industry, DOE revised the real discount rate to 
be 7.4 percent for this analysis. Many of the GRIM inputs come from the 
engineering analysis, the NIA, manufacturer interviews, and other 
research conducted during the MIA. The major GRIM inputs are described 
in detail in the following sections.
a. Capital and Product Conversion Costs
    DOE expects amended ceiling fan energy conservation standards to 
cause manufacturers to incur conversion costs by bringing their tooling 
and product designs into compliance with amended standards. For the 
MIA, DOE classified these conversion costs into two major groups: (1) 
Capital conversion costs and (2) product conversion costs. Capital 
conversion costs are investments in property, plant, and equipment 
necessary to adapt or change existing tooling equipment so new product 
designs can be fabricated and assembled. Product conversion costs are 
investments in research, development, testing, marketing, 
certification, and other non-capitalized costs necessary to make 
product designs comply with amended standards.
    Using feedback from manufacturer interviews, DOE conducted a 
bottom-up analysis to calculate the capital and product conversion 
costs for ceiling fan manufacturers for each product class at each EL. 
To conduct this bottom-up analysis, DOE used manufacturer input from 
manufacturer interviews regarding the types and dollar amounts of 
discrete capital and product expenditures that would be necessary to 
convert specific production lines for ceiling fans at each EL. Ceiling 
fan manufacturers identified tooling costs as the primary capital cost 
that would be necessary to meet higher efficiency levels for ceiling 
fans. Tooling costs are necessary to produce ceiling fans with 
optimized designs that accommodate more efficient fan motors and fan 
blades to meet proposed efficiency levels. The two main types of 
product conversion costs for ceiling fans that manufacturers shared 
with DOE during manufacturer interviews were the engineering hours 
necessary to redesign ceiling fans to meet higher efficiency standards 
and the testing and certification costs necessary to comply with higher 
efficiency standards.
    ALA commented that achieving greater efficiency through the use of 
a larger AC motor will impose significant ceiling fan redesign and 
regulatory approval costs. ALA stated that modifying an existing model 
to use a larger AC motor will require redesign of ceiling fan motor 
housings, blade arm tooling, and potentially switchcups and flange 
skirts to aesthetically accommodate the larger motor and maintain 
proper spacing to accommodate motor cooling. ALA estimates that tooling 
costs for this modification is $20,000 per modified model and that each 
modified model will need a complete safety investigation, at an 
additional estimated cost of $6,000 per model. (ALA, No. 91 at p. 5) 
Additionally, ALA commented that a standard requiring larger direct 
drive motors could cause manufacturers to pass on significant 
conversion costs associated with product design, engineering, 
retooling, and regulatory approval to customers. (ALA, No. 91 at p. 5-
6)
    DOE agrees that certain efficiency levels requiring model redesigns 
that include replacing the motor powering a ceiling fan and modifying 
motor housing and rotors will most likely cause manufacturers to incur 
capital conversion costs for retooling and product conversion costs for 
redesigning models. DOE used these comments from ALA and other comments 
from manufacturer interviews to make average value estimates (i.e., 
average number of hours or average dollar amounts) based on the range 
of responses given by manufacturers for each capital and product 
conversion cost at each EL. See chapter 12 of the NOPR TSD for a 
complete description of DOE's assumptions for the capital and product 
conversion costs. Additionally, DOE analyzed how conversion costs and 
increased MPCs will impact the ceiling fan industry as well as how 
manufacturers will pass along conversion costs and increased production 
costs to consumers in section V.B.2.a of this NOPR.
b. 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 increases in the MPCs of the analyzed products can 
affect the revenues, gross margins, and cash flow of the industry, 
making these product costs key inputs for the GRIM and the MIA.
    In the MIA, DOE used the MPCs calculated in the engineering 
analysis, as described in section IV.C and further detailed in chapter 
5 of this NOPR TSD. To calculate the MPCs for ceiling fans, DOE 
purchased ceiling fans for specific product classes and efficiency 
levels and performed testing on these units to calculate the 
efficiencies of those units. DOE then conducted teardowns of these 
units to cost each ceiling fan model. This allowed DOE to estimate the 
incremental material, labor, depreciation, and overhead costs for 
products at each efficiency level within a product class. DOE used 
modeled data to represent some efficiency levels within a product class 
when it was unable to purchase ceiling fans at those efficiency levels. 
Manufacturers provided feedback on these performance and cost 
breakdowns during manufacturer interviews.
c. Shipment Scenarios
    INPV, which is the key GRIM output, depends on industry revenue, 
which depends on the quantity and prices of ceiling fans shipped in 
each year of the analysis period. Industry revenue calculations require 
forecasts of: (1) total annual shipment volume of ceiling fans; (2) the 
distribution of shipments across the product class (because prices vary 
by product class); and, (3) the distribution of shipments across ELs 
(because prices vary with ceiling fan efficiency).
    DOE modeled the no-standards case ceiling fan shipments and the 
growth of ceiling fan shipments using replacement shipments of failed 
ceiling fan units, new construction starts as projected by AEO 2015, 
and the number of additions to existing buildings due to expanding 
demand throughout the analysis period

[[Page 1725]]

taking into account demolitions in the housing stock.
    For the standards cases, DOE used a ``roll-up'' approach to 
estimate shipments for HSSD and large-diameter ceiling fans and a 
consumer-choice model to estimate shipments for standard, hugger, and 
VSD ceiling fans. DOE used two different approaches to model shipments 
based on the availability of data to calibrate the market share model. 
See section IV.G.3 for further detail.
    For HSSD and large-diameter ceiling fans, a roll-up approach was 
used, in which consumers who would have purchased ceiling fans that 
fail to meet the new standards in the no-standards case purchase the 
least efficient, compliant ceiling fans in the standards cases. 
Consumers that would have purchased compliant ceiling fans in the no-
standards case continue to purchase the exact same ceiling fans in the 
standards cases. For standard, hugger, and VSD ceiling fan, a consumer-
choice model was used to project consumer purchases based on consumer 
sensitivity to first cost.
    For all ceiling fans, DOE also included price elasticity in the 
shipments analysis for all standards cases. When price elasticity is 
included in the shipment analysis, the total number of ceiling fans 
declines as the price of a ceiling fan increases due to standards. For 
a complete description of the shipments, see the shipments analysis 
discussion in section IV.G of this NOPR.
d. Markup Scenarios
    As discussed in the previous manufacturer production costs section, 
the MPCs for ceiling fans are the manufacturers' costs for those units. 
These costs include materials, labor, depreciation, and overhead, which 
are collectively referred to as the cost of goods sold (COGS). The MSP 
is the price received by ceiling fan manufacturers from the first sale, 
typically to a distributor, regardless of the downstream distribution 
channel through which the ceiling fans are ultimately sold. The MSP is 
not the cost the end user pays for ceiling fans, because there are 
typically multiple sales along the distribution chain and various 
markups applied to each sale. The MSP equals the MPC multiplied by the 
manufacturer markup. The manufacturer markup covers all the ceiling fan 
manufacturer's non-production costs (i.e., selling, general and 
administrative expenses [SG&A], research and development [R&D], 
interest) as well as profit. Total industry revenue for ceiling fan 
manufacturers equals the MSPs at each EL multiplied by the number of 
shipments at that EL.
    Modifying these manufacturer markups in the standards cases yields 
a different set of impacts on ceiling fan manufacturers than in the no-
standards case. For the MIA, DOE modeled three standards case markup 
scenarios for ceiling fans to represent the uncertainty regarding the 
potential impacts on prices and profitability for ceiling fan 
manufacturers following the implementation of analyzed amended energy 
conservation standards. The three scenarios are: (1) A preservation of 
gross margin, or flat, markup scenario; (2) a preservation of operating 
profit markup scenario; and (3) a two-tiered markup scenario. Each 
scenario leads to different manufacturer markup values, which, when 
applied to the inputted MPCs, result in varying revenue and cash-flow 
impacts on ceiling fan manufacturers.
    The preservation of gross margin markup scenario assumes that the 
COGS for each product is marked up by a preservation of gross margin 
percentage to cover SG&A expenses, R&D expenses, interest expenses, and 
profit. This allows manufacturers to preserve the same gross margin 
percentage in the standards cases as in the no-standards case. This 
markup scenario represents the upper bound of the ceiling fan 
industry's profitability in the standards cases because ceiling fan 
manufacturers are able to fully pass additional costs due to standards 
to their consumers.
    To estimate the industry average gross margin percentage for 
ceiling fans for the preservation of gross margin markup scenario, DOE 
examined the SEC 10-Ks of publicly traded ceiling fan manufacturers. 
DOE then asked manufacturers to verify the industry average gross 
margin percentage derived from SEC 10-Ks. For this NOPR analysis, DOE 
used 1.37 as the manufacturer markup for all ceiling fans in the 
preservation of gross margin markup scenario.
    The preservation of operating profit markup scenario assumes that 
manufacturers are able to maintain only the no-standards case total 
operating profit in absolute dollars in the standards cases, despite 
higher product costs and investment. The no-standards case total 
operating profit is derived from marking up the COGS for each product 
by the preservation of gross margin markup. In the standards cases for 
the preservation of operating profit markup scenario, DOE adjusted the 
ceiling fan manufacturer markups in the GRIM at each TSL to yield 
approximately the same earnings before interest and taxes in the 
standards cases in the year after the compliance date of the amended 
ceiling fan standards as in the no-standards case. Under this scenario, 
while manufacturers are not able to yield additional operating profit 
from higher production costs and the investments that are required to 
comply with amended ceiling fan energy conservation standards, they are 
able to maintain the same operating profit in the standards case that 
was earned in the no-standards case.
    DOE also modeled a two-tiered markup scenario, which reflects the 
industry's high- and low-efficiency product pricing structure. DOE 
implemented the two-tiered markup scenario because multiple 
manufacturers stated in interviews that they offer multiple tiers of 
product lines that are differentiated, in part, by efficiency level. 
The higher efficiency tiers typically earn premiums (for the 
manufacturer) over the baseline efficiency tier. Several manufacturers 
suggested that amended standards would lead to a reduction in premium 
markups and reduce the profitability of higher efficiency products. 
During the MIA interviews, manufacturers provided information on the 
range of typical ELs in those tiers and the change in profitability at 
each level. DOE used this information to estimate markups for ceiling 
fans under a two-tiered pricing strategy in the no-standards case. In 
the standards cases, DOE modeled the situation in which standards 
result in less product differentiation, compression of the markup 
tiers, and an overall reduction in profitability.
3. Discussion of Comments
    Interested parties commented on the assumptions and results of the 
preliminary analysis. These topics covered MIA issues regarding the 
number of small businesses and the capital and product conversion costs 
associated with potential standards. These two comments were previously 
discussed in sections IV.J.1 and IV.J.2 respectively. No further 
comments on the preliminary analysis were submitted regarding the MIA.
4. Manufacturer Interviews
    DOE conducted additional interviews with manufacturers following 
the preliminary analysis as part of the NOPR analysis. In these 
interviews, DOE asked manufacturers to describe their major concerns 
with this ceiling fan rulemaking. Manufacturers identified four major 
areas of concern: (1) Shift to air conditioning; (2) testing burden; 
and (3) utility of DC motors for residential consumers.

[[Page 1726]]

a. Shift to Air Conditioning
    Several manufacturers stated that ceiling fan energy conservation 
standards could cause consumers to forgo the purchase of a ceiling fan 
in lieu of an air conditioner due to the anticipated price increase, or 
could cause ceiling fan owners to run their air conditioners more 
frequently instead of using their ceiling fan. Manufacturers assert 
that if consumers instead use their air conditioner to cool their 
homes, this could result in more energy use, as ceiling fans tend to be 
more efficient at cooling rooms than air conditioners.
    Manufacturers also stated that overly stringent ceiling fan 
standards could force manufacturers to reduce the aesthetic quality of 
some ceiling fans to comply with energy conservation standards. This 
could cause consumers to forgo the purchase of these ceiling fans 
because the aesthetic appearance of ceiling fans is an important factor 
when consumers purchase ceiling fans. Manufacturers claim this 
reduction in aesthetic quality could again result in more energy use, 
because consumers who do not purchase ceiling fans would need to use 
air conditioners to cool their homes. DOE addresses this issue in 
section IV.E.3 of this NOPR.
b. Testing Burden
    Manufacturers are concerned about the additional testing burden 
associated with complying with energy conservation standards. Most 
manufacturers use third-party testing facilities for testing and 
reporting purposes, which can be expensive. Manufacturers stated that 
ceiling fan standards would significantly increase the amount that they 
already invest in testing each year. DOE includes the additional 
testing and certification costs that manufacturers must make due to 
standards as part of the MIA. DOE calculates the total industry 
conversion costs for manufacturers, which includes the additional 
testing and certification costs of complying with any potential 
standards. These conversion costs impact the INPVs at each TSL 
displayed in section V.B.2.a of this NOPR notice.
c. Utility of DC Motors for Residential Consumers
    Manufacturers stated that energy conservation standards that 
required the use of DC motors in residential ceiling fans would limit 
the overall utility of the fan, as well as increase maintenance costs. 
Manufacturers claim that DC motors require significantly more 
maintenance and have a higher warranty factor compared to ceiling fans 
with AC motors. Additionally, ceiling fans with DC motors require the 
use of a handheld remote, which manufacturers claim is not preferred by 
many residential consumers. Therefore, manufacturers stated any ceiling 
fan standard that required the use of a DC motor would significantly 
reduce the overall utility of ceiling fans to residential consumers.
    DOE conducted a screening analysis as part of this NOPR analysis 
and concluded that DC motors should be considered as a viable 
technology for all product classes of covered ceiling fans for the 
engineering analysis. See section IV.B of this NOPR for a detailed 
discussion of the screening analysis. Also, DOE did include the 
additional repair costs of ceiling fans using DC motors as part of the 
LCC analysis. See section IV.F.4 for a complete description of the 
repair cost assumptions of DC motors.
    For the HSSD and large-diameter product classes, which are expected 
to represent 3 percent of all covered ceiling fan shipments in 2019, 
DOE is proposing standards that manufacturers indicated they would most 
likely meet using a DC motor. Use of DC motors will not significantly 
impact consumer utility for HSSD and large-diameter ceiling fans 
because HSSD and large-diameter ceiling fans are used in commercial and 
industrial applications as opposed to residential applications. Most 
manufacturers indicated that commercial and industrial consumers do not 
dislike using a handheld remote that is required when operating a 
ceiling fan with a DC motor, and in some applications it is preferable. 
Also, these commercial and industrial consumers tend to be better 
equipped to respond to the increased maintenance costs associated with 
owning and operating ceiling fans with DC motors due to these consumers 
repairing products and equipment they own more frequently compared to 
residential consumers.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. The associated emissions are referred 
to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO 2015, as described in 
section IV.M. The methodology is described in chapter 13 and chapter 15 
of the NOPR TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA, GHG 
Emissions Factors Hub.\56\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the NOPR TSD. The 
upstream emissions include both emissions from fuel combustion during 
extraction, processing, and transportation of fuel, and ``fugitive'' 
emissions (direct leakage to the atmosphere) of CH4 and 
CO2.
---------------------------------------------------------------------------

    \56\ Available at: http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
national impact analysis.
    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 gas by the gas' global warming potential 
(GWP) over a 100-year time horizon. Based on the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change,\57\ DOE used 
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \57\ IPCC, 2013: Climate Change 2013: The Physical Science 
Basis. Contribution of Working Group I to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Stocker, 
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. 
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge 
University Press, Cambridge, United Kingdom and New York, NY, USA. 
Chapter 8.
---------------------------------------------------------------------------

    The AEO incorporates the projected impacts of existing air quality 
regulations on emissions. AEO 2015 generally represents current 
legislation and environmental regulations, including recent government 
actions, for which implementing regulations were available as of 
October 31, 2014. DOE's estimation of impacts accounts for the presence 
of the emissions control programs discussed in the following 
paragraphs.
    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 and the 
District of

[[Page 1727]]

Columbia (DC). (42 U.S.C. 7651 et seq.) SO2 emissions from 
28 eastern States and DC were also limited under the Clean Air 
Interstate Rule (CAIR). 70 FR 25162 (May 12, 2005). CAIR created an 
allowance-based trading program that operates along with the Title IV 
program. In 2008, CAIR was remanded to EPA by the U.S. Court of Appeals 
for the District of Columbia Circuit, but it remained in effect.\58\ 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,\59\ and the court ordered 
EPA to continue administering CAIR. On April 29, 2014, the U.S. Supreme 
Court reversed the judgment of the DC Circuit and remanded the case for 
further proceedings consistent with the Supreme Court's opinion.\60\ On 
October 23, 2014, the DC Circuit lifted the stay of CSAPR.\61\ Pursuant 
to this action, CSAPR went into effect (and CAIR ceased to be in 
effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \58\ 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).
    \59\ 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).
    \60\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 
(U.S. 2014). The Supreme Court held in part that EPA's methodology 
for quantifying emissions that must be eliminated in certain States 
due to their impacts in other downwind States was based on a 
permissible, workable, and equitable interpretation of the Clean Air 
Act provision that provides statutory authority for CSAPR.
    \61\ See Georgia v. EPA, Order (D.C. Cir. filed October 23, 
2014) (No. 11-1302),
---------------------------------------------------------------------------

    EIA was not able to incorporate CSAPR into AEO 2015, so it assumes 
implementation of CAIR. Although DOE's analysis used emissions factors 
that assume that CAIR, not CSAPR, is the regulation in force. However, 
the difference between CAIR and CSAPR is not relevant for the purpose 
of DOE's analysis of emissions impacts from energy conservation 
standards.
    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO2 
emissions allowances resulting from the lower electricity demand caused 
by the adoption of an energy conservation standard could be used to 
permit 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 2016, 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 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. AEO 
2015 assumes that, in order to continue operating, coal plants must 
have either flue gas desulfurization or dry sorbent injection systems 
installed by 2016. Both technologies, which are used to reduce acid gas 
emissions, also reduce SO2 emissions. Under the MATS, 
emissions will be far below the cap established by CAIR, so it is 
unlikely that excess SO2 emissions allowances resulting from 
the lower electricity demand would be needed or used to permit 
offsetting increases in SO2 emissions by any regulated EGU. 
Therefore, energy conservation standards will generally reduce 
SO2 emissions in 2016 and beyond.\62\
---------------------------------------------------------------------------

    \62\ DOE notes that the Supreme Court recently determined that 
EPA erred by not considering costs in the finding that regulation of 
hazardous air pollutants from coal- and oil-fired electric utility 
steam generating units is appropriate. See Michigan v. EPA (Case No. 
14-46, 2015). The Supreme Court did not vacate the MATS rule and DOE 
has tentatively determined that the Court's decision on the MATS 
rule does not change the assumptions regarding the impact of energy 
efficiency standards on SO2 emissions (see chapter 13 for 
further discussion). Further, the Court's does not change the impact 
of the energy efficiency standards on mercury emissions. DOE will 
continue to monitor developments related to this case and respond to 
them as appropriate.
---------------------------------------------------------------------------

    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia.\63\ 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 
permit 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 this NOPR for 
these States.
---------------------------------------------------------------------------

    \63\ CSAPR also applies to NOX and it would supersede 
the regulation of NOX under CAIR. As stated previously, 
the current analysis assumes that CAIR, not CSAPR, is the regulation 
in force. The difference between CAIR and CSAPR with regard to DOE's 
analysis of NOX emissions is slight.
---------------------------------------------------------------------------

    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 2015, which 
incorporates the MATS.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed 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 products 
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 NOPR.
    For this NOPR, DOE relied on a set of values for the social cost of 
carbon (SCC) that was developed by a Federal interagency process. The 
basis for these values is summarized in the next section, and a more 
detailed description of the methodologies used is provided as an 
appendix to chapter 14 of the NOPR 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 CO2. A domestic SCC value is 
meant to reflect the value of damages in the United States resulting 
from a unit change in CO2 emissions, while a global SCC 
value is meant to reflect the value of damages worldwide.
    Under section 1(b) of Executive Order 12866, ``Regulatory Planning 
and Review,'' 58 FR 51735 (Oct. 4, 1993), 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

[[Page 1728]]

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.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of challenges. A 
report from the National Research Council \64\ 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.
---------------------------------------------------------------------------

    \64\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use, National Academies Press: 
Washington, DC (2009).
---------------------------------------------------------------------------

    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 NPV 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.
b. 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.
c. 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.
    In 2010, 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 integrated assessment models, 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 climate 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,\65\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV-9 
presents the values in the 2010 interagency group report,\66\ which is 
reproduced in appendix 14A of the NOPR TSD.
---------------------------------------------------------------------------

    \65\ 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.
    \66\ 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).

[[Page 1729]]



                      Table IV-9--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       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
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this notice were generated using the most 
recent versions of the three integrated assessment models that have 
been published in the peer-reviewed literature, as described in the 
2013 update from the interagency working group (revised July 2015).\67\
---------------------------------------------------------------------------

    \67\ 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 July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
---------------------------------------------------------------------------

    Table IV-10 shows the updated sets of SCC estimates from the latest 
interagency update in 5-year increments from 2010 to 2050. The full set 
of annual SCC values between 2010 and 2050 is reported in appendix 14B 
of the NOPR 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-10--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                       Discount rate
                                         -----------------------------------------------------------------------
                  Year                           5%                3%               2.5%               3%
                                         -----------------------------------------------------------------------
                                               Average           Average           Average       95th percentile
----------------------------------------------------------------------------------------------------------------
2010....................................                10                31                50                86
2015....................................                11                36                56               105
2020....................................                12                42                62               123
2025....................................                14                46                68               138
2030....................................                16                50                73               152
2035....................................                18                55                78               168
2040....................................                21                60                84               183
2045....................................                23                64                89               197
2050....................................                26                69                95               212
----------------------------------------------------------------------------------------------------------------

    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 National Research 
Council report mentioned previously 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 (revised July 2015), adjusted to 2014$ using 
the implicit price deflator for gross domestic product (GDP) from the 
Bureau of Economic Analysis. For each of the four sets of SCC cases 
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3, 
and $117 per metric ton avoided (values expressed in 2014$). 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.
2. Social Cost of Other Air Pollutants
    As noted previously, DOE has estimated how the considered energy

[[Page 1730]]

conservation standards would reduce site NOX emissions 
nationwide and decrease power sector NOX emissions in those 
22 States not affected by the CAIR.
    DOE estimated the monetized value of NOX emissions 
reductions using benefit per ton estimates from the Regulatory Impact 
Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing 
Power Plants and Emission Standards for Modified and Reconstructed 
Power Plants,'' published in June 2014 by EPA's Office of Air Quality 
Planning and Standards. The report includes high and low values for 
NOX (as PM2.5) for 2020, 2025, and 2030 
discounted at 3 percent and 7 percent,\68\ which are presented in 
chapter 14 of the NOPR TSD. DOE assigned values for 2021-2024 and 2026-
2029 using, respectively, the values for 2020 and 2025. DOE assigned 
values after 2030 using the value for 2030.
---------------------------------------------------------------------------

    \68\ For the monetized NOX benefits associated with 
PM2.5, the related benefits (derived from benefit-per-ton 
values) are based on an estimate of premature mortality derived from 
the ACS study (Krewski et al., 2009), which is the lower of the two 
EPA central tendencies. Using the lower value is more conservative 
when making the policy decision concerning whether a particular 
standard level is economically justified so using the higher value 
would also be justified. If the benefit-per-ton estimates were based 
on the Six Cities study (Lepuele et al., 2012), the values would be 
nearly two-and-a-half times larger. (See chapter 14 of the NOPR TSD 
for further description of the studies mentioned above.)
---------------------------------------------------------------------------

    DOE multiplied the emissions reduction (tons) in each year by the 
associated $/ton values, and then discounted each series using discount 
rates of 3 percent and 7 percent as appropriate. DOE will continue for 
evaluate the monetization of avoided NOx emissions and will make any 
appropriate updates of the current analysis for the final rulemaking.
    DOE is evaluating appropriate monetization of avoided 
SO2 and Hg emissions in energy conservation standards 
rulemakings. DOE has not included monetization of those emissions in 
the current analysis.

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power industry that would result from the adoption of new or 
amended energy conservation standards. The utility impact analysis 
estimates the changes in installed electrical capacity and generation 
that would result for each TSL. The analysis is based on published 
output from NEMS associated with AEO 2015. NEMS produces the AEO 
Reference case, as well as a number of side cases that estimate the 
economy-wide impacts of changes to energy supply and demand. DOE uses 
published side cases to estimate the marginal impacts of reduced energy 
demand on the utility sector. These marginal factors are estimated 
based on the changes to electricity sector generation, installed 
capacity, fuel consumption and emissions in the AEO Reference case and 
various side cases. Details of the methodology are provided in the 
appendices to Chapters 13 and 15 of the NOPR TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of new or amended 
energy conservation standards

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts from new or 
amended energy conservation standards include both direct and indirect 
impacts. Direct employment impacts are any changes in the number of 
employees of manufacturers of the products subject to standards, their 
suppliers, and related service firms. 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 net jobs created or 
eliminated in the national economy, other than in the manufacturing 
sector being regulated, caused by: (1) Reduced spending by end users on 
energy; (2) reduced spending on new energy supply by the utility 
industry; (3) increased consumer spending on new products to which the 
new standards apply; 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).\69\ 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.\70\ 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, net national employment may increase due to 
shifts in economic activity resulting from energy conservation 
standards.
---------------------------------------------------------------------------

    \69\ Data on industry employment, hours, labor compensation, 
value of production, and the implicit price deflator for output for 
these industries are available upon request by calling the Division 
of Industry Productivity Studies (202-691-5618) or by sending a 
request by email to [email protected].
    \70\ 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).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this NOPR using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies version 3.1.1 
(ImSET).\71\ 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 187 
sectors most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \71\ 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).
---------------------------------------------------------------------------

    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 may over-estimate actual job impacts over the long 
run for this rule. Therefore, DOE generated results for near-term 
timeframes, where these uncertainties are reduced. For more details on 
the employment impact

[[Page 1731]]

analysis, see chapter 16 of the NOPR TSD.

V. Analytical Results and Conclusions

    The following section addresses the results from DOE's analyses 
with respect to the considered energy conservation standards for 
ceiling fans. It addresses the TSLs examined by DOE, the projected 
impacts of each of these levels if adopted as energy conservation 
standards for ceiling fans, and the standards levels that DOE is 
proposing to adopt in this NOPR. Additional details regarding DOE's 
analyses are contained in the NOPR TSD supporting this notice.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of six TSLs for ceiling fans. 
These TSLs were developed by combining specific efficiency levels for 
each of the product classes analyzed by DOE. DOE presents the results 
for the TSLs in this document, while the results for all efficiency 
levels that DOE analyzed are in the NOPR TSD.
    Table V-1 presents the TSLs and the corresponding efficiency levels 
for ceiling fans. TSL 6 represents the maximum technologically feasible 
(max-tech) energy efficiency for all product classes. TSL 5 corresponds 
to the maximum NPV (at a 7 percent discount rate). TSL 4 corresponds to 
the highest efficiency level for which the LCC savings and NPV are both 
positive. TSL 3 corresponds to the highest efficiency level that can be 
met with a standard (AC) motor for all product classes. TSL 2 
corresponds to the fan-optimization design-option efficiency level. TSL 
1 corresponds to the first non-baseline efficiency level (i.e., EL 1).

                                                    Table V-1--Trial Standard Levels for Ceiling fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            VSD                   Hugger                 Standard                  HSSD               Large-diameter
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1...........................  EL 1..................  EL 1..................  EL 1..................  EL 1..................  EL 1
TSL 2...........................  EL 1..................  EL 2..................  EL 2..................  EL 1..................  EL 1
TSL 3...........................  EL 2..................  EL 3..................  EL 3..................  EL 3..................  EL 2
TSL 4...........................  EL 2..................  EL 3..................  EL 3..................  EL 4..................  EL 3
TSL 5...........................  EL 3..................  EL 3..................  EL 4..................  EL 4..................  EL 3
TSL 6...........................  EL 3..................  EL 4..................  EL 4..................  EL 4..................  EL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on ceiling fan consumers by 
looking at the effects potential amended standards at each TSL would 
have on the LCC and PBP. DOE also examined the impacts of potential 
standards on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency products affect consumers in two 
ways: (1) Purchase price increases, and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses product lifetime and a discount rate. Chapter 8 of the NOPR TSD 
provides detailed information on the LCC and PBP analyses.
    Table V-2 and Table V-3 show the LCC and PBP results for the 
efficiency levels considered for all the ceiling fan product classes. 
In the first of each pair of tables for each product class, the simple 
payback is measured relative to the baseline product. In the second 
table, the LCC savings are measured relative to the no-standards 
efficiency distribution in the compliance year (see section IV.F.7 of 
this notice).

                                      Table V-2--Average LCC and PBP Results by Efficiency Level for Standard Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                           EL                                              First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          113.36           19.95          184.36          297.71  ..............            13.8
1.......................................................          113.36           14.98          138.97          252.33  ..............            13.8
2.......................................................          113.36           13.32          123.84          237.20  ..............            13.8
3.......................................................          125.41           11.94          111.28          236.69             1.5            13.8
4.......................................................          158.30            8.74           82.25          240.55             4.0            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


   Table V-3--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for Standard Fans
----------------------------------------------------------------------------------------------------------------
                                                                      Life-Cycle cost savings
                                                 ---------------------------------------------------------------
                       EL                          % of  Consumers    Average savings        Average savings
                                                   that experience    (all consumers)     (affected consumers)*
                                                       net cost           (2014$)                (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................  .................  .................  ........................
1...............................................              0.00%               1.59                     48.62
2...............................................              0.00%               2.81                     36.38

[[Page 1732]]

 
3...............................................             20.22%               3.03                      8.47
4...............................................             61.77%              -0.40                     -0.44
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                       Table V-4--Average LCC and PBP Results by Efficiency Level for Hugger Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                           EL                                              First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          101.24           17.34          160.38          261.62  ..............            13.8
1.......................................................          101.24           13.02          121.05          222.29  ..............            13.8
2.......................................................          101.24           11.58          107.93          209.18  ..............            13.8
3.......................................................          111.90           10.48           97.99          209.89             1.6            13.8
4.......................................................          140.97            8.09           76.43          217.40             4.3            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


    Table V-5--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for Hugger Fans
----------------------------------------------------------------------------------------------------------------
                                                                      Life-Cycle cost savings
                                                 ---------------------------------------------------------------
                       EL                          % of  Consumers    Average savings        Average savings
                                                   that experience    (all consumers)     (affected consumers)*
                                                       net cost           (2014$)                (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................  .................  .................  ........................
1...............................................               0.00               1.25                     41.66
2...............................................               0.00               2.20                     30.20
3...............................................              21.89               1.99                      5.59
4...............................................              66.01              -4.80                     -5.27
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                         Table V-6--Average LCC and PBP Results by Efficiency Level for VSD Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                           EL                                Installed     First year's      Lifetime                         payback        lifetime
                                                               cost       operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          283.94           16.84          155.54          439.48  ..............            13.8
1.......................................................          283.94           14.98          138.64          422.57  ..............            13.8
2.......................................................          306.04           13.97          129.48          435.52             7.7            13.8
3.......................................................          366.47            8.46           79.59          446.06             9.8            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


      Table V-7--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for VSD Fans
----------------------------------------------------------------------------------------------------------------
                                                                      Life-Cycle cost savings
                                                 ---------------------------------------------------------------
                       EL                          % of  Consumers    Average savings        Average savings
                                                   that experience    (all consumers)     (affected consumers)*
                                                       net cost           (2014$)                (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................  .................  .................  ........................
1...............................................               0.00               0.66                     16.47
2...............................................               2.39               0.12                      3.01

[[Page 1733]]

 
3...............................................              70.86             -10.42                    -10.42
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                        Table V-8--Average LCC and PBP Results by Efficiency Level for HSSD Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                           EL                                              First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          145.00           22.83          193.80          338.80  ..............            13.8
1.......................................................          145.00           20.29          172.50          317.50  ..............            13.8
2.......................................................          168.37           18.97          161.35          329.72             6.0            13.8
3.......................................................          177.01           18.83          166.65          343.66             8.0            13.8
4.......................................................          217.50            8.95           83.67          301.16             5.2            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


     Table V-9--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for HSSD Fans
----------------------------------------------------------------------------------------------------------------
                                                                      Life-Cycle cost savings
                                                 ---------------------------------------------------------------
                       EL                           % of Consumers    Average savings        Average savings
                                                   that experience    (all consumers)     (affected consumers)*
                                                       net cost           (2014$)                (2014$)
----------------------------------------------------------------------------------------------------------------
--..............................................  .................  .................  ........................
1...............................................               0.00              10.03                     21.56
2...............................................              59.71              -1.18                     -1.29
3...............................................              71.46             -14.03                    -15.26
4...............................................              32.77              25.95                     27.63
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


               Table V-10--Average LCC and PBP Results by Efficiency Level for Large-Diameter Fans
----------------------------------------------------------------------------------------------------------------
                                                   Average costs (2014$)
                                   ----------------------------------------------------
                                                    First                                  Simple      Average
                EL                   Installed      year's      Lifetime                  payback      lifetime
                                        cost      operating    operating       LCC        (years)      (years)
                                                     cost         cost
----------------------------------------------------------------------------------------------------------------
0.................................      4080.64       246.45      2102.94      6183.58  ...........         13.8
1.................................      4080.64       219.48      1875.26      5955.91  ...........         13.8
2.................................      4206.91       199.87      1709.68      5916.59          2.7         13.8
3.................................      4420.85       168.25      1486.83      5907.68          4.4         13.8
4.................................      4577.89       160.35      1420.10      5997.99          5.8         13.8
----------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency
  level. The PBP is measured relative to the baseline product.


  Table V-11--Average LCC Savings Relative to the No-Standards Case Efficiency Distribution for Large-Diameter
                                                      Fans
----------------------------------------------------------------------------------------------------------------
                                                                     Life-Cycle cost savings
                                               -----------------------------------------------------------------
                      EL                                                                       Average savings
                                                 % of Consumers that  Average savings (all        (affected
                                                 experience net cost   consumers) (2014$)    consumers)* (2014$)
----------------------------------------------------------------------------------------------------------------
--............................................  ....................  ....................  ....................
1.............................................                  0.00                 10.41                235.01
2.............................................                  1.52                 14.15                159.69

[[Page 1734]]

 
3.............................................                 34.92                 22.75                 27.26
4.............................................                 49.05                -52.65                -63.10
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered ELs on low-income households and small businesses. Table V-
12 to Table V-15 compare the average LCC savings for each EL and the 
simple PBP at each efficiency level for the two consumer subgroups to 
the average LCC savings and the simple PBP for the entire sample for 
all the product classes. In most cases, the average LCC savings and the 
simple PBP for low-income households and small businesses that purchase 
ceiling fans are not substantially different from the average LCC 
savings and simple PBP for all households and all buildings, 
respectively. Chapter 11 of the NOPR TSD presents the complete set of 
results and discussion for LCC and PBP for the subgroups.

  Table V-12--Comparison of LCC Savings and PBP for Low-Income Households and All Households for Standard Fans
----------------------------------------------------------------------------------------------------------------
                                                                 Average LCC savings      Simple payback period
                                                                       (2014$)                   (years)
                             EL                              ---------------------------------------------------
                                                                  All       Low-income      All       Low-income
----------------------------------------------------------------------------------------------------------------
--..........................................................  ...........  ...........  ...........
1...........................................................        48.62        50.03          0.0          0.0
2...........................................................        36.38        37.26          0.0          0.0
3...........................................................         8.47         8.81          1.5          1.5
4...........................................................        -0.44        -1.30          4.0          4.1
----------------------------------------------------------------------------------------------------------------


   Table V-13--Comparison of LCC Savings and PBP for Low-Income Households and All Households for Hugger Fans
----------------------------------------------------------------------------------------------------------------
                                                                 Average LCC savings      Simple payback period
                                                                       (2014$)                   (years)
                             EL                              ---------------------------------------------------
                                                                  All       Low-income      All       Low-income
----------------------------------------------------------------------------------------------------------------
--..........................................................  ...........  ...........  ...........  ...........
1...........................................................        41.66        46.99          0.0          0.0
2...........................................................        30.20        31.44          0.0          0.0
3...........................................................         5.59         4.98          1.6          1.6
4...........................................................        -5.27        -6.60          4.3          4.4
----------------------------------------------------------------------------------------------------------------


     Table V-14--Comparison of LCC Savings and PBP for Low-Income Households and All Households for VSD Fans
----------------------------------------------------------------------------------------------------------------
                                                                 Average LCC savings      Simple payback period
                                                                       (2014$)                   (years)
                             EL                              ---------------------------------------------------
                                                                  All       Low-income      All       Low-income
----------------------------------------------------------------------------------------------------------------
--..........................................................  ...........  ...........  ...........  ...........
1...........................................................        16.47        15.97          0.0          0.0
2...........................................................         3.01         1.55          7.7          7.2
3...........................................................       -10.42        -8.15          9.8          9.3
----------------------------------------------------------------------------------------------------------------


[[Page 1735]]


       Table V-15--Comparison of LCC Savings and PBP for Small Businesses and All Buildings for HSSD Fans
----------------------------------------------------------------------------------------------------------------
                                                                 Average LCC savings      Simple payback period
                                                                       (2014$)                   (years)
                             EL                              ---------------------------------------------------
                                                                              Small                     Small
                                                                  All       businesses      All       businesses
----------------------------------------------------------------------------------------------------------------
--..........................................................  ...........  ...........  ...........  ...........
1...........................................................        21.56        19.22          0.0          0.0
2...........................................................        -1.29        -3.85          6.0          6.0
3...........................................................       -15.26       -17.07          8.0          7.9
4...........................................................        27.63        17.25          5.2          5.2
----------------------------------------------------------------------------------------------------------------


  Table V-16--Comparison of LCC Savings and PBP for Small Businesses and All Buildings for Large-Diameter Fans
----------------------------------------------------------------------------------------------------------------
                                                                 Average LCC savings      Simple payback period
                                                                       (2014$)                   (years)
                             EL                              ---------------------------------------------------
                                                                              Small                     Small
                                                                  All       businesses      All       businesses
----------------------------------------------------------------------------------------------------------------
--..........................................................  ...........  ...........  ...........  ...........
1...........................................................       235.01       194.80          0.0          0.0
2...........................................................       159.69       112.87          2.7          2.7
3...........................................................        27.26        -7.88          4.4          4.3
4...........................................................       -63.10      -107.69          5.8          5.7
----------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed in section IV.F.8, EPCA establishes a rebuttable 
presumption that 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. The criterion is equivalent to 
having a simple payback period of less than 3 years. In calculating a 
rebuttable presumption payback period for each of the considered ELs, 
DOE based the energy use calculation on the DOE test procedures for 
ceiling fans, as required by EPCA. Table V-17 shows the results of this 
analysis for the considered ELs.

                            Table V-17--Rebuttable Presumption Payback Period Results
----------------------------------------------------------------------------------------------------------------
                                                                                                        Large-
                       EL                          Standard      Hugger        VSD          HSSD       diameter
----------------------------------------------------------------------------------------------------------------
--.............................................  ...........  ...........  ...........  ...........  ...........
1..............................................          0.0          0.0          0.0          0.0          0.0
2..............................................          0.0          0.0          9.2          3.2          3.3
3..............................................          1.5          1.5         11.8          3.9          5.4
4..............................................          3.8          3.9  ...........          2.8          7.1
----------------------------------------------------------------------------------------------------------------

    While DOE examined the rebuttable-presumption criterion, it 
considered whether the standard levels considered for this rule are 
economically justified through a more detailed analysis of the economic 
impacts of those levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that 
considers the full range of impacts to the consumer, manufacturer, 
Nation, and environment. The results of that 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.
2. Economic Impacts on Manufacturers
a. Industry Cash-Flow Analysis Results
    Table V-18 through Table V-20 present the financial impacts 
(represented by changes in INPV) of analyzed standards on ceiling fan 
manufacturers as well as the conversion costs that DOE estimates 
ceiling fan manufacturers would incur at each TSL. To evaluate the 
range of cash-flow impacts on the ceiling fan industry, DOE modeled 
three markup scenarios that correspond to the range of anticipated 
market responses to amended standards. Each scenario 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 no-standards case and the 
standards cases that result from the sum of discounted cash flows from 
the base year (2015) through the end of the analysis period (2048). The 
results also discuss the difference in cash flows between the no-
standards case and the standards cases in the year before the 
compliance date for analyzed standards. This difference in cash flow 
represents the size of the required conversion costs relative to the 
cash flow generated by the ceiling fan industry in the absence of 
amended energy conservation standards.
    To assess the upper (less severe) end of the range of potential 
impacts on ceiling fan manufacturers, DOE modeled a preservation of 
gross margin, or flat, markup scenario. This scenario assumes that in 
the standards cases, manufacturers would be able to pass along all the 
higher production costs required for more efficient products to their 
consumers. Specifically, the industry would be able to maintain its 
average no-standards case gross margin (as a percentage of revenue) 
despite the

[[Page 1736]]

higher product costs in the standards cases. In general, the larger the 
product price increases, the less likely manufacturers are to achieve 
the cash flow from operations calculated in this scenario because it is 
less likely that manufacturers would be able to fully mark up these 
larger cost increases.
    To assess the lower (more severe) end of the range of potential 
impacts on ceiling fan manufacturers, DOE modeled two additional markup 
scenarios; a preservation of operating profit markup and a two-tiered 
markup. In the preservation of operating profit markup scenario 
manufacturers are not able to yield additional operating profit from 
higher production costs and the investments that are required to comply 
with amended ceiling fan energy conservation standards, but instead are 
only able to maintain the same operating profit in the standards cases 
that was earned in the no-standards case. This scenario represents a 
potential lower end of the range of impacts on manufacturers because 
manufacturers are only able to maintain the operating profit that they 
would have earned in the no-standards case despite higher production 
costs and investments. Manufacturers must therefore, reduce margins as 
a result of this markup scenario which reduces profitability.
    Another manufacturer markup scenario DOE analyzed was the two-
tiered markup scenario. In this markup scenario manufacturers have two 
tiers of manufacturer markups for their products, one for ceiling fans 
with small motors and one for ceiling fans with larger AC or DC motors. 
As the stringency of analyzed standards increases, the higher premium 
markup applied to more efficient products erodes, and all products sold 
adopt the lower baseline markup. This scenario represents a potential 
lower end of the range of impacts on manufacturers because 
manufacturers reduce profit margins on high efficiency products as 
these products become the baseline, higher volume products. Therefore, 
manufacturers' profits are also reduced as a result of this markup 
scenario.

                         Table V-18--Manufacturer Impact Analysis for Ceiling Fans--Preservation of Gross Margin Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard levels
                                            Units            No-standards  -----------------------------------------------------------------------------
                                                                 case            1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  2014$ millions.......         1,308.7       1,307.9      1,306.8      1,296.2      1,293.2      1,253.3      1,229.8
Change in INPV....................  2014$ millions.......  ...............        (0.8)        (1.9)       (12.4)       (15.5)       (55.4)       (78.9)
                                    (%)..................  ...............        (0.1)        (0.1)        (1.0)        (1.2)        (4.2)        (6.0)
Product Conversion Costs..........  2014$ millions.......  ...............          0.0          0.1          0.8          1.1          2.0          2.4
Capital Conversion Costs..........  2014$ millions.......  ...............          0.1          0.2          2.6          3.4          7.3          8.6
Total Conversion Costs............  2014$ millions.......  ...............          0.2          0.3          3.4          4.5          9.4         11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                       Table V-19--Manufacturer Impact Analysis for Ceiling Fans--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard levels
                                            Units            No-standards  -----------------------------------------------------------------------------
                                                                 case            1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  2014$ millions.......         1,308.7       1,305.2      1,299.6      1,244.9      1,231.6      1,059.1        925.2
Change in INPV....................  2014$ millions.......  ...............        (3.5)        (9.1)       (63.8)       (77.1)      (249.5)      (383.4)
                                    (%)..................  ...............        (0.3)        (0.7)        (4.9)        (5.9)       (19.1)       (29.3)
Product Conversion Costs..........  2014$ millions.......  ...............          0.0          0.1          0.8          1.1          2.0          2.4
Capital Conversion Costs..........  2014$ millions.......  ...............          0.1          0.2          2.6          3.4          7.3          8.6
Total Conversion Costs............  2014$ millions.......  ...............          0.2          0.3          3.4          4.5          9.4         11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                  Table V-20--Manufacturer Impact Analysis for Ceiling Fans--Two-Tiered Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard levels
                                            Units            No-standards  -----------------------------------------------------------------------------
                                                                 case            1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  2014$ millions.......         1,308.7       1,311.2      1,315.3      1,147.6      1,142.4      1,091.2      1,058.5
Change in INPV....................  2014$ millions.......  ...............          2.5          6.6      (161.1)      (166.3)      (217.4)      (250.2)
                                    (%)..................  ...............          0.2          0.5       (12.3)       (12.7)       (16.6)       (19.1)
Product Conversion Costs..........  2014$ million).......  ...............          0.0          0.1          0.8          1.1          2.0          2.4
Capital Conversion Costs..........  2014$ millions.......  ...............          0.1          0.2          2.6          3.4          7.3          8.6
Total Conversion Costs............  2014$ millions.......  ...............          0.2          0.3          3.4          4.5          9.4         11.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 1737]]

    TSL 1 sets the efficiency level at EL 1 for all ceiling fans. At 
TSL 1, DOE estimates impacts on INPV range from -$3.5 million to $2.5 
million, or a change in INPV of -0.3 percent to 0.2 percent. At TSL 1, 
industry free cash flow (operating cash flow minus capital 
expenditures) is expected to decrease by approximately 0.1 percent to 
$79.7 million, compared to the no-standards case value of $79.0 million 
in 2018, the year leading up to the proposed standards.
    Percentage impacts on INPV are slightly negative to slightly 
positive at TSL 1. DOE estimates that 97 percent of standard and hugger 
ceiling fan shipments, 96 percent of VSD ceiling fan shipments, 54 
percent of HSSD ceiling fan shipments, and 96 percent of large-diameter 
fan ceiling fan shipments would meet or exceed the efficiency levels 
required at TSL 1.
    DOE expects conversion costs to be small compared to the no-
standards case industry value because most of the ceiling fan 
shipments, on a total volume basis, already meet or exceed the 
efficiency levels analyzed at TSL 1. DOE expects ceiling fan 
manufacturers to incur approximately $43 thousand in product conversion 
costs for ceiling fan redesign and testing. DOE estimates manufacturers 
will incur minimal capital conversion costs associated with TSL 1, as 
most efficiency gains will be achieved by the optimization of existing 
ceiling fan designs, not through any major equipment upgrades or 
capital investments. DOE expects approximately $114 thousand in capital 
conversion costs for manufacturers, primarily to invest in tooling 
necessary to produce optimized ceiling fans in models that do not meet 
the required efficiency levels.
    At TSL 1, the shipment-weighted average MPC increases by 
approximately 0.3 percent for all ceiling fans relative to the no-
standards case MPC in 2019, the expected year of compliance. In the 
preservation of gross margin markup scenario, manufacturers are able to 
fully pass on this slight cost increase to consumers. However, this 
slight increase in MPC is outweighed by the approximately $0.2 million 
in conversion costs that manufacturers would incur, which causes a 
slightly negative change in INPV at TSL 1 under the preservation of 
gross margin markup scenario.
    Under the preservation of operating profit markup scenario, 
manufacturers earn the same operating profit as would be earned in the 
no-standards case, but manufacturers do not earn additional profit from 
their investments. In this scenario, the 0.3 percent MPC increase 
results in a very slight reduction in manufacturer markup after the 
compliance year, from 1.37 in the no-standards case to 1.369 at TSL1. 
This slight reduction in manufacturer markup and $0.2 million in 
conversion costs incurred by manufacturers cause a slightly negative 
change in INPV at TSL 1 under the preservation of operating profit 
markup scenario.
    Under the two-tiered markup scenario, where manufacturers earn 
different markups for more efficient products, the average manufacturer 
markup across the entire analysis period slightly increases from 1.370 
in the no-standards case to 1.371 at TSL 1. This increase in 
manufacturer markup combined with the slight increase in MPC outweighs 
the $0.2 million in conversion costs that manufacturers incur, causing 
a slightly positive change in INPV at TSL 1 under the two-tiered markup 
scenario.
    TSL 2 sets the efficiency level at EL 1 for VSD, HSSD, and large-
diameter ceiling fans and EL 2 for standard and hugger ceiling fans. At 
TSL 2, DOE estimates impacts on INPV range from -$9.1 million to $6.6 
million, or a change in INPV of -0.7 percent to 0.5 percent. At this 
TSL, industry free cash flow is estimated to decrease by approximately 
0.1 percent to $79.6 million, compared to the no-standards case value 
of $79.0 million in 2018.
    Percentage impacts on INPV range from slightly negative to slightly 
positive at TSL 2. DOE projects that in 2019, 92 percent of standard 
and hugger ceiling fan shipments, 96 percent of VSD ceiling fan 
shipments, 54 percent of HSSD ceiling fan shipments, and 96 percent of 
large-diameter fan shipments would meet or exceed the efficiency levels 
required at TSL 2.
    DOE expects conversion costs to be small compared to the industry 
value because most of the ceiling fan shipments, on a total volume 
basis, already meet or exceed the efficiency levels analyzed at TSL 2. 
DOE expects that product conversion costs will rise from approximately 
$43 thousand at TSL 1 to approximately $77 thousand at TSL 2 for 
ceiling fan redesign and testing. Capital conversion costs will 
increase from $0.1 million at TSL 1 to $0.2 million at TSL 2. Increased 
capital conversion costs at TSL 2 are driven by investments in tooling 
needed to further optimize ceiling fans above aggregated market minimum 
efficiencies for standard and hugger ceiling fan product classes to 
meet efficiency levels required at TSL 2.
    At TSL 2, the shipment-weighted average MPC increases by 
approximately 0.8 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup 
scenario, manufacturers are not able to recover their $0.3 million in 
conversion costs through the slight increase in MPC over the course of 
the analysis period causing a slightly negative change in INPV at TSL 2 
under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup, the 0.8 percent 
MPC increase for all ceiling fans results in a very slight reduction in 
manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.369 at TSL 2. This slight reduction in manufacturer 
markup and $0.3 million in conversion costs incurred by manufacturers 
cause a slightly negative change in INPV at TSL 2 under the 
preservation of operating profit scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup across the entire analysis period slightly increases from 1.37 
in the no-standards case to 1.371 at TSL 2. This increase in 
manufacturer markup combined with the slight increase in MPC outweighs 
the $0.3 million in conversion costs that manufacturers incur, causing 
a slightly positive change in INPV at TSL 2 under the two-tiered markup 
scenario.
    TSL 3 sets the efficiency level at EL 2 for VSD and large-diameter 
ceiling fans and EL 3 for standard, hugger, and HSSD ceiling fans. At 
TSL 3, DOE estimates impacts on INPV range from -$161.1 million to -
$12.4 million, or decreases in INPV of -12.3 percent to -1.0 percent. 
At this level, industry free cash flow is estimated to decrease by 
approximately 1.8 percent to $78.3 million, compared to the no-
standards case value of $79.0 million in 2018.
    Percentage impacts on INPV range from moderately negative to 
slightly negative at TSL 3. DOE projects that in 2019, 64 percent of 
standard and hugger ceiling fan shipments, 96 percent of VSD ceiling 
fan shipments, 9 percent of HSSD ceiling fan shipments, and 91 percent 
of large-diameter fan shipments would meet or exceed the efficiency 
levels analyzed at TSL 3.
    DOE expects that manufacturers will incur increased total 
conversion costs of $3.4 million at TSL 3. DOE expects that product 
conversion costs will rise from $0.1 million at TSL 2 to $0.8 million 
at TSL 3 for ceiling fan redesign and testing. Capital conversion costs 
will increase from $0.2 million at TSL 2 to $2.6 million at TSL 3. 
Increased capital conversion costs at TSL 3 are driven by investments 
in tooling needed to produce ceiling fans with larger direct

[[Page 1738]]

drive motors in the standard, hugger, and VSD ceiling fan product 
classes as well as accommodating air foil blades in the HSSD and large-
diameter fan product classes.
    At TSL 3, the shipment-weighted average MPC increases by 
approximately 5.8 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup 
scenario, manufacturers are not able to recover their $3.4 million in 
conversion costs through the increase in MPC over the course of the 
analysis period causing a slightly negative change in INPV at TSL 3 
under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup, the 5.8 percent 
MPC increase for all ceiling fans results in a reduction in 
manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.362 at TSL 3. This reduction in manufacturer markup 
and $3.4 million in conversion costs incurred by manufacturers cause a 
slightly negative change in INPV at TSL 3 under the preservation of 
operating profit scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup across the entire analysis period decreases from 1.30 in the no-
standards case to 1.354 at TSL 3. This decrease in manufacturer markup 
and the $3.4 million in conversion costs incurred by manufacturers 
outweighs the increase in MPC, causing a moderately negative change in 
INPV at TSL 3 under the two-tiered markup scenario.
    TSL 4 sets the efficiency level at EL 2 for VSD ceiling fans, EL 3 
for standard, hugger, and large-diameter ceiling fans, and EL 4 for 
HSSD ceiling fans. At TSL 4, DOE estimates impacts on INPV range from -
$166.3 million to -$15.5 million, or decreases in INPV of -12.7 percent 
to -1.2 percent. At this level, industry free cash flow is estimated to 
decrease by approximately 2.3 percent to $77.9 million, compared to the 
no-standards case value of $79.0 million in 2018.
    Percentage impacts on INPV range from moderately negative to 
slightly negative at TSL 4. DOE projects that in 2019, 64 percent of 
standard and hugger ceiling fan shipments, 96 percent of VSD ceiling 
fan shipments, 6 percent of HSSD shipments, and 17 percent of large-
diameter ceiling fan shipments would meet or exceed efficiency levels 
analyzed at TSL 4.
    TSL 4 is the first TSL that requires DC motors be used to meet 
required efficiency levels in the large-diameter fan and HSSD ceiling 
fan product classes. DOE expects total conversion costs to increase 
from $3.4 million at TSL 3 to $4.5 million at TSL 4. DOE estimates 
manufacturers will incur product conversion costs of $1.1 million to 
redesign and test ceiling fans that do not meet required efficiency 
levels at TSL 4. DOE estimates that manufacturers will incur $3.4 
million in capital conversion costs due to retooling costs associated 
with accommodating larger direct drive motors in the standard, hugger 
and VSD product classes and DC motors in the HSSD and large-diameter 
fan product classes.
    At TSL 4, the shipment-weighted average MPC increases by 
approximately 7.0 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup 
scenario, manufacturers are not able to recover their $4.5 million in 
conversion costs through the increase in MPC over the course of the 
analysis period causing a slightly negative change in INPV at TSL 4 
under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup, the 7.0 percent 
MPC increase for all ceiling fans results in a reduction in 
manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.360 at TSL 4. This reduction in manufacturer markup 
and $4.5 million in conversion costs incurred by manufacturers causes a 
slightly negative change in INPV at TSL 4 under the preservation of 
operating profit scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup across the entire analysis period decreases from 1.370 in the 
no-standards case to 1.351 at TSL 4. This decrease in manufacturer 
markup and $4.5 million in conversion costs that manufacturers incur 
outweigh the increase in MPC, causing a moderately negative change in 
INPV at TSL 4 under the two-tiered markup scenario.
    TSL 5 sets the efficiency level at EL 3 for hugger, VSD, and large-
diameter ceiling fans and EL 4 for standard and HSSD ceiling fans. At 
TSL 5, DOE estimates impacts on INPV range from -$249.5 million to -
$55.4 million, or decreases in INPV of -19.1 percent to -4.2 percent. 
At this level, industry free cash flow is estimated to decrease by 
approximately 4.9 percent to $75.9 million, compared to the no-
standards case value of $79.0 million in 2018.
    Percentage impacts on INPV range from significantly negative to 
slightly negative at TSL 5. DOE projects that in 2019, 9 percent of 
standard ceiling fan shipments, 64 percent of hugger ceiling fan 
shipments, no VSD ceiling fan shipments, 6 percent of HSSD shipments, 
and 17 percent of large-diameter fan shipments would meet or exceed the 
efficiency levels analyzed at TSL 5.
    DOE expects total conversion costs to increase from $4.5 million at 
TSL 4 to $9.4 million at TSL 5. DOE estimates manufacturers will incur 
product conversion costs of $2.0 million to redesign and test ceiling 
fans that do not meet required efficiency levels at TSL 5. DOE 
estimates that manufacturers will incur $7.3 million in capital 
conversion costs due to retooling costs associated with accommodating 
larger direct drive motors in the hugger ceiling fan product class and 
DC motors in the standard, VSD, HSSD, and large-diameter fan product 
classes.
    At TSL 5, the shipment-weighted average MPC increases by 
approximately 23.4 percent for all ceiling fans relative to the no-
standards case MPC in 2019. In the preservation of gross margin markup 
scenario, manufacturers are not able to recover their $9.4 million in 
conversion costs through the increase in MPC over the course of the 
analysis period causing a slightly negative change in INPV at TSL 5 
under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, the 
23.4 percent MPC increase for all ceiling fans results in a reduction 
in manufacturer markup after the compliance year, from 1.37 in the no-
standards case to 1.346 at TSL 5. This reduction in manufacturer markup 
and $9.4 million in conversion costs incurred by manufacturers causes a 
significantly negative change in INPV at TSL 5 under the preservation 
of operating profit markup scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup across the entire analysis period decreases from 1.37 in the no-
standards case to 1.351 at TSL 5. This decrease in manufacturer markup 
and $9.4 million in conversion costs that manufacturers incur outweigh 
the increase in MPC, causing a moderately negative in INPV at TSL 5 
under the two-tiered markup scenario.
    TSL 6 represents max-tech for all ceiling fan product classes. This 
TSL sets the efficiency level at EL 3 for VSD ceiling fans and EL 4 for 
standard, hugger, HSSD, and large-diameter ceiling fans. At TSL 6, DOE 
estimates impacts on INPV range from -$383.4 million to -$78.9 million, 
or decreases in INPV of -29.3 percent to -6.0 percent. At this level, 
industry free cash flow is estimated to decrease by approximately 5.7 
percent to $75.2 million, compared to the no-standards case value of 
$79.0 million in 2018.

[[Page 1739]]

    Percentage impacts on INPV range from significantly negative to 
slightly negative at TSL 6. DOE projects that in 2019, 9 percent of 
standard and hugger ceiling fan shipments, no VSD ceiling fan 
shipments, 6 percent of HSSD shipments, and 17 percent of large-
diameter fan shipments would meet the efficiency levels analyzed at TSL 
6.
    DOE expects total conversion costs to increase from $9.4 million at 
TSL 5 to $11.0 million at TSL 6. DOE estimates manufacturers will incur 
product conversion costs of $2.4 million to redesign and test the 
majority of covered ceiling fans currently offered on the market. DOE 
estimates that manufacturers will incur $8.6 million in capital 
conversion costs due to retooling costs associated with accommodating 
DC motors in all of the ceiling fan product classes.
    At TSL 6, the shipment-weighted average MPC increases by 
approximately 36.9 percent for all ceiling fans relative to the no-
standards case MPC in 2016. In the preservation of gross margin markup 
scenario, manufacturers are not able to recover their $11.0 million in 
conversion costs through the increase in MPC over the course of the 
analysis period causing a slightly negative change in INPV at TSL 6 
under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup, the 36.9 percent 
MPC increase for all ceiling fans results in a reduction in 
manufacturer markup after the compliance years, from 1.37 in the no-
standards case to 1.336 at TSL 6. This reduction in manufacturer markup 
and $11.0 million in conversion costs incurred by manufacturers causes 
a significantly negative change in INPV at TSL 6 under the preservation 
of operating profit markup scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup across the entire analysis period decreases from 1.37 in the no-
standards case to 1.351 at TSL 6. This decrease in manufacturer markup 
and $11.0 million in conversion costs that manufacturers incur outweigh 
the increase in MPC, causing a moderately negative change in INPV at 
TSL 6 under the two-tiered markup scenario.
b. Impacts on Employment
    DOE quantitatively assessed the impacts of potential amended energy 
conservation standards on direct employment in the ceiling fan 
industry. DOE used the GRIM to estimate the domestic labor expenditures 
and number of domestic production workers in the no-standards case and 
at each TSL from 2015 to 2048. DOE used statistical data from the U.S. 
Census Bureau's 2011 Annual Survey of Manufacturers, 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 involved with the 
manufacturer 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.
    In the GRIM, DOE used the labor content of ceiling fans and the 
MPCs to estimate the annual labor expenditures in the industry. DOE 
used Census data and interviews with manufacturers to estimate the 
portion of the total labor expenditures that is attributable to 
domestic labor.
    The production worker estimates in this section only cover workers 
up to the line-supervisor level directly involved in fabricating and 
assembling a product within a manufacturing facility. Workers 
performing services that are closely associated with production 
operations, such as material handing with a forklift, are also included 
as production labor. DOE's estimates account for production workers who 
manufacture only the specific products covered by this rulemaking.
    The employment impacts shown in Table V-21 represent the potential 
production employment that could result following amended energy 
conservation standards. The upper bound of the results estimates the 
maximum change in the number of production workers that could occur 
after compliance with amended energy conservation standards when 
assuming that manufacturers continue to produce the same scope of 
covered products in the same production facilities. It also assumes 
that domestic production does not shift to lower labor-cost countries. 
Because there is a real risk of manufacturers evaluating sourcing 
decisions in response to amended energy conservation standards, the 
lower bound of the employment results includes the estimated total 
number of U.S. production workers in the industry who could lose their 
jobs if some or all existing production were moved outside of the 
United States. While the results present a range of employment impacts 
following 2019, the sections below also include qualitative discussions 
of the likelihood of negative employment impacts at the various TSLs. 
Finally, the employment impacts shown are independent of the employment 
impacts from the broader U.S. economy, documented in chapter 17 of this 
NOPR TSD.
    DOE estimates that in the absence of amended energy conservation 
standards, there would be approximately 39 domestic production workers 
involved in manufacturing ceiling fans in 2019. The table below shows 
the range of the impacts of potential amended energy conservation 
standards on U.S. production workers in the ceiling fan industry.

                          Table V-21--Potential Changes in the Total Number of Domestic Ceiling Fan Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard level
                                                             No-standards  -----------------------------------------------------------------------------
                                                                 case            1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2019                    39            39           39           38           38           36           34
 (without changes in production locations)...............
Potential Changes in Domestic Production Workers in        ...............       0-(39)       0-(39)     (1)-(39)     (1)-(39)     (3)-(39)     (5)-(39)
 2019\*\.................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

    At the upper end of the employment impact range, all TSLs show 
either no change in domestic employment or slight negative impacts. 
These slightly negative impacts are driven by the reduction in total 
ceiling fan shipments at higher TSLs. DOE included price elasticity as 
part of the shipments analysis, so as the average price of ceiling fans 
increase due to amended standards, fewer ceiling fans would be sold. 
Therefore, the amount of labor

[[Page 1740]]

associated with these fewer shipments also decreases. It is important 
to note that while the average total MPC increases for more efficient 
ceiling fans, the increase in MPC is almost entirely attributed to the 
increase in the material costs used to produce more efficient fans. The 
amount of labor associated with more efficient ceiling fans remains 
constant even as the total MPC of a ceiling fan increases at higher 
ELs.
    At the lower end of the range, DOE models a situation where all 
domestic employment associated with ceiling fan production moves abroad 
as a result of energy conservation standards. In this situation, the 
handful of manufacturers who currently purchase various ceiling fan 
components from original equipment manufacturers abroad and assemble 
ceiling fans domestically may instead purchase fully assembled ceiling 
fans, and the handful of manufacturers who currently produce ceiling 
fans domestically may move all ceiling fan production abroad. DOE does 
not anticipate either of these situations to be probable, because the 
majority of manufacturers that have domestic production produce large 
diameter ceiling fans and the associated shipping costs of those large 
diameter ceiling fans is significant. Therefore, manufacturers would 
incur much higher shipping costs if production or assembly is moved 
abroad. Based on manufacturer feedback, DOE does not expect a 
significant impact on domestic employment at any TSL.
    At TSL 4, the proposed TSL in today's NOPR, DOE concludes, based on 
the shipment analysis, manufacturer interviews, and the potential range 
of result of the direct employment analysis, that manufacturers could 
face a slight negative impact on domestic employment due to a slight 
reduction in overall ceiling fan shipments in 2019. However, DOE does 
not have information upon which to conclude that any ceiling fan 
manufacturers would shift their domestic ceiling fan production abroad 
as a result of the proposed standards.
c. Impacts on Manufacturing Capacity
    Ceiling fan manufacturers stated that they anticipate manufacturing 
capacity constraints if all ceiling fans are required to use DC motors 
to comply with the amended energy conservation standards. DOE learned 
during interviews that manufacturers primarily source motors for 
ceiling fans from either ceiling fan original equipment manufacturers 
or directly from motor manufacturers and then insert them into their 
ceiling fan models. During interviews, manufacturers stated that demand 
for DC motors may outpace supply if DC motors are required for all 
ceiling fans to comply with amended standards. Manufacturers expressed 
concern during interviews that currently only a few ceiling fan 
shipments incorporate DC motors, and there would be major sourcing 
concerns if all ceiling fan were required to use DC motors.
    While the proposed TSL 4 requires HSSD and large-diameter ceiling 
fans to use DC motors to meet efficiency levels, this only accounts for 
approximately 2.5 percent of all ceiling fans. Therefore, DOE does not 
anticipate a manufacturer capacity constraint on the supply of DC 
motors for this small portion of the overall ceiling fan market. DOE 
expects that the motor manufacturers that supply ceiling fan 
manufacturers with DC motors would be able to increase production of DC 
motors in the estimated 3 years from the publication of the final rule 
to the compliance date to meet demand for ceiling fans that require DC 
motors due to amended standards. DOE does not anticipate any 
significant impact on the manufacturing capacity at the proposed 
amended energy conservation standards in this NOPR. See section V.C.1 
for more details on the proposed standard. DOE seeks comment on any 
potential impact on manufacturing capacity at the efficiency levels 
proposed in this NOPR. See issue 23 in section VII.E.
d. Impacts on Subgroups of Manufacturers
    Using average cost assumptions to develop an industry cash-flow 
estimate may not be adequate for assessing differential impacts among 
manufacturer subgroups. Small manufacturers, niche product 
manufacturers, and manufacturers exhibiting cost structures 
substantially different from the industry average could be affected 
disproportionately. DOE identified only one manufacturer subgroup that 
would require a separate analysis in the MIA; small businesses. DOE 
analyzes the impacts on small businesses in a separate analysis in 
section VI.B of this NOPR. DOE did not identify any other adversely 
impacted manufacturer subgroups for ceiling fans for this rulemaking 
based on the results of the industry characterization. DOE seeks 
comment on any other potential manufacturer subgroups that could be 
disproportionally affected by amended energy conservation standards for 
ceiling fans. See issue 24 in section VII.E.
e. 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. 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 
a cumulative regulatory burden analysis as part of its rulemakings for 
ceiling fans.
    DOE identified a number of requirements, in addition to amended 
energy conservation standards for ceiling fans, that ceiling fan 
manufacturers will face for products they manufacture approximately 3 
years prior to and 3 years after the estimated compliance date of these 
amended standards. The following section addresses key related concerns 
that manufacturers raised during interviews regarding cumulative 
regulatory burden.
    Manufacturers raised concerns about existing regulations and 
certifications separate from DOE's energy conservation standards that 
ceiling fan manufacturers must meet. These include California Title 20, 
which has the same energy conservation standards to DOE's existing 
ceiling fan standards, but requires an additional certification, and 
California Air Resources Board Standards limiting the amount of 
formaldehyde in composite wood used to make fan blades, among others.
    DOE discusses these and other requirements in chapter 12 of the 
NOPR TSD, which lists the estimated compliance costs of those 
requirements when available. In considering the cumulative regulatory 
burden, DOE evaluates the timing of regulations that affect the same 
product because the coincident requirements could strain financial 
resources in the same profit center and consequently affect capacity. 
DOE identified the upcoming ceiling fan light kit standards rulemaking 
as a potential source of additional cumulative regulatory burden on 
ceiling fan manufacturers.
    DOE has initiated a rulemaking to evaluate the energy conservation 
standards of ceiling fan light kits by publishing a notice of 
availability for a framework document (78 FR 16443; Mar. 15, 2013) and 
preliminary analysis TSD (79 FR 64712; Oct. 31, 2014), (ceiling fan 
light kit standards rulemaking). The ceiling fan light kit standards 
rulemaking affects the majority of ceiling fan manufacturers and has a 
similar projected compliance

[[Page 1741]]

as the ceiling fan rulemaking. Due to these similar projected 
compliance dates, manufacturers could potentially be required to make 
investments to bring ceiling fan light kits and ceiling fans into 
compliance during the same time period. Additionally, redesigned 
ceiling fan light kits could also require adjustments to ceiling fan 
redesigns separate from those potentially required by the ceiling fan 
rule.
    In addition to the proposed amended energy conservation standards 
on ceiling fans, several other existing and pending federal regulations 
may apply to other products produced by ceiling fan manufacturers. DOE 
acknowledges that each regulation can affect a manufacturer's financial 
operations. Multiple regulations affecting the same manufacturer can 
quickly strain manufacturers' profit and possibly cause them to exit 
particular markets. Table V-22 lists the other DOE energy conservation 
standards that could also affect ceiling fan manufacturers in the 3 
years leading up to and after the estimated compliance date of amended 
energy conservation standards for these products.

   Table V-22--Other DOE Regulations Potentially Affecting Ceiling Fan
                              Manufacturers
------------------------------------------------------------------------
                                                      Estimated industry
           Regulation                Approximate      total  conversion
                                   compliance date         expenses
------------------------------------------------------------------------
Electric Motors.................               2016  $84.6 million
                                                      (2013$).\a\
Ceiling Fan Light Kits..........             * 2019  N/A.[dagger]
Commercial and Industrial Fans..             * 2019  N/A.[dagger]
------------------------------------------------------------------------
* The dates listed are an approximation. The exact dates are pending
  final DOE action.
[dagger] For energy conservation standards for rulemakings awaiting DOE
  final action, DOE does not have a finalized estimated total industry
  conversion cost.
\a\ Estimated industry conversion expenses were published in the TSD for
  the May 2014 electric motors final rule. 79 FR 30933 The TSD for 2014
  electric motors final rule can be found at http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/42.

    DOE did not receive any data on other regulatory costs that affect 
the industry modeled in the cash-flow analysis. To the extent DOE 
receives specific costs associated with other regulations affecting the 
ceiling fan profit centers modeled in the GRIM, DOE will incorporate 
that information, as appropriate, into its cash-flow analysis. DOE 
seeks comment on the compliance costs of any other regulations on 
products that ceiling fan manufacturers also manufacture, especially if 
compliance with those regulations is required 3 years before or after 
the estimated compliance date of this proposed standard. See issue 25 
in section VII.E.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for ceiling fans, DOE compared the energy consumption of those products 
under the no-standards case to their anticipated energy consumption 
under each TSL. The savings are measured over the entire lifetime of 
products purchased in the 30-year period that begins in the year of 
anticipated compliance with amended standards (2019-2048). Table V-23 
presents DOE's projections of the national energy savings for each TSL 
considered for ceiling fans. The savings were calculated using the 
approach described in section IV.H of this notice.

                                    Table V-23--Cumulative National Energy Savings for Ceiling Fans Shipped 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Trial standard level (Quads)
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy..........................................           0.132           0.201           0.531           0.725           1.303           1.724
FFC energy..............................................           0.137           0.210           0.555           0.758           1.362           1.802
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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 9, rather than 30, years of 
product shipments. The choice of a 9-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 ceiling fans. Thus, such results 
are presented for informational purposes only and are not indicative of 
any change in DOE's analytical methodology. The NES sensitivity 
analysis results based on a 9-year analytical period are presented in 
Table V-24. The impacts are counted over the lifetime of ceiling fans 
purchased in 2019-2027.
---------------------------------------------------------------------------

    \72\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: 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.

[[Page 1742]]



                                Table V-24--Cumulative National Energy Savings for Ceiling Fans; Nine Years of Shipments
                                                                       [2019-2027]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Trial standard level (Quads)
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy..........................................           0.041           0.061           0.152           0.203           0.401           0.544
FFC energy..............................................           0.042           0.064           0.159           0.212           0.419           0.569
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. 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 ceiling 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.
---------------------------------------------------------------------------

    \74\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis,'' section E, (Sept. 17, 2003) (Available 
at:http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------

    Table V-25 shows the consumer NPV results with impacts counted over 
the lifetime of products purchased in 2019-2048.

                           Table V-25--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans Shipped in 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level (Billion 2014$)
                      Discount rate                      -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent...............................................           0.952           1.333           1.944           2.760           4.466           5.251
7 percent...............................................           0.400           0.539           0.522           0.813           1.094           1.051
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V-26. The impacts are counted over the 
lifetime of products purchased in 2019-2027. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

                         Table V-26--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans; Nine Years of Shipments
                                                                       [2019-2027]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level (Billion 2014$)
                      Discount rate                      -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent...............................................           0.360           0.491           0.561           0.773           0.947           0.834
7 percent...............................................           0.203           0.268           0.180           0.280           0.138          -0.126
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a default trend to estimate 
the change in price for ceiling fans over the analysis period (see 
section IV.G of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with no price decline. The 
results of these alternative cases are presented in appendix 10C of the 
NOPR TSD.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for ceiling fans to 
reduce energy bills for consumers of those products, with the resulting 
net savings being redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. As described in section IV.N of this document, 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. 
There are uncertainties involved in projecting employment impacts, 
especially changes in the later years of the analysis. Therefore, DOE 
generated results for near-term timeframes (2019-2024), where these 
uncertainties are reduced.
    The results suggest that the proposed standards are likely to have 
a 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 NOPR TSD presents detailed results 
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    DOE has tentatively concluded that the standards proposed in this 
NOPR would not reduce the utility or performance of the ceiling fans 
under consideration in this rulemaking. During manufacturer interviews, 
manufacturers stated that energy conservation standards that require 
the use of DC motors in ceiling fans would limit the overall utility of 
ceiling fans for residential consumers, as well as increase maintenance 
costs. DOE is proposing standards that manufacturers indicated they 
would likely meet using a DC motor for the HSSD and large-diameter 
ceiling fan product classes, which represent less than three percent of 
expected covered ceiling fan shipments in 2019. Additionally, the

[[Page 1743]]

use of DC motors will not significantly impact consumer utility for 
HSSD and large-diameter ceiling fans because the consumers using these 
products have significantly different needs for their ceiling fans than 
the needs of consumers using residential ceiling fans that were 
referenced by manufacturers during interviews.
5. Impact of Any Lessening of Competition
    DOE has considered any lessening of competition that is likely to 
result from the proposed standards. The Attorney General determines the 
impact, if any, of any lessening of competition likely to result from a 
proposed standard, and transmits such determination in writing to the 
Secretary, together with an analysis of the nature and extent of such 
impact.
    To assist the Attorney General in making such determination, DOE 
has provided DOJ with copies of this NOPR and the accompanying TSD for 
review. DOE will consider DOJ's comments on the proposed rule in 
determining whether to proceed to a final rule. DOE will publish and 
respond to DOJ's comments in that document. DOE invites comment from 
the public regarding the competitive impacts that are likely to result 
from this proposed rule. See issue 26 in section VII.E. In addition, 
stakeholders may also provide comments separately to DOJ regarding 
these potential impacts. See ADDRESSES section for information to send 
comments to DOJ.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. As a measure of this reduced 
demand, chapter 15 of the NOPR TSD presents the estimated impact on 
generating capacity, relative to the no-standards case, for the TSLs 
that DOE considered in this rulemaking.
    Energy savings from amended standards for ceiling fans are expected 
to yield environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases. Table V-27 provides DOE's estimate of 
cumulative emissions reductions expected 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 NOPR TSD.

                                      Table V-27--Cumulative Emissions Reduction for Ceiling Fans Shipped 2019-2048
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................            7.87           11.99           31.67           43.20           77.91          103.19
SO2 (thousand tons).....................................            4.40            6.71           17.67           24.04           43.61           57.85
NOX (thousand tons).....................................            8.84           13.48           35.64           48.66           87.62          116.00
Hg (tons)...............................................            0.02            0.02            0.07            0.09            0.16            0.22
CH4 (thousand tons).....................................            0.63            0.97            2.55            3.47            6.29            8.34
N2O (thousand tons).....................................            0.09            0.14            0.36            0.49            0.89            1.18
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................            0.45            0.68            1.81            2.48            4.45            5.88
SO2 (thousand tons).....................................            0.08            0.13            0.34            0.46            0.82            1.09
NOX (thousand tons).....................................            6.43            9.81           25.99           35.51           63.72           84.28
Hg (tons)...............................................            0.00            0.00            0.00            0.00            0.00            0.00
CH4 (thousand tons).....................................           35.52           54.17          143.56          196.12          351.90          465.40
N2O (thousand tons).....................................            0.00            0.01            0.02            0.02            0.04            0.05
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................            8.31           12.67           33.48           45.68           82.36          109.08
SO2 (thousand tons).....................................            4.49            6.84           18.01           24.50           44.43           58.94
NOX (thousand tons).....................................           15.28           23.29           61.63           84.17          151.34          200.27
Hg (tons)...............................................            0.02            0.03            0.07            0.09            0.16            0.22
CH4 (thousand tons).....................................           36.15           55.14          146.11          199.59          358.18          473.74
CH4 (thousand tons CO2eq) *.............................         1012.20         1543.84         4091.09         5588.54        10029.17        13264.68
N2O (thousand tons).....................................            0.09            0.14            0.38            0.51            0.93            1.23
N2O (thousand tons CO2eq) *.............................           24.83           37.83           99.71          135.69          245.85          326.06
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential.

    As part of the analysis for this proposed rule, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
CO2 and NOX that DOE estimated for each of the 
considered TSLs for ceiling fans. As discussed in section IV.L of this 
notice, for CO2, DOE used the most recent values for the SCC 
developed by an interagency process. The four sets of SCC values for 
CO2 emissions reductions in 2015 resulting from that process 
(expressed in 2014$) are represented by $12.2/metric ton (the average 
value from a distribution that uses a 5-percent discount rate), $40.0/
metric ton (the average value from a distribution that uses a 3-percent 
discount rate), $62.3/metric ton (the average value from a distribution 
that uses a 2.5-percent discount rate), and $117/metric ton (the 95th-
percentile value from a distribution that uses a 3-percent discount 
rate). The values for later years are higher due to increasing damages 
(public health, economic and

[[Page 1744]]

environmental) as the projected magnitude of climate change increases.
    Table V-28 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values; these results are presented in chapter 
14 of the NOPR TSD.

   Table V-28--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2019-2048
                                                 (Million 2014$)
----------------------------------------------------------------------------------------------------------------
                                                                          SCC Case *
                                             -------------------------------------------------------------------
                     TSL                                                                           3% discount
                                                5% discount      3% discount     2.5% discount      rate, 95th
                                               rate, average    rate, average    rate, average      percentile
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...........................................            53.88           247.99           394.24           755.34
2...........................................            81.92           377.43           600.14          1149.69
3...........................................           214.57           992.25          1579.02          3023.52
4...........................................           291.62          1350.73          2150.25          4116.32
5...........................................           533.47          2455.82          3904.26          7480.15
6...........................................           709.41          3260.18          5181.11          9928.66
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...........................................             3.02            14.01            22.30            42.70
2...........................................             4.59            21.33            33.98            65.04
3...........................................            12.07            56.27            89.70           171.61
4...........................................            16.43            76.71           122.32           233.96
5...........................................            29.89           138.74           220.94           422.94
6...........................................            39.69           183.90           292.76           560.54
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...........................................            56.90           262.00           416.54           798.03
2...........................................            86.52           398.76           634.12          1214.73
3...........................................           226.64          1048.53          1668.72          3195.13
4...........................................           308.06          1427.44          2272.57          4350.28
5...........................................           563.36          2594.56          4125.20          7903.09
6...........................................           749.10          3444.09          5473.88         10489.20
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
  per metric ton (2014$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other 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 on 
reduced CO2 emissions in this rulemaking 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 uncertainty involved 
with this particular issue, DOE has included in this proposed rule the 
most recent values and analyses resulting from the interagency review 
process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for ceiling fans. The 
dollar-per-ton values that DOE used are discussed in section IV.L of 
this document. Table V-29 presents the cumulative present value ranges 
for NOX emissions for each TSL calculated using 7-percent 
and 3-percent discount rates. This table presents values that use the 
low dollar-per-ton values. Results that reflect the range of 
NOX dollar-per-ton values are presented in Table V-31.

  Table V-29--Estimates of Present Value of NOX Emissions Reduction for
                     Ceiling Fans Shipped 2019-2048
                             (Million 2014$)
------------------------------------------------------------------------
                                                        3%         7%
                        TSL                          discount   discount
                                                       rate       rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.................................................      28.60      11.67
2.................................................      43.48      17.67
3.................................................     113.87      45.66
4.................................................     154.82      61.76
5.................................................     283.19     115.39
6.................................................     376.58     154.36
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.................................................      20.48       8.15
2.................................................      31.15      12.36
3.................................................      81.80      32.02
4.................................................     111.29      43.34
5.................................................     202.78      80.64
6.................................................     269.34     107.74
------------------------------------------------------------------------

[[Page 1745]]

 
                           Total FFC Emissions
------------------------------------------------------------------------
1.................................................      49.08      19.82
2.................................................      74.63      30.02
3.................................................     195.67      77.68
4.................................................     266.11     105.10
5.................................................     485.97     196.04
6.................................................     645.92     262.11
------------------------------------------------------------------------

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)(VII)) No 
other factors were considered in this analysis.
8. Summary of National Economic Impacts
    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-
30 presents the NPV values that result from adding the estimates of the 
potential economic benefits resulting from reduced CO2 and 
NOX emissions in each of four valuation scenarios to the NPV 
of consumer savings calculated for each TSL for ceiling fans considered 
in this rulemaking, at both a 7-percent and 3-percent discount rate. 
The CO2 values used in the columns of each table correspond 
to the four sets of SCC values discussed above.

        Table V-30--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: (Billion 2014$)
                                                                 ---------------------------------------------------------------------------------------
                               TSL                                   SCC case $12.2/       SCC case $40.0/       SCC case $62.3/    SCC case $117/metric
                                                                    metric ton and 3%     metric ton and 3%     metric ton and 3%    ton and 3% low NOX
                                                                     low NOX values        low NOX values        low NOX values            values
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................                   1.1                   1.3                   1.4                   1.8
2...............................................................                   1.5                   1.8                   2.0                   2.6
3...............................................................                   2.4                   3.2                   3.8                   5.3
4...............................................................                   3.3                   4.5                   5.3                   7.4
5...............................................................                   5.5                   7.5                   9.1                  12.9
6...............................................................                   6.6                   9.3                  11.4                  16.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Consumer NPV at 7% discount rate added with: (Billion 2014$)
                                                                 ---------------------------------------------------------------------------------------
                               TSL                                   SCC case $12.2/       SCC case $40.0/       SCC case $62.3/    SCC case $117/metric
                                                                    metric ton and 7%    metric ton and % 7%    metric ton and 7%    ton and 7% low NOX
                                                                     low NOX values        low NOX values        low NOX values            values
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................                   0.5                   0.7                   0.8                   1.2
2...............................................................                   0.7                   1.0                   1.2                   1.8
3...............................................................                   0.8                   1.6                   2.3                   3.8
4...............................................................                   1.2                   2.3                   3.2                   5.3
5...............................................................                   1.9                   3.9                   5.4                   9.2
6...............................................................                   2.1                   4.8                   6.8                  11.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Although adding the value of consumer savings to the values of 
emission reductions informs DOE's evaluation, two issues should be 
considered. First, the national operating cost savings are domestic 
U.S. 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 different time frames for 
analysis. The national operating cost savings is measured for the 
lifetime of products shipped from 2019 to 2048. Because CO2 
emissions have a very long residence time in the atmosphere,\75\ the 
SCC values in future years reflect future climate-related impacts 
resulting from the emission of CO2 that continue beyond 
2100.
---------------------------------------------------------------------------

    \75\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of 
fossil-fuel particulate black carbon and organic matter, possibly 
the most effective method of slowing global warming,' '' J. Geophys. 
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------

C. Conclusion

    When considering proposed standards, the new or amended energy 
conservation standards that DOE adopts for any type (or class) of 
covered product must 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 this NOPR, DOE considered the impacts of amended standards for 
ceiling fans 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 as DOE discusses the benefits and/or burdens of 
each TSL, tables in this section present a summary of the results of 
DOE's quantitative

[[Page 1746]]

analysis for each TSL. 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.
    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, between 
renters and owners, or builders and purchasers). Having less than 
perfect foresight and a high degree of uncertainty about the future, 
consumers may trade off these types of investments at a higher than 
expected rate between current consumption and uncertain future energy 
cost savings.
    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 the 
purchase of a product in the standards case, this decreases sales for 
product manufacturers, and the impact on manufacturers attributed to 
lost revenue 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 regulatory option decreases the number of products 
purchased by consumers, this decreases the potential energy savings 
from an energy conservation standard. DOE provides estimates of 
shipments and changes in the volume of product purchases in chapter 9 
of the NOPR TSD. However, DOE's current analysis does not explicitly 
control for heterogeneity in consumer preferences, preferences across 
subcategories of products or specific features, or consumer price 
sensitivity variation according to household income.\76\
---------------------------------------------------------------------------

    \76\ 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 energy conservation 
standards, and potential enhancements to the methodology by which these 
impacts are defined and estimated in the regulatory process.\77\ 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 in future rulemakings.
---------------------------------------------------------------------------

    \77\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory (2010) (Available online at: www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf).
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Ceiling Fan Standards
    Table V-31 and Table V-32 summarize the quantitative impacts 
estimated for each TSL for ceiling fans. The national impacts are 
measured over the lifetime of ceiling fans purchased in the 30-year 
period that begins in the anticipated year of compliance with amended 
standards (2019-2048). The energy savings, emissions reductions, and 
value of emissions reductions refer to full-fuel-cycle results. The 
efficiency levels contained in each TSL are described in section V.A of 
this notice.

                                                        Table V-31--Summary of Analytical Results for Ceiling Fans TSLs: National Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Category                        TSL 1                      TSL 2                      TSL 3                      TSL 4                      TSL 5                     TSL 6
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Cumulative FFC National Energy Savings
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
quads...........................  0.137....................  0.210....................  0.555....................  0.758....................  1.362...................  1.802
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       NPV of Consumer Costs and Benefits (2014$ billion)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate................  0.952....................  1.333....................  1.944....................  2.760....................  4.466...................  5.251
7% discount rate................  0.400....................  0.539....................  0.522....................  0.813....................  1.094...................  1.051
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Cumulative FFC Emissions Reduction ( Total FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 million metric tons.........  8.31.....................  12.67....................  33.48....................  45.68....................  82.36...................  109.08
SO2 thousand tons...............  4.49.....................  6.84.....................  18.01....................  24.50....................  44.43...................  58.94
NOX thousand tons...............  15.28....................  23.29....................  61.63....................  84.17....................  151.34..................  200.27
Hg tons.........................  0.02.....................  0.03.....................  0.07.....................  0.09.....................  0.16....................  0.22
CH4 thousand tons...............  36.15....................  55.14....................  146.11...................  199.59...................  358.18..................  473.74
CH4 thousand tons CO2eq *.......  1012.20..................  1543.84..................  4091.09..................  5588.54..................  10029.17................  13264.68
N2O thousand tons...............  0.09.....................  0.14.....................  0.38.....................  0.51.....................  0.93....................  1.23
N2O thousand tons CO2eq *.......  24.83....................  37.83....................  99.71....................  135.69...................  245.85..................  326.06
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Value of Emissions Reduction (Total FFC Emissions)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 2014$ billion **............  0.057 to 0.798...........  0.087 to 1.215...........  0.227 to 3.195...........  0.308 to 4.350...........  0.563 to 7.903..........  0.749 to 10.489

[[Page 1747]]

 
NOX--3% discount rate 2014$       49.1 to 108.9............  74.6 to 165.6............  195.7 to 433.9...........  266.1 to 590.0...........  486.0 to 1078.7.........  645.9 to 1434.2
 million.
NOX--7% discount rate 2014$       19.8 to 44.2.............  30.0 to 67.0.............  77.7 to 173.4............  105.1 to 234.6...........  196.0 to 437.5..........  262.1 to 584.9
 million.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* 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 estimates of the global benefit of reduced CO2 emissions.


                           Table V-32--Summary of Analytical Results for Ceiling Fans TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Category                         TSL 1 *           TSL 2 *           TSL 3 *           TSL 4 *           TSL 5 *           TSL 6 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ million) (No-Standards         1,305-1,311       1,300-1,315       1,148-1,296       1,142-1,293       1,059-1,253         925-1,230
 Case INPV = 1,309).........................
Industry NPV................................         (3.5)-2.5         (9.1)-6.6    (161.1)-(12.4)    (166.3)-(15.5)    (249.5)-(55.4)    (383.4)-(78.9)
$2014 million change........................
Industry NPV................................         (0.3)-0.2         (0.7)-0.5      (12.3)-(1.0)      (12.7)-(1.2)      (19.1)-(4.2)      (29.3)-(6.0)
% change....................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Average LCC Savings 2014$:
    Standard................................             48.62             36.38              8.47              8.47            (0.44)            (0.44)
    Hugger..................................             41.66             30.20              5.59              5.59              5.59            (5.27)
    VSD.....................................             16.47             16.47              3.01              3.01           (10.42)           (10.42)
    HSSD....................................             21.56             21.56           (15.26)             27.63             27.63             27.63
    Large-Diameter..........................            235.01            235.01            159.69             27.26             27.26           (63.10)
Consumer Simple PBP **years:
    Standard................................                 -                 -               1.5               1.5               4.0               4.0
    Hugger..................................                 -                 -               1.6               1.6               1.6               4.3
    VSD.....................................                 -                 -               7.7               7.7               9.8               9.8
    HSSD....................................                 -                 -               8.0               5.2               5.2               5.2
    Large-Diameter..........................                 -                 -               2.7               4.4               4.4               5.8
% of Consumers that Experience Net Cost:
    Standard................................              0.00              0.00                20                20                62                62
    Hugger..................................              0.00              0.00                22                22                22                66
    VSD.....................................              0.00              0.00                 2                 2                71                71
    HSSD....................................              0.00              0.00                71                33                33                33
    Large-Diameter..........................              0.00              0.00                 2                35                35                49
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values.
** Simple PBP results are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the baseline
  product.

    DOE first considered TSL 6, which represents the max-tech 
efficiency levels. TSL 6 would save 1.802 quads of energy, an amount 
DOE considers significant. Under TSL 6, the NPV of consumer benefit 
would be $1.051 billion using a discount rate of 7 percent, and $5.251 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 6 are 109.08 Mt of 
CO2, 58.94 thousand tons of SO2, 200.27 thousand 
tons of NOX, 0.22 ton of Hg, 473.74 thousand tons of 
CH4, and 1.23 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 6 
ranges from $0.749 billion to $10.489 billion.
    At TSL 6, the average LCC impact is a savings of ($10.42) for VSD 
ceiling fans, ($5.27) for hugger ceiling fans, ($0.44) for standard 
ceiling fans, $27.63 for HSSD ceiling fans, and ($63.10) for large-
diameter ceiling fans. The simple payback period is 9.8 years for VSD 
ceiling fans, 4.3 years for hugger ceiling fans, 4.0 years for standard 
ceiling fans, 5.2 years for HSSD ceiling fans, and 5.8 years for large-
diameter ceiling fans. The fraction of consumers experiencing a net LCC 
cost is 71 percent for VSD ceiling fans, 66 percent for hugger ceiling 
fans, 62 percent for standard ceiling fans, 33 percent for HSSD ceiling 
fans, and 49 percent for large-diameter ceiling fans.
    At TSL 6, the projected change in INPV ranges from a decrease of 
$383.4 million to a decrease of $78.9 million, which represent 
decreases of 29.3 percent and 6.0 percent, respectively.
    At TSL 6, the corresponding efficiency levels for all product 
classes are the max-tech efficiency levels. Specifically for the VSD, 
hugger, standard and large-diameter ceiling fan product classes, the 
average LCC savings in 2014$ for all consumers, and affected consumers 
relative to no standards case is negative. Additionally, the percentage 
of consumers that experience net cost for the VSD, hugger and standard 
ceiling fan product classes at max-tech efficiencies are greater than 
60 percent.

[[Page 1748]]

    The Secretary tentatively concludes that at TSL 6, the benefits of 
energy savings, positive NPV of consumer benefits, emission reductions, 
and the estimated monetary value of the emissions reductions would be 
outweighed by the negative average LCC savings for the VSD, hugger, 
standard, and large-diameter ceiling fan product classes and the 
potential reduction in manufacturer industry value. Consequently, the 
Secretary has tentatively concluded that TSL 6 is not economically 
justified.
    DOE then considered TSL 5, which corresponds to the maximum NPV at 
a 7 percent discount rate, which would save 1.362 quads of energy, an 
amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be $1.094 billion using a discount rate of 7 percent, and 
$4.466 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 82.36 Mt of 
CO2, 44.43 thousand tons of SO2, 151.34 thousand 
tons of NOX, 0.16 ton of Hg, 358.18 thousand tons of 
CH4, and 0.93 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 5 
ranges from $0.563 billion to $7.903 billion.
    At TSL 5, the average LCC impact is a savings of ($10.42) for VSD 
ceiling fans, $5.59 for hugger ceiling fans, ($0.44) for standard 
ceiling fans, $27.63 for HSSD ceiling fans, and $27.26 for large-
diameter ceiling fans. The simple payback period is 9.8 years for VSD 
ceiling fans, 1.6 years for hugger ceiling fans, 4.0 years for standard 
ceiling fans, 5.2 years for HSSD ceiling fans, and 4.4 years for large-
diameter ceiling fans. The fraction of consumers experiencing a net LCC 
cost is 71 percent for VSD ceiling fans, 22 percent for hugger ceiling 
fans, 62 percent for standard ceiling fans, 33 percent for HSSD ceiling 
fans, and 35 percent for large-diameter ceiling fans.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$249.5 million to a decrease of $55.4 million, which represent 
decreases of 19.1 percent and 4.2 percent, respectively.
    For TSL 5, the efficiency levels for each product class correspond 
to the following: max-tech efficiency levels for the VSD, standard and 
HSSD ceiling fan product classes, and EL 3 for hugger and large-
diameter ceiling fan product classes. Therefore, for the VSD and 
standard ceiling fan product classes, the average LCC savings in 2014$ 
for all consumers and affected consumers relative to no standards case 
is negative. Additionally, the percentage of consumers that experience 
net cost for these product classes at max-tech efficiencies are greater 
than 60 percent. The Secretary tentatively concludes that at TSL 5 for 
ceiling fans, the benefits of energy savings, positive NPV of consumer 
benefits, emission reductions, and the estimated monetary value of the 
emissions reductions would be outweighed by the negative average LCC 
savings for the VSD and standard ceiling fan product classes and the 
potential reduction in manufacturer industry value. Consequently, the 
Secretary has tentatively concluded that TSL 5 is not economically 
justified.
    DOE then considered TSL 4, which corresponds to the highest 
efficiency level for which the LCC and NPV are both positive, which 
would save 0.758 quads of energy, an amount DOE considers significant. 
Under TSL 4, the NPV of consumer benefit would be $0.813 billion using 
a discount rate of 7 percent, and $2.760 billion using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 4 are 45.68 Mt of 
CO2, 24.50 thousand tons of SO2, 84.17 thousand 
tons of NOX, 0.09 ton of Hg, 199.59 thousand tons of 
CH4, and 0.51 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 4 
ranges from $0.308 billion to $4.350 billion.
    At TSL 4, the average LCC impact is a savings of $3.01 for VSD 
ceiling fans, $5.59 for hugger ceiling fans, $8.47 for standard ceiling 
fans, $27.63 for HSSD ceiling fans, and $27.26 for large-diameter 
ceiling fans. The simple payback period is 7.7 years for VSD ceiling 
fans, 1.6 years for hugger ceiling fans, 1.5 years for standard ceiling 
fans, 5.2 years for HSSD ceiling fans, and 4.4 years for large-diameter 
ceiling fans. The fraction of consumers experiencing a net LCC cost is 
2 percent for VSD ceiling fans, 22 percent for hugger ceiling fans, 20 
percent for standard ceiling fans, 33 percent for HSSD ceiling fans, 
and 35 percent for large-diameter ceiling fans.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$166.3 million to a decrease of $15.5 million, which represent 
decreases of 12.7 percent and 1.2 percent, respectively.
    For TSL 4, the efficiency levels for each product class correspond 
to the following: max-tech for HSSD ceiling fan product class, EL 3 for 
the hugger, standard and large-diameter ceiling fan product classes, 
and EL 2 for the very-small diameter ceiling fan product class. At TSL 
4, the average LCC savings in 2014$ are positive for all product 
classes. Also, the fraction of consumers that experience net savings at 
TSL 4 is much greater than the fraction of consumers that experience a 
net cost.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has tentatively concluded that at TSL 4, the 
benefits of energy savings, positive NPV of consumer benefits, emission 
reductions, the estimated monetary value of the emissions reductions, 
and positive average LCC savings would outweigh the negative impacts on 
some consumers and on manufacturers, including the conversion costs 
that could result in a reduction in INPV for manufacturers. 
Accordingly, the Secretary has tentatively concluded that TSL 4 would 
offer the maximum improvement in efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy.
    Therefore, based on the above considerations, DOE proposes to adopt 
the energy conservation standards for ceiling fans at TSL 4. The 
proposed amended energy conservation standards for ceiling fans, which 
are expressed as maximum CFM/W, are shown in Table V-33.

 Table V-33--Proposed Amended Energy Conservation Standards for Ceiling
                                  Fans
------------------------------------------------------------------------
                                                              Maximum
                                                              airflow
                      Product class                         efficiency
                                                          equation (CFM/
                                                               W) *
------------------------------------------------------------------------
Very Small-Diameter (VSD)...............................     3.17D-16.75
Hugger..................................................     0.05D+56.41
Standard................................................     0.30D+60.61
High-Speed Small-Diameter (HSSD)........................      4.22D+0.02
Large Diameter..........................................     1.16D-24.38
------------------------------------------------------------------------
* D is the ceiling fan diameter, in inches.

2. Summary of Annualized Benefits and Costs of the Proposed Standards
    The benefits and costs of the proposed 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 2014$) of the benefits from operating products that meet the 
proposed standards (consisting primarily of operating cost savings from 
using less energy, minus increases in product purchase costs, which is 
another way of representing consumer NPV), and (2) the annualized 
monetary value of the benefits of CO2 and NOX 
emission reductions.\78\
---------------------------------------------------------------------------

    \78\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2015. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 
reductions, for which DOE used case-specific discount rates. Using 
the present value, DOE then calculated the fixed annual payment over 
a 30-year period, starting in the compliance year that yields the 
same present value.

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

[[Page 1749]]

    Table V-34 shows the annualized values for ceiling fans under TSL 
4, expressed in 2014$. 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 average SCC series that has a value of $40.0/t in 2015), 
the estimated cost of the standards proposed in this rule is $140 
million per year in increased equipment costs, while the estimated 
annual benefits are $220 million in reduced equipment operating costs, 
$80 million in CO2 reductions, and $10 million in reduced 
NOX emissions. In this case, the net benefit amounts to $170 
million per year.
    Using a 3-percent discount rate for all benefits and costs and the 
average SCC series that has a value of $40.0/t in 2015, the estimated 
cost of the proposed ceiling fans standards is $136 million per year in 
increased equipment costs, while the estimated annual benefits are $290 
million in reduced operating costs, $80 million in CO2 
reductions, and $15 million in reduced NOX emissions. In 
this case, the net benefit amounts to $248 million per year.

                                Table V-34--Annualized Benefits and Costs of Proposed Standards (TSL 4) for Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2014$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                        Low net benefits estimate  High net benefits estimate
                                                                          Primary estimate *                   *                           *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  220.......................  195.......................  253.
                                    3%..............................  290.......................  255.......................  341.
CO2 Reduction Value ($12.2/t) **..  5%..............................  23........................  21........................  26.
CO2 Reduction Value ($40.0/t) **..  3%..............................  80........................  71........................  90.
CO2 Reduction Value ($62.3/t) **..  2.5%............................  117.......................  105.......................  132.
CO2 Reduction Value ($117/t) **...  3%..............................  243.......................  217.......................  274.
NOX Reduction Value [dagger]......  7%..............................  10........................  9.........................  26.
                                    3%..............................  15........................  13........................  37.
                                   ---------------------------------------------------------------------------------------------------------------------
    Total Benefits                  7% plus CO2 range...............  254 to 473................  225 to 421................  305 to 553.
     [dagger][dagger].
                                    7%..............................  310.......................  275.......................  369.
                                    3% plus CO2 range...............  328 to 547................  289 to 485................  404 to 652.
                                    3%..............................  384.......................  340.......................  467.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  140.......................  177.......................  155.
                                    3%..............................  136.......................  182.......................  152.
                                   ---------------------------------------------------------------------------------------------------------------------
    Total [dagger][dagger]........  7% plus CO2 range...............  114 to 333................  47 to 243.................  150 to 398.
                                    7%..............................  170.......................  98........................  214.
                                    3% plus CO2 range...............  192 to 411................  107 to 303................  251 to 499.
                                    3%..............................  248.......................  157.......................  315.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with ceiling 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 Primary Estimate assumes the Reference case
  electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the
  electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend
  for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the
  same product price decrease for ceiling fans with DC motors as in the Primary Estimate.
** The CO2 values represent global monetized values of the SCC, in 2014$, 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 incorporate an escalation factor.
[dagger] The $/ton values used for NOX are described in section IV.L. DOE estimated the monetized value of NOx emissions reductions using benefit per
  ton estimates from the Regulatory Impact Analysis titled, ``Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for
  Modified and Reconstructed Power Plants,'' published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf.) See section IV.L.2 I.A.2for further discussion. For DOE's Primary Estimate and Low
  Net Benefits Estimate, the agency is presenting a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit
  sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the
  benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the
  ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE
  intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's
  Regulatory Impact Analysis for the Clean Power Plan Final Rule.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
  rate ($40.0/t case). 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 1750]]

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 the proposed standards set forth in this NOPR are 
intended to address are as follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads some consumers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases, the benefits of more-efficient equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of appliances and equipment that are not captured by the 
users of such products. These benefits include externalities related to 
public health, environmental protection, and national energy security 
that are not reflected in energy prices, such as reduced emissions of 
air pollutants and greenhouse gases that impact human health and global 
warming. DOE attempts to quantify some of the external benefits through 
use of social cost of carbon values.
    The Administrator of the Office of Information and Regulatory 
Affairs (OIRA) in the OMB has determined that the proposed regulatory 
action is a significant regulatory action under section (3)(f) of 
Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of 
the Order, DOE has provided to OIRA: (i) The text of the draft 
regulatory action, together with a reasonably detailed description of 
the need for the regulatory action and an explanation of how the 
regulatory action will meet that need; and (ii) An assessment of the 
potential costs and benefits of the regulatory action, including an 
explanation of the manner in which the regulatory action is consistent 
with a statutory mandate. DOE has included these documents in the 
rulemaking record.
    In addition, the Administrator of OIRA has determined that the 
proposed regulatory action is an ``economically'' significant 
regulatory action under section (3)(f)(1) of Executive Order 12866. 
Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has 
provided to OIRA an assessment, including the underlying analysis, of 
benefits and costs anticipated from the regulatory action, together 
with, to the extent feasible, a quantification of those costs; and an 
assessment, including the underlying analysis, of costs and benefits of 
potentially effective and reasonably feasible alternatives to the 
planned regulation, and an explanation why the planned regulatory 
action is preferable to the identified potential alternatives. These 
assessments 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, OIRA 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 this NOPR 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

1. Description on Estimated Number of Small Entities Regulated
    For manufacturers of ceiling fans, the 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. See 13 CFR part 121. The 
size standards are listed by North American Industry Classification 
System (NAICS) code and industry description available at: https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Ceiling 
fan manufacturing is classified under NAICS code 335210, ``Small 
Electrical Appliance 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 businesses 
that sell ceiling fans covered by this rulemaking, DOE conducted a 
market survey using publicly available information. DOE first attempted 
to identify all potential ceiling fan manufacturers by researching 
industry trade associations (e.g., ALA \79\), information from previous 
rulemakings, individual company Web sites, and SBA's database. DOE then 
attempted to gather information on the location and number of employees 
to see if these companies met SBA's definition of a small business for 
each potential ceiling fan manufacturer by reaching out directly to 
those potential small businesses and using market research tools (e.g., 
www.hoovers.com, www.manta.com, glassdoor.com, www.linkedin.com, etc.). 
DOE also asked interested parties and industry representatives if they 
were aware of any small businesses during manufacturer interviews and 
DOE public meetings. DOE used information from these sources to create 
a list of companies that potentially manufacture or sell ceiling fans 
and would be affected by this rulemaking. DOE

[[Page 1751]]

screened out companies that do not offer products covered by this 
rulemaking, do not meet the definition of a ``small business,'' or are 
completely foreign owned and operated.
---------------------------------------------------------------------------

    \79\ ALA. Membership Directory and Buyer's Guide 2015. Last 
Accessed June 9, 2015. http://www.lightrays-digital.com/lightrays/2015_membership_directory#pg1.
---------------------------------------------------------------------------

    For ceiling fans, DOE initially identified 82 potential companies 
that sell ceiling fans in the United States. After reviewing publicly 
available information on these potential ceiling fan manufacturers, DOE 
determined that 45 were either large businesses or businesses that were 
completely foreign owned and operated. DOE determined that the 
remaining 37 companies were small businesses that either manufacture or 
sell covered ceiling fans in the United States. Based on manufacturer 
interviews, DOE estimates that these small businesses account for 
approximately 25 percent of the ceiling fan market.
    DOE seeks comments, information, and data on the small businesses 
in the industry, including their numbers and their role in the ceiling 
fan market. DOE also requests data on the market share of small 
businesses in the ceiling fan market. See issue 27 in section VII.E.
2. Description and Estimate of Compliance Requirements
    At TSL 4, DOE estimates that small ceiling fan businesses selling 
standard and hugger ceiling fans could be disproportionally impacted by 
the proposed energy conservation standards compared to large ceiling 
fan businesses. However, since DOE estimates that more than 90 percent 
of VSD, HSSD, and large-diameter ceiling fans are manufactured by small 
businesses, DOE projects the impacts on small businesses that only 
produce VSD, HSSD, and large-diameter fan product classes to be 
represented by the overall industry impacts for those particular 
product classes. DOE displays the overall industry impacts for VSD, 
HSSD, and large-diameter fan product classes individually at the 
proposed TSL in Table VI-1, Table VI-2, and Table VI-3.

  Table VI-1--Manufacturer Impact Analysis for Very Small-Diameter Ceiling Fans at the Proposed Trial Standard
                                                  Level (TSL 4)
----------------------------------------------------------------------------------------------------------------
                                                                       Proposed trial standard level (TSL 4)
                                                                 -----------------------------------------------
                                      Units        No-standards    Preservation    Preservation
                                                       case          of gross      of operating     Two-tiered
                                                                      margin          profit
----------------------------------------------------------------------------------------------------------------
INPV..........................  2014$ thousands.           8,898           8,889           8,855           7,020
Change in INPV................  2014$ thousands.  ..............             (9)            (43)         (1,878)
                                %...............  ..............           (0.1)           (0.5)          (21.1)
Product Conversion Costs......  2014$ thousands.  ..............               3               3               3
Capital Conversion Costs......  2014$ thousands.  ..............               9               9               9
Total Conversion Costs........  2014$ thousands.  ..............              12              12              12
----------------------------------------------------------------------------------------------------------------

    For the VSD ceiling fan product class, at TSL 4 DOE estimates 
impacts on INPV range from -$1,878 thousand to -$9 thousand, or 
decreases in INPV of -21.1 percent to -0.1 percent. DOE projects that 
in 2019, 96 percent of VSD ceiling fan shipments will meet or exceed 
efficiency levels analyzed at TSL 4.

    Table VI-2--Manufacturer Impact Analysis for High-Speed Small-Diameter Ceiling Fans at the Proposed Trial
                                             Standard Level (TSL 4)
----------------------------------------------------------------------------------------------------------------
                                                                       Proposed trial standard level (TSL 4)
                                                                 -----------------------------------------------
                                      Units        No-standards    Preservation    Preservation
                                                       case          of gross      of operating     Two-tiered
                                                                      margin          profit
----------------------------------------------------------------------------------------------------------------
INPV..........................  2014$ thousands.          29,350          28,030          13,088          27,278
Change in INPV................  2014$ thousands.  ..............         (1,323)        (16,265)         (2,072)
                                %...............  ..............           (4.5)          (55.4)           (7.1)
Product Conversion Costs......  2014$ thousands.  ..............              94              94              94
Capital Conversion Costs......  2014$ thousands.  ..............             293             293             293
Total Conversion Costs........  2014$ thousands.  ..............             388             388             388
----------------------------------------------------------------------------------------------------------------

    For the HSSD ceiling fan product class, at TSL 4 DOE estimates 
impacts on INPV range from -$16,265 thousand to -$1,323 thousand, or 
decreases in INPV of -55.4 percent to -4.5 percent. TSL 4 represents 
max-tech for the HSSD ceiling fan product class, and DOE projects that 
in 2019, 6 percent of HSSD ceiling fan shipments will meet or exceed 
efficiency levels analyzed at TSL 4.

  Table VI-3--Manufacturer Impact Analysis for Large-Diameter Ceiling Fans at the Proposed Trial Standard Level
                                                     (TSL 4)
----------------------------------------------------------------------------------------------------------------
                                                                       Proposed trial standard level (TSL 4)
                                                                 -----------------------------------------------
                                      Units        No-standards    Preservation    Preservation
                                                       case          of gross      of operating     Two-tiered
                                                                      margin          profit
----------------------------------------------------------------------------------------------------------------
INPV..........................  2014$ thousands.          37,840          36,415          33,923          34,870

[[Page 1752]]

 
Change in INPV................  2014$ thousands.  ..............         (1,425)         (3,917)         (2,970)
                                %...............  ..............           (3.8)          (10.4)           (7.8)
Product Conversion Costs......  2014$ thousands.  ..............             174             174             174
Capital Conversion Costs......  2014$ thousands.  ..............             638             638             638
Total Conversion Costs........  2014$ thousands.  ..............             812             812             812
----------------------------------------------------------------------------------------------------------------

    For the large-diameter ceiling fans product class, at TSL 4, DOE 
estimates impacts on INPV range from -$3,917 thousand to -$1,425 
thousand, or decreases in INPV of -10.4 percent to -3.8 percent. DOE 
projects that in 2019, 17 percent of large-diameter ceiling fan 
shipments will meet or exceed efficiency levels analyzed at TSL 4.
    Because small businesses represent the majority of the VSD, HSSD 
and large-diameter ceiling fan markets, these estimated industry 
impacts represent the estimated impacts on small businesses selling 
VSD, HSSD, and large-diameter ceiling fan product classes.
    As a result of this rulemaking, small businesses will incur product 
conversion costs because products that no longer meet the proposed 
efficiency levels of amended energy conservation standards will most 
likely need to be redesigned, tested, and certified. Manufacturers will 
also incur capital conversion costs due to retooling costs associated 
with producing more efficient ceiling fans required by the proposed 
standards. Table VI-4 presents total conversion costs for both large 
and small manufacturers. At TSL 4, approximately fifty percent of total 
industry conversion costs are incurred by small manufacturers.

                                                 Table VI-4--Total Conversion Costs by Manufacturer Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Units                 TSL 1        TSL 2        TSL 3        TSL 4        TSL 5        TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Conversion Costs for Small             2014$ (thousands)............           99          140        1,209        2,273        4,072        4,610
 Manufacturers.
Total Conversion Costs for Large             2014$ (thousands)............           57          144        2,221        2,221        5,284        6,411
 Manufacturers.
Total Industry Conversion Costs............  2014$ (thousands)............          156          284        3,430        4,494        9,356       11,022
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Because small businesses have significantly less revenue, annual 
R&D budgets, and annual capital expenditure budgets than large 
manufacturers, the conversion costs necessary to comply with proposed 
standards represent the majority of a typical small business' annual 
R&D budget, almost one and a half times a typical small business' 
annual capital expenditure budget, and a sizeable portion of a typical 
small business' annual revenue. Table VI-5 demonstrates the impacts 
that conversion costs as a result of the proposed standards could have 
on typical small and large ceiling fan business's annual R&D budgets, 
annual capital expenditure budgets, and annual revenues.

   Table VI-5--Estimated Testing and Certification Costs as a Percentage of Annual R&D Expense and Revenue for
                                            Ceiling Fan Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                 Product  conversion   Capital conversion
                                                     cost  as a       cost as a percentage    Total conversion
                                                   percentage  of       of annual capital   cost as a percentage
                                                 annual  R&D expense       expenditure        of annual revenue
----------------------------------------------------------------------------------------------------------------
Typical Small Manufacturer....................                    80                   147                     7
Typical Large Manufacturer....................                    12                    23                     1
----------------------------------------------------------------------------------------------------------------

    At TSL 4, an average of 36 percent of standard and hugger ceiling 
fans would need to be redesigned to meet the efficiency levels required 
at the proposed TSL. For a typical small business that sells standard 
and hugger ceiling fans, the cost of redesigning and testing these 
models would account for 80 percent of a typical small business' annual 
R&D budget, compared to 12 percent of a typical large business' annual 
R&D budget.
    Capital conversion costs are driven primarily by the retooling 
costs associated with producing redesigned models that meet efficiency 
levels required by the proposed standards and would account for 147 
percent of a typical small business' annual capital expenditure budget, 
compared to 23 percent of a typical large business' annual capital 
expenditure budget.
    Additionally, total conversion costs at the proposed standards 
represents 7 percent of an average small ceiling fan business' revenue, 
compared to 1 percent of an average large ceiling fan business' 
revenue. Small ceiling businesses that sell standard and hugger ceiling 
fans must recover costs that

[[Page 1753]]

account for a larger percentage of their total revenue with a smaller 
amount of sales than large ceiling fan businesses.
    Due to the difficulty of cost recovery, DOE concludes that small 
businesses selling standard and hugger ceiling fan product classes 
could be disproportionately impacted by the proposed amended ceiling 
fan energy conservation standard compared to large businesses.
    DOE seeks comment on the potential impacts of the amended standards 
on ceiling fan small businesses. See issue 28 in section VII.E.
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 proposed amended standard. DOE seeks 
comment on any rules or regulations that could potentially duplicate, 
overlap, or conflict with the proposed amended standard. See issue 29 
in section VII.E.
4. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from DOE's proposed rule, TSL 4. In 
reviewing alternatives to the proposed rule, DOE examined energy 
conservation standards set at lower efficiency levels. While TSL 1, TSL 
2, and TSL 3 would reduce the impacts on small business manufacturers, 
it would come at the expense of a significant reduction in energy 
savings and NPV benefits to consumers. TSL 1 achieves 82 percent lower 
energy savings and 51 percent less NPV benefits to consumers compared 
to the energy savings and NPV benefits at TSL 4. TSL 2 achieves 72 
percent lower energy savings and 34 percent less NPV benefits to 
consumers compared to the energy savings and NPV benefits at TSL 4. TSL 
3 achieves 27 percent lower energy savings and 36 percent less NPV 
benefits to consumers compared to the energy savings and NPV benefits 
at TSL 4.
    Establishing standards at TSL 4 balances the benefits of the energy 
savings and the NPV benefits to consumers created at TSL 4 with the 
potential burdens placed on ceiling fan manufacturers, including small 
business manufacturers. Accordingly, DOE is declining to adopt one of 
the other TSLs considered in the analysis, or the other policy 
alternatives detailed as part of the regulatory impacts analysis 
included in chapter 17 of this NOPR TSD.
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure (see 10 CFR 430.27). Further, EPCA 
provides that a manufacturer whose annual gross revenue from all of its 
operations does not exceed $8 million may apply for an exemption from 
all or part of an energy conservation standard for a period not longer 
than 24 months after the effective date of a final rule establishing 
the standard. Additionally, Section 504 of the Department of Energy 
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary 
to adjust a rule issued under EPCA in order to prevent ``special 
hardship, inequity, or unfair distribution of burdens'' that may be 
imposed on that manufacturer as a result of such rule. Manufacturers 
should refer to 10 CFR part 430, subpart E, and part 1003 for 
additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of ceiling fans must certify to DOE that their 
products comply with any applicable energy conservation standards. In 
certifying compliance, manufacturers must test their products according 
to the DOE test procedures for ceiling fans, including any amendments 
adopted for those test procedures. DOE has established regulations for 
the certification and recordkeeping requirements for all covered 
consumer products and commercial equipment, including ceiling fans. See 
generally 10 CFR part 429. The collection-of-information requirement 
for the certification and recordkeeping is subject to review and 
approval by OMB under the Paperwork Reduction Act (PRA). This 
requirement has been approved by OMB under OMB control number 1910-
1400. 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.
    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 the proposed 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 proposed 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 proposed rule. 
DOE's CX determination for this proposed 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 
proposed rule and has tentatively 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 this 
proposed 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) Therefore, 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

[[Page 1754]]

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 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 proposed 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 proposed ``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 this proposed rule does not contain a Federal 
intergovernmental mandate, it may require expenditures of $100 million 
or more by the private sector. Specifically, the proposed rule would 
likely result in a final rule that could require expenditures of $100 
million or more. Such expenditures may include: (1) Investment in 
research and development and in capital expenditures by ceiling fan 
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 ceiling 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 proposed 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 the NOPR and the ``Regulatory 
Impact Analysis'' section of the NOPR TSD for this proposed 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 proposed 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(d), 
(f), and (o), 6313(e), and 6316(a), this proposed rule would establish 
amended energy conservation standards for ceiling 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 NOPR TSD 
for this proposed 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 15, 1988), DOE has determined that this proposed rule 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 this NOPR 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

[[Page 1755]]

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 tentatively concluded that this regulatory action, which 
proposes amended energy conservation standards for ceiling fans, is not 
a significant energy action because the proposed 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 this proposed 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 FR 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.

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this notice. If 
you plan to attend the public meeting, please notify Ms. Brenda Edwards 
at (202) 586-2945 or [email protected].
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures which require advance 
notice prior to attendance at the public meeting. If a foreign national 
wishes to participate in the public meeting, please inform DOE of this 
fact as soon as possible by contacting Ms. Regina Washington at (202) 
586-1214 or by email ([email protected]) so that the 
necessary procedures can be completed.
    DOE requires visitors to have laptops and other devices, such as 
tablets, checked upon entry into the Forrestal Building. Any person 
wishing to bring these devices into the building will be required to 
obtain a property pass. Visitors should avoid bringing these devices, 
or allow an extra 45 minutes to check in. Please report to the 
visitor's desk to have devices checked before proceeding through 
security.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding identification 
(ID) requirements for individuals wishing to enter Federal buildings 
from specific States and U.S. territories. As a result, driver's 
licenses from several States or territory will not be accepted for 
building entry, and instead, one of the alternate forms of ID listed 
below will be required. DHS has determined that regular driver's 
licenses (and ID cards) from the following jurisdictions are not 
acceptable for entry into DOE facilities: Alaska, American Samoa, 
Arizona, Louisiana, Maine, Massachusetts, Minnesota, New York, 
Oklahoma, and Washington. Acceptable alternate forms of Photo-ID 
include: U.S. Passport or Passport Card; an Enhanced Driver's License 
or Enhanced ID-Card issued by the States of Minnesota, New York, or 
Washington (Enhanced licenses issued by these States are clearly marked 
Enhanced or Enhanced Driver's License); a military ID or other Federal 
government-issued Photo-ID card.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=65. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address shown in the ADDRESSES section at the beginning 
of this notice. The request and advance copy of statements must be 
received at least one week before the public meeting and may be 
emailed, hand-delivered, or sent by mail. DOE prefers to receive 
requests and advance copies via email. Please include a telephone 
number to enable DOE staff to make follow-up contact, if needed.

C. Conduct of the Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 
6306) A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. There shall not be discussion of proprietary 
information, costs or prices, market share, or other commercial matters 
regulated by U.S. anti-trust laws. After the public meeting, interested 
parties may submit further comments on the proceedings, as well as on 
any aspect of the rulemaking, until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this rulemaking. Each participant will be allowed 
to make a general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will allow, as time 
permits, other participants to comment briefly on any general 
statements.

[[Page 1756]]

    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this notice and will be accessible on the DOE Web site. In addition, 
any person may buy a copy of the transcript from the transcribing 
reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this notice.
    Submitting comments via www.regulations.gov. The 
www.regulations.gov Web page will require you to provide your name and 
contact information. Your contact information will be viewable to DOE 
Building Technologies staff only. Your contact information will not be 
publicly viewable except for your first and last names, organization 
name (if any), and submitter representative name (if any). If your 
comment is not processed properly because of technical difficulties, 
DOE will use this information to contact you. If DOE cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the Web site will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section below.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery/courier, or 
mail also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible, in 
which case it is not necessary to submit printed copies. No 
telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
One copy of the document marked ``confidential'' including all the 
information believed to be confidential, and one copy of the document 
marked ``non-confidential'' with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. DOE will make its own determination about the confidential 
status of the information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person that would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE requests comment on the proposed product class structure 
based on blade diameter, distance from the ceiling and the UL 507 
table. See section IV.A.1.
    2. DOE seeks comment on the definition of highly-decorative ceiling 
fans based on both an RPM and a CFM threshold. See section IV.A.1.a.
    3. DOE requests comment on the applications of wind and temperature 
sensors, and if they reduce or increase the energy consumption of a 
ceiling fan considering both active and standby of

[[Page 1757]]

fan operation. If so, DOE seeks specific data on how wind and 
temperature sensors reduce or increase energy consumption of a ceiling 
fan. See section IV.A.2.c.
    4. DOE requests comment on the technologies that were assumed to be 
available and able to allow each product class to meet the specified 
energy efficiency level, including fan optimization, larger direct-
drive motor and DC motors for the very small-diameter product class. 
See section IV.B.
    5. DOE requests comment and data about the performance of occupancy 
sensors and occupancy sensor schedulers and whether they would reduce 
or increase the energy consumption of a ceiling fan considering both 
active and standby/off modes of fan operation. See section IV.B.1.a.
    6. One method to improve ceiling fan efficiency is to reduce the 
fan speed. Some reduction in fan speed may not impact consumer utility. 
DOE requests comment on what an acceptable reduction of fan speed may 
be such that it does not affect consumer utility for each of the 
proposed product classes. See section IV.C.
    7. DOE requests comment about the proposed factory costs at each 
efficiency level for each product class. Specifically DOE seeks comment 
on the 52-inch standard ceiling fan baseline factory costs of $38.85 
and a baseline MPC of $54.93. See section IV.C.3.
    8. DOE requests any data on operating hours for each product class 
and inparticular the HSSD ceiling fan product class. See section 
IV.E.2.b.
    9. DOE requests any relevant data on how the proposed ceiling fan 
standards could have on the operation of air conditioners, whether and 
to what level there may be a substitution effect that would cause a 
reduction in the purchase of residential and/or commercial air 
conditioning systems in lieu of ceiling fans. In addition, DOE requests 
any relevant data regarding whether the proposed standards would impact 
the usage rate of residential and/or commercial air conditioning 
systems. See section IV.E.3.
    10. Installation costs were assumed not to vary by efficiency level 
for all product classes, and therefore were not considered in the 
analysis. DOE requests comments on this assumption. See section IV.F.
    11. DOE requests comments on the methodology of the LCC and PBP 
analysis for ceiling fans. See section IV.F.
    12. DOE has assumed that the excess rate of failure for DC motors, 
above the repair rate for AC motors, is 6.5 percent of purchases. DOE 
also assumed a repair cost of $150 for all product classes other than 
the large-diameter product class, and a repair cost of $1000 for large-
diameter fans. DOE requests comment, input, and data that can improve 
the estimate of repair costs, particularly repairs costs associated 
with DC motors. See section IV.F.4.
    13. DOE requests comment on the survival function used in this 
rulemaking, which DOE assumed has the form of a cumulative Weibull 
distribution, and provides a mean of 13.8 years and a median of 13.0 
years for appliance lifetime. This is the same distribution employed in 
the preliminary analysis. DOE welcomes comment on these estimates. See 
section IV.F.5.
    14. Shipment data were only available for standard, hugger, and VSD 
ceiling fans, so DOE assumed the survival probability function of 
large-diameter and HSSD ceiling fans is the same as that for standard, 
hugger, and VSD ceiling fans. DOE requests comments and data on product 
lifetimes of large-diameter and HSSD ceiling fans. See section IV.F.5.
    15. Using updated, price-weighted data, DOE calculated 48.7 percent 
and 51.3 percent as the current market share split for hugger and 
standard ceiling fans, respectively. (This calculation retained the 27 
percent/73 percent installation split used in the preliminary analysis 
for multi-mount fans.) DOE requests comment, data, or information on 
its estimates for the relative split between hugger, standard, and VSD 
product classes. See section IV.G.1.
    16. DOE requests data and information on current and historical 
shipments for HSSD and large-diameter ceiling fans. See section IV.G.1.
    17. DOE requests comments on the assumed ceiling fan usage by 
sector for all product classes. See section IV.G.1.
    18. DOE requests comments on its approach for estimating the market 
share distribution by efficiency level using a consumer-choice model 
sensitive to first cost for standard, hugger, and VSD ceiling fans. See 
section IV.G.3.
    19. DOE requests comments on its use of the roll-up approach to 
estimate market-shares by efficiency levels for HSSD and large-diameter 
ceiling fans. See section IV.G.3.
    20. DOE assumed that the cost of DC motor ceiling fans would 
decrease over the course of the shipments analysis due to a price trend 
applied to the electronics controller used in DC motor fans. DOE 
estimated the cost of the electronics controller as the incremental 
price difference between a DC motor and a comparable AC motor. DOE 
applied a 6% price decline rate to the incremental cost associated with 
the electronic controller. DOE's methodology leads to an average annual 
decrease of 0.5% in the total price of a DC motor ceiling fan. DOE 
requests input on the validity of its price trend methodology as 
applied to the incremental cost of a DC motor. See section IV.G.4.
    21. DOE requests data and information to more accurately estimate a 
price elasticity of demand specific to ceiling fans. Specifically, DOE 
requests concurrent data on industry-wide shipments-weighted retail 
price and efficiency and average household income. See section IV.G.5.
    22. DOE requests comments on the overall methodology used to 
develop shipment forecasts and estimate NES and the NPV of those 
savings. See section IV.H.2.
    23. DOE seeks comment on any potential impact on manufacturing 
capacity at the efficiency levels proposed in this NOPR. See section 
V.B.2.c.
    24. DOE seeks comment on any other potential manufacturer subgroups 
that could be disproportionally affected by amended energy conservation 
standards for ceiling fans. See section V.B.2.d.
    25. DOE seeks comment on the cumulative regulatory burden due to 
compliance costs of any other regulations, such as the ceiling fan 
light kit proposed rule, on products that ceiling fan manufacturers 
also manufacture, especially if compliance with those regulations is 
required 3 years before or after the estimated compliance date of this 
proposed standard. See section V.B.2.e.
    26. DOE invites comment from the public regarding the competitive 
impacts that are likely to result from this proposed rule. See section 
V.B.5.
    27. DOE seeks comments, information, and data on the small 
businesses in the industry, including their numbers and their role in 
the ceiling fan market. DOE also requests data on the market share of 
small businesses in the ceiling fan market. See section VI.B.1.
    28. DOE seeks comment on the potential impacts of the amended 
standards on ceiling fan small businesses. See section VI.B.2.
    29. DOE seeks comment on any rules or regulations that could 
potentially duplicate, overlap, or conflict with the proposed amended 
standard. See section VI.B.3.

[[Page 1758]]

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking.

List of Subjects in 10 CFR Part 430

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

    Issued in Washington, DC, on December 23, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons set forth in the preamble, DOE proposes to amend 
part 430 of chapter II, subchapter D, of title 10 of the Code of 
Federal Regulations, as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
1. 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
2. Section 430.2 is amended by adding the definitions for ``belt-driven 
ceiling fan,'' ``highly-decorative ceiling fan,'' ``high-speed small-
diameter ceiling fan,'' ``hugger ceiling fan,'' ``large-diameter 
ceiling fan,'' ``small-diameter ceiling fan,'' ``standard ceiling 
fan,'' and ``very small-diameter ceiling fan'' in alphabetical order to 
read as follows:


Sec.  430.2  Definitions.

* * * * *
    Belt-driven ceiling fan means a ceiling fan with a series of one or 
more fan heads, each driven by a belt connected to one or more motors.
* * * * *
    Highly-decorative ceiling fan means a ceiling fan with a maximum 
rotational speed of 90 RPM and less than 1,840 CFM airflow at high 
speed.
* * * * *
    High-speed small-diameter ceiling fan means a ceiling fan that is 
not a very small-diameter ceiling fan, highly-decorative ceiling fan or 
belt-driven ceiling fan; and has a blade thickness of < 3.2 mm at the 
edge or a maximum tip speed > the applicable limit in the table in this 
definition.

                      Small-Diameter Ceiling Fans, Less Than or Equal to 7 Feet in Diameter
----------------------------------------------------------------------------------------------------------------
                                        Thickness (t) of Edges of Blades       Maximum Speed at Tip of Blades
          Airflow Direction          ---------------------------------------------------------------------------
                                              mm                inch               m/s          feet per minute
----------------------------------------------------------------------------------------------------------------
Downward-only.......................     4.8 > t >= 3.2    3/16 > t >= 1/8               16.3              3,200
Downward-only.......................           t >= 4.8          t >= 3/16               20.3              4,000
Reversible..........................     4.8 > t >= 3.2    3/16 > t >= 1/8               12.2              2,400
Reversible..........................           t >= 4.8          t >= 3/16               16.3              3,200
----------------------------------------------------------------------------------------------------------------

* * * * *
    Hugger ceiling fan means a ceiling fan that is not a ceiling fan 
that is not a very small-diameter ceiling fan, highly-decorative 
ceiling fan or belt-driven ceiling fan; and where the lowest point on 
fan blades is <= 10 inches from the ceiling; and has a blade thickness 
of >= 3.2 mm at the edge and a maximum tip speed <= the applicable 
limit in the table in this definition.

                      Small-Diameter Ceiling Fans, Less Than or Equal to 7 Feet in Diameter
----------------------------------------------------------------------------------------------------------------
                                        Thickness (t) of Edges of Blades       Maximum Speed at Tip of Blades
          Airflow Direction          ---------------------------------------------------------------------------
                                              mm                inch               m/s          feet per minute
----------------------------------------------------------------------------------------------------------------
Downward-only.......................     4.8 > t >= 3.2    3/16 > t >= 1/8               16.3              3,200
Downward-only.......................           t >= 4.8          t >= 3/16               20.3              4,000
Reversible..........................     4.8 > t >= 3.2    3/16 > t >= 1/8               12.2              2,400
Reversible..........................           t >= 4.8          t >= 3/16               16.3              3,200
----------------------------------------------------------------------------------------------------------------

* * * * *
    Large-diameter ceiling fan means a ceiling fan that is greater than 
7 feet in diameter.
* * * * *
    Small-diameter ceiling fan means a ceiling fan that is less than or 
equal to 7 feet in diameter.
* * * * *
    Standard ceiling fan means a ceiling fan is not a ceiling fan that 
is not a very small-diameter ceiling fan, highly-decorative ceiling fan 
or belt-driven ceiling fan; and where the lowest point on fan blades is 
> 10 inches from the ceiling; and has a blade thickness of >= 3.2 mm at 
the edge and a maximum tip speed <= the applicable limit in the table 
in this definition.

                      Small-Diameter Ceiling Fans, Less Than or Equal to 7 Feet in Diameter
----------------------------------------------------------------------------------------------------------------
                                        Thickness (t) of Edges of Blades       Maximum Speed at Tip of Blades
          Airflow Direction          ---------------------------------------------------------------------------
                                              mm                inch               m/s          feet per minute
----------------------------------------------------------------------------------------------------------------
Downward-only.......................     4.8 > t >= 3.2    3/16 > t >= 1/8               16.3              3,200
Downward-only.......................           t >= 4.8          t >= 3/16               20.3              4,000
Reversible..........................     4.8 > t >= 3.2    3/16 > t >= 1/8               12.2              2,400
Reversible..........................           t >= 4.8          t >= 3/16               16.3              3,200
----------------------------------------------------------------------------------------------------------------


[[Page 1759]]

* * * * *
    Very small-diameter ceiling fan means a ceiling fan that is not a 
highly-decorative ceiling fan or belt-driven ceiling fan; and has one 
or more fan heads, each of which has a blade span of 18 inches or less.
* * * * *
0
3. Section 430.32 is amended by:
0
a. Redesignating paragraphs (s)(2), (s)(3), (s)(4) and (s)(5) as 
(s)(3), (s)(4), (s)(5) and (s)(6).
0
b. Adding a new paragraph (s)(2).
    The addition to read as follows:


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

* * * * *
    (s) * * *
    (1) * * *
    (2) Ceiling fans manufactured on or after [DATE 3 YEARS AFTER DATE 
OF FINAL RULE PUBLICATION IN THE Federal Register] shall meet the 
requirements shown in the table:

------------------------------------------------------------------------
                                                            Airflow
                                                           Efficiency
                    Product Class                      Equation  (CFM/W)
                                                               *
------------------------------------------------------------------------
Very small-diameter (VSD)............................      3.17D - 16.75
Hugger...............................................      0.05D + 56.41
Standard.............................................      0.30D + 60.61
High-speed small-diameter (HSSD).....................       4.22D + 0.02
Large-diameter.......................................      1.16D - 24.38
------------------------------------------------------------------------
* D is the ceiling fan diameter, in inches.

* * * * *
[FR Doc. 2015-33062 Filed 1-12-16; 8:45 am]
 BILLING CODE 6450-01-P