[Federal Register Volume 81, Number 16 (Tuesday, January 26, 2016)]
[Rules and Regulations]
[Pages 4368-4433]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-00324]



[[Page 4367]]

Vol. 81

Tuesday,

No. 16

January 26, 2016

Part II





Department of Energy





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





10 CFR Parts 429 and 431





 Energy Conservation Program: Energy Conservation Standards for Pumps; 
Final Rule

  Federal Register / Vol. 81 , No. 16 / Tuesday, January 26, 2016 / 
Rules and Regulations  

[[Page 4368]]


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

DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2011-BT-STD-0031]
RIN 1904-AC54


Energy Conservation Program: Energy Conservation Standards for 
Pumps

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

ACTION: Final rule.

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

SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, sets forth a variety of provisions designed to improve energy 
efficiency. Part C of Title III establishes the ``Energy Conservation 
Program for Certain Industrial Equipment.'' The covered equipment 
includes pumps. In this final rule, the U.S. Department of Energy (DOE) 
adopts new energy conservation standards for pumps. DOE has determined 
that the new energy conservation standards for pumps would result in 
significant conservation of energy, and are technologically feasible 
and economically justified.

DATES: The effective date of this rule is March 28, 2016. Compliance 
with the new standards established for pumps in this final rule is 
required on and after January 27, 2020.

ADDRESSES: 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, such as those 
containing information that is exempt from public disclosure, may not 
be publicly available.
    A link to the docket Web page can be found at: www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0031. The www.regulations.gov Web 
page will contain instructions on how to access all documents, 
including public comments, in the docket.
    For further information on how to review the docket, contact Ms. 
Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

FOR FURTHER INFORMATION CONTACT: 
    John Cymbalsky, 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) 287-1692. Email: [email protected].
    Elizabeth Kohl, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 586-9507. Email: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    C. Relevant Industry Sectors
III. General Discussion
    A. Definition of Covered Equipment
    B. Scope of the Energy Conservation Standards in this Rulemaking
    C. Test Procedure and Metric
    1. PER of a Minimally Compliant Pump
    D. Compliance Date
    E. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    F. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    G. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Equipment Classes
    2. Scope of Analysis and Data Availability
    a. Radially Split, Multi-Stage, Vertical, In-Line Diffuser 
Casing
    b. Submersible Turbine, 1800 RPM
    3. Technology Assessment
    a. Applicability of Technology Options to Reduced Diameter 
Impellers
    b. Elimination of Technology Options Due to Low Energy Savings 
Potential.
    B. Screening Analysis
    1. Screened Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Representative Equipment for Analysis
    a. Representative Configuration Selection
    b. Baseline Configuration
    2. Design Options
    3. Available Energy Efficiency Improvements
    4. Efficiency Levels Analyzed
    a. Maximum Technologically Feasible Levels
    5. Manufacturers Production Cost Assessment Methodology
    a. Changes in MPC Associated with Hydraulic Redesign
    b. Manufacturer Production Cost (MPC) Model
    6. Product and Capital Conversion Costs
    7. Manufacturer Markup Analysis
    a. Industry-average markups
    b. Individual manufacturer markup structures
    c. Industry-wide markup structure
    8. MSP-Efficiency Relationship
    D. Markups Analysis
    E. Energy Use Analysis
    1. Duty Point
    2. Pump Sizing
    3. Operating Hours
    4. Load Profiles
    5. Equipment Losses
    F. Life-Cycle Cost and Payback Period Analysis
    1. Approach
    2. Life-Cycle Cost Inputs
    a. Equipment Prices
    b. Installation Costs
    c. Annual Energy Use
    d. Electricity Prices
    e. Maintenance Costs
    f. Repair Costs
    g. Equipment Lifetime
    h. Discount Rates
    3. Payback Period
    4. Rebuttable-Presumption Payback Period
    G. Shipments Analysis
    H. National Impact Analysis
    1. Approach
    a. National Energy Savings
    b. Net Present Value
    2. No-New-Standards Case and Standards-Case Distribution of 
Efficiencies
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis
    a. GRIM Key Inputs
    b. GRIM Scenarios
    3. Discussion of MIA Comments
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Development of Social Cost of Carbon Values
    c. Current Approach and Key Assumptions
    2. Valuation of Other Emissions Reductions
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    1. Trial Standard Level Formulation Process and Criteria
    2. Trial Standard Level Equations
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Commercial Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Labeling Costs
    c. Impacts on Direct Employment
    d. Impacts on Manufacturing Capacity
    e. Impacts on Subgroups of Manufacturers

[[Page 4369]]

    f. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Equipment
    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 Trial Standard Levels Considered for 
Pumps Standards
    2. Summary of Annualized Benefits and Costs of the Adopted 
Standards
VI. Labeling and Certification Requirements
    A. Labeling
    B. Certification Requirements
    C. Representations
VII. 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
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

    Title III of the Energy Policy and Conservation Act of 1975 (42 
U.S.C. 6291, et seq.; ``EPCA''), Public Law 94-163, sets forth a 
variety of provisions designed to improve energy efficiency. Part C of 
Title III, which for editorial reasons was re-designated as Part A-1 
upon incorporation into the U.S. Code (42 U.S.C. 6311-6317), 
establishes the ``Energy Conservation Program for Certain Industrial 
Equipment.'' Covered industrial equipment includes pumps, the subject 
of this document. (42 U.S.C. 6311(1)(H)).\1\
---------------------------------------------------------------------------

    \1\ 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).
---------------------------------------------------------------------------

    The standards for certain pumps set forth in this document reflect 
the consensus of a stakeholder negotiation. A working group was 
established under the Appliance Standards and Rulemaking Federal 
Advisory Committee (ASRAC) in accordance with the Federal Advisory 
Committee Act (FACA) and the Negotiated Rulemaking Act (NRA). (5 U.S.C. 
App.; 5 U.S.C. 561-570) The purpose of the working group was to discuss 
and, if possible, reach consensus on proposed standards for pump energy 
efficiency. On June 19, 2014, the working group successfully reached 
consensus on proposed energy conservation standards for specific 
rotodynamic, clean water pumps used in a variety of commercial, 
industrial, agricultural, and municipal applications. See section II.B 
for further discussion of the working group, section II.C for the 
industry sectors covered, and section III.C for a description of the 
relevant pumps.
    The new standards are expressed as a Pump Energy Index (PEI). PEIs 
for each equipment class and the respective nominal design speed are 
shown in Table I.1. These standards apply to all equipment classes 
listed in Table I.1 and manufactured in, or imported into, the United 
States on and after January 27, 2020.

                             Table I.1--New Energy Conservation Standards for Pumps
                                     [Compliance starting January 27, 2020]
----------------------------------------------------------------------------------------------------------------
                                                                     Standard       Efficiency
                        Equipment class *                          level ** PEI     percentile       C-Values
----------------------------------------------------------------------------------------------------------------
ESCC.1800.CL....................................................            1.00              25          128.47
ESCC.3600.CL....................................................            1.00              25          130.42
ESCC.1800.VL....................................................            1.00              25          128.47
ESCC.3600.VL....................................................            1.00              25          130.42
ESFM.1800.CL....................................................            1.00              25          128.85
ESFM.3600.CL....................................................            1.00              25          130.99
ESFM.1800.VL....................................................            1.00              25          128.85
ESFM.3600.VL....................................................            1.00              25          130.99
IL.1800.CL......................................................            1.00              25          129.30
IL.3600.CL......................................................            1.00              25          133.84
IL.1800.VL......................................................            1.00              25          129.30
IL.3600.VL......................................................            1.00              25          133.84
RSV.1800.CL.....................................................            1.00      [dagger] 0          129.63
RSV.3600.CL.....................................................            1.00      [dagger] 0          133.20
RSV.1800.VL.....................................................            1.00      [dagger] 0          129.63
RSV.3600.VL.....................................................            1.00      [dagger] 0          133.20
VTS.1800.CL.....................................................            1.00  [dagger][dagge          138.78
                                                                                            r] 0
VTS.3600.CL.....................................................            1.00              25          134.85
VTS.1800.VL.....................................................            1.00  [dagger][dagge          138.78
                                                                                            r] 0
VTS.3600.VL.....................................................            1.00              25          134.85
----------------------------------------------------------------------------------------------------------------
* Equipment class designations consist of a combination (in sequential order separated by periods) of: (1) An
  equipment family (ESCC = end suction close-coupled, ESFM = end suction frame mounted/own bearing, IL = inline,
  RSV = radially split, multi-stage, vertical, in-line diffuser casing, VTS = submersible turbine); (2) a
  nominal design speed (1800 = 1800 revolutions per minute (rpm), 3600 = 3600 rpm); and (3) an operating mode
  (CL = constant load, VL = variable load). For example, ``ESCC.1800.CL'' refers to the ``end suction close-
  coupled, 1,800 rpm, constant load'' equipment class. See discussion in chapter 5 of the final rule technical
  support document (TSD) for a more detailed explanation of the equipment class terminology.
** A pump model is compliant if its PEI rating is less than or equal to the adopted standard.
[dagger] The standard level for RSV was set at a level that harmonized with the current European Union energy
  conservation standard level. See discussion in section IV.A.2.a for more detail regarding matters related to
  harmonization.
[dagger][dagger] The standard level for VTS.1800 was set based on the baseline C-value for VTS.3600 pumps due to
  limited data availability. See discussion in section IV.A.2.b for more detail.


[[Page 4370]]

    Under the adopted standards, a pump model would be compliant if its 
PEI rating is less than or equal to the adopted standard. PEI is 
defined as the pump efficiency rating (PER) for a given pump model (at 
full impeller diameter), divided by a calculated minimally compliant 
PER for the given pump model. PER is defined as a weighted average of 
the electric input power supplied to the pump over a specified load 
profile, represented in units of horsepower (hp). A value of PEI 
greater than 1.00 would indicate that the pump does not comply with 
DOE's energy conservation standard, while a value less than 1.00 would 
indicate that the pump is more efficient than the standard requires.
    The minimally compliant PER is unique to each pump model and is a 
function of specific speed (a dimensionless quantity describing the 
geometry of the pump); flow at best efficiency point (BEP); and a 
specified C-value. A C-value is the translational component of a three-
dimensional polynomial equation that describes the attainable hydraulic 
efficiency of pumps as a function of flow at BEP, specific speed, and 
C-value. Thus, when a C-value is used to define an efficiency level, 
that efficiency level can be considered equally attainable across the 
full scope of flow and specific speed encompassed by this final rule.
    A certain percentage of pumps currently on the market will not meet 
each efficiency level. That percentage can be referred to as the 
efficiency percentile. For example, if 10% of the pumps on the market 
do not meet a specified efficiency level, that efficiency level 
represents the lower 10th percentile of efficiency. The efficiency 
percentile is an effective descriptor of the impact of a selected 
efficiency level (selected C-value) on the current market.
    The C-values listed in Table I.1 correspond to the lower 25th 
percentile of efficiency for the End Suction Close-Coupled (ESCC), End 
Suction Frame Mounted/Own Bearings (ESFM), and In-line (IL) equipment 
classes. For the Submersible Turbine (VTS) equipment classes,\2\ the C-
values of 3600 rpm speed pumps correspond to the lower 25th percentile 
of efficiency, while those of 1800 rpm speed pumps correspond to the 
baseline efficiency level. The C-values for the radially split, multi-
stage, vertical, in-line diffuser casing (RSV) equipment class 
harmonize with the standards recently enacted in the European Union.\3\ 
Models in the RSV equipment class are known to be global platforms with 
no differentiation between products sold into the United States and 
European Union markets.\4\ Section III.C describes the PEI metric in 
further detail.
---------------------------------------------------------------------------

    \2\ In the test procedure final rule (See EERE-2013-BT-TP-0055), 
DOE changed the terminology for this equipment class from ``vertical 
turbine submersible'' to ``submersible turbine'' for consistency 
with the definition of this equipment class. DOE is adopting the 
acronym ``ST'' in the regulatory text for long-term consistency with 
the defined term but has retained the ``VTS'' abbreviation in the 
preamble for consistency with the energy conservation standards NOPR 
and all Working Group discussions and recommendations to date 
(Docket No. EERE-2013-BT-NOC-0039).
    \3\ Council of the European Union. 2012. Commission Regulation 
(EU) No 547/2012 of 25 June 2012 implementing Directive 2009/125/EC 
of the European Parliament and of the Council with regard to 
ecodesign requirements for water pumps. Official Journal of the 
European Union. L 165, 26 June 2012, pp. 28-36.
    \4\ Market research, limited confidential manufacturer data, and 
direct input from the CIP working group indicate that RSV models 
sold in the United States market are global platforms with hydraulic 
designs equivalent to those in the European market.
---------------------------------------------------------------------------

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
adopted standards on consumers of pumps, as measured by the average 
life-cycle cost (LCC) savings and the simple payback period (PBP).\5\ 
The average LCC savings are positive for all equipment classes for 
which consumers would be impacted by the adopted standards \6\ and the 
PBP is less than the average lifetime of pumps, which is estimated to 
range between 11 and 23 years depending on equipment class, with an 
average of 15 years (see section IV.F.2.g).
---------------------------------------------------------------------------

    \5\ The average LCC savings are measured relative to the no-new-
standards case efficiency distribution, which depicts the market in 
the compliance year (see section IV.H.2). The simple PBP, which is 
designed to compare specific pump efficiency levels, is measured 
relative to the baseline model (see section IV.C.1.b).
    \6\ DOE also calculates a distribution of LCC savings; the 
percentage of consumers that would have negative LCC savings (net 
cost) under the adopted standards is shown in section V.B.1.a.

Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers
                                of Pumps
------------------------------------------------------------------------
                                            Average LCC   Simple payback
             Equipment class                  savings         period
                                              (2014$)         (years)
------------------------------------------------------------------------
ESCC.1800...............................             163             2.2
ESCC.3600...............................              92             1.0
ESFM.1800...............................             174             2.9
ESFM.3600...............................             549             0.8
IL.1800.................................             147             2.9
IL.3600.................................             138             2.0
RSV.1800................................             N/A             N/A
RSV.3600................................             N/A             N/A
VTS.1800................................             N/A             N/A
VTS.3600................................              17             3.1
------------------------------------------------------------------------
Notes: DOE relied on available data for bare pumps with no information
  on configuration. Therefore, DOE conducted analysis at the level of
  equipment type and nominal design speed only. DOE is adopting
  identical standards for both CL and VL equipment classes.Economic
  results are not presented for RSV.1800, RSV.3600, and VTS.1800 classes
  because the adopted standard is at the baseline.

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

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 2049). Using a real discount rate of 11.8 
percent,\7\ DOE estimates that the (INPV) for manufacturers of pumps in 
the case without new standards is $120.0 million in 2014$. Under the

[[Page 4371]]

standards adopted in this final rule, DOE expects INPV impacts to be 
between a loss of 32.9 percent to an increase of 7.0 percent of INPV, 
which is between approximately -$39.5 million and $8.4 million. 
Additionally, based on DOE's interviews with pump manufacturers, DOE 
does not expect significant impacts on manufacturing capacity or loss 
of employment for the industry as a whole to result from the standards 
for pumps. DOE expects the industry to incur $81.2 million in 
conversion costs.
---------------------------------------------------------------------------

    \7\ DOE estimated draft financial metrics, including the 
industry discount rate, based on data from Securities and Exchange 
Commission (SEC) filings. DOE presented the draft financial metrics 
to manufacturers in MIA interviews and adjusted those values based 
on feedback from industry. The complete set of financial metrics and 
more detail about the methodology can be found in section 12.4.3 of 
TSD chapter 12.
---------------------------------------------------------------------------

    DOE's analysis of the impacts of the adopted standards on 
manufacturers is described in section V.B.2 of this document.

C. National Benefits \8\
---------------------------------------------------------------------------

    \8\ 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).
---------------------------------------------------------------------------

    DOE's analyses indicate that the adopted energy conservation 
standards for pumps would save a significant amount of energy. Relative 
to the case without new standards, the lifetime energy savings for 
pumps purchased in the 30-year period that begins in the anticipated 
year of compliance with the new standards (2020-2049), amount to 0.29 
quadrillion Btu (quads).\9\ This represents a savings of one percent 
relative to the energy use of these products in the case without new 
standards (referred to as the ``no-new-standards case'').
---------------------------------------------------------------------------

    \9\ A quad is equal to 10\15\ British thermal units (Btu). The 
quantity refers to full-fuel-cycle (FFC) energy savings. FFC energy 
savings includes the energy consumed in extracting, processing, and 
transporting primary fuels (i.e., coal, natural gas, petroleum 
fuels), and, thus, presents a more complete picture of the impacts 
of energy efficiency standards. For more information on the FFC 
metric, see section IV.H.1.
---------------------------------------------------------------------------

    The cumulative net present value (NPV) of total consumer costs and 
savings of the standards for pumps ranges from $0.39 billion (at a 7-
percent discount rate) to $1.1 billion (at a 3-percent discount rate). 
This NPV expresses the estimated total value of future operating-cost 
savings minus the estimated increased equipment costs for pumps 
purchased in 2020-2049.
    In addition, the standards for pumps would have significant 
environmental benefits. DOE estimates that the standards would result 
in cumulative greenhouse gas emission reductions (over the same period 
as for energy savings) of 17 million metric tons (Mt) \10\ of carbon 
dioxide (CO2), 9.5 thousand tons of sulfur dioxide 
(SO2), 31 tons of nitrogen oxides (NOX), 75 
thousand tons of methane (CH4), 0.20 thousand tons of 
nitrous oxide (N2O), and 0.035 tons of mercury (Hg).\11\ The 
cumulative reduction in CO2 emissions through 2030 amounts 
to 2.7 Mt, which is equivalent to the emissions resulting from the 
annual electricity use of more than 0.37 million homes.
---------------------------------------------------------------------------

    \10\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \11\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy 
Outlook 2015 (AEO 2015) Reference case, which generally represents 
current legislation and environmental regulations for which 
implementing regulations were available as of October 31, 2014.
---------------------------------------------------------------------------

    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.\12\ The derivation of the SCC values is discussed 
in section IV.L.1. Using discount rates appropriate for each set of SCC 
values, DOE estimates that the net present monetary value of the 
CO2 emissions reduction (not including CO2 
equivalent emissions of other gases with global warming potential) is 
between $0.11 billion and $1.6 billion, with a value of $0.52 billion 
using the central SCC case represented by $40.0/t in 2015. DOE also 
estimates that the net present monetary value of the NOX 
emissions reduction to be $0.04 billion at a 7-percent discount rate, 
and $0.09 billion at a 3-percent discount rate.\13\
---------------------------------------------------------------------------

    \12\ 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: www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).
    \13\ 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.
---------------------------------------------------------------------------

    Table I.3 summarizes the national economic benefits and costs 
expected to result from the adopted standards for pumps.

  Table I.3--Summary of National Economic Benefits and Costs of Adopted
                Energy Conservation Standards for Pumps *
------------------------------------------------------------------------
                                           Present value   Discount rate
                Category                   Billion 2014$        (%)
------------------------------------------------------------------------
                                 Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings.........             0.5               7
                                                     1.4               3
------------------------------------------------------------------------
CO2 Reduction Value ($12.2/t case) **...             0.1               5
CO2 Reduction Value ($40.0/t case) **...             0.5               3
CO2 Reduction Value ($62.3/t case) **...             0.8             2.5
CO2 Reduction Value ($117/t case) **....             1.6               3
NOX Reduction Monetized Value [dagger]..            0.04               7
                                                    0.09               3
Total Benefits [dagger][dagger].........             1.1               7
                                                     2.0              3

[[Page 4372]]

 
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs....             0.2               7
                                                     0.3               3
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                      0.9               7
 Monetized Value [dagger][dagger].......             1.7               3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with pumps
  shipped in 2020-2049. These results include benefits to consumers
  which accrue after 2049 from the products purchased in 2020-2049. The
  costs 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.2.
  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.
[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 adopted standards, for pumps sold in 
2020-2049, can also be expressed in terms of annualized values. The 
monetary values for the total annualized net benefits are the sum of 
(1) the national economic value of the benefits in reduced operating 
costs, minus (2) the increases in product purchase prices and 
installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\14\
---------------------------------------------------------------------------

    \14\ 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.3. 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 DOE believes that the value of operating cost savings and 
CO2 emission reductions are both important, two issues are 
relevant. First, the national operating cost savings are domestic U.S. 
consumer monetary savings that occur as a result of market 
transactions, whereas the value of CO2 reductions is based 
on a global value. Second, the assessments of operating cost savings 
and CO2 savings are performed with different methods that 
use different time frames for analysis. The national operating cost 
savings are measured for the lifetime of pumps shipped in 2020-2049. 
Because CO2 emissions have a very long residence time in the 
atmosphere,\15\ the SCC values in future years reflect future 
CO2-emissions impacts that continue beyond 2100.
---------------------------------------------------------------------------

    \15\ 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 adopted standards 
are shown in Table I.4. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reduction, (for which DOE used a 3-percent discount 
rate along with the SCC series that has a value of $40.0/t in 
2015),\16\ the estimated cost of the standards in this rule is $17 
million per year in increased equipment costs, while the estimated 
annual benefits are $58 million in reduced equipment operating costs, 
$30 million in CO2 reductions, and $3.7 million in reduced 
NOX emissions. In this case, the net benefit amounts to $74 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the SCC series has a value of $40.0/t in 2015, the estimated 
cost of the standards is $17 million per year in increased equipment 
costs, while the estimated annual benefits are $78 million in reduced 
operating costs, $30 million in CO2 reductions, and $5.4 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $96 million per year.
---------------------------------------------------------------------------

    \16\ DOE used a 3-percent discount rate because the SCC values 
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L.1).

[[Page 4373]]



                              Table I.4--Annualized Benefits and Costs of Adopted Energy Conservation Standards for Pumps *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2014$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                            Low net  benefits           High net benefits
                                                                           Primary  estimate               estimate                    estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  58........................  52........................  68.
                                    3%..............................  78........................  70........................  94.
CO2 Reduction Value ($12.2/t case)  5%..............................  8.7.......................  8.1.......................  9.5.
 **.
CO2 Reduction Value ($40.0/t case)  3%..............................  30........................  28........................  33.
 **.
CO2 Reduction Value ($62.3/t case)  2.5%............................  44........................  41........................  48.
 **.
CO2 Reduction Value ($117/t case)   3%..............................  91........................  84........................  99.
 **.
NOX Reduction Value [dagger]......  7%..............................  3.7.......................  3.5.......................  9.0.
                                    3%..............................  5.4.......................  5.0.......................  13.
Total Benefits [dagger][dagger]...  7% plus CO2 range...............  70 to 152.................  64 to 140.................  86 to 176.
                                    7%..............................  91........................  83........................  109.
                                    3% plus CO2 range...............  92 to 174.................  83 to 159.................  116 to 206.
                                    3%..............................  113.......................  102.......................  139.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment      7%..............................  17........................  19........................  17.
 Costs.                             3%..............................  17........................  20........................  18.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............  7% plus CO2 range...............  53 to 136.................  45 to 121.................  69 to 159.
                                    7%..............................  74........................  65........................  92.
                                    3% plus CO2 range...............  75 to 157.................  63 to 139.................  99 to 189.
                                    3%..............................  96........................  83........................  122.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with pumps shipped in 2020-2049. These results include benefits to consumers which
  accrue after 2049 from the pumps purchased from 2020-2049. The results account for the incremental variable and fixed costs incurred by manufacturers
  due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize
  projections of energy prices and shipments from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
  addition, incremental equipment costs reflect constant real prices in the Primary Estimate, an increase in the Low Benefits Estimate, and a decrease
  in the High Benefits Estimate. The methods used to derive projected price trends are explained in IV.F.2.a.
** 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.2. 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. 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 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 adopted standards is 
described in sections IV.H, IV.K, and IV.L of this document.

D. Conclusion

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

II. Introduction

    The following section briefly discusses the statutory authority 
underlying this final rule, as well as some of the relevant historical 
background related to the establishment of standards for pumps.

A. Authority

    Title III of the Energy Policy and Conservation Act of 1975 
``EPCA''), Public Law 94-163, codified at 42 U.S.C. 6291 et seq., sets 
forth a variety of provisions designed to improve energy efficiency. 
Part C of Title III, which for editorial reasons was re-designated as 
Part A-1 upon incorporation into the U.S. Code (42 U.S.C. 6311 et 
seq.), establishes the ``Energy Conservation Program for Certain 
Industrial Equipment.'' The covered equipment includes pumps, the 
subject of this rulemaking. (42 U.S.C. 6311(1)(A)) \17\ There are 
currently no

[[Page 4374]]

energy conservation standards for pumps.
---------------------------------------------------------------------------

    \17\ 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).
---------------------------------------------------------------------------

    Pursuant to EPCA, DOE's energy conservation program for covered 
equipment consists essentially of four parts: (1) Testing; (2) 
labeling; (3) the establishment of Federal energy conservation 
standards; and (4) certification and enforcement procedures. 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. 6295(o)(3)(A) 
and 6316(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 equipment. (42 U.S.C. 
6314(d)) Similarly, DOE must use these test procedures to determine 
whether the equipment complies with standards adopted pursuant to EPCA. 
Id. The DOE test procedures for pumps appear at title 10 of the Code of 
Federal Regulations (CFR) part 431, subpart Y, appendix A.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including pumps. 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. 6313(a)(6)(C), 6295(o), 
and 6316(a)) Furthermore, DOE may not adopt any standard that would not 
result in the significant conservation of energy. (42 U.S.C. 6295(o)(3) 
and 6316(a)) Moreover, DOE may not prescribe a standard: (1) For 
certain products, including pumps, 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) and 6316(a)) In deciding whether a proposed standard is 
economically justified, DOE must determine whether the benefits of the 
standard exceed its burdens. 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 equipment 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) and 6316(a))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) and 
6316(a))
    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any new 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)) and 6316(a)) 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) and 6316(a))
    Additionally, EPCA specifies requirements when promulgating an 
energy conservation standard for a covered equipment that has two or 
more subcategories. DOE must specify a different standard level for a 
group of equipment that has the same function or intended use if DOE 
determines that equipment within such group: (A) Consume a different 
kind of energy from that consumed by other covered equipment within 
such type (or class); or (B) have a capacity or other performance-
related feature which other equipment within such type (or class) do 
not have and such feature justifies a higher or lower standard. (42 
U.S.C. 6295(q)(1)) and 6316(a)) In determining whether a performance-
related feature justifies a different standard for a group of 
equipment, DOE must consider such factors as the utility to the 
consumer of such a feature and other factors DOE deems appropriate. Id. 
Any rule prescribing such a standard must include an explanation of the 
basis on which such higher or lower level was established. (42 U.S.C. 
6295(q)(2)) and 6316(a))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) and 6316(a)) 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).

B. Background

    Prior to this final rule, DOE did not have energy conservation 
standards for pumps. In considering whether to establish standards for 
pumps, DOE issued a Request for Information (RFI) on June 13, 2011. 76 
FR 34192. DOE received several comments in response to the RFI. In 
December 2011, DOE received a letter from the Appliance Standards 
Awareness Project (ASAP) and the Hydraulic Institute indicating that 
efficiency advocates (including ASAP, American Council for an Energy-
Efficient Economy, Natural Resources Defense Council, and Northwest 
Energy Efficiency Alliance) and pump manufacturers (as represented by 
the Hydraulic Institute) had initiated discussions regarding potential 
energy conservation standards for pumps. (EERE-2011-BT-STD-0031-0011.) 
In subsequent letters in March and April 2012, and in a meeting with 
DOE in May 2012, the stakeholders reported on a tentative path forward 
on energy conservation standards for clean water pumps, inclusive of 
the motor and controls, and certification and labeling. (EERE-2011-BT-
STD-0031-0010 and -0012.)
    On February 1, 2013, DOE published a document in the Federal 
Register that announced the availability of the ``Commercial and 
Industrial Pumps Energy Conservation Standard Framework Document,'' 
solicited comment on the document, and invited all stakeholders to a 
public meeting to

[[Page 4375]]

discuss the document. 78 FR 7304. The Framework Document described the 
procedural and analytical approaches that DOE anticipated using to 
evaluate energy conservation standards for pumps, addressed stakeholder 
comments related to the RFI, and identified and solicited comment on 
various issues to be resolved in the rulemaking. (EERE-2011-BT-STD-
0031-0013.)
    DOE held the framework public meeting on February 20, 2013 and 
received many comments that helped identify and resolve issues 
pertaining to pumps relevant to this rulemaking.
    As noted previously, DOE established a working group to negotiate 
proposed energy conservation standards for pumps. Specifically, on July 
23, 2013, DOE issued a notice of intent to establish a commercial and 
industrial pumps working group (``CIP Working Group''). 78 FR 44036. 
The working group was established under the Appliance Standards and 
Rulemaking Federal Advisory Committee (ASRAC) in accordance with the 
Federal Advisory Committee Act (FACA) and the Negotiated Rulemaking Act 
(NRA). (5 U.S.C. App.; 5 U.S.C. 561-570) The purpose of the working 
group was to discuss and, if possible, reach consensus on proposed 
standard levels for the energy efficiency of pumps. The working group 
was to consist of representatives of parties having a defined stake in 
the outcome of the proposed standards, and the group would consult as 
appropriate with a range of experts on technical issues.
    DOE received 19 nominations for membership. Ultimately, the working 
group consisted of 16 members, including one member from the ASRAC and 
one DOE representative. (See Table II.1) The working group met in-
person during seven sets of meetings held December 18-19, 2013 and 
January 30-31, March 4-5, March 26-27, April 29-30, May 28-29, and June 
17-19, 2014.

      Table II.1--ASRAC Pump Working Group Members and Affiliations
------------------------------------------------------------------------
              Member                             Affiliation
------------------------------------------------------------------------
Lucas Adin........................  U.S. Department of Energy.
Tom Eckman........................  Northwest Power and Conservation
                                     Council (ASRAC Member).
Robert Barbour....................  TACO, Inc.
Charles Cappelino.................  ITT Industrial Process.
Greg Case.........................  Pump Design, Development and
                                     Diagnostics.
Gary Fernstrom....................  Pacific Gas & Electric Company, San
                                     Diego Gas & Electric Company,
                                     Southern California Edison, and
                                     Southern California Gas Company.
Mark Handzel......................  Xylem Corporation.
Albert Huber......................  Patterson Pump Company.
Joanna Mauer......................  Appliance Standards Awareness
                                     Project.
Doug Potts........................  American Water.
Charles Powers....................  Flowserve Corporation, Industrial
                                     Pumps.
Howard Richardson.................  Regal Beloit.
Steve Rosenstock..................  Edison Electric Institute.
Louis Starr.......................  Northwest Energy Efficiency
                                     Alliance.
Greg Towsley......................  Grundfos USA.
Meg Waltner.......................  Natural Resources Defense Council.
------------------------------------------------------------------------

    To facilitate the negotiations, DOE provided analytical support and 
supplied the group with a variety of analyses and presentations, all of 
which are available in the docket (www.regulations.gov/#!docketDetail;D=EERE-2013-BT-NOC-0039). These analyses and 
presentations, developed with direct input from the working group 
members, include preliminary versions of many of the analyses discussed 
in this rulemaking, including a market and technology assessment; 
screening analysis; engineering analysis; energy use analysis; markups 
analysis; life cycle cost and payback period analysis; shipments 
analysis; national impact analysis; and manufacturer impact analysis.
    On June 19, 2014, the working group reached consensus on proposed 
energy conservation standards for specific types of pumps. The working 
group assembled their recommendations into a term sheet (See EERE-2013-
BT-NOC-0039-0092) that was presented to, and approved by the ASRAC on 
July 7, 2014. DOE considered the approved term sheet, along with other 
comments received during the rulemaking process, in developing the 
proposed energy conservation standards. DOE published the notice of 
proposed rulemaking (NOPR) on April 2, 2015 with proposed standards for 
pumps. 80 FR 17826. DOE received multiple comments from interested 
parties and considered these comments in the preparation of the final 
rule. Relevant comments and DOE's responses are provided in the 
appropriate sections of this document.

C. Relevant Industry Sectors

    The energy conservation standards adopted in this final rule will 
primarily affect the pump and pumping equipment manufacturing industry. 
The North American Industry Classification System (NAICS) classifies 
this industry under code 333911. DOE identified 86 manufacturers of 
pumps covered under this adopted rule, with 56 of those being domestic 
manufacturers. The leading U.S. industry association for the pumps 
covered under this adopted rule is the Hydraulic Institute (HI).

III. General Discussion

    DOE developed this final rule after considering comments, data, and 
information from interested parties that represent a variety of 
interests. The following discussion addresses issues raised by these 
commenters.
    In developing this final rule, DOE reviewed comments received on 
the April 2015 energy conservation standards NOPR (herein referred to 
as ``NOPR''). 80 FR 17826. Commenters included: The Hydraulic Institute 
(HI); Wilo USA (Wilo); Pacific Gas and Electric Company, San Diego Gas 
and Electric, Southern California Gas Company, and Southern California 
Edison collectively, the CA IOUs); Edison Electric Institute (EEI); The 
Appliance Standards Awareness Project (ASAP), Natural Resources Defense 
Council (NRDC), the Northwest Energy Efficiency Alliance, and the 
Northwest Power and Conservation Council (collectively, the Advocates); 
the Cato Institute; and the U.S. Chamber of Commerce, the American 
Chemistry Council, the American Forest & Paper

[[Page 4376]]

Association, the American Fuel & Petrochemical Manufacturers, the 
American Petroleum Institute, the Brick Industry Association, the 
Council of Industrial Boiler Owners, the National Association of 
Manufacturers, the National Mining Association, the National Oilseed 
Processors Association, and the Portland Cement Association 
(collectively, ``the Associations''). DOE addressed all relevant 
stakeholder comments and requests throughout this final rule.
    DOE notes that they received two comments in support of the 
proposed standards in general. Specifically, the Advocates and the CA 
IOUs supported the proposed standards (which are consistent with TSL 2 
in the final rule) and believed they reflect the negotiations of the 
ASRAC working group. (Advocates, No. 49 at p. 1; \18\ CA IOUs, No. 50 
at p. 1) The following sections describe the specifics of DOE's 
proposed standard and all relevant comments from interested parties.
---------------------------------------------------------------------------

    \18\ A notation in the form ``Advocates, No. 49 at p. 1'' 
identifies a written comment that DOE has received and has included 
in the docket of this rulemaking (Docket No. EERE-2011-BT-STD-0031). 
This particular notation refers to (1) a comment submitted by the 
Advocates, (2) in document number 49 in the docket of this 
rulemaking, and (3) appearing on page 1 of document number 49.
---------------------------------------------------------------------------

A. Definition of Covered Equipment

    Although pumps are listed as covered equipment under 42 U.S.C. 
6311(1)(A), the term ``pump'' is not defined in EPCA. In the test 
procedure final rule (See EERE-2013-BT-TP-0055) DOE defined ``pump'' to 
clarify what constitutes covered equipment. The definition reflects the 
consensus reached by the CIP Working Group in its negotiations: 
``Pump'' means equipment designed to move liquids (which may include 
entrained gases, free solids, and totally dissolved solids) by physical 
or mechanical action and includes a bare pump and, if included by the 
manufacturer at the time of sale, mechanical equipment, driver and 
controls. In the test procedure final rule, DOE also defined ``bare 
pump,'' ``mechanical equipment,'' ``driver,'' and ``controls,'' as 
recommended by the CIP Working Group.

B. Scope of the Energy Conservation Standards in this Rulemaking

    The pumps for which DOE is setting energy conservation standards in 
this rulemaking are consistent with the scope of applicability of the 
test procedure final rule. (See EERE-2013-BT-TP-0055) This scope is 
also consistent with the recommendations of the CIP Working Group and 
includes the following five equipment categories, which are defined in 
the test procedure final rule:
     End suction close-coupled,
     End suction frame mounted/own bearings,
     In-line,
     Radially split, multi-stage, vertical, in-line diffuser 
casing, and
     Submersible turbine.
    As discussed in the test procedure final rule (See EERE-2013-BT-TP-
0055), DOE is further limiting the scope of this rulemaking to clean 
water pumps. DOE defined ``clean water pump'' as a pump that is 
designed for use in pumping water with a maximum non-absorbent free 
solid content of 0.016 pounds per cubic foot, and with a maximum 
dissolved solid content of 3.1 pounds per cubic foot, provided that the 
total gas content of the water does not exceed the saturation volume, 
and disregarding any additives necessary to prevent the water from 
freezing at a minimum of 14[emsp14][deg]F.
    In the test procedure final rule (See EERE-2013-BT-TP-0055), DOE 
also specified several kinds of pumps that fall within one of the five 
equipment categories and are clean water pumps, but will not be subject 
to the test procedure, in accordance with CIP Working Group 
recommendations. DOE has not adopted standards for these pumps in this 
rule:
    (a) Fire pumps;
    (b) self-priming pumps;
    (c) prime-assist pumps;
    (d) magnet driven pumps;
    (e) pumps designed to be used in a nuclear facility subject to 10 
CFR part 50--Domestic Licensing of Production and Utilization 
Facilities; and
    (f) a pump meeting the design and construction requirements set 
forth in Military Specification MIL-P-17639F, ``Pumps, Centrifugal, 
Miscellaneous Service, Naval Shipboard Use'' (as amended); MIL-P-
17881D, ``Pumps, Centrifugal, Boiler Feed, (Multi-Stage)'' (as 
amended); MIL-P-17840C, ``Pumps, Centrifugal, Close-Coupled, Navy 
Standard (For Surface Ship Application)'' (as amended); MIL-P-18682D, 
``Pump, Centrifugal, Main Condenser Circulating, Naval Shipboard'' (as 
amended); MIL-P-18472G, ``Pumps, Centrifugal, Condensate, Feed Booster, 
Waste Heat Boiler, And Distilling Plant'' (as amended). Military 
specifications and standards are available for review at http://everyspec.com/MIL-SPECS.
    In the test procedure final rule (See EERE-2013-BT-TP-0055), DOE 
defined ``fire pump,'' ``self-priming pump,'' ``prime-assist pump,'' 
and ``magnet driven pump.'' DOE also limited the applicability of the 
test procedure to those pumps with the following characteristics:
     25 gallons/minute and greater (at BEP at full impeller 
diameter);
     459 feet of head maximum (at BEP at full impeller diameter 
and the number of stages specified for testing);
     Design temperature range from 14 to 248[emsp14][deg]F;
     Pumps designed to operate with either: (1) a 2- or 4-pole 
induction motor, or (2) a non-induction motor with a speed of rotation 
operating range that includes speeds of rotation between 2,880 and 
4,320 revolutions per minute and/or 1,440 and 2,160 revolutions per 
minute, and in either case, the driver and impeller must rotate at the 
same speed; \19\
---------------------------------------------------------------------------

    \19\ The CIP Working Group recommendation specified pumps 
designed for nominal 3600 or 1800 revolutions per minute (rpm) 
driver speed. However, it was intended that this would include pumps 
driven by non-induction motors as well. DOE believes that its 
clarification accomplishes the same intent while excluding niche 
pumps sold with non-induction motors that may not be able to be 
tested according to the proposed test procedure. The test procedure 
final rule contains additional details.
---------------------------------------------------------------------------

     For VTS pumps, 6 inch or smaller bowl diameter; and
     For ESCC and ESFM pumps, specific speed less than or equal 
to 5000 when calculated using U.S. customary units.\20\
---------------------------------------------------------------------------

    \20\ DOE notes that the NOPR included a scope limitation of 1 to 
200 hp. In the test procedure final rule, these parameters have been 
included in the equipment category definitions. Therefore, the 
limitation is no longer listed separately.
---------------------------------------------------------------------------

    In this final rule, DOE is not adopting standards for pumps that do 
not have these characteristics. DOE responded to all comments on these 
scope parameters in the test procedure final rule (See EERE-2013-BT-TP-
0055) including those from Wilo regarding horsepower, BEP flow, and 
speed, provided in the energy conservation standards docket (See Wilo, 
No. 44 at p. 1-2).
    DOE also specified in the test procedure final rule (See EERE-2013-
BT-TP-0055) that all pump models must be rated and certified in a full 
impeller configuration, as recommended by the CIP Working Group. (See 
EERE-2013-BT-NOC-0039-0092, Recommendation No. 7).\21\ DOE also

[[Page 4377]]

specified a definition for full impeller in that rule.
---------------------------------------------------------------------------

    \21\ The CIP Working Group made this recommendation because a 
given pump may be distributed to a particular customer with its 
impeller trimmed, and impeller trim has a direct impact on a pump's 
performance characteristics. For any pump sold with a trimmed 
impeller, it was recommended that the certification rating for that 
pump model with a full diameter impeller would apply. This approach 
would limit the overall burden when measuring the energy efficiency 
of a given pump. In addition, a rating at full impeller diameter 
will typically be the most consumptive rating for the pump.
---------------------------------------------------------------------------

C. Test Procedure and Metric

    DOE established a uniform test procedure for determining the energy 
consumption of certain pumps, as well as sampling plans for the 
purposes of demonstrating compliance with the energy conservation 
standards that DOE is adopting in this final rule. In the test 
procedure final rule (See EERE-2013-BT-TP-0055), DOE prescribed test 
methods for measuring the energy consumption of pumps, inclusive of 
motors and/or controls, by measuring the produced hydraulic power and 
measuring or calculating the shaft power and/or electric input power to 
the motor or controls. Consistent with the recommendations of the CIP 
Working Group, DOE specified that these methods be based on Hydraulic 
Institute (HI) Standard 40.6-2014, ``Hydraulic Institute Standard for 
Method for Rotodynamic Pump Efficiency Testing,'' hereinafter referred 
to as ``HI 40.6-2014.'' (See EERE-2013-BT-NOC-0039-0092, Recommendation 
No. 10.) DOE specified additions to HI 40.6-2014 to account for the 
energy performance of motors and/or controls, which is not addressed in 
HI 40.6-2014.
    Wilo commented on several elements of the test procedure. Namely, 
Wilo noted that there are no standard losses associated with VFDs; that 
calculation-based methods in the test procedure should be eliminated; 
and that the allowed fluctuations in power measure such as voltage and 
frequency will cause error and discrepancy between tests conducted by 
manufacturers and DOE. (Wilo, No. 44 at p. 3). DOE has addressed these 
comments in the pumps test procedure final rule (See EERE-2013-BT-TP-
0055).
    The test procedure final rule (See EERE-2013-BT-TP-0055) specifies 
that the energy conservation standards for pumps be expressed in terms 
of a constant load PEI (PEICL) for pumps sold without 
continuous or non-continuous controls (i.e., either bare pumps or pumps 
sold inclusive of motors but not continuous or non-continuous controls) 
or a variable load PEI (PEIVL) for pumps sold with 
continuous or non-continuous controls. The PEICL or 
PEIVL, as applicable, describes the weighted average 
performance of the rated pump, inclusive of any motor and/or controls, 
at specific load points, normalized with respect to the performance of 
a ``minimally compliant pump'' (as defined in section III.C.1) without 
controls. The metrics are defined as follows:
[GRAPHIC] [TIFF OMITTED] TR26JA16.000

Where:

PERCL = the equally-weighted average electric input power 
to the pump measured (or calculated) at the driver input over a 
specified load profile, as tested in accordance with the DOE test 
procedure. This metric applies only to pumps in a fixed speed 
equipment class. For bare pumps, the test procedure specifies the 
default motor loss values to use in the calculations of driver 
input.
PERVL = the equally-weighted average electric input power 
to the pump measured (or calculated) at the controller input over a 
specified load profile as tested in accordance with the DOE test 
procedure. This metric applies only to pumps in a variable speed 
equipment class.
PERSTD = the PER rating of a minimally compliant pump (as 
defined in section III.C.1). It can be described as the allowable 
weighted average electric input power to the specific pump, as 
calculated in the test procedure. This metric applies to all 
equipment classes.

    A value of PEI greater than 1.00 indicates that the pump consumes 
more energy than allowed by DOE's energy conservation standard and thus 
does not comply. A value less than 1.00 indicates that the pump 
consumes less energy than the level required by the standard.
    HI requested that DOE release a calculation tool for both 
PEICL and PEIVL, to ensure that all manufacturers 
are rating pumps in the same manner. (HI, No. 45 at pp. 2-3). Wilo also 
commented that, in absence of such a calculation tool, parties could 
potentially make errors in calculating PEI. (Wilo, No. 44 at p. 3). As 
a convenience to interested parties, DOE has provided a draft Excel 
spreadsheet designed to perform the calculations necessary to determine 
PEI.\22\ DOE notes that interested parties should not rely on this 
spreadsheet and should consult the final test procedure rule (See EERE-
2013-BT-TP-0055) for the formulas for calculating PEI. Ultimately, it 
is the responsibility of any party certifying the performance of a 
given pump to ensure the accuracy of calculation of PEI according to 
the DOE test procedure.
---------------------------------------------------------------------------

    \22\ The draft PEI calculator is available at: http://www.energy.gov/eere/buildings/downloads/draft-pei-calculator.
---------------------------------------------------------------------------

1. PER of a Minimally Compliant Pump
    DOE is using a standardized, minimally compliant bare pump, 
inclusive of a minimally compliant motor, as a reference pump for each 
combination of flow at BEP and specific speed. The efficiency of a 
minimally compliant pump is defined as a function of certain physical 
properties of the bare pump, such as flow at BEP and specific speed 
(Ns), as shown in equation 2:
[GRAPHIC] [TIFF OMITTED] TR26JA16.001

Where:

Q100%= BEP flow rate of the tested pump at full impeller diameter 
and nominal speed of rotation (gpm),
Ns = specific speed of the tested pump at 60 Hz and calculated using 
U.S. customary units, and
C = a constant that is set for the surface based on the speed of 
rotation and equipment category of the pump model.

    As noted in the test procedure final rule, DOE developed this 
equation based on the equation used in the EU to develop its 
regulations for clean water pumps, translated to 60 Hz electrical input 
power and U.S. customary units.\23\
---------------------------------------------------------------------------

    \23\ The equation to define the minimally compliant pump in the 
EU is of the same form, but employs different coefficients to 
reflect the fact that the flow will be reported in m3/h 
at 50 Hz and the specific speed will also be reported in metric 
units. Specific speed is a dimensionless quantity, but has a 
different magnitude when calculated using metric versus U.S. 
customary units. DOE notes that an exact translation from metric to 
U.S. customary units is not possible due to the logarithmic 
relationship of the terms.
---------------------------------------------------------------------------

    The C-value is the translational component of the three-dimensional 
polynomial equation that controls pump efficiency by a constant factor 
across the

[[Page 4378]]

entire range of flow and specific speed. A positive or negative change 
in C-value corresponds to a decrease or increase in the pump efficiency 
of a minimally compliant pump, respectively. The efficiency of the 
minimally compliant pump calculated from this function corresponds to 
pump efficiency at BEP flow. This value is adjusted to determine the 
minimally compliant pump efficiency at 75 percent and 110 percent of 
BEP flow using the scaling values implemented in the EU regulations for 
clean water pumps. Namely, the efficiency at 75 percent of BEP flow is 
assumed to be 94.7 percent of that at 100 percent of BEP flow and the 
pump efficiency at 110 percent of BEP flow is assumed to be 98.5 
percent of that at 100 percent of BEP flow.
    Using the efficiency of a minimally compliant pump, PER for a 
minimally compliant pump is determined using equation 3:
[GRAPHIC] [TIFF OMITTED] TR26JA16.002

Where:

[omega]i = weighting at each load point i (equal 
weighting or 0.3333 in this case);
Pu,i = the measured hydraulic output power at load point 
i of the tested pump (hp);
[alpha]i = 0.947 for 75 percent of the BEP flow rate, 
1.000 for 100 percent of the BEP flow rate, and 0.985 for 110 
percent of the BEP flow rate;
[eta]pump,STD = the minimally compliant pump efficiency, 
as determined in accordance with equation 2,
Li = the motor losses at load point i, as determined in 
accordance with the procedure specified in the DOE test procedure, 
and
i = load point corresponding to 75%, 100%, and 110% of BEP flow, as 
determined in accordance with the DOE test procedure.

    Equation 3 defines PER as a function of the average power input to 
the pump motor at three load points, 75%, 100%, and 110% of BEP flow. 
The input power to the motor at each load point comprises a shaft input 
power term and a motor loss term. The shaft input power is computed as 
the quotient of hydraulic output power divided by the minimally 
compliant pump efficiency, where the pump hydraulic output power for 
the minimally compliant pump is the same as that for the particular 
pump being evaluated. As described in the test procedure final rule, 
the corresponding motor loss term is calculated assuming a minimally 
compliant motor that is sized for the calculated shaft input power at 
120% BEP flow, as well as the default part-load loss curve. The 
applicable minimum motor efficiency is determined as a function of 
construction (i.e., open or enclosed), number of poles, and horsepower 
as specified by DOE's energy conservation standards for electric motors 
at 10 CFR 431.25. PERSTD is then determined as the weighted 
average input power to the motor at each load point, as shown in 
equation 3.
    DOE selected several C-values to establish the efficiency levels 
analyzed in this final rule. Each C-value and efficiency level accounts 
for pump efficiency at all load points as well as motor losses, and 
does so equivalently across the full scope of flow and specific speed 
encompassed by this final rule. See section IV.C.4 for a complete 
examination of the efficiency levels analyzed in this rulemaking.

D. Compliance Date

    Pump manufacturers must comply with the energy conservation 
standards established in this final rule as of January 27, 2020. The 
compliance date is consistent with the recommendations of the CIP 
Working Group. (See EERE-2013-BT-NOC-0039-0092, Recommendation No. 9) 
In its analysis, DOE used an analysis period of 2020 through 2049.

E. Technological Feasibility

1. General
    EPCA requires that any new or amended energy conservation standard 
that DOE prescribes be designed to achieve the maximum improvement in 
energy efficiency that DOE determines is technologically feasible. (42 
U.S.C. 6295(o)(2)(A) and 6316(a).) In determining the maximum possible 
improvement in energy efficiency, DOE conducts a screening analysis 
based on all current technology options and working prototype designs 
that could improve the efficiency of the products or equipment that are 
the subject of the rulemaking. DOE develops a list of technology 
options for consideration in consultation with manufacturers, design 
engineers, and other interested parties. DOE then determines which of 
those means for improving efficiency are technologically feasible.
    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).) Section IV.B of this final rule discusses the 
results of the

[[Page 4379]]

screening analysis for pumps, particularly the designs DOE considered, 
those it screened out, and those that are the basis for the trial 
standard levels (TSLs) in this rulemaking. For further details on the 
screening analysis for this rulemaking, see chapter 4 of the final rule 
TSD.
2. Maximum Technologically Feasible Levels
    When DOE adopts a new or amended standard for a type or class of 
covered equipment, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such equipment. (42 U.S.C. 6295(p)(1) and 6316(a)). 
Accordingly, in the engineering analysis, DOE determined the maximum 
technologically feasible (``max-tech'') improvements in energy 
efficiency for pumps, using the design options that passed the 
screening analysis.

F. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the pumps that are 
the subject of this rulemaking purchased in the 30-year period that 
begins in the first full year of compliance with new standards (2020-
2049).\24\ The savings are measured over the entire lifetime of pumps 
purchased in the 30-year analysis period. DOE quantified the energy 
savings attributable to each TSL as the difference in energy 
consumption between each standards case and the no-new-standards case. 
The no-new-standards case represents a projection of energy consumption 
that currently exists in the marketplace in the absence of mandatory 
efficiency standards, and it considers market forces and policies that 
affect demand for more efficient products. To estimate the no-new-
standards case, DOE used data provided by the CIP Working Group, as 
discussed in section IV.H.2.
---------------------------------------------------------------------------

    \24\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a nine-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from potential new standards for the equipment 
that is the subject of this rulemaking. The NIA spreadsheet model 
(described in section IV.H of this document) calculates energy savings 
in site energy, which is the energy directly consumed by products at 
the locations where they are used. For electricity, DOE reports 
national energy savings in terms of primary energy savings, which is 
the savings in the energy that is used to generate and transmit the 
site electricity. To calculate this primary energy savings, DOE derives 
annual conversion factors from the model used to prepare the Energy 
Information Administration's (EIA) 2015 Annual Energy Outlook (AEO).
    DOE also estimates full-fuel-cycle (FFC) energy savings, as 
discussed in DOE's statement of policy and notice of policy amendment. 
76 FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 17, 
2012). 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 efficiency standards. DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
the covered equipment. For more information on FFC energy savings, see 
section IV.H.1.a.
2. Significance of Savings
    To adopt 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)) and 6316(a).) 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), indicated 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 
the TSLs considered in this rulemaking, including the adopted 
standards, are nontrivial, and, therefore, DOE considers them 
``significant'' within the meaning of section 325 of EPCA.

G. Economic Justification

1. Specific Criteria
    As noted above, 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) and 6316(a).) 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 new or 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) Industry net 
present value (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 payback period (PBP) associated with new or amended 
standards. These measures are discussed further in the following 
section. For consumers in the aggregate, DOE also calculates the 
national net present value of the economic impacts applicable to a 
particular rulemaking. DOE also evaluates the LCC impacts of potential 
new standards on identifiable subgroups of consumers that may be 
affected disproportionately by a national 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) and 6316(a).) DOE conducts this comparison in its 
LCC and PBP analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating cost (including energy, 
maintenance, and repair expenditures) discounted over 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 discount rates appropriate for 
consumers. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of

[[Page 4380]]

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 analysis, DOE assumes that consumers will 
purchase the covered products in the first year of compliance with new 
standards. The LCC savings for the considered efficiency levels are 
calculated relative to the case that reflects projected market trends 
in the absence of new standards. DOE's LCC and PBP analysis is 
discussed in further detail in section IV.F.
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) and 
6316(a).) As discussed in section IV.H, DOE uses the NIA spreadsheet to 
project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing classes of equipment, and in evaluating design 
options and the impact of potential standard levels, DOE evaluates 
potential new standards that would not lessen the utility or 
performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV) 
and 6316(a).) Based on data available to DOE, the standards adopted in 
the final rule would not reduce the utility or performance of the 
equipment 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 standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and 
6316(a).) It also directs the Attorney General to determine the impact, 
if any, of any lessening of competition likely to result from a 
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)) 
and 6316(a).) DOE transmitted a copy of its proposed rule to the 
Attorney General with a request that the Department of Justice (DOJ) 
provide its determination on this issue. In a letter dated July 10, 
2015, DOJ stated that it did not have sufficient information to 
conclude that the proposed energy conservation standards or test 
procedure likely will substantially lessen competition in any 
particular product or geographic market. However, DOJ noted that the 
possibility exists that the proposed energy conservation standards and 
test procedure--which will apply to a broad range of pumps--may result 
in anticompetitive effects in certain pump markets. Specifically in 
relation to the proposed standards, DOJ expressed concern that ``by 
design, the bottom quartile of pumps in each class of covered pumps 
will not meet the new standards. The non-compliance of the bottom 
quartile of pump models may result in some manufacturers stopping 
production of pumps altogether and fewer firms producing models that 
comply with the new standards. At this point, it is not possible to 
determine the impact on any particular product or geographic market.''
    Although the terminology in this rule is different from that 
typically used in energy conservation standards rulemaking documents, 
as requested by the Pumps Working Group, the options for non-compliant 
models are no different from other rules. In all energy conservation 
standards rulemakings that set new standards or amend standards, a 
certain percentage of the market is affected by the standard. The 
percentage of affected pumps is represented by any models below the 
amended standard, which may have a distribution of efficiencies (i.e., 
some pump models will be closer to the new or amended standard level 
than others). It is not unusual for a large fraction of models 
(sometimes greater than 25%) to be at or near the baseline and thus be 
impacted. As in all rulemakings, manufacturers have a choice between 
re-designing a non-compliant model to meet the standard and 
discontinuing it.
    The ASRAC working group indicated that between 5 and 10% of models 
requiring redesign may be dropped because current sales are very low. 
(Docket No. EERE-2013-BT-NOC-0039, May 28 Pumps Working Group Meeting, 
p. 61-63) Manufacturers indicated that additional models may be dropped 
where they can be replaced by another existing equivalent model 
currently made by the same manufacturer, often under an alternative 
brand. (Docket No. EERE-2013-BT-NOC-0039, April 29 Pumps Working Group 
Meeting, p. 100) In either case, the elimination of these models would 
not have an adverse impact on the market or overall availability of 
pumps to serve particular applications.
    For these reasons, DOE has concluded that the standard levels 
included in this final rule will not result in adverse impacts on 
competition within the pump marketplace. The remaining concerns in the 
DOJ letter regarding the test procedure have been addressed in the 
parallel test procedure rulemaking (Docket No. EERE-2013-BT-TP-0055).
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)) and 6316(a)) The energy 
savings from the adopted 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 adopted 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 new standards 
may affect these emissions, as discussed in section IV.K; the emissions 
impacts are reported in section V.B.6 of this document. 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)) 
and 6316(a).) 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
    EPCA creates a rebuttable presumption that an energy conservation 
standard is economically

[[Page 4381]]

justified if the additional cost to the consumer of a product that 
meets the standard is less than three times the value of the first 
year's energy savings resulting from the standard, as calculated under 
the applicable DOE test procedure. 42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a) DOE's LCC and PBP analyses generate values used to calculate 
the effect potential new or amended 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) and 6316(a). 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 results are 
discussed in section V.B.1.c of this final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE performed for this 
rulemaking. Separate subsections address each component of DOE's 
analyses.
    DOE used four analytical tools to estimate the impact of the 
standards adopted in this document. The first tool is a spreadsheet 
that calculates LCC and PBP of potential new energy conservation 
standards. The second tool is a spreadsheet that provides shipments 
projections 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. These three spreadsheet tools 
are available on the DOE Web site for this rulemaking: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0031. 
Additionally, DOE used output from the latest version of EIA's National 
Energy Modeling System (NEMS) for the emissions and utility impact 
analyses. NEMS is a public domain, multi-sector, partial equilibrium 
model of the U.S. energy sector. EIA uses NEMS to prepare its Annual 
Energy Outlook (AEO), a widely known energy forecast for the United 
States.

A. Market and Technology Assessment

    When beginning an energy conservation standards rulemaking, DOE 
develops information that provides an overall picture of the market for 
the equipment concerned, including the purpose of the equipment, the 
industry structure, and market characteristics. This activity includes 
both quantitative and qualitative assessments based primarily on 
publicly available information (e.g., manufacturer specification 
sheets, industry publications) and data submitted by manufacturers, 
trade associations, and other stakeholders. The subjects addressed in 
the market and technology assessment for this rulemaking include: (1) 
Quantities and types of equipment sold and offered for sale; (2) retail 
market trends; (3) equipment covered by the rulemaking; (4) equipment 
classes; (5) manufacturers; (6) regulatory requirements and non-
regulatory programs (such as rebate programs and tax credits); and (7) 
technologies that could improve the energy efficiency of the equipment 
under examination. DOE researched manufacturers of pumps and made a 
particular effort to identify and characterize small business 
manufacturers in this sector. See chapter 3 of the final rule TSD for 
further discussion of the market and technology assessment.
1. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
divides covered equipment into equipment classes by the type of energy 
used, capacity, or other performance-related features that would 
justify a different standard from that which would apply to other 
equipment classes. In the NOPR, DOE proposed to divide pumps into 
equipment classes based on the following three factors:
    1. Basic pump equipment category,
    2. Configuration, and
    3. Nominal design speed.
    In the NOPR, DOE also noted that some clean water pumps are sold 
for use with engines or turbines rather than electric motors, and as 
such, would use a different fuel type (i.e., fossil fuels rather than 
electricity). However, because of the small market share of clean water 
pumps using these fuel types, in the test procedure final rule, DOE 
specifies that any pump sold with, or for use with, a driver other than 
an electric motor would be rated as a bare pump.\25\ Therefore, in the 
NOPR, DOE did not disaggregate equipment classes by fuel type.
---------------------------------------------------------------------------

    \25\ Such a rating would include the hydraulic efficiency of the 
bare pump as well as the efficiency of a minimally-compliant 
electric motor, as described in section III.C.1.
---------------------------------------------------------------------------

    As discussed in section III.B, there were five pump equipment 
categories considered in NOPR, each of which form the basis for the 
individual equipment classes; these categories are:
     End suction close coupled;
     End suction frame mounted/own bearings;
     In-line;
     Radially split, multi-stage, vertical, in-line diffuser 
casing; and
     Submersible turbine.
    In the NOPR, DOE proposed to define a pump's configuration by the 
equipment with which it is sold. Pumps sold inclusive of motors and 
continuous or non-continuous controls (as defined in the test 
procedure), capable of operation at multiple driver shaft speeds are 
defined as variable load (VL); pumps sold as bare pumps or with motors 
without such controls, capable only of operation at a fixed shaft 
speed, are defined as constant load (CL).
    The CIP Working Group also recommended separate energy efficiency 
standards for equipment categories at the nominal speeds for two- and 
four-pole motors. (See EERE-2013-BT-NOC-0039-0092, p. 4, Recommendation 
No. 9.) In its NOPR analysis, DOE found that across the market, pumps 
at each nominal speed demonstrate distinctly different energy-related 
performance. For the same load point (flow and head), 2-pole pumps were 
typically found to be less efficient than 4-pole pumps. Their higher 
operating speeds, however, allow a 2-pole pump serving the same load as 
a 4-pole pump to be significantly smaller in size. The smaller size is 
a consumer utility to consumers who face space constraints in their 
installation location.
    To account for the variability in efficiency between 2- and 4-pole 
pumps, in the NOPR, DOE proposed that for both constant load and 
variable load pumps, the equipment classes should also be 
differentiated on the basis of nominal design speed. Therefore, within 
the scope of the NOPR, pumps were to be defined as being designed for 
either 3,600 or 1,800 rpm nominal driver speeds. Pumps defined as 
having a 3,600 rpm nominal driver speed are designed to operate with a 
2-pole induction motor or with a non-induction motor with a speed of 
rotation operating range that includes speeds of rotation between 2,880 
and 4,320 rpm. Pumps defined as having an 1,800 rpm nominal driver 
speed are designed to operate with a 4-pole induction motor or with a 
non-induction motor with a speed of rotation operating range that 
includes speeds of rotation between

[[Page 4382]]

1,440 and 2,160 rpm. Throughout this document, a 3,600 rpm nominal 
speed is abbreviated as 3600, and a 1,800 rpm nominal speed is 
abbreviated as 1800.
    Taking into account the basic pump equipment category, nominal 
design speed, and configuration, DOE proposed the following twenty 
equipment classes in the NOPR:
     ESCC.1800.CL;
     ESCC.3600.CL;
     ESCC.1800.VL;
     ESCC.3600.VL;
     ESFM.1800.CL;
     ESFM.3600.CL;
     ESFM.1800.VL;
     ESFM.3600.VL;
     IL.1800.CL;
     IL.3600.CL;
     IL.1800.VL;
     IL.3600.VL;
     RSV.1800.CL;
     RSV.3600.CL;
     RSV.1800.VL;
     RSV.3600.VL;
     VTS.1800.CL;
     VTS.3600.CL;
     VTS.1800.VL; and
     VTS.3600.VL.
    DOE received no comments regarding their proposed equipment classes 
and associated methodology; consequently, DOE has maintained these 
equipment classes in this final rule. Chapter 3 of the final rule TSD 
provides further detail on the definition of equipment classes.
    As noted in section III.C and specified in the test procedure final 
rule, CL equipment classes are rated with the PEICL metric, 
and VL equipment classes are rated with the PEIVL metric. In 
the NOPR, however, DOE relied on available data for bare pumps. DOE 
received no comment regarding the use of bare pump data to represent 
all equipment classes, as such, DOE's final rule analysis is based on 
equipment category and nominal design speed only--reported results do 
not use a ``.CL'' or ``.VL'' designation. Separate CL and VL equipment 
classes are maintained because CL and VL pumps have distinctly 
different utilities to the consumer (constant vs. variable load 
systems) and as a result require different metric and testing methods.
2. Scope of Analysis and Data Availability
    DOE collected data to conduct all final rule analyses for the 
following equipment classes directly: \26\
---------------------------------------------------------------------------

    \26\ DOE again notes that all analyses are based on data for 
bare pumps. This data is broken out by equipment category and 
nominal design speed only. As such the ``.CL'' or ``.VL'' 
designations are not listed.
---------------------------------------------------------------------------

     ESCC.1800,
     ESCC.3600,
     ESFM.1800,
     ESFM.3600,
     IL.1800,
     IL.3600, and
     VTS.3600.
    The following subsections summarize DOE's approach for the 
remaining equipment classes:
     RS-V.1800;
     RS-V.3600; and
     VT-S.1800.
a. Radially Split, Multi-Stage, Vertical, in-Line Diffuser Casing
    In the NOPR, DOE used available information to identify baseline 
and the maximum technologically feasible efficiency levels for this 
class. DOE identified these efficiency levels based on a review of the 
efficiency data for RSV pumps in a database generated using market 
research and confidential manufacturer information, and that included 
models offered for sale in the United States by three major 
manufacturers of RSV pumps. DOE found no models less efficient than the 
European Union's MEI 40 standard level, which took effect on January 1, 
2015.\27\ Details of this analysis are presented in Chapter 5 of the 
TSD. This analysis, in conjunction with confidential discussions with 
manufacturers, led DOE to conclude that RSV models sold in the United 
States market are global platforms with hydraulic designs equivalent to 
those in the European market. DOE presented this conclusion to the CIP 
Working Group for consideration, where it was supported and reaffirmed 
on numerous occasions (See, e.g. EERE-2013-BT-NOC-0039-0109 at pp. 91-
97, EERE-2013-BT-NOC-0039-0105 at pp. 293-300, EERE-2013-BT-NOC-0039-
0106 at pp. 38-40, 62-67, 88-95; EERE-2013-BT-NOC-0039-0108 at pp. 
119.) Additionally, both HI and Wilo commented in agreement with this 
conclusion (HI, No. 45 at p. 3; Wilo, No. 44 at p. 4). As a result, in 
this final rule, DOE is setting the baseline and max-tech levels 
equivalent to those established in Europe. Specifically, the baseline 
is the European minimum efficiency standard,\28\ and the max-tech level 
is the European level referred to as ``the indicative benchmark for the 
best available technology.'' \29\
---------------------------------------------------------------------------

    \27\ Council of the European Union. 2012. Commission Regulation 
(EU) No 547/2012 of 25 June 2012 implementing Directive 2009/125/EC 
of the European Parliament and of the Council with regard to 
ecodesign requirements for water pumps. Official Journal of the 
European Union. L 165, 26 June 2012, pp. 28-36.
    \28\ Note that this final rule and the European Union regulation 
use different metrics to represent efficiency. DOE used available 
data to establish harmonized baseline and max-tech efficiency levels 
using the DOE metric.
    \29\ Council of the European Union. 2012. Commission Regulation 
(EU) No 547/2012 of 25 June 2012 implementing Directive 2009/125/EC 
of the European Parliament and of the Council with regard to 
ecodesign requirements for water pumps. Official Journal of the 
European Union. L 165, 26 June 2012, pp. 28-36.
---------------------------------------------------------------------------

    Available data did not support the development of a cost-efficiency 
relationship or additional efficiency levels for RSV equipment. As a 
result, in this final rule DOE is specifying a standard level for RSV 
that is equivalent to the baseline, consistent with the recommendation 
of the CIP Working Group. (See EERE-2013-BT-NOC-0039-0092, p. 4, 
Recommendation No. 9). Based on the data available and recommendation 
of the CIP Working Group, DOE concludes that this standard level is 
representative of the typical minimum efficiency configuration sold in 
this equipment class, and no significant impact is expected for either 
the consumers or manufacturers. Chapter 5 of the final rule TSD 
provides complete details on RSV data availability and the development 
of the baseline efficiency level.
b. Submersible Turbine, 1800 RPM
    In the NOPR DOE proposed to set the energy conservation standard 
level for VTS.1800 at the same C-values as those for the VTS.3600 
equipment based on a preliminary consensus of the CIP working group. 
DOE and the working group pursued this approach due to limited 
availability of performance data for the VTS.1800 equipment class; the 
mechanical similarity between VTS.1800 and VTS.3600 equipment; and a 
concern that because of the mechanical similarity, bare VTS.1800 pumps 
(which are identical to bare VTS.3600 pumps) could be sold into the 
market as unregulated equipment, if DOE set a standard only for 
VTS.3600 equipment. However, at the time of consensus, working group 
members were asked to perform research on their four-pole VTS product 
lines and provide feedback on the proposed C-values. (See EERE-2013-BT-
NOC-0039-0105 at pp. 300-308; EERE-2013-BT-NOC-0039-0106 at pp. 38-40, 
62-67) In the NOPR, DOE requested comment on whether any pump models 
would meet the proposed standard at a nominal speed of 3600 but fail at 
a nominal speed of 1800 if the same C-values were used for each 
equipment class.
    In response, Wilo commented that duplicated C-values could be 
eliminated and DOE could use data from only 3600

[[Page 4383]]

rpm (2-pole) pumps, which would set the minimum standards at a slightly 
lower efficiency. (Wilo, No. 44 at p. 4) Wilo's comment implies that 
1800 rpm (4-pole) pumps, in general, are typically more efficient than 
analogous 3600 rpm models; this implication agrees with the preliminary 
consensus reached by the CIP Working Group.
    HI commented that the submersible turbines as defined in this 
regulation are designed for 2-pole speeds and that C-values derived for 
submersible turbines in the April 2015 proposed rule are valid only for 
those pumps with 2-pole motors, and not those with four-pole motors. 
(HI, No. 45 at p. 3).
    DOE considered HI and Wilo's comments in establishing an energy 
conservation standard for VTS.1800 equipment. Per Wilo's comment, DOE 
recognizes that in other analyzed equipment categories, pumps using 4-
pole motors are generally more efficient than an equivalent pump using 
a 2-pole motor at a given flow and specific speed. However, 
insufficient data exists to confirm that 4-pole VTS pumps are more 
efficient than equivalent 2-pole versions. DOE also notes that it did 
not use any data from four-pole pumps to establish the C-values for 2-
pole VTS pumps.
    DOE agrees with HI that submersible turbines in the scope of this 
rulemaking are primarily designed for 2-pole speeds. In the NOPR, DOE 
stated that every 4-pole based model is constructed from a bare pump 
that was originally designed for use with a 2-pole motor. DOE also 
acknowledged that total shipments for the VTS.1800 equipment are 
estimated to be less than 1-percent of VTS.3600 equipment. While the C-
values were derived from pumps with 2-pole motors, as discussed 
previously, the C-values were set equal for VTS.1800 and VTS.3600 due 
to lack of data for VTS.1800 and concerns that bare VTS.1800 pumps 
(which are identical to bare VTS.3600 pumps) could be sold into the 
market as unregulated equipment, if DOE set a standard only for 
VTS.3600.
    Upon further review, DOE concludes that setting standards only for 
pumps that have bowl diameters less than or equal to 6 inches limits 
the possibility that manufacturers would design VTS pumps for use with 
4-pole motors. Specifically, submersible pumps with 6 inch or less bowl 
diameter are primarily designed for wells. Reducing the speed of the 
motor would require additional bowl assemblies that would significantly 
increase the cost of the pump.
    For these reasons, DOE updated its analysis of the VTS.1800 
equipment class. In this final rule, DOE maintained its approach in 
identifying baseline and max-tech levels for VTS.1800, utilizing data 
from VTS.3600 equipment. Specifically, DOE established the baseline and 
max-tech levels for VTS.1800 at a C-value equivalent to the VTS.3600 
baseline and max-tech levels. Available data did not support the 
development of a cost-efficiency relationship, or additional efficiency 
levels for VTS.1800 equipment. As a result, after consideration of 
working group and additional stakeholder input, DOE is setting an 
energy conservation standard for VTS.1800 pumps at the baseline level. 
DOE will continue to monitor VTS products in the market and may 
consider revisions in future rulemakings.
3. Technology Assessment
    Throughout DOE's NOPR analyses, DOE considered technologies that 
may improve pump efficiency. DOE received no comments regarding 
additional technologies to consider; accordingly, DOE has made no 
changes to its considered technologies for the final rule. Chapter 3 of 
the final rule TSD details each of these technology options, which 
include:
     Improved hydraulic design;
     Improved surface finish on wetted components;
     Reduced running clearances;
     Reduced mechanical friction in seals;
     Reduction of other volumetric losses;
     Addition of a variable speed drive (VSD);
     Improvement of VSD efficiency; and
     Reduced VSD standby and off mode power usage.
a. Applicability of Technology Options to Reduced Diameter Impellers
    In the NOPR, DOE proposed setting energy conservation standards for 
pump efficiency based on the pump's full impeller diameter 
characteristics, which would require testing the pump at its full 
impeller diameter. DOE did not receive any comments related to full 
impeller diameter testing. As such, DOE's analyses of technology 
options have been made with respect to the full diameter model. In 
setting standards only on the full diameter, DOE considered that 
improvements made to the full diameter pumps will also improve the 
efficiency for all trimmed or reduced diameter variants.
b. Elimination of Technology Options Due to Low Energy Savings 
Potential.
    In the NOPR, DOE eliminated some technologies that were determined 
to provide little or no potential for efficiency improvement for one of 
the following additional reasons: (a) The technology does not 
significantly improve efficiency; (b) the technology is not applicable 
to the equipment for which standards are being considered or does not 
significantly improve efficiency across the entire scope of each 
equipment class; and (c) efficiency improvements from the technology 
degrade quickly.
    Furthermore, in the NOPR, DOE found that most of the considered 
technology options have limited potential to improve the efficiency of 
pumps. In addition, DOE found that several of the options also do not 
pass the screening criteria listed in section III.B. DOE did not 
receive any comments related to the elimination of technology options 
due to low energy savings potential. DOE discusses the elimination of 
all of these technologies in section III.B.

B. Screening Analysis

    In the NOPR, DOE used four screening factors to determine which 
technology options are suitable for further consideration in a 
standards rulemaking. If a technology option failed to meet any one of 
the factors, it was removed from consideration. The factors for 
screening design options include:
    (1) Technological feasibility. Technologies incorporated in 
commercial products or in working prototypes will be considered 
technologically feasible.
    (2) Practicability to manufacture, install and service. If mass 
production of a technology in commercial products and reliable 
installation and servicing of the technology could be achieved on the 
scale necessary to serve the relevant market at the time of the 
effective date of the standard, then that technology will be considered 
practicable to manufacture, install and service.
    (3) Adverse impacts on product utility or product availability.
    (4) Adverse impacts on health or safety. 10 CFR part 430, subpart 
C, appendix A, sections (4)(a)(4) and (5)(b).
1. Screened Out Technologies
    DOE did not receive any comments related to the technology options 
that were screened out in the NOPR. As such, the conclusions of DOE's 
screening analysis are unchanged from the NOPR. The following 
subsections

[[Page 4384]]

outline DOE's screening methodology and conclusions.

Improved Surface Finish on Wetted Components

    DOE observed through analysis that manual smoothing poses a number 
of significant drawbacks--(1) the process is manually-intensive, which 
makes it impractical to implement in a production environment, (2) the 
efficiency improvements from this process degrade over a short period 
of time, and (3) the relative magnitude of efficiency improvements are 
small (e.g., approximately 20:1 for a baseline pump with a specific 
speed of 2,500 rpms) when compared to other options, such as hydraulic 
redesign. After considering these limitations and the relative benefits 
that might be possible from including this particular option, DOE 
concluded that manual smoothing operations would not be likely to 
significantly improve the energy efficiency across the entire scope of 
each equipment class in this rule. Consequently, DOE screened this 
technology option out. Chapters 3 and 4 of final rule TSD provide 
further details on the justification for screening out this technology.
    In addition to smoothing operations, DOE also evaluated two 
additional methods for improving surface finish; (1) surface coating or 
plating, and (2) improved casting techniques. In addition to being 
unable to significantly improve efficiency across the entire scope of 
each equipment class, surface coatings and platings were also screened 
out due to reliability and durability concerns, and improved casting 
techniques were screened out because the efficiency improvements from 
the technology degrade quickly. Chapters 3 and 4 of final rule TSD 
provide further details on these methods for surface finish 
improvement, and justification for screening out each one.

Reduced Running Clearances

    Manufacturer interview responses indicate that clearances are 
currently set as tight as possible, given the limitations of current 
wear ring materials, machining tolerances, and pump assembly practices. 
To tighten clearance any further without causing operational contact 
between rotating and static components would require larger (stiffer) 
shafts, and larger (stiffer) bearings. Without these stiffer 
components, operational contact will lead to accelerated pump wear and 
loosened clearances. Loosened clearances cause the initial efficiency 
improvements to quickly degrade. Alternatively, the use of larger 
components to improve the stiffness to appropriate levels results in 
increased mechanical losses. These losses negate the potential 
improvements gained from reduced clearances. Consequently, DOE 
eliminated this technology option because of the concerns about 
reliability and quick degradation of efficiency improvements. For 
additional details on the screening of reduced running clearances, see 
chapter 4 of the final rule TSD.

Reduced Mechanical Friction in Seals

    DOE evaluated mechanical seal technologies that offered reduced 
friction when compared to commonly used alternatives. DOE concluded 
from this evaluation that the reduction in friction resulting from 
improved mechanical seals would be too small to significantly improve 
efficiency across the entire scope of each equipment class. For 
additional details, see chapters 3 and 4 of the final rule TSD.

Reduction of Other Volumetric Losses

    The most common causes of volumetric losses (other than previously 
discussed technology options) are thrust balance holes. (Thrust balance 
holes are holes located in the face of an impeller that act to balance 
the axial loads on the impeller shaft and thus reduce wear on rub 
surfaces and bearings). DOE found that removal of thrust balance holes 
from existing impellers will reduce pump reliability. DOE notes that 
manufacturers may be able to decrease volumetric losses by reducing the 
number and/or diameter of thrust balance holes as a part of a full 
hydraulic redesign. For additional details, see chapters 3 and 4 of the 
final rule TSD.

Addition of a Variable Speed Drive (VSD)

    Because there are many application types and load profiles that 
would not benefit from a VSD, and many applications for which energy 
use would increase with a VSD, DOE eliminated the use of VSDs from the 
list of technology options. For additional details, see chapters 3 and 
4 of the final rule TSD.

Improvement of VSD Efficiency

    Because DOE has eliminated the use of VSDs as a technology option, 
improvement of VSD efficiency was screened out as technology option. 
For additional details, see chapters 3 and 4 of the final rule TSD.

Reduced VSD Standby and Off Mode Power Usage

    Although improving VSD efficiency and standby/off mode power may 
help improve overall pump efficiency, DOE concluded that not all pumps 
for which DOE is considering standards in this rule would benefit from 
the use of a VSD. As such, DOE screened out improved VSD efficiency and 
reduced standby and off mode power usage as design options in the 
engineering analysis. For additional details, see chapter 4 of the 
final rule TSD.
2. Remaining Technologies
    In the NOPR, DOE concluded that only improved hydraulic design met 
all four screening criteria (i.e., practicable to manufacture, install, 
and service and no adverse impacts on consumer utility, product 
availability, health, or safety). Furthermore, DOE concluded that 
improved hydraulic design is technologically feasible, as there is 
equipment currently available in the market that has utilized this 
technology option. As such, DOE considered improved hydraulic design as 
a design option in the engineering analysis. 80 FR 17826, 17843 (April 
2, 2015)
    In response to DOE's conclusions, HI commented that hydraulic 
redesign towards higher efficiency may impact suction performance, 
which subsequently may cause issues with increased cavitation, as well 
as reduced mechanical seal and bearing life. (HI, No. 45 at p. 6). In 
response, DOE notes in the NOPR DOE established and analyzed market-
based efficiency levels. This means that for all analyzed efficiency 
levels, a full range of equipment already exists in the market. 
Specifically, the standard level proposed in the NOPR and established 
in this final rule was selected by the CIP Working Group and determined 
to be technologically feasible. Therefore, DOE concludes that improved 
hydraulic design, as analyzed, does not have a negative impact on 
utility. For additional details, see chapter 4 of the final rule TSD.

C. Engineering Analysis

    The engineering analysis determines the manufacturing costs of 
achieving increased efficiency or decreased energy consumption. DOE 
historically has used the following three methodologies to generate the 
manufacturing costs needed for its engineering analyses: (1) The 
design-option approach, which provides the incremental costs of adding 
to a baseline model design options that will improve its efficiency; 
(2) the efficiency-level approach, which

[[Page 4385]]

provides the relative costs of achieving increases in energy efficiency 
levels, without regard to the particular design options used to achieve 
such increases; and (3) the cost-assessment (or reverse engineering) 
approach, which provides ``bottom-up'' manufacturing cost assessments 
for achieving various levels of increased efficiency, based on detailed 
data as to costs for parts and material, labor, shipping/packaging, and 
investment for models that operate at particular efficiency levels.
    DOE conducted the engineering analyses for this rulemaking using a 
design-option approach. The decision to use this approach was made due 
to several factors, including the wide variety of equipment analyzed, 
the lack of numerous levels of equipment efficiency currently available 
in the market, and the limited design options available for the 
equipment. More specifically, for the hydraulic redesign option, DOE 
used industry research to determine changes in manufacturing costs and 
associated increases in energy efficiency. DOE directly analyzed costs 
for the equipment classes listed in section IV.A.2. Consistent with 
HI's recommendation (HI, Framework Public Meeting Transcript at p. 329) 
and available data, DOE concluded that it was infeasible to determine 
the upfront costs (engineering time, tooling, new patterns, 
qualification, etc.) associated with hydraulic redesign via reverse 
engineering.
    The following sections briefly discuss the methodology used in the 
engineering analysis. Complete details of the engineering analysis are 
available in chapter 5 of the final rule TSD.
1. Representative Equipment for Analysis
a. Representative Configuration Selection
    For the NOPR engineering analysis, DOE directly analyzed the cost-
efficiency relationship for all equipment classes specified in in 
section IV.C.8, over the full range of sizes, for all pumps falling 
within the proposed scope. Within the engineering analysis, ``size'' is 
defined by a pump's flow at BEP and specific speed. Analyzing over the 
full size range allowed DOE to use representative configurations for 
each equipment class, rather than an approach that analyzes a 
representative unit from each class. A representative unit has a 
defined size and defined features, while a representative configuration 
defines only the features of the pump, allowing the cost-efficiency 
analysis to consider a large range of data points that occur over the 
full range of sizes.
    In selecting representative configurations, DOE researched the 
offerings of major manufacturers to select configurations generally 
representative of the typical offerings produced within each equipment 
class. Configurations and features were based on high-shipment-volume 
designs prevalent in the market. The key features that define each 
representative configuration include impeller material, impeller 
production method, volute/casing material, volute/casing production 
method, and seal type.
    For the ESCC, ESFM, and IL equipment classes, the representative 
configuration was defined as a pump fitted with a cast bronze impeller; 
cast-iron volute; and mechanical seal. For the RSV and VTS equipment 
classes, the representative configuration was defined as a pump fitted 
with sheet metal-based fabricated stainless-steel impeller(s), and 
sheet metal-based fabricated stainless-steel casing and internal static 
components. 80 FR 17826, 17844 (April 2, 2015) DOE received no comments 
regarding its approach to representative units; consequently, DOE 
utilized the same representative unit configurations in this final 
rule. Chapter 5 of the TSD provides further detail on representative 
configurations.
b. Baseline Configuration
    The baseline configuration defines the lowest efficiency equipment 
in each analyzed equipment class. This configuration represents 
equipment that utilizes the lowest efficiency technologies present in 
the market. In the NOPR, DOE directly analyzed the cost-efficiency 
relationship over the full range of pump sizes; as such, in the NOPR, 
DOE defined a baseline configuration applicable across all sizes, 
rather than a more specific baseline model. This baseline configuration 
ultimately defines the energy consumption and associated cost for the 
lowest efficiency equipment analyzed in each class. In the NOPR, DOE 
established baseline configurations by reviewing available manufacturer 
performance and sales data for equipment manufactured at the time of 
the analysis. 80 FR 17826, 17844 (April 2, 2015) DOE received no 
comments regarding baseline configurations; consequently, DOE has 
maintained this methodology in this final rule. Chapter 5 of the final 
rule TSD sets forth the process that DOE used to select the baseline 
configuration for each equipment class and discusses the baseline in 
greater detail.
2. Design Options
    After conducting the screening analysis, DOE considered hydraulic 
redesign as a design option in the final rule engineering analysis.
3. Available Energy Efficiency Improvements
    In the NOPR, DOE assessed the available energy efficiency 
improvements resulting from a hydraulic redesign for each equipment 
class. This assessment was informed by manufacturer performance and 
cost data, confidential manufacturer interview responses, general 
industry research, and stakeholder input gathered at the CIP Working 
Group public meetings. DOE concluded that a hydraulic redesign is 
capable of improving the efficiency of a pump up to and including the 
max-tech level (discussed in section IV.C.4.a). The efficiency gains 
that a manufacturer realizes from a hydraulic redesign are expected to 
be commensurate with the level of effort and capital a manufacturer 
invests in redesign. 80 FR 17826, 17844 (April 2, 2015) DOE received no 
comments regarding this assessment; consequently, DOE maintained this 
methodology in this final rule. Section IV.C.6 discusses the 
relationship between efficiency gains and conversion cost in more 
detail.
4. Efficiency Levels Analyzed
    In assessing the cost associated with hydraulic redesign, and 
carrying through to all downstream analyses, DOE analyzed several 
efficiency levels for the NOPR. Each level corresponds to a specific C-
value, as shown in Table IV.2. 80 FR 17826, 17844 (April 2, 2015)

[[Page 4386]]



                                         Table IV.1--NOPR Efficiency Levels Analyzed With Corresponding C-Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               EL 0               EL 1               EL 2               EL 3               EL 4               EL 5
                                       -----------------------------------------------------------------------------------------------------------------
            Equipment class                                                                                                             70th efficiency
                                             Baseline       10th efficiency    25th efficiency    40th efficiency    55th efficiency     percentile/max
                                                               percentile         percentile         percentile         percentile            tech
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.............................             134.43             131.63             128.47             126.67             125.07             123.71
ESCC.3600.............................             135.94             134.60             130.42             128.92             127.35             125.29
ESFM.1800.............................             134.99             132.95             128.85             127.04             125.12             123.71
ESFM.3600.............................             136.59             134.98             130.99             129.26             127.77             126.07
IL.1800...............................             135.92             133.95             129.30             127.30             126.00             124.45
IL.3600...............................             141.01             138.86             133.84             131.04             129.38             127.35
RSV.1800 *............................             129.63                N/A                N/A                N/A                N/A             124.73
RSV.3600 *............................             133.20                N/A                N/A                N/A                N/A             129.10
VTS.1800..............................             137.62             135.93             134.13             130.83             128.92             127.29
VTS.3600..............................             137.62             135.93             134.13             130.83             128.92             127.29
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For RSV equipment, DOE established only baseline and max-tech efficiency levels due to limited data availability.

    DOE did not receive any comments related to ESCC, ESFM, IL, or RSV 
pumps and has maintained the same efficiency levels for these equipment 
categories in this final rule. DOE received feedback related to VTS 
pumps and has accordingly updated efficiency levels for the VTS.3600 
and VTS.1800 equipment classes. DOE calculated new C-values for each 
efficiency level based on updated data for submersible motors submitted 
by HI. (See EERE-2013-BT-TP-0055-0008 at pp. 19-20) More detailed 
discussion of this data can be found in the pumps test procedure final 
rule. Additionally, based on feedback from HI suggesting that standards 
for 2-pole VTS pumps (i.e. VTS.3600) should not apply to 4-pole VTS 
pumps (i.e. VTS.1800), DOE analyzed baseline and max-tech efficiency 
levels for the VTS.1800 equipment class. This feedback was previously 
discussed in section IV.A.2.b. In the final rule, DOE updated 
efficiency levels for VTS pumps based on stakeholder feedback. The 
final rule efficiency levels and corresponding C-values are shown in 
Table IV.2. (See section III.C for more information about C-values and 
the related equations.)

                                      Table IV.2--Final Rule Efficiency Levels Analyzed With Corresponding C-Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               EL0                EL1                EL 2               EL 3               EL 4               EL 5
                                       -----------------------------------------------------------------------------------------------------------------
            Equipment class                                                                                                             70th efficiency
                                             Baseline       10th efficiency    25th efficiency    40th efficiency    55th efficiency     percentile/max
                                                               percentile         percentile         percentile         percentile            tech
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.............................             134.43             131.63             128.47             126.67             125.07             123.71
ESCC.3600.............................             135.94             134.60             130.42             128.92             127.35             125.29
ESFM.1800.............................             134.99             132.95             128.85             127.04             125.12             123.71
ESFM.3600.............................             136.59             134.98             130.99             129.26             127.77             126.07
IL.1800...............................             135.92             133.95             129.30             127.30             126.00             124.45
IL.3600...............................             141.01             138.86             133.84             131.04             129.38             127.35
RSV.1800 *............................             129.63                N/A                N/A                N/A                N/A             124.73
RSV.3600 *............................             133.20                N/A                N/A                N/A                N/A             129.10
VTS.1800 *............................             138.78                N/A                N/A                N/A                N/A             127.15
VTS.3600..............................             138.78             136.92             134.85             131.92             129.25             127.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For RSV and VTS.1800 equipment, DOE established only baseline and max-tech efficiency levels due to limited data availability.

a. Maximum Technologically Feasible Levels
    Efficiency level five (EL5), as shown in Table IV.2, represents the 
maximum technologically feasible (``max-tech'') efficiency level for 
the ESCC, ESFM, IL, RSV, and VTS equipment classes. To set the max-tech 
level for the applicable equipment classes, DOE performed an analysis 
to determine the maximum improvement in energy efficiency that is 
technologically feasible for each equipment class.
    DOE considers technologies to be technologically feasible if they 
are incorporated in any currently available equipment or working 
prototypes. A max-tech level results from the combination of design 
options predicted to result in the highest efficiency level possible 
for an equipment class.
    DOE determined during the NOPR stage, based on available 
information and consistent with the conclusions of the CIP Working 
Group, that pumps are a mature technology, with all available design 
options already existing in the marketplace.\30\ Therefore, DOE assumed 
in its analysis that the max-tech efficiency level coincides with the 
maximum available efficiency already offered in the marketplace. As a 
result, DOE performed a market-based analysis to determine max-tech/
max-available levels. Based on this analysis, and as a result of the 
wide range of pumps in each equipment class (1-200 hp), DOE established 
a max-tech level for each equipment class at the 70th efficiency 
percentile. This max-tech level was set so that there are existing 
pumps available in the market that both meet this level and have 
varying shaft input powers over the entire range of 1-200 hp. As a 
result, for each equipment class, the max-tech level is representative 
of the maximum efficiency achievable for pumps that is inclusive of the 
entire horsepower range. A preliminary version of this analysis was 
provided to the CIP

[[Page 4387]]

Working Group during the April 29-30, 2014 meetings, and DOE did not 
receive feedback on any alternative max-tech efficiency levels. (EERE-
2013-BT-NOC-0039-0051, pp. 17-32) DOE incorporated the 70th efficiency 
percentile as the highest TSL level evaluated in the NOPR (80 FR 17826, 
17845 (April 2, 2015)) and received no further comments. DOE therefore 
maintained these max-tech efficiency levels in this final rule. Chapter 
5 of final rule TSD provides complete details on DOE's market-based 
max-tech analysis and results.
---------------------------------------------------------------------------

    \30\ See EERE-2013-BT-NOC-0039-0072, pp.103-105.
---------------------------------------------------------------------------

5. Manufacturers Production Cost Assessment Methodology
a. Changes in MPC Associated With Hydraulic Redesign
    In the NOPR, DOE performed an analysis for each equipment class to 
determine the change in manufacturer production cost (MPC), if any, 
associated with a hydraulic redesign. 80 FR 17826, 17845 (April 2, 
2015) For this analysis, DOE reviewed the manufacturer selling price 
(MSP), component cost, performance, and efficiency data supplied by 
both individual manufacturers and HI. DOE, with the support of the 
majority of the CIP Working Group, concluded that for all equipment 
classes, a hydraulic redesign is not expected to increase the MPC of 
the representative pump configuration used for analysis.\31\ 
Specifically, a hydraulic redesign is not expected to increase 
production or purchase cost of a pump's two primary components; the 
impeller and the volute.
---------------------------------------------------------------------------

    \31\ Refer to the following transcripts in which the conclusion 
of no change in MPC with improved efficiency is presented to the 
working group and discussed: EERE-2013-BT-NOC-0039-0072, pp. 114-130 
and pp. 270-273; EERE-2013-BT-NOC-0039-0109, p. 264).
---------------------------------------------------------------------------

    In the NOPR, DOE acknowledged that actual changes in MPC 
experienced by individual manufacturers will vary, and that in some 
cases redesigns may actually increase or decrease the cost of the 
impeller and/or volute. However, available information indicates that 
the flat MPC-versus-efficiency relationship best represents the 
aggregated pump industry as a whole. DOE did not receive any comments 
on changes in MPC. Consequently, in this final rule, DOE maintains its 
conclusions that hydraulic redesign is not expected to increase the MPC 
of the representative pump configuration used for analysis. Chapter 5 
of the final rule TSD provides complete details on DOE's MPC-efficiency 
analysis and results.
b. Manufacturer Production Cost (MPC) Model
    In the NOPR, for each equipment class, DOE developed a scalable 
cost model to estimate MPC across all pump sizes. Given a pump's 
specific speed and BEP flow, the cost model outputs an estimated MPC. 
Because hydraulic redesign is not expected to result in an increase in 
MPC, the model is efficiency-independent and predicts the same MPC for 
all pumps of the identical BEP flow, specific speed, and equipment 
class, regardless of efficiency.
    The NOPR MPC model was developed using data supplied by both HI and 
individual manufacturers. 80 FR 17826, 17845 (April 2, 2015) This data 
set includes information on the MSP, manufacturer markup, shipments 
volumes, model performance and efficiency, and various other 
parameters. DOE did not receive any comments on the MPC model. 
Consequently, DOE utilized the same MPC model in this final rule. 
Chapter 5 of the final rule TSD provides additional detail on the 
development of the MPC model.
6. Product and Capital Conversion Costs
    DOE expects that hydraulic redesigns will result in significant 
conversion costs for manufacturers as they attempt to bring their pumps 
into compliance with the proposed standard. DOE classified these 
conversion costs into two major groups: (1) Product conversion costs 
and (2) capital conversion costs. Product conversion costs are 
investments in research, development, testing, marketing, and other 
non-capitalized costs necessary to make product designs comply with a 
new or amended energy conservation standard. Capital conversion costs 
are investments in property, plant, and equipment necessary to adapt or 
change existing production facilities such that new product designs can 
be fabricated and assembled.
    In the NOPR, DOE used a bottom-up approach to evaluate the 
magnitude of the product and capital conversion costs the pump industry 
would incur to comply with new energy conservation standards. 80 FR 
17826, 17845-17846 (April 2, 2015) For this approach, DOE first 
determined the industry-average cost, per model, to redesign pumps of 
varying sizes to meet each of the proposed efficiency levels. DOE then 
modeled the distribution of unique pump models that would require 
redesign at each efficiency level. For each efficiency level, DOE 
multiplied each unique failing model by its associated cost to redesign 
and summed the total to reach an estimate of the total product and 
capital conversion cost for the industry.
    Data supplied to DOE by HI was used as the basis for the industry-
average cost, per model, to redesign a failing pump model. HI, through 
an independent third party, surveyed 15 manufacturers regarding the 
product and conversion costs associated with redesigning one-, 50-, and 
200-hp pumps from the 10th to the 40th percentile of market efficiency. 
Specifically, HI's survey contained cost categories for the following: 
Redesign; prototype and initial test; patterns and tooling; testing; 
working capital; and marketing.
    DOE validated the HI survey data with independent analysis and 
comparable independently collected manufacturer interview data. In 
addition, data from the EU pumps regulation preparatory study \32\ was 
used to augment the HI survey data and scale costs to various 
efficiency levels above and below the 40th percentile.
---------------------------------------------------------------------------

    \32\ AEA Energy & Environment. 2008, Appendix 6: Lot 11--
`Circulators in buildings,' Report to European Commission.
---------------------------------------------------------------------------

    DOE used a pump model database, containing various performance 
parameters, to model the distribution of unique pump models that would 
require redesign at each efficiency level. The database is comprised of 
a combination of data supplied by HI and data that DOE collected 
independently from manufacturers. For the ESCC, ESFM, IL, and VTS 
equipment classes, the database is of suitable size to be 
representative of the industry as a whole. Table IV.3 presents the 
resulting product and capital conversion costs for each equipment 
class, at each efficiency level.
    DOE received comments that were consistent with the conversion 
costs presented in the NOPR, as discussed in section IV.J.3. 
Consequently, DOE is maintaining the same product and capital 
conversion costs in this final rule. However, DOE adjusted conversion 
costs for the VTS.1800 class, as DOE could not establish intermediate 
efficiency levels due to lack of data, as discussed in section 
IV.A.2.b. As a result, in Table IV.3, VTS.3600 and VTS.1800 are listed 
separately, as different efficiency levels were established for each of 
these equipment classes. Complete details on the calculation of 
industry aggregate

[[Page 4388]]

product and capital conversion costs are found in chapter 5 of the 
final rule TSD.

                                               Table IV.3--Total Conversion Cost at Each Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
  All values in millions of 2014
             dollars                   EL 0             EL 1                  EL 2                 EL 3                 EL 4                 EL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC/ESFM *......................            0  12.6................  50.1...............  112.2..............  213.5..............  349.8
IL...............................            0  5.1.................  20.3...............  46.0...............  89.5...............  146.1
VTS.3600 [dagger][dagger]........            0  2.6.................  9.5................  19.4...............  38.4...............  62.2
VTS.1800 [dagger][dagger]........            0  N/A **..............  N/A **.............  N/A **.............  N/A **.............  Data Not Available
                                                                                                                                      [dagger]
RSV..............................            0  N/A **..............  N/A **.............  N/A **.............  N/A **.............  Data Not Available
                                                                                                                                      [dagger]
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Due to commonality in design and components, DOE calculated the conversion costs for ESCC and ESFM in aggregate. These values were later
  disaggregated, as appropriate, in downstream analyses.
** Intermediate efficiency levels were not established for VTS.1800 and RSV equipment classes. Please see section IV.A.2 for further detail.
[dagger] Although max-tech efficiency levels were established for VTS.1800 and RSV equipment classes, the available data was insufficient to establish a
  cost-efficiency relationship at max-tech. Please see section IV.A.2 for further detail.
[dagger][dagger] VTS.3600 and VTS.1800 are listed separately as different efficiency levels have been established for each equipment class. Please see
  section IV.A.2 for more details.

7. Manufacturer Markup Analysis
    To account for manufacturers' non-production costs and profit 
margin, DOE applies a non-production cost multiplier (the manufacturer 
markup) to the full MPC. The resulting MSP is the price at which the 
manufacturer can recover all production and non-production costs and 
earn a profit. To meet the new energy conservation standards set forth 
in this rule, DOE expects that manufacturers will hydraulically 
redesign their product lines, which may result in new and increased 
capital and equipment conversion costs. Depending on the competitive 
environment for this equipment, some or all of the increased conversion 
costs may be passed from manufacturers to retailers and eventually to 
consumers in the form of higher purchase prices. The MSP should be high 
enough to recover the full cost of the equipment (i.e., full production 
and non-production costs) and overhead (including amortized product and 
capital conversion costs), and still yield a profit. The manufacturer 
markup has an important bearing on profitability. A high markup under a 
standards scenario suggests manufacturers can readily pass along more 
of the increased capital and equipment conversion costs to consumers. A 
low markup suggests that manufacturers will not be able to recover as 
much of the necessary investment in plant and equipment.
    To support the downstream analyses, DOE investigated industry 
markups in detail, characterizing industry-average markups, individual 
manufacturer markup structures, and the industry-wide markup structure.
a. Industry-Average Markups
    In the NOPR, industry-average manufacturer markups were developed 
by weighting individual manufacturer markup estimates on a market share 
basis, as manufacturers with larger market shares more significantly 
affect the market average. 80 FR 17826, 17846 (April 2, 2015) DOE did 
not receive any comments on these industry-average markups and used the 
same markups in this final rule.
b. Individual Manufacturer Markup Structures
    In the NOPR, DOE concluded that within an equipment class, each 
manufacturer maintains a flat markup, based on data and information 
gathered during the manufacturer interviews. This means that each 
manufacturer targets a single markup value for models offered in an 
equipment class, regardless of size, efficiency, or other design 
features. Tiered product offerings and markups do not exist at the 
individual manufacturer level. 80 FR 17827, 17846 (April 2, 2015) DOE 
received no comments regarding these individual manufacturer markup 
structure conclusions. Consequently, DOE has carried through these 
conclusion into their final rule analysis.
c. Industry-Wide Markup Structure
    DOE also used the markup data gathered during the manufacturer 
interviews to assess the industry-wide markup structure. Although 
tiered product offerings and markups do not exist at the individual 
manufacturer level, DOE concluded in the NOPR that when analyzed as 
whole, the industry exhibits a relationship between manufacturer markup 
and efficiency. 80 FR 17827, 17846-17847 (April 2, 2015) DOE's analysis 
showed that on the industry-wide scale, the lowest efficiency models 
tend to garner lower markups than higher efficiency models, up to about 
the 25th percentile of efficiency. Beyond the 25th percentile, the 
relationship flattens out, and no correlation is seen between markup 
and efficiency. The data suggest that this relationship is a result of 
certain manufacturers positioning themselves with more or less 
efficient product portfolios and charging markups commensurate with 
their position in the marketplace. They also indicate (consistent with 
the views of the CIP Working Group) that the market does not value 
efficiency beyond the lower 25th percentile. (EERE-2013-BT-NOC-0039-
0072, pp. 269-278; EERE-2013-BT-NOC-0039-0054, pp. 67-69) In both 
manufacturer interviews and working group comments, manufacturers 
stated that efficiency is not currently the primary selling point or 
cost driver for the majority of pumps within the scope of the proposed 
rule. Rather, other factors, such as reliability, may influence price 
significantly and are known to be more influential in the purchaser's 
decision making process. (EERE-2013-BT-NOC-0039-0072, pp. 269-278)
    DOE notes that in the NOPR analysis, the development of the markup-
efficiency relationship was based on data from the IL equipment class. 
In the NOPR phase, DOE, with support of the CIP Working Group, 
concluded that the markup structure of the IL equipment class is 
representative of the ESCC, ESFM, and VTS equipment classes.\33\
---------------------------------------------------------------------------

    \33\ Refer to the following transcript in which the conclusion 
that the markup structure of the IL equipment class is 
representative of the ESCC, ESFM, and VTS equipment classes is 
presented to the working group and no negative feedback is received: 
EERE-2013-BT-NOC-0039-0072, pp. 292-295.
---------------------------------------------------------------------------

    Based on comments previously discussed in section IV.A.2.b, DOE has 
concluded that available data do not support the development of a cost-
efficiency relationship for the VTS.1800 equipment class. Beyond the 
removal of the VTS.1800 equipment class from the analysis, DOE did not 
receive any additional comments on the IL markup-efficiency 
relationship or the general

[[Page 4389]]

methodology presented in the NOPR. Consequently, in this final rule, 
DOE applied the industry-wide IL markup-efficiency relationship to only 
the ESCC, ESFM, and VTS.3600 equipment classes. Chapter 5 of the final 
rule TSD provides complete details the markup-efficiency relationship 
analysis and results.
8. MSP-Efficiency Relationship
    Ultimately, the goal of the engineering analysis is to develop an 
MSP-Efficiency relationship that can be used in downstream rulemaking 
analyses such as the Life Cycle Cost (LCC) analysis, the Payback Period 
(PBP) analysis, and the Manufacturer Impact Analysis (MIA).
    For the NOPR downstream analyses, DOE evaluated the base case MSP-
Efficiency relationship as well as two separate MSP-Efficiency 
relationship scenarios to represent the uncertainty regarding the 
potential impacts on prices and profitability for manufacturers 
following the implementation of new energy conservation standards. 80 
FR 17827, 17847 (Apr. 2, 2015) The two scenarios are: (1) Flat pricing, 
and (2) cost recovery pricing. These scenarios result in varying 
revenue and cash flow impacts and were chosen to represent the lower 
and upper bounds of potential revenues for manufacturers. DOE did not 
received any additional comments on these two cost recovery scenarios. 
Consequently, DOE has maintained its methodology and scenarios in the 
analysis of this final rule. The scenarios are described in further 
detail in the following paragraphs.
    The base pricing scenario represents a snapshot of the pump market, 
as it stands prior to this rulemaking. The base pricing scenario was 
developed by applying the markup-efficiency relationship presented in 
section IV.C.7.c to the MPC model presented in section IV.C.5.a. Both 
the markup and MPC model are based on data supplied by individual 
manufacturers. From these data, DOE created a scalable model that can 
determine MSP as a function of efficiency, specific speed, and flow at 
BEP.
    Under the flat pricing standards case scenario, DOE maintains the 
same pricing as in the base case, which resulted in no price changes at 
a given efficiency level for the manufacturer's first consumer. Because 
this pricing scenario assumes that manufacturers would not increase 
their pricing as a result of standards, even as they incur conversion 
costs, this scenario is considered a lower bound for revenues.
    In the cost recovery pricing scenario, manufacturer pricing is set 
so that manufacturers recover their conversion costs over the analysis 
period. This cost recovery is enabled by an increase in mark-up, which 
results in higher sales prices for pumps even as MPCs stay the same. 
The cost recovery calculation assumes manufacturers raise prices on 
models where a redesign is necessitated by the standard. The additional 
revenue due to the increase in markup results in manufacturers 
recovering 100 percent of their conversion costs over the 30-year 
analysis period, taking into account the time-value of money. The final 
MSP-efficiency relationship for this scenario is created by applying 
the markup-efficiency relationship to the MPC cost model presented in 
section IV.C.5.b., resulting in a scalable model that can determine MSP 
as a function of efficiency, specific speed, and flow at BEP. In the 
LCC and NIA analysis, DOE evaluated only the cost recovery pricing 
scenario, as it would be the most conservative case for consumers, 
resulting in the fewest benefits.\34\
---------------------------------------------------------------------------

    \34\ The cost recovery pricing scenario is the most conservative 
case (i.e., resulting in the fewest benefits) for consumers and the 
most positive case for manufacturers (i.e., resulting in the fewest 
negative impacts). In the MIA, DOE analyses this scenario and the 
flat pricing scenario, which results in the most positive case for 
consumer and the most conservative case for manufacturers.
---------------------------------------------------------------------------

D. Markups Analysis

    DOE uses markups (e.g., manufacturer markups, distributor markups, 
contractor markups) and sales taxes to convert the MSP estimates from 
the engineering analysis to consumer prices, which are then used in the 
LCC and PBP analysis and in the manufacturer impact analysis. The 
markups are multipliers that represent increases above the MSP. DOE 
develops baseline and incremental markups based on the equipment 
markups at each step in the distribution chain. The incremental markup 
relates the change in the manufacturer sales price of higher-efficiency 
models (the incremental cost increase) to the change in the consumer 
price.
    Before developing markups, DOE defines key market participants and 
identifies distribution channels. In the NOPR, DOE used the following 
main distribution channels that describe how pumps pass from the 
manufacturer to end-users: (1) Manufacturer to distributor to 
contractor to end-users (70 percent of sales); (2) manufacturer to 
distributor to end-users (17 percent of sales); (3) manufacturer to 
original equipment manufacturer to end-users (8 percent of sales); (4) 
manufacturer to end-users (2 percent of sales); and (5) manufacturer to 
contractor to end-users (1 percent of sales). Other distribution 
channels exist but are estimated to account for a minor share of pump 
sales (combined 2 percent). 80 FR 17826, 17847 (April 2, 2015). In 
response to the NOPR, Wilo agreed that the market distribution channels 
included all appropriate intermediate steps, and the estimated market 
share of each channel. (Wilo, No. 44 at p. 4) DOE received no 
additional comments on this topic. Therefore, DOE maintained these 
distribution channels for this final rule.
    In the NOPR, to develop markups for the parties involved in the 
distribution of the equipment, DOE utilized several sources, including: 
(1) The U.S. Census Bureau 2007 Economic Census Manufacturing Industry 
Series (NAICS 33 Series) \35\ to develop original equipment 
manufacturer markups; (2) the U.S. Census Bureau 2012 Annual Wholesale 
Trade Survey, Hardware, and Plumbing and Heating Equipment and Supplies 
Merchant Wholesalers \36\ to develop distributor markups; and (3) 2013 
RS Means Electrical Cost Data \37\ to develop mechanical contractor 
markups. 80 FR 17826, 17847 (April 2, 2015).
---------------------------------------------------------------------------

    \35\ U.S. Census Bureau (2007). Economic Census Manufacturing 
Industry Series (NAICS 33 Series) www.census.gov/manufacturing/asm.
    \36\ U.S. Census Bureau (2012). Annual Wholesale Trade Survey, 
Hardware, and Plumbing and Heating Equipment and Supplies Merchant 
Wholesalers (NAICS 4237). www.census.gov/wholesale/index.html.
    \37\ RS Means (2013), Electrical Cost Data, 36th Annual Edition 
(Available at: www.rsmeans.com).
---------------------------------------------------------------------------

    In addition to the markups, DOE derived State and local taxes from 
data provided by the Sales Tax Clearinghouse.\38\ 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. (Id.)
---------------------------------------------------------------------------

    \38\ Sales Tax Clearinghouse, Inc. (last accessed on January 10, 
2014), State sales tax rates along with combined average city and 
county rates, http://thestc.com/STrates.stm.
---------------------------------------------------------------------------

    DOE did not receive any comments on the markups or sales tax and 
has maintained this approach for the final rule.
    Chapter 6 of the final rule TSD provides details on DOE's 
development of markups for pumps.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of pumps at different efficiency levels and to 
assess the energy savings potential of increased pumps efficiency. The 
energy use analysis estimates the range of energy

[[Page 4390]]

use of pumps in the field (i.e., as they are actually used by 
consumers). The energy use analysis provides the basis for other 
analyses DOE performed, particularly assessments of the energy savings 
and the savings in consumer operating costs that could result from 
adoption of amended or new standards.
    DOE analyzed the energy use of pumps to estimate the savings in 
energy costs that consumers would realize from more energy-efficient 
pump equipment. Annual energy use depends on a number of factors that 
depend on the utilization of the pump, particularly duty point (i.e., 
flow, head, and power required for a given application), pump sizing, 
annual hours of operation, load profiles, and equipment losses. The 
annual energy use is calculated as a weighted sum of input power 
multiplied by the annual operating hours across all load points.
1. Duty Point
    For the NOPR, DOE researched information on duty points for the 
commercial, industrial, and agricultural sectors from a variety of 
sources. DOE identified statistical samples only for the agricultural 
sector. Therefore, DOE used manufacturer shipment data to estimate the 
distribution of pumps in use by duty point. To account for the wide 
range of pump duty points in the field, DOE placed pump models in bins 
with varying power capacities using the shipment data provided by 
individual manufacturers. DOE grouped all pump models into nine power 
bins on a log-scale between 1 and 200 hp. Then, for each equipment 
class, DOE grouped the pump models into nine flow bins on a log-scale 
between minimum flow at BEP and maximum flow at BEP. Based on the power 
and flow binning process, DOE defined a representative unit for each of 
the combined power and flow bins. Within each bin, DOE defined the pump 
performance data (power and flow at BEP, pump curve and efficiency 
curve) as the shipment-weighted averages over all units in the bin. DOE 
used these data to calculate the annual energy use for each of the 
equipment classes. 80 FR 17826, 17848 (Apr. 2, 2015). DOE did not 
receive any comments and has maintained this approach in the final 
rule.
2. Pump Sizing
    For the NOPR, DOE reviewed relevant guidelines and resources and 
introduced a variable called the BEP offset to capture variations in 
pump sizing practices in the field. The BEP offset is essentially the 
relative distance between the consumer's duty point and the pump's BEP. 
Pumps are often sized to operate within 75 percent to 110 percent of 
their BEP flow. Therefore, for the NOPR analysis, the BEP offset was 
assumed to be uniformly distributed between -0.25 (i.e., 25% less than 
BEP flow) and 0.1 (10% more than BEP flow). 80 FR 17826, 17848 (April 
2, 2015). DOE did not receive any comments on pump sizing and has 
maintained this approach in the final rule.
3. Operating Hours
    For the NOPR, DOE estimated average annual operating hours by 
application based on inputs from a market expert and feedback from the 
CIP Working Group.\39\ DOE developed statistical distributions to use 
in its energy use analysis. 80 FR 17826, 17848 (April 2, 2015). In 
response to the NOPR, Wilo commented that the average operating hours 
for the different pump equipment classes and applications in the scope 
of this rulemaking are based on assumptions and are not well documented 
in engineering resources. (Wilo, No. 44 at p. 4) Because operating 
hours are not well documented in engineering resources, DOE developed 
statistical distributions in the NOPR. DOE maintained its estimate on 
operating hours based on feedback from the CIP Working Group.
---------------------------------------------------------------------------

    \39\ Refer to the following transcripts in which operating hours 
are presented to the working group and no negative feedback is 
received: EERE-2013-BT-NOC-0039-0072, pp. 353-355; EERE-2013-BT-NOC-
0039-0109, pp. 139-152.
---------------------------------------------------------------------------

4. Load Profiles
    Considering the range of all applications of the pump equipment 
classes for which DOE considered standards, in the NOPR DOE developed 
four load profiles, characterized by different weights at 50 percent, 
75 percent, 100 percent, and 110 percent of the flow at the duty point. 
These load profiles represent different types of loading conditions in 
the field: flat load at BEP, flat/over-sized load weighted evenly at 50 
percent and 75 percent BEP, variable load over-sized, and variable load 
under-sized. In the NOPR, based on discussion in the CIP Working Group, 
DOE estimated that only 10 percent of consumers would use pumps with 
the variable load/undersized load profile; the remaining load profiles 
were estimated to apply to 30 percent of consumers each. 80 FR 17826, 
17848 (April 2, 2015). In response to the NOPR, Wilo commented that 
there are no established typical load profiles for pumps within U.S. 
engineering standards. (Wilo, No. 44 at p. 5) HI recommended that the 
equally weighted load profiles initially proposed during the CIP 
Working Group negotiations be used in the consumer sample. (HI, No. 45 
at p. 3) After considering comments from HI and Wilo, and in the 
absence of established typical load profiles for pumps, DOE maintains 
the four distinct load profiles and weights outlined in the NOPR to 
define the range of applications available for pumps on the market.
    To describe a pump's power requirements at points on the load 
profile away from the BEP, DOE used the shipment-weighted average pump 
curves, modeled as second-order polynomial functions, for each of the 
representative units. 80 FR 17826, 17849 (April 2, 2015). DOE received 
no comment on this approach and maintains it in this final rule.
5. Equipment Losses
    Using the duty point, load profile, and operating hours, DOE 
calculated the energy use required for the end-use (or the energy which 
that is converted to useful hydraulic horsepower). However, the total 
energy use by pumps also depends on pump losses, motor losses, and 
control losses.
    Pump losses account for the differences between pump shaft 
horsepower and hydraulic horsepower due to friction and other factors. 
In the NOPR, DOE took this into account using the efficiency 
information available in the manufacturer shipment data for each pump. 
To describe pump efficiency at points away from the BEP, DOE calculated 
shipment-weighted average efficiency curves for each representative 
unit, modeled as second-order polynomial functions. DOE used existing 
minimum motor efficiency standards in calculating annual energy use as 
well as the proposed default submersible motor efficiency values. DOE 
did not consider VFDs in the LCC analysis. 80 FR 17826, 17849 (April 2, 
2015).
    DOE received no comments on the use of these equipment losses in 
its energy use analysis. However, based on comments on the test 
procedure NOPR, DOE revised the default submersible motor efficiency 
values in the test procedure final rule. For the energy use analysis, 
DOE updated its submersible motor efficiency values to reflect those 
values.
    DOE proposed in the test procedure NOPR that pumps sold with non-
electric drivers be rated as bare pumps. Any hydraulic improvements 
made to the bare pump to comply with any applicable energy conservation 
standards would also result in energy savings if the pump is used with 
a non-electric driver. However, DOE

[[Page 4391]]

estimated, based on information from consultants and the working group, 
that only 1-2% of pumps in scope are driven by non-electric drivers. 
Therefore, in the NOPR, DOE accounted for the energy use of all pumps 
as electricity use and did not account for fuel use in its analysis. 
DOE requested comment on the percent of pumps in scope operated by each 
fuel type other than electricity (e.g., diesel, gasoline, liquid 
propane gas, or natural gas) and the efficiency or losses of each type 
of non-electric driver, including transmission losses if any, that 
would allow DOE to estimate the fuel use and savings of pumps sold with 
non-electric drivers. 80 FR 17826, 17849 (April 2, 2015).
    DOE did not receive any input that would allow it to conduct this 
side analysis. HI agreed that non-electric drivers represent a very 
small percentage of drivers used with pumps and does not believe 
further evaluation on non-electric drivers is needed. (HI, No. 45 at p. 
4) Consistent with HI's suggestion and lack of any additional input or 
data during public review, DOE did not include energy savings from non-
electric drivers in the final rule. As in the NOPR, DOE accounted for 
the energy use of all pumps, including those used in agricultural 
applications with non-electric drivers, as electricity use.
    Chapter 7 of the final rule TSD provides details on DOE's energy 
use analysis for pumps.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducts the life-cycle cost (LCC) and payback period (PBP) 
analysis to estimate the economic impacts of potential new standards on 
individual consumers of pump equipment. The LCC calculation considers 
total installed cost (equipment cost, sales taxes, distribution chain 
markups, and installation cost), operating expenses (energy, repair, 
and maintenance costs), equipment lifetime, and discount rate. DOE 
calculated the LCC for all consumers as if each would purchase a pump 
in the year that compliance is required with the standard. DOE presumes 
that the purchase year for all pump equipment for purposes of the LCC 
calculation is 2020, the first full year following the expected 
compliance date of late 2019. To compute LCCs, DOE discounted future 
operating costs to the time of purchase and summed them over the 
lifetime of the equipment.
    DOE analyzed the effect of changes in installed costs and operating 
expenses by calculating the PBP of potential new standards relative to 
baseline efficiency levels. The PBP estimates the amount of time it 
would take the consumer to recover the incremental increase in the 
purchase price of more-efficient equipment through lower operating 
costs. In other words, the PBP is the change in purchase price divided 
by the change in annual operating cost that results from the energy 
conservation standard. DOE expresses this period in years. Similar to 
the LCC, the PBP is based on the total installed cost and operating 
expenses. However, unlike the LCC, DOE only considers the first year's 
operating expenses in the PBP calculation. Because the PBP does not 
account for changes in operating expense over time or the time value of 
money, it is also referred to as a simple PBP.
    DOE's LCC and PBP analyses are presented in the form of a 
spreadsheet model, available on DOE's Web site for pumps.\40\ DOE 
accounts for variability in energy use and prices, discount rates by 
doing individual LCC calculations for a large sample of pumps (10,000 
for each equipment class) that are assigned different installation 
conditions. Installation conditions include consumer attributes such as 
sector and application, and usage attributes such as duty point and 
annual hours of operation. Each pump installation in the sample is 
equally weighted. The simple average over the sample is used to 
generate national LCC savings by efficiency level. The results of DOE's 
LCC and PBP analysis are summarized in section V.B.1.a and described in 
detail in chapter 8 of the final rule TSD.
---------------------------------------------------------------------------

    \40\ See www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/14.
---------------------------------------------------------------------------

1. Approach
    DOE conducted the LCC analysis by developing a large sample of 
10,000 pump installations, which represent the general population of 
pumps that would be affected by adopted energy conservation standards. 
Separate LCC analyses are conducted for each equipment class. 
Conceptually, the LCC distinguishes between the pump installation and 
the pump itself. The pump installation is characterized by a 
combination of consumer attributes (sector, application, electricity 
price, discount rate) and usage attributes (duty point, BEP offset, 
load profile, annual hours of operation, mechanical lifetime) that do 
not change among the considered efficiency levels. The pump itself is 
the regulated equipment, so its efficiency and selling price change in 
the analysis.
    In the no-new-standards case, which represents the market in the 
absence of new energy efficiency standards, DOE assigns a specific 
representative pump to each pump installation. These pumps are chosen 
from the set of representative units described in the energy use 
analysis. The relative weighting of different representative units in 
the LCC sample is determined based on 2012 shipments data supplied by 
the manufacturers.
    The no-new-standards case also includes an estimate of the 
distribution of equipment efficiencies. In the NOPR, DOE developed a 
no-new-standards case distribution of efficiency levels for pumps using 
the shipments data mentioned above. DOE assumed that this distribution 
would remain constant over time and applied the 2012 distribution in 
2020. 80 FR 17826, 17850 (April 2, 2015). DOE received no comment on 
these assumptions and has maintained them for this final rule. Out of 
this distribution, DOE assigns a pump efficiency based on the relative 
weighting of different efficiencies. Chapter 8 of the final rule TSD 
contains details regarding the no-new-standards case efficiency 
distribution.
    At each efficiency level, the pump assigned in the no-new-standards 
case has a PEI rating that either would or would not meet a standard 
set at that efficiency level. If the pump would meet the standard at a 
given efficiency level, the installation is left unchanged. For that 
installation, the LCC at the given TSL is the same as the LCC in the 
no-new-standards case and the standard does not impact that user. If 
the pump would not meet the standard at a given efficiency level, the 
no-new-standards case pump is replaced with a compliant unit (i.e., a 
redesigned pump) having a higher selling price and higher efficiency, 
and the LCC is recalculated. The LCC savings at that efficiency level 
are defined as the difference between the LCC in the no-new-standards 
case and the LCC for the more efficient pump. The LCC is calculated for 
each pump installation at each efficiency level.
    In the engineering analysis, DOE determines the total conversion 
costs required to bring the entire population of pump models up to a 
given efficiency level. DOE uses these conversion costs to calculate 
the selling price of a redesigned pump within each of the combined 
power and flow bins that define a representative unit. DOE assumes that 
all consumers whose no-new-standards case pump would not meet the 
standard at a given efficiency level will purchase the new redesigned 
pump at the new selling price, and that manufacturers recover the total 
conversion costs at each efficiency level. DOE allocates conversion 
costs to each

[[Page 4392]]

representative unit based on the proportion of total revenues generated 
by that unit in the no-new-standards case.
    DOE calculates the selling price in two stages. In the first stage, 
for each equipment class and efficiency level, DOE calculates the total 
revenue generated from all failing units, adds the total conversion 
costs to the revenues from failing units to generate the new revenue 
requirement, and defines a markup as the ratio of the new revenue 
requirement to the no-new-standards case revenue from failing units. 
This approach ensures that (1) the conversion costs are recovered from 
the sale of redesigned units and (2) the conversion costs are 
distributed across the different representative units in proportion to 
the amount of revenue each representative unit generates in the no-new-
standards case.
    In the second stage, DOE calculates a new selling price for each 
redesigned representative unit, i.e., for each of the combined power 
and flow bins. In the no-new-standards case, each bin contains a set of 
pumps with varying efficiencies and varying prices. However, all pumps 
that fail at an efficiency level are given the same new price. Hence, 
the markup defined in stage one of the calculation cannot be applied 
directly to the selling price of a failing unit. Instead, DOE 
calculates revenues associates with all failing units in the bin, and 
applies the markup to this total to get the new revenue requirement for 
that bin. Then DOE defines the new selling price as the new revenue 
requirement divided by the number of failing units in the bin.
    In general, the economic inputs to the LCC, (e.g., discount rate 
and electricity price) depend on the sector, while the usage criteria 
(e.g., hours of operation) may depend on the application. For the pumps 
analysis, DOE considered four sectors: industrial, commercial 
buildings, agricultural and municipal water utilities. DOE assigns 
electricity prices and discount rates based on the sector. DOE 
considered several applications, based on a review of available data, 
and determined that there is some correlation between application and 
operating hours. DOE did not find any information relating either the 
BEP offset (a pump sizing factor) or load profile to either sector or 
application, so DOE assigned these values randomly.
    As noted above, DOE determines the distribution of representative 
units in the pump installation sample from the shipments data. Each 
representative unit can be thought of as a pump that operates at a 
representative duty point. To assign the consumer attributes (sector, 
application, etc.) to duty points, DOE reviewed several data sources to 
incorporate correlations between sector, application, equipment class 
and the distribution of duty points into the analysis. Specifically, 
DOE used a database of various industrial applications collected from 
several case studies and field studies, and a database on pump tests 
provided by the Pacific Gas & Electric Company, to construct the 
distribution of pumps by sector, application and speed as a function of 
power bin and equipment class. DOE used these distributions to 
determine the relative weighting of different sectors and applications 
in the LCC sample for each equipment class.
2. Life-Cycle Cost Inputs
    For each efficiency level DOE analyzed, the LCC analysis required 
input data for the total installed cost of the equipment, its operating 
cost, and the discount rate. Table IV.4 summarizes the inputs and key 
assumptions DOE used to calculate the consumer economic impacts of all 
energy efficiency levels analyzed in this rulemaking. A more detailed 
discussion of the inputs follows.

               Table IV.4--Summary of Inputs and Key Assumptions Used in the LCC and PBP Analyses*
----------------------------------------------------------------------------------------------------------------
                              Inputs                                                Description
----------------------------------------------------------------------------------------------------------------
                                            Affecting Installed Costs
----------------------------------------------------------------------------------------------------------------
Equipment Price..................................................  Equipment price derived by multiplying
                                                                    manufacturer sales price or MSP (calculated
                                                                    in the engineering analysis) by distribution
                                                                    channel markups, as needed, plus sales tax
                                                                    from the markups analysis.
----------------------------------------------------------------------------------------------------------------
Installation Cost................................................  Installation cost assumed to not change with
                                                                    efficiency level, and therefore is not
                                                                    included in this analysis.
----------------------------------------------------------------------------------------------------------------
                                            Affecting Operating Costs
----------------------------------------------------------------------------------------------------------------
Annual Energy Use................................................  Annual unit energy consumption for each class
                                                                    of equipment at each efficiency level
                                                                    estimated by sector and application using
                                                                    simulation models.
----------------------------------------------------------------------------------------------------------------
Electricity Prices...............................................  DOE developed average electricity prices and
                                                                    projections of future electricity prices
                                                                    based on Annual Energy Outlook 2015 (AEO
                                                                    2015).\41\
----------------------------------------------------------------------------------------------------------------
Maintenance Cost.................................................  Maintenance cost assumed to not change with
                                                                    efficiency level, and therefore is not
                                                                    included in this analysis.
Repair Cost......................................................  Repair cost assumed to not change with
                                                                    efficiency level, and therefore is not
                                                                    included in this analysis.
----------------------------------------------------------------------------------------------------------------
                            Affecting Present Value of Annual Operating Cost Savings
----------------------------------------------------------------------------------------------------------------
Equipment Lifetime...............................................  Pump equipment lifetimes estimated to range
                                                                    between 4 and 40 years, with an average
                                                                    lifespan of 15 years across all equipment
                                                                    classes, based on estimates from market
                                                                    experts and input from the CIP Working
                                                                    Group.
----------------------------------------------------------------------------------------------------------------
Discount Rate....................................................  Mean real discount rates for all sectors that
                                                                    purchase pumps range from 3.4 percent for
                                                                    municipal sector to 5.9 percent for
                                                                    industrial sector.
Analysis Start Year..............................................  Start year for LCC is 2020, which is the
                                                                    first full year following the estimated
                                                                    compliance date of late 2019.

[[Page 4393]]

 
                                           Analyzed Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Analyzed Efficiency Levels.......................................  DOE analyzed the baseline efficiency levels
                                                                    and five higher efficiency levels for each
                                                                    equipment class. See the engineering
                                                                    analysis for additional details on
                                                                    selections of efficiency levels and cost.
----------------------------------------------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided in the sections following the table or in
  chapter 8 of the final rule TSD.
\41\ U.S. Energy Information Administration. Annual Energy Outlook 2015 (2015) DOE/EIA-0383(2015). (Last
  Accessed August 30, 2015) (Available at: www.eia.gov/forecasts/aeo/.)

    DOE analyzed the baseline efficiency levels (reflecting the lowest 
efficiency levels currently on the market) and five higher efficiency 
levels for each equipment class analyzed. Chapter 5 of the final rule 
TSD provides additional details on the selection of efficiency levels 
and cost.
a. Equipment Prices
    The price of pump equipment reflects the application of 
distribution channel markups and sales tax to the manufacturer sales 
price (MSP), which is the cost established in the engineering analysis. 
For each equipment class, DOE generated MSPs for the baseline equipment 
and five higher equipment efficiencies in the engineering analysis. As 
described in section IV.D, DOE determined distribution channel costs 
and markups for pump equipment.
    The markup is the percentage increase in price as the pump 
equipment passes through distribution channels. As explained in section 
IV.D, DOE assumed that pumps are delivered by the manufacturer through 
one of five distribution channels. The overall markups used in LCC 
analyses are weighted averages of all of the relevant distribution 
channel markups.
    To project an equipment price trend for the NOPR, DOE derived an 
inflation-adjusted index of the Producer Price Index for pumps and 
pumping equipment over the period 1984-2013.\42\ These data show a 
general price index increase from 1987 through 2009. Since 2009, there 
has been no clear trend in the price index. Given the relatively slow 
global economic activity in 2009 through 2013, the extent to which the 
future trend can be predicted based on the last two decades is 
uncertain and the observed data do not provide a firm basis for 
projecting future cost trends for pump equipment. Therefore, DOE used a 
constant price assumption as the default trend to project future pump 
prices in 2020. Thus, prices projected for the LCC and PBP analysis 
were equal to the 2012 values for each efficiency level in each 
equipment class. 80 FR 17826, 17851 (April 2, 2015).
---------------------------------------------------------------------------

    \42\ Series ID PCU333911333911; www.bls.gov/ppi/.
---------------------------------------------------------------------------

    Wilo commented that a more appropriate inflation-adjusted pump 
price trend for existing products would exceed the inflation rate by 
0.5 percent. (Wilo, No. 44 at p. 5) HI commented that the additional 
costs to re-design more efficient pumps cannot be passed along to the 
market, based on practices evidenced from the EU regulations, therefore 
marked up prices are not reflected in the current pump price trend. 
(HI, No. 45 at p.4.) DOE notes that Wilo did not provide any data or 
evidence supporting its assertions regarding the expected inflation-
adjusted pump price trend, and DOE has not identified any data beyond 
the PPI series that it reviewed in the NOPR. In response to HI, DOE 
notes that the equipment prices developed in the NOPR and also used as 
the basis for this final rule reflect manufacturer cost-recovery as a 
worst-case scenario for consumers. Therefore, although DOE used a 
constant price trend, the prices in the LCC year (2020) reflect an 
increase over the pump prices in 2012. For these reasons, DOE has not 
changed its assumption of a constant price trend for this final rule. 
Appendix 8A of the final rule TSD describes the historical data that 
were considered in developing the trend.
b. Installation Costs
    In the NOPR, due to the absence of data to indicate at what 
efficiency level DOE may need to consider an increase in installation 
costs, DOE did not estimate installation costs for the LCC. 80 FR 
17826, 17851 (April 2, 2015). In response to the NOPR, Wilo and HI both 
agreed that consumers will experience an increase in installation costs 
that scale with efficiency. Specifically, HI commented that in driving 
for higher efficiency, suction performance could be impacted resulting 
in higher NPSH required and lower margins of safety. Piping system 
design and foundation changes may be required for reliable operation. 
(HI, No. 45 at p.4) Wilo commented that if a constant-speed efficiency 
requirement becomes extensive, consumers would experience a 30 percent 
increase in installation costs, and added that some submersible turbine 
pumps would require a larger diameter size, therefore leading to 
increased installation costs. (Wilo, No. 44 at p. 5) Wilo also 
commented that pump configurations that do not meet the standard and 
require a VFD will experience an additional 30 percent increase in 
installation costs, supplementary to the cost of the VFD. (Id.)
    In response to HI, DOE requested specific data to help inform any 
estimates of at what point an increase in efficiency would decrease 
suction performance. Without actual data, DOE cannot implement a 
scaling of costs with efficiency (NOPR public meeting transcript, No. 
51 at p. 38-39) Commenters did not provide data regarding increases in 
cost with efficiency, what would drive the increased installation costs 
for pumps other than submersible turbines, or at what efficiency level 
such increases might occur. In addition, for submersible turbines 
(which are designed to fit in boreholes), commenters did not identify 
the efficiency level at which diameter size would be expected to 
increase. Finally, DOE notes that the efficiency levels were all 
analyzed using hydraulic redesign. Therefore, none of the considered 
levels, including the proposed levels, would require use of a VFD. 
While manufacturers may opt to sell pumps with VFDs instead of 
improving their hydraulic efficiency, DOE did not consider the use of 
VFDs as a design option and therefore did not account for the 
associated increase in installation costs in its analysis. In other 
words, DOE only incorporated installation costs associated to the 
design options considered when establishing the efficiency levels. 
Given that available data do not support increases in installation 
costs at specific efficiency levels for any pump category due to 
hydraulic redesign, DOE continues to assume in this final rule

[[Page 4394]]

that installation costs would not increase as a function of efficiency 
level and has not taken installation costs into account in the final 
rule.
c. Annual Energy Use
    In the NOPR, DOE estimated the annual electricity consumed by each 
class of pump equipment, by efficiency level, based on the energy use 
analysis described in section IV.E and in chapter 7 of the final rule 
TSD. 80 FR 17826, 17852 (April 2, 2015). DOE did not receive any 
comments on annual energy use, so it has maintained this approach in 
the final rule.
d. Electricity Prices
    Electricity prices are used to convert changes in the electric 
consumption from higher-efficiency equipment into energy cost savings. 
For the NOPR, DOE used average national commercial and industrial 
electricity prices from the AEO 2014 reference case. DOE applied the 
commercial price to pump installations in the commercial sector and the 
industrial price to installations in the industrial, agricultural, and 
municipal sectors. To establish prices beyond 2040 (the last year in 
the AEO 2014 projection, DOE extrapolated the trend in prices from 2030 
to 2040 for both the commercial and industrial sectors. 80 FR 17826, 
17852 (April 2, 2015). DOE did not receive any comments on electricity 
prices. For the final rule, DOE has maintained the same approach but 
has updated the prices and price trends to AEO 2015.
e. Maintenance Costs
    As discussed in the NOPR, DOE assumed that maintenance costs would 
not change with efficiency level and did not estimate a maintenance 
cost for this analysis. 80 FR 17826, 17852 (April 2, 2015). DOE did not 
receive any comments on maintenance costs and has maintained this 
approach for the final rule.
f. Repair Costs
    As discussed in the NOPR, DOE assumed that repair costs are not 
expected to change with efficiency level and did not estimate a repair 
cost for this analysis. 80 FR 17826, 17852 (April 2, 2015). DOE did not 
receive any comments on repair costs and has maintained this approach 
for the final rule.
g. Equipment Lifetime
    DOE defines ``equipment lifetime'' as the age when a given 
commercial or industrial pump is retired from service. In the NOPR, DOE 
developed distributions of lifetimes that vary by equipment class. The 
average across all equipment classes was 15 years. DOE also used a 
distribution of mechanical lifetime in hours to allow a negative 
correlation between annual operating hours and lifetime in years--pumps 
with more annual operating hours tend to have shorter lifetimes. In 
addition, based on discussions in the CIP Working Group meetings,\43\ 
DOE introduced lifetime variation by pump speed--pumps running faster 
tend to have a shorter lifetime. 80 FR 17826, 17852 (April 2, 2015). 
DOE did not receive any comments on equipment lifetime, and therefore 
maintained this approach in the final rule.
---------------------------------------------------------------------------

    \43\ See, e.g., Docket No. EERE-2013-BT-NOC-0039-0073, p. 153.
---------------------------------------------------------------------------

    Chapter 8 of the final rule TSD contains a detailed discussion of 
equipment lifetimes.
h. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. The 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 the cost of capital is 
the weighted-average cost to the firm of equity and debt financing. In 
the NOPR, for all but the municipal sector, DOE used the capital asset 
pricing model to calculate the equity capital component, and financial 
data sources, primarily the Damodaran Online Web site,\44\ to calculate 
the cost of debt financing. DOE derived the discount rates by 
estimating the cost of capital of companies that purchase pumping 
equipment. 80 FR 17826, 17852 (April 2, 2015).
---------------------------------------------------------------------------

    \44\ Damodaran financial data used for determining cost of 
capital are available at: http://pages.stern.nyu.edu/~adamodar/ for 
commercial businesses (Last accessed February 12, 2014).
---------------------------------------------------------------------------

    For the municipal sector, DOE calculated the real average interest 
rate on state and local bonds over the period of 1983-2012 by adjusting 
the Federal Reserve Board nominal rates to account for inflation. This 
30-year average is assumed to be representative of the cost of capital 
relevant to municipal end users over the analysis period. (Id.)
    DOE did not receive any comments on the proposed discount rates, 
and therefore maintained its approach in the final rule. More details 
regarding DOE's estimates of consumer discount rates are provided in 
chapter 8 of the final rule TSD.
3. Payback Period
    The PBP measures the amount of time it takes the commercial 
consumer to recover the assumed higher purchase expense of more-
efficient equipment through lower operating costs. Similar to the LCC, 
the PBP is based on the total installed cost and the operating expenses 
for each application and sector, weighted by the probability of 
shipments to each market. Because the simple PBP does not take into 
account changes in operating expense over time or the time value of 
money, DOE considered only the first year's operating expenses to 
calculate the PBP, unlike the LCC, which is calculated over the 
lifetime of the equipment. Chapter 8 of the final rule TSD provides 
additional details about the PBP calculation.
4. Rebuttable-Presumption Payback Period
    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 (and, as applicable, water) savings during the first year 
that the consumer will receive as a result of the standard, as 
calculated under the test procedure in place for that standard. (42 
U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a). For each considered 
efficiency level, DOE determines the value of the first year's energy 
savings by calculating the quantity of those savings in accordance with 
the applicable DOE test procedure, and multiplying that amount by the 
average energy price forecast for the year in which compliance with the 
new standards would be required.

G. Shipments Analysis

    In its shipments analysis, DOE developed shipment projections for 
pumps and, in turn, calculated equipment stock over the course of the 
analysis period. DOE used the shipments projection and the equipment 
stock to determine the NES. The shipments portion of the spreadsheet 
model projects pump shipments from 2020 through 2049.
    In the NOPR, to develop the shipments model, DOE started with the 
2012 shipment estimates by equipment type from HI (EERE-2013-BT-NOC-
0039-0068). For the initial year, DOE distributed total shipments into 
the four sectors using estimates from the LCC, as discussed in section 
IV.F.1. To project shipments of pumps, DOE relied primarily on AEO 2014 
forecasts of various indicators for each sector: (1) Commercial floor 
space; (2) value of manufacturing shipments; (3) value of agriculture, 
mining, and construction

[[Page 4395]]

shipments; and (4) population (for the municipal sector).
    DOE used the 2012 total industry shipments by equipment class 
estimated by HI to distribute total shipments in each year into the 
five equipment types. DOE then used 2012 shipment data collected 
directly from manufacturers to distribute shipments into the further 
disaggregated equipment classes accounting for nominal speeds. The 
distribution of sectors changes over time as a result of each sector's 
differing forecast in AEO, while the distribution of equipment classes 
remains constant over time.
    DOE estimated that standards would have a negligible impact on pump 
shipments. Under most pricing scenarios, it is likely that following a 
standard, a consumer would be able to buy a more efficient pump for the 
same price as the less efficient pump they would have purchased before 
or without a standard. Therefore, rather than foregoing a pump purchase 
under a standards case, a consumer might simply switch brands or pumps 
to purchase a cheaper one that did not have to be redesigned. As a 
result, DOE used the same shipments projections in the standards case 
as in the no-new-standards case. 80 FR 17826, 17852 (April 2, 2015).
    In response to the NOPR, HI agreed that total shipments will not 
change significantly with the proposed standards but commented that 
consumers may decide to repair rather than replace pumps. (HI, No. 45 
at p. 4) Wilo commented that there will likely be some minor impacts to 
shipments, specifically, a slight decline in complete pump sales, and 
an increase in replacement parts to repair pumps. (Wilo, No. 44 at p. 
5-6) Given that HI and Wilo expect the impacts to be minor and that no 
data are available to support changes in total shipments estimates and 
annual repair estimates, DOE maintained its approach to the shipments 
analysis in the final rule. DOE updated its projections based on the 
forecasts of various indicators for each sector in AEO 2015. Chapter 9 
of the final rule TSD contains more details.

H. National Impact Analysis

    The national impact analysis (NIA) evaluates the effects of energy 
conservation standards from a national perspective. This analysis 
assesses the net present value (NPV) (future amounts discounted to the 
present) and the national energy savings (NES) of total commercial 
consumer costs and savings expected to result from new standards at 
specific efficiency levels.\45\
---------------------------------------------------------------------------

    \45\ The NIA accounts for impacts in the 50 States and the U.S. 
territories.
---------------------------------------------------------------------------

    The NES refers to cumulative energy savings for the lifetime of 
pumps shipped from 2020 through 2049. DOE calculated energy savings in 
each year relative to a no-new-standards case, defined by the current 
market. DOE calculated net monetary savings in each year relative to 
the no-new-standards case as the difference between total operating 
cost savings and increases in total installed cost. DOE accounted for 
operating cost savings until the year when the equipment installed in 
2049 should be retired. Cumulative savings are the sum of the annual 
NPV over the specified period.
1. Approach
    The NES and NPV are a function of the total number of units in use 
and their efficiencies. Both the NES and NPV depend on annual shipments 
and equipment lifetime. Both calculations start by using the shipments 
estimate and the quantity of units in service derived from the 
shipments model.
    DOE used a spreadsheet tool, available on DOE's Web site for 
pumps,\46\ to calculate the energy savings and the national monetary 
costs and savings from potential new standards. Interested parties can 
review DOE's analyses by changing various input quantities within the 
spreadsheet.
---------------------------------------------------------------------------

    \46\ DOE's Web page on pumps can be found at: 
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/14.
---------------------------------------------------------------------------

    Unlike the LCC analysis, the NES spreadsheet does not use 
distributions for inputs or outputs, but relies on national average 
equipment costs and energy costs developed from the LCC analysis. DOE 
projected the energy savings, energy cost savings, equipment costs, and 
NPV of benefits for equipment sold in each pump class from 2020 through 
2049.
a. National Energy Savings
    DOE calculated the NES based on the difference between the per-unit 
energy use under a standards-case scenario and the per-unit energy use 
in the no-new-standards case. The average energy per unit used by the 
pumps in service gradually decreases in the standards case relative to 
the no-new-standards case because more-efficient pumps are expected to 
gradually replace less-efficient ones.
    Unit energy consumption values for each equipment class are taken 
from the LCC spreadsheet for each efficiency level and weighted based 
on market efficiency distributions. To estimate the total energy 
savings for each efficiency level, DOE first calculated the delta unit 
energy consumption (i.e., the difference between the energy directly 
consumed by a unit of equipment in operation in the no-new-standards 
case and the standards case) for each class of pumps for each year of 
the analysis period. The analysis period begins with the first full 
year following the estimated compliance date of any new energy 
conservation standards (i.e., 2020). Second, DOE determined the annual 
site energy savings by multiplying the stock of each equipment class by 
vintage (i.e., year of shipment) by the delta unit energy consumption 
for each vintage (from step one). Third, DOE converted the annual site 
electricity savings into the annual amount of energy saved at the 
source of electricity generation (primary energy) using a time series 
of conversion factors derived from the AEO 2015 version of EIA's 
National Energy Modeling System (NEMS). Finally, DOE summed the annual 
primary energy savings for the lifetime of units shipped over a 30-year 
period to calculate the total NES. DOE performed these calculations for 
each efficiency level considered for pumps in this rulemaking.
    DOE has historically presented NES in terms of primary energy 
savings. On August 18, 2011, DOE published a final statement of policy 
in the Federal Register announcing 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. After 
evaluating the approaches discussed in the August 18, 2011 statement, 
DOE published a statement of amended policy in the Federal Register in 
which DOE explained its determination that NEMS is the most appropriate 
tool for its FFC analysis and its intention to use NEMS for that 
purpose. 77 FR 49701 (August 17, 2012). Therefore, DOE used the NEMS 
model to conduct the FFC analysis. The approach used for this 
rulemaking, and the FFC multipliers that were applied, are described in 
appendix 10B of the final rule TSD.
    To properly account for national impacts, DOE adjusted the energy 
use and energy costs developed from the LCC spreadsheet. Specifically, 
in the LCC, DOE does not account for pumps sold with trimmed impellers 
or pumps used with VSDs, both of which may reduce the energy savings 
resulting from pump efficiency improvements.
    For the NOPR, DOE reviewed studies on VSD penetration and used an 
initial

[[Page 4396]]

penetration of 3.2 percent in 1998 \47\ with a 5 percent annual 
increase.\48\ Although these studies are not specific to VFDs, DOE 
assumed all VSD use was attributable to VFD use, as VFDs are the most 
common type of VSD in the pumps market.\49\ Based on DOE's analysis of 
VFD users in the consumer subgroup analysis (see section IV.I), DOE 
assumed VFDs would reduce energy use by 39 percent on average, which 
also reduces the potential energy savings from higher efficiency. 
However, DOE assumed based on the difficulties with VFD installation 
and operation,\50\ that the full amount of potential savings would not 
be realized for all consumers. DOE assumed an ``effectiveness rate'' of 
75 percent; in other words DOE assumed that consumers would achieve on 
average only 75 percent of the 39 percent estimated savings (i.e., 29 
percent savings) because of improper installation, operation 
inconsistent with intended use, or other equipment problems. 80 FR 
17826, 17853 (April 2, 2015).
---------------------------------------------------------------------------

    \47\ United States Industrial Electric Motor Systems Market 
Opportunities Assessment. Tech. Washington DC: U.S. Department of 
Energy's (DOE) Office of Energy Efficiency and Renewable Energy 
(EERE), 1998. Print.
    \48\ Almeida, A., Chretien, B., Falkner, H., Reichert, J., West, 
M., Nielsen, S., and Both, D. VSDs for Electric Motor Systems. Tech. 
N.p.: European Commission Directorate-General for Transport and 
Energy, SAVE II Programme 2000, n.d. Print.
    \49\ See for example: Energy Tips--Motor. Tech. Washington DC: 
U.S. Department of Energy's (DOE) Office of Energy Efficiency and 
Renewable Energy (EERE), 2008, Motor Tip Sheet #11, Print, p. 1. 
Variable Frequency Drives. Tech. Northwest Energy Efficiency 
Alliance, 2000, Report #00-054, Print, Exhibit 2.1.
    \50\ See for example: Variable speed drives: Introducing energy 
saving opportunities for business. London: Carbon Trust, 2011.
---------------------------------------------------------------------------

    For the NOPR, DOE assumed that for all equipment classes except 
VTS, 50 percent of pumps not sold with VFDs are sold with impellers 
trimmed to 85 percent of full impeller. According to the pump affinity 
laws, which are a set of relationships that can be used to predict the 
performance of a pump when its speed or impeller diameter is changed, 
such an impeller trim uses 61 percent of the power of full trim. 
Accordingly, DOE reduced the energy use for those consumers by 39 
percent. For the VTS equipment class, DOE assumed that pumps were not 
sold with trimmed impellers. A large percentage of these pumps are 
pressed stainless steel and will never be trimmed; the remainder of 
these pumps will be significantly less likely to be trimmed than other 
pump types because variability in the number of stages would be used in 
place of trimming the impellers. (Id.)
    DOE used the penetration rate and power reduction values for VFDs 
and trimmed impellers, as well as the effectiveness rate for VFDs, to 
create an energy use adjustment factor time series in the NES 
spreadsheet. (Id.)
    In response to the NOPR, Wilo commented that the energy savings 
relative to ``business-as-usual'' are overstated due to the adoption of 
new technologies, including pumps with VFDs (Wilo, No. 44 at p. 1), and 
that power reductions associated with VFDs are dependent on the pump 
application. (Wilo, No. 44 at p. 6) HI stated that maintaining maximum 
diameter and using continuous controls would result in higher energy 
savings. (HI, No. 45 at p. 6) Wilo commented that pumps shipped with 
VFDs do not have a trimmed impeller. (Wilo, No. 44 p. 6)
    As stated previously, DOE used a 5 percent annual increase for VFD 
penetration to account for market adoption of these technologies. 
Available data do not indicate that DOE's assumption on the VFD 
penetration growth rate is incorrect. Therefore, DOE has maintained 
this growth rate in the final rule. DOE acknowledges that power 
reductions associated with VFDs are dependent on pump application. In 
the NIA, however, DOE has attempted to capture the national average 
power reduction. Modeling variability in power reduction across 
applications is not expected to significantly impact the average 
assumed reduction.
    DOE believes that HI and Wilo's comments regarding maximum diameter 
and trimmed impellers validate DOE's approach to assuming only trimmed 
impellers for non-VFD shipments. Therefore, DOE maintains this approach 
in the final rule.
    For more information on VFD penetration, see chapter 9 of the final 
rule TSD.
    In the NOPR, DOE considered whether a rebound effect applies to 
pumps. A rebound effect occurs when an increase in equipment efficiency 
leads to increased demand for its service. For example, when a consumer 
realizes that a more-efficient pump used for cooling will lower the 
electricity bill, that person may opt for increased comfort in the 
building by using the equipment more, thereby negating a portion of the 
energy savings. In commercial buildings, however, the person owning the 
equipment (i.e., the building owner) is usually not the person 
operating the equipment (i.e., the renter). Because the operator 
usually does not own the equipment, that person will not have the 
operating cost information necessary to influence their operation of 
the equipment. Therefore, DOE believes that a rebound effect is 
unlikely to occur in commercial buildings. In the industrial and 
agricultural sectors, DOE believes that pumps are likely to be operated 
whenever needed for the required process or irrigation demand, so a 
rebound effect is also unlikely to occur in the industrial and 
agricultural sectors. 80 FR 17826, 17853 (April 2, 2015).
    In response to the NOPR, HI agreed that a rebound effect is 
unlikely to occur and does not believe it should be included in the 
determination of annual energy savings. (HI, No. 45 at p. 5) Consistent 
with this suggestion, DOE maintained its position and did not 
incorporate the impact of a rebound effect in the final rule.
b. Net Present Value
    To estimate the NPV, DOE calculated the net impact as the 
difference between total operating cost savings and increases in total 
installed costs. DOE calculated the NPV of each considered standard 
level over the life of the equipment using the following three steps.
    First, DOE determined the difference between the equipment costs 
under the standard-level case and the no-new-standards case to obtain 
the net equipment cost increase resulting from the higher standard 
level. In the NOPR, DOE used a constant price assumption as the default 
price forecast. In addition, DOE considered two alternative price 
trends to investigate the sensitivity of the results to different 
assumptions regarding equipment price trends. One of these used an 
exponential fit on the deflated Producer Price Index (PPI) for pump and 
puming equipment manufacturing, and the other is based on the 
``deflator--industrial equipment'' forecast for AEO 2014. 80 FR 17826, 
17854 (April 2, 2015) Comments on this approach are discussed in 
section IV.F.2.a, and DOE has maintained the same approach for the 
final rule with minor updates described in appendix 10B of the final 
rule TSD.
    Second, DOE determined the difference between the no-new-standards 
case operating costs and the standard-level operating costs to obtain 
the net operating cost savings from each higher efficiency level.
    Third, DOE determined the difference between the net operating cost 
savings and the net equipment cost increase to obtain the net savings 
(or expense) for each year. DOE then discounted the annual net savings 
(or expenses) to 2015 and summed the discounted values to

[[Page 4397]]

provide the NPV for a standard at each efficiency level.
    In accordance with the Office of Management and Budget's (OMB's) 
guidelines on regulatory analysis,\51\ DOE calculated NPV using both a 
7-percent and a 3-percent real discount rate. The 7-percent rate is an 
estimate of the average before-tax rate of return on private capital in 
the U.S. economy. DOE used this discount rate to approximate the 
opportunity cost of capital in the private sector, because recent OMB 
analysis has found the average rate of return on capital to be near 
this rate. DOE used the 3-percent rate to capture the potential effects 
of standards on private consumption (e.g., through higher prices for 
equipment and reduced purchases of energy). This rate represents the 
rate at which society discounts future consumption flows to their 
present value. This rate can be approximated by the real rate of return 
on long-term government debt (i.e., yield on United States Treasury 
notes minus annual rate of change in the Consumer Price Index), which 
has averaged about 3 percent on a pre-tax basis for the past 30 years.
---------------------------------------------------------------------------

    \51\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/omb/circulars_a004_a-4.)
---------------------------------------------------------------------------

2. No-New-Standards Case and Standards-Case Distribution of 
Efficiencies
    As described in the NOPR, DOE developed a no-new-standards case 
distribution of efficiency levels for pumps using performance data 
provided by manufacturers. Because the available evidence suggested 
that there is no trend toward greater interest in higher pump 
efficiency, DOE assumed that the no-new-standards case distribution 
would remain constant over time. Furthermore, DOE had no reason to 
believe that implementation of standards would lead to an increased 
demand for more efficient equipment than the minimum available, and 
therefore did not use an efficiency trend in the standards-case 
scenarios.
    For each efficiency level analyzed, DOE used a ``roll-up'' scenario 
to establish the market shares by efficiency level for the year that 
compliance would be required with new standards (i.e., 2020). DOE 
concluded that equipment efficiencies in the no-new-standards case that 
were above the standard level under consideration would not be 
affected. Information from certain manufacturers indicated that for 
pumps not meeting a potential standard at some of the lower efficiency 
levels, redesign would likely target an efficiency level higher than 
the minimum given the level of investment required for a redesign, and 
the relatively more modest change in investment to design a given pump 
to a higher level once redesign is already taking place. However, DOE 
had no data that clearly indicate what percentage of failing pumps 
would likely be redesigned to a level higher than the minimum, or how 
high that level would be. In the absence of such data, DOE did not 
assume that manufacturers would design to a level higher than required, 
to avoid overestimating the energy savings that would result from the 
rulemaking. 80 FR 17826, 17855 (April 2, 2015) DOE did not receive 
comment on this approach and has maintained it for the final rule. The 
no-new-standards case efficiency distributions for each equipment class 
are presented in chapter 10 of the final rule TSD.

I. Consumer Subgroup Analysis

    For the consumer subgroup analysis, DOE estimated the impacts of 
the TSLs on the subgroup of consumers who operate their pumps with 
VFDs.\52\ DOE analyzed this subgroup because the lower power typically 
drawn by operating pumps at reduced speed may reduce the energy and 
operating cost savings to the consumer that would result from improved 
efficiency of the pump itself. DOE estimated the average LCC savings 
and simple PBP for the subgroup compared with the results from the full 
sample of pump consumers, which did not account for VFD use.
---------------------------------------------------------------------------

    \52\ In this analysis, DOE is not counting energy savings of 
switching from throttling a pump to using a VFD, as this is not a 
design option. DOE is simply analyzing the life-cycle costs of 
customers that use VFDs with their pumps.
---------------------------------------------------------------------------

J. Manufacturer Impact Analysis

1. Overview
    DOE performed a manufacturer impact analysis (MIA) to calculate the 
financial impact of energy conservation standards on manufacturers of 
pumps and to estimate the potential impact of such standards on direct 
employment and manufacturing capacity.
    The MIA has both quantitative and qualitative aspects. The 
quantitative portion of the MIA primarily relies on the Government 
Regulatory Impact Model (GRIM), an industry cash-flow model customized 
for this rulemaking. The key GRIM inputs are data on the industry cost 
structure, equipment costs, shipments, markups, and conversion 
expenditures. The key output is the industry net present value (INPV). 
Different sets of assumptions will produce different results. The 
qualitative portion of the MIA addresses factors such as equipment 
characteristics, as well as industry and market trends. Chapter 12 of 
the TSD describes the complete MIA.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the pumps industry that 
includes a top-down cost analysis of manufacturers that DOE used to 
derive preliminary financial inputs for the GRIM (e.g., sales, general, 
and administration (SG&A) expenses; research and development (R&D) 
expenses; and tax rates). DOE used public sources of information, 
including the Securities and Exchange Commission (SEC) 10-K filings; 
\53\ corporate annual reports; the U.S. Census Bureau's Annual Survey 
of Manufacturers; \54\ and Hoovers reports.\55\
---------------------------------------------------------------------------

    \53\ Filings & Forms, Securities and Exchange Commission (2013) 
(Available at: http://www.sec.gov/edgar.shtml) (Last accessed July 
2013).
    \54\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2010) 
(Available at: <http://www.census.gov/manufacturing/asm/index.html>) 
(Last accessed July, 2013).
    \55\ Hoovers [verbar] Company Information [verbar] Industry 
Information [verbar] Lists, D&B (2013) (Available at: http://www.hoovers.com/) (Last accessed July 2013).
---------------------------------------------------------------------------

    In phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the potential impacts of an energy conservation standard. 
In general, new or amended energy conservation standards can affect 
manufacturer cash flow in three distinct ways: (1) Create a need for 
increased investment; (2) raise production costs per unit; and (3) 
alter revenue due to higher per-unit prices and possible changes in 
sales volumes.
    In phase 3 of the MIA, DOE conducted detailed interviews with a 
representative cross-section of manufacturers. During these interviews, 
DOE discussed engineering, manufacturing, procurement, and financial 
topics to validate assumptions used in the GRIM and to identify key 
issues or concerns.
    Additionally, in phase 3, DOE evaluates subgroups of manufacturers 
that may be disproportionately impacted by standards or that may not be 
accurately represented by the average cost assumptions used to develop 
the industry cash-flow analysis. For example, small manufacturers, 
niche players, or manufacturers exhibiting a cost structure that 
largely differs from the industry average could be more negatively 
affected. For this final rule, DOE analyzed small manufacturers as a 
subgroup.
    The Small Business Administration (SBA) defines a small business 
under

[[Page 4398]]

North American Industry Classification System (NAICS) code 333911, 
``Pump and Pumping Equipment Manufacturing,'' as one having no more 
than 500 employees. During its research, DOE identified 25 domestic 
companies that manufacture equipment covered by this rulemaking and 
qualify as small businesses under the SBA definition. Consistent with 
the requirements of the Regulatory Flexibility Act, DOE's analysis of 
the small business subgroup is discussed in section VII.B of this 
document and chapter 12 of the TSD.
2. GRIM Analysis
    As discussed previously, DOE uses the GRIM to quantify the changes 
in cash flow that result in a higher or lower industry value due to 
energy conservation standards. The GRIM analysis uses a discounted 
cash-flow methodology that incorporates manufacturer costs, markups, 
shipments, and industry financial information as inputs. The GRIM model 
changes in MPCs, distributions of shipments, investments, and 
manufacturer margins that could result from new energy conservation 
standards. The GRIM spreadsheet uses the inputs to arrive at a series 
of annual cash flows, beginning in 2015 (the base year of the MIA) and 
continuing to 2049. DOE calculated INPVs by summing the stream of 
annual discounted cash flows during this period. DOE applied a discount 
rate of 11.8 percent, derived from industry financials and then 
modified according to feedback received during manufacturer interviews.
    In the GRIM, DOE calculates cash flows using standard accounting 
principles and compares changes in INPV between the no-new-standards 
case and each TSL (the standards case). The difference in INPV between 
the no-new-standards case and a standards case represents the financial 
impact of the energy conservation standard on manufacturers. Additional 
details about the GRIM, the discount rate, and other financial 
parameters can be found in chapter 12 of the TSD.
a. GRIM Key Inputs
Manufacturer Production Costs
    Manufacturer production costs (MPCs) are the cost to the 
manufacturer to produce a covered pump. The cost includes raw materials 
and purchased components, production labor, factory overhead, and 
production equipment depreciation. The changes, if any, in the MPC of 
the analyzed products can affect revenues, gross margins, and cash flow 
of the industry. In the MIA, DOE used the MPCs for each efficiency 
level calculated in the engineering analysis, as described in section 
IV.C.5 and further detailed in chapter 5 of the TSD. In addition, DOE 
used information from manufacturer interviews to disaggregate the MPCs 
into material, labor, and overhead costs.
Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by equipment 
class. For the no-new-standards case analysis, the GRIM uses the NIA 
no-new-standards case shipments forecasts from 2015 (the base year for 
the MIA analysis) to 2049 (the last year of the analysis period). In 
the shipments analysis, DOE estimates the distribution of efficiencies 
in the no-new-standards case for all equipment classes. See section 
IV.G for additional details.
    For the standards-case shipment forecast, the GRIM uses the NIA 
standards-case shipment forecasts. The NIA assumes that equipment 
efficiencies in the no-new-standards case that do not meet the energy 
conservation standard in the standards case ``roll up'' to meet the 
standard after the compliance date. See section IV.G for additional 
details.
Product and Capital Conversion Costs
    Energy conservation standards can cause manufacturers to incur 
conversion costs to make necessary changes to their production 
facilities and bring product designs into compliance. DOE evaluated the 
level of conversion-related expenditures that would be needed to comply 
with each considered efficiency level in each equipment class. For the 
purpose of the MIA, DOE classified these conversion costs into two 
major groups: (1) Product conversion costs; and (2) capital conversion 
costs. Product conversion costs are investments in research, 
development, testing, and marketing, focused on making product designs 
comply with the energy conservation standard. Capital conversion costs 
are investments in property, plant, and equipment to adapt or change 
existing production facilities so that compliant equipment designs can 
be fabricated and assembled.
    In the NOPR, DOE used a bottom-up approach to evaluate the 
magnitude of the product and capital conversion costs the pump industry 
would incur to comply with new energy conservation standards. 80 FR 
17826, 17845-17846 (April 2, 2015) For this approach, DOE first 
determined the industry-average cost, per model, to redesign pumps of 
varying sizes to meet each of the candidate efficiency levels. DOE then 
modeled the distribution of unique pump models that would require 
redesign at each efficiency level. For each efficiency level, DOE 
multiplied each unique failing model by its associated cost to redesign 
it to comply with the applicable efficiency level and summed the total 
to reach an estimate of the total product and capital conversion cost 
for the industry. DOE maintained this approach in this final rule. A 
more detailed description of this methodology can be found in 
engineering section IV.C.6.
    In general, DOE assumes that all conversion-related investments 
occur between the year of publication of the final rule and the year by 
which manufacturers must comply with the standard. The investment 
figures used in the GRIM can be found in section V.V.B.2 of this 
document. For additional information on the estimated product 
conversion and capital conversion costs, see chapters 5 and 12 of the 
TSD.
b. GRIM Scenarios
Markup Scenarios
    As discussed above, MSPs include direct manufacturing production 
costs (i.e., labor, material, and overhead estimated in DOE's MPCs), 
all non-production costs (i.e., SG&A, R&D, and interest), and profit. 
To account for manufacturers' non-production costs and profit margin, 
DOE applies a non-production cost multiplier (the manufacturer markup) 
to the full MPC. The resulting MSP is the price at which the 
manufacturer can recover all production and non-production costs and 
earn a profit. Modifying these markups in the standards case yields 
different sets of impacts on manufacturers.
    To meet new energy conservation standards, manufacturers must often 
invest in design changes that result in changes to equipment design and 
production lines, which can result in changes to MPC and changes to 
working capital, as well as change to capital expenditures. Depending 
on the competitive pressures, some or all of the increased costs may be 
passed from manufacturers to the manufacturers' first consumer 
(typically a distributor) and eventually to consumers in the form of 
higher purchase prices. The MSP should be high enough to recover the 
full cost of the produced equipment (i.e., full production and non-
production costs) and yield a profit. The manufacturer markup impacts 
profitability. A high markup under a standards scenario suggests 
manufacturers can readily pass along

[[Page 4399]]

increases in variable costs and some of the capital and product 
conversion costs (the one-time expenditures) to consumers. A low markup 
suggests that manufacturers will not be able to recover as much of the 
necessary investment in plant and equipment.
    In the NOPR, industry-average, no-new-standards case manufacturer 
markups were developed by weighting individual manufacturer markup 
estimates on a market share basis, as manufacturers with larger market 
shares more significantly affect the market average. 80 FR 17826, 17846 
(April 2, 2015) DOE did not receive any comments on these industry-
average markups and used the same markups in this final rule.
    In the NOPR, DOE modeled two standards case markup scenarios to 
represent the uncertainty regarding the potential impacts on prices and 
profitability for manufacturers following the implementation of new 
energy conservation standards: (1) A flat markup scenario; and (2) a 
cost recovery markup scenario. 80 FR 17827, 17847 (April 2, 2015) These 
scenarios lead to different markup values that, when applied to the 
MPCs, result in varying revenue and cash flow impacts. DOE used these 
values to represent the lower and upper bounds of potential markups for 
manufacturers. DOE did not receive any additional comments on these two 
cost recovery scenarios. Consequently, DOE has maintained its 
methodology scenarios, and resulting markups, in the analysis of this 
final rule. The scenarios are described in further detail in the 
following paragraphs.
    Under the flat markup scenario, DOE maintains the same markup in 
the no-new-standards case and standards case. This results in no price 
changes at a given efficiency level for the manufacturer's first 
consumer. Based on the MSP, component cost, performance, and efficiency 
data supplied by both individual manufacturers and HI, DOE concluded 
the non-production cost markup (which includes SG&A expenses, R&D 
expenses, interest, and profit) to vary by efficiency level. DOE 
calculated the flat markups as follows:

                             Table IV.5--Industry Average Flat Manufacturer Markups
----------------------------------------------------------------------------------------------------------------
                                      Baseline      TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC..............................         1.37         1.38         1.39         1.39         1.39         1.39
ESFM..............................         1.33         1.37         1.38         1.39         1.39         1.39
IL................................         1.43         1.46         1.47         1.47         1.47         1.47
VT-S..............................         1.37         1.37         1.40         1.40         1.40         1.40
----------------------------------------------------------------------------------------------------------------

    Because this markup scenario assumes that manufacturers would not 
increase their pricing for a given efficiency level as a result of a 
standard even as they incur conversion costs, this markup scenario is 
considered a lower bound.
    In the cost recovery markup scenario, manufacturer markups are set 
so that manufacturers recover their conversion costs, which are 
investments necessary to comply with the new energy conservation 
standard, over the analysis period. That cost recovery is enabled by an 
increase in mark-up, which results in higher manufacturer sales prices 
for pumps even as manufacturer product costs stay the same. The cost 
recovery calculation assumes manufacturers raise prices only on models 
where a redesign is necessitated by the standard. The additional 
revenue due to the increase in markup results in manufacturers 
recovering 100% of their conversion costs over the 30-year analysis 
period, taking into account the time-value of money. DOE's calculated 
cost recovery markups are as follows:

                         Table IV.6--Industry Average Cost Recovery Manufacturer Markups
----------------------------------------------------------------------------------------------------------------
                                      Baseline      TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC..............................         1.37         1.57         1.68         1.74         1.92         2.13
ESFM..............................         1.33         1.45         1.51         1.54         1.61         1.70
IL................................         1.43         1.53         1.62         1.73         1.88         2.02
VT-S..............................         1.37         1.49         1.47         1.54         1.65         1.77
----------------------------------------------------------------------------------------------------------------

    Because this markup scenario models the maximum level to which 
manufacturers would increase their pricing as a result of the given 
standard, this markup scenario is considered an upper bound to markups.
    Depending on the equipment class and the standard level being 
analyzed, the cost-recovery markup results in a simple payback period 
of 7 to 8 years for the industry. This means the total additional 
revenues due to a higher markup equal the industry conversion cost 
within seven to eight years, not taking into account the time value of 
money. The simple payback period varies at each TSL due to differences 
in the number of models requiring redesign, the total conversion costs, 
and the number of units over which costs can be recouped. The simple 
payback timeframes are as follows:

                                 Table IV.7--Manufacturer Simple Payback Period
----------------------------------------------------------------------------------------------------------------
                                Baseline        TSL 1         TSL 2         TSL 3         TSL 4         TSL 5
----------------------------------------------------------------------------------------------------------------
Years.......................            0             8             7             7             7             7
----------------------------------------------------------------------------------------------------------------


[[Page 4400]]

    The payback period is greatest at TSL 1 due to the relatively high 
numbers of models that require redesign as compared to the number of 
units sold at that level. These payback periods are unchanged from the 
NOPR analysis.
3. Discussion of MIA Comments
    During the NOPR public comment period, interested parties commented 
on assumptions and results described in the NOPR document and 
accompanying TSD, addressing several topics related to manufacturer 
impacts. These include: Conversion costs; industry direct employment; 
cumulative regulatory burden; and small business impacts.
Conversion Costs
    Several commenters requested information about DOE's conversion 
costs for the pump industry. In response to DOE's request for comment 
on conversion costs, HI requested further clarification of the sources 
of DOE's conversion cost data. (HI, No.45 at p.5) Wilo commented that 
conversion costs at their company would total $125,000 to $300,000 per 
pump model to reach ``high efficiency''. Wilo also noted that testing 
could require operational expenditures of $750,000 for their business. 
(Wilo, No. 44 at p.6-7)
    DOE's conversion costs were based on industry survey data provided 
to the Department by HI, as noted in section IV.C.5 of this document. 
The industry feedback, which included data from 15 different 
manufacturers, suggested industry-average conversion costs of 
approximately $200,000 per model. DOE believes the data provided by HI 
to be the best dataset available for estimating industry conversion 
costs. Wilo's range of $125,000 to $300,000 is consistent with DOE's 
estimates, though DOE recognizes that any single manufacturer's 
conversion cost may differ from the average. In Wilo's written 
comments, the company also noted a cost of $750,000 to retest 15,000 
unique products. DOE believes that grouping of products into basic 
models for the purposes of CC&E testing may allow the company to 
mitigate these costs, as not each unique product requires testing. In 
response to Wilo's concern, DOE updated its financial models for the 
final rule to include an expense to industry for testing all basic 
models. The final pumps test procedure estimated the total cost of 
testing a pump, including setup, tests, and takedown to range between 
$161.61 and $430.96 per model. 80 FR 17586 (April 1, 2015). DOE used 
the upper end estimate of $430.96 per test to develop a conservative 
expense to industry. Assuming two tests per model and 3,332 basic 
models in the industry, DOE estimates the cost to test all products in 
accordance with the DOE test procedure expense will result in an 
expense of $2.9 million to the industry in both the no-standards case 
and the standards cases. Additional information about DOE's conversion 
cost methodology can be found in section IV.C.6 of this document and in 
Chapter 12 of the TSD.
Direct Employment
    HI stated that it disagreed with the statement that ``DOE estimates 
that in the absence of energy conservation standards, there would be 
415 domestic production workers for covered pumps'', and requests to 
know what data was used to determine this value. HI also believes that 
the impact will be greater than what is stated by the DOE. HI also 
believes it is important for DOE to analyze and report the impact on 
employment throughout the supply and distribution chain. (HI, No.45 at 
p.5)
    In the manufacturer impact analysis, DOE analyzes the impacts on 
regulated pump manufacturers. DOE's production worker employment 
estimate includes only workers directly involved in fabricating and 
assembling the covered product and their line supervisors within the 
manufacturing facility. Workers performing services that are closely 
associated with production operations, such as materials handling tasks 
using forklifts, are also included as production labor. DOE's 
production worker estimate relies on the domestic pump shipments 
estimated in the shipments analysis, the labor content per pump 
estimated using the engineering analysis, and typical production worker 
wages estimated using labor rate data in the US Census. The complete 
methodology is explained in detail in section 12.7 of the TSD. DOE's 
production worker estimate does not include workers in the supply or 
distribution chain. These workers are accounted for in DOE's analysis 
of the indirect employment impact, which estimates impacts on the 
broader economy. These impacts can be found in section V.B.3.c.
    Cumulative Regulatory Burden
    HI noted that pending regulations on dedicated purpose pool pumps 
and any additional pump regulations will further tax the limited 
resources available for redesign, manufacturing, and testing of new 
products. (HI, No.45 at p. 6) DOE does not list the pool pump 
rulemaking in its list of cumulative regulations because the rulemaking 
is in the preliminary stages. Until the rule reaches the NOPR stage, 
DOE does not have enough detail on the scope of coverage, the effective 
date, and potential conversion costs. DOE will consider whether to 
include the regulatory burden of these pump standards in any subsequent 
analysis of the cumulative regulatory burden of potential standards for 
dedicated purpose pool pumps.
    Small Businesses Impacts
    DOE requested comment on the number of small business in the 
industry. Wilo commented that the number of businesses affected by this 
rule numbers in the hundreds, including distributors, installers, 
design-builders, manufacturers and engineers. (Wilo, No.44 at p.8) 
Consistent with the requirements of the Regulatory Flexibility Act (5 
U.S.C. 601, et seq.), as amended, the Department analyzes the expected 
impacts of an energy conservation standard on pump manufacturers 
directly regulated by DOE's standards. Distributors, installers, 
design-builders, manufacturers, and engineers that are not pump 
manufacturers are excluded from analysis.

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 15 of the 
final rule 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 final rule TSD. 
The upstream emissions include both emissions from fuel combustion 
during extraction, processing, and transportation of fuel, and 
``fugitive''

[[Page 4401]]

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 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 D.C. 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 D.C. Circuit and 
remanded the case for further proceedings consistent with the Supreme 
Court's opinion.\60\ On October 23, 2014, the D.C. 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, 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 efficiency 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.\62\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \62\ DOE notes that the Supreme Court recently remanded EPA's 
2012 rule regarding national emission standards for hazardous air 
pollutants from certain electric utility steam generating units. See 
Michigan v. EPA (Case No. 14-46, 2015). DOE has tentatively 
determined that the remand of the MATS rule does not change the 
assumptions regarding the impact of energy efficiency standards on 
SO2 emissions. Further, while the remand of the MATS rule 
may have an impact on the overall amount of mercury emitted by power 
plants, it 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 from other 
facilities. 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 final rule 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 rulemaking, DOE considered the 
estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the considered efficiency levels. To make

[[Page 4402]]

this calculation similar to the calculation of the NPV of consumer 
benefit, DOE considered the reduced emissions expected to result over 
the lifetime of equipment shipped in the forecast period for each 
efficiency level. This section summarizes the basis for the monetary 
values used for CO2 and NOX emissions and 
presents the values considered in this rulemaking.
    For this final rule, DOE is relying on a set of values for the 
social cost of carbon (SCC) that was developed by an interagency 
process. A summary of the basis for those values is provided in the 
following subsection, and a more detailed description of the 
methodologies used is provided as an appendix to chapter 14 of the 
final rule TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services. Estimates of the SCC are provided 
in dollars per metric ton of carbon dioxide. A domestic SCC value is 
meant to reflect the value of damages in the United States resulting 
from a unit change in carbon dioxide emissions, while a global SCC 
value is meant to reflect the value of damages worldwide.
    Under section 1(b)(6) 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 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 the 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 
carbon dioxide emissions, the analyst faces a number of challenges. A 
recent report from the National Research Council points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of greenhouse gases; (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.
    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
carbon dioxide emissions. The agency can estimate the benefits from 
reduced emissions in any future year by multiplying the change in 
emissions in that year by the SCC value appropriate for that year. The 
net present value of the benefits can then be calculated by multiplying 
the 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 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. 
Specifically, 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. Each model 
was given equal weight in the SCC values that were developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four sets of SCC values for use in 
regulatory analyses. Three sets of values are based on the average SCC 
from three integrated assessment models, at discount rates of 2.5 
percent, 3 percent,

[[Page 4403]]

and 5 percent. The fourth set, which represents the 95th-percentile SCC 
estimate across all three models at a 3-percent discount rate, is 
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, although 
preference is given to consideration of the global benefits of reducing 
CO2 emissions. Table IV.8 presents the values in the 2010 
interagency group report,\64\ which is reproduced in appendix 14A of 
the final rule TSD.
---------------------------------------------------------------------------

    \64\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866, Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

                      Table IV.8--Annual SCC Values from 2010 Interagency Report, 2010-2050
                                      [In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                            Discount Rate %
                                                      ----------------------------------------------------------
                         Year                               5            3           2.5               3
                                                      ----------------------------------------------------------
                                                         Average      Average      Average      95th Percentile
----------------------------------------------------------------------------------------------------------------
2010.................................................          4.7         21.4         35.1                64.9
2015.................................................          5.7         23.8         38.4                72.8
2020.................................................          6.8         26.3         41.7                80.7
2025.................................................          8.2         29.6         45.9                90.4
2030.................................................          9.7         32.8         50.0               100.0
2035.................................................         11.2         36.0         54.2               109.7
2040.................................................         12.7         39.2         58.4               119.3
2045.................................................         14.2         42.1         61.7               127.8
2050.................................................         15.7         44.9         65.0               136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this document 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).\65\ 
(See appendix 14B of the final rule TSD for further information.) Table 
IV.9 shows the updated sets of SCC estimates in five year increments 
from 2010 to 2050. Appendix 14B of the final rule TSD provides the full 
set of SCC estimates. 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.
---------------------------------------------------------------------------

    \65\ 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: www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).

            Table IV.9--Annual SCC Values from 2013 Interagency Update [Revised July 2015, 2010-2050
                                      [In 2007 dollars 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 since 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 above points out that there is tension between 
the goal of producing quantified estimates of the economic damages from 
an incremental ton of carbon and the limits of existing efforts to 
model these effects. There are a number of analytical challenges that 
are being addressed by the research community, including research 
programs housed in many of the Federal agencies participating in the 
interagency process to estimate the SCC. The interagency group intends 
to periodically review and reconsider those estimates to reflect 
increasing knowledge of the science and economics of climate impacts, 
as well as improvements in modeling.

[[Page 4404]]

    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 Gross Domestic Product price deflator. For each of the four cases 
specified, the values used 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.
    In response to the NOPR, the Cato Institute commented that the 
integrated assessment model (IAM) on which the SCC values are based 
does not provide reliable guidance and does not signal the order of 
magnitude of the actual social cost of carbon. Furthermore, the Cato 
Institute commented that the values are discordant with leading 
scientific literature on important SCC parameters. (Cato Institute, No. 
48 at p. 1) The Associations object to DOE's use of the SCC in the 
cost-benefit analysis performed in the NOPR and believes that the SCC 
should not be used in any rulemaking or policymaking until it undergoes 
a more rigorous notice, review, and comment process. (The Associations, 
No. 47 at p. 4)
    In conducting the interagency process that developed the SCC 
values, technical experts from numerous agencies met on a regular basis 
to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. Key 
uncertainties and model differences transparently and consistently 
inform the range of SCC estimates. These uncertainties and model 
differences are discussed in the interagency working group's reports, 
which are reproduced in appendix 14A and 14B of the final rule TSD, as 
are the major assumptions. Specifically, uncertainties in the 
assumptions regarding climate sensitivity, as well as other model 
inputs such as economic growth and emissions trajectories, are 
discussed and the reasons for the specific input assumptions chosen are 
explained. However, the three integrated assessment models used to 
estimate the SCC are frequently cited in the peer-reviewed literature 
and were used in the last assessment of the IPCC. In addition, new 
versions of the models that were used in 2013 to estimate revised SCC 
values were published in the peer-reviewed literature (see appendix 14B 
of the final rule TSD for discussion). Although uncertainties remain, 
the revised estimates used in this final rule are based on the best 
available scientific information on the impacts of climate change. The 
current estimates of the SCC have been developed over many years, using 
the best science available, and with input from the public. In November 
2013, OMB announced a new opportunity for public comment on the 
interagency technical support document underlying the revised SCC 
estimates. In July 2015 OMB published a detailed summary and formal 
response to the many comments that were received.\66\ It also stated 
its intention to seek independent expert advice on opportunities to 
improve the estimates, including many of the approaches suggested by 
commenters. DOE stands ready to work with OMB and the other members of 
the interagency working group on further review and revision of the SCC 
estimates as appropriate.
---------------------------------------------------------------------------

    \66\ https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions.
---------------------------------------------------------------------------

2. Valuation of Other Emissions Reductions
    As noted previously, DOE has estimated how the considered energy 
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.\67\ 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 final rule 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.
---------------------------------------------------------------------------

    \67\ http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf. See Tables 4-7, 4-8, and 4-9 in the 
report.
    \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 final 
rule 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 to 
evaluate the monetization of avoided NOx emissions and will make any 
appropriate updates in energy conservation standards rulemakings.
    DOE is evaluating appropriate monetization of avoided 
SO2 and Hg emissions in energy conservation standards 
rulemakings. It has not included such monetization 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 the 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 final rule 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

    Employment impacts include direct and indirect impacts. Direct

[[Page 4405]]

employment impacts are any changes in the number of employees of 
manufacturers of the equipment subject to standards; the MIA addresses 
those impacts. Indirect employment impacts are changes in national 
employment that occur due to the shift in expenditures and capital 
investment caused by the purchase and operation of more-efficient 
equipment. Indirect employment impacts from standards consist of the 
jobs created or eliminated in the national economy due to: (1) Reduced 
spending by end users on energy; (2) reduced spending on new energy 
supply by the utility industry; (3) increased consumer spending on the 
purchase of new products; and (4) the effects of those three factors 
throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS).\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, net national employment may increase because of shifts 
in economic activity resulting from new energy conservation standards 
for pumps.
---------------------------------------------------------------------------

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

    For the standard levels considered in this final rule, DOE 
estimated indirect national employment impacts using an input/output 
model of the U.S. economy called Impact of Sector Energy Technologies 
version 3.1.1 (ImSET).\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 the 187 sectors. ImSET's national economic I-O 
structure is based on a 2002 U.S. benchmark table, specially aggregated 
to the 187 sectors most relevant to industrial, commercial, and 
residential building energy use. DOE notes that ImSET is not a general 
equilibrium forecasting model, and understands the uncertainties 
involved in projecting employment impacts, especially changes in the 
later years of the analysis. Because ImSET does not incorporate price 
changes, the employment effects predicted by ImSET may over-estimate 
actual job impacts over the long run. For the final rule, DOE used 
ImSET only to estimate short-term (through 2024) employment impacts.
---------------------------------------------------------------------------

    \71\ M. J. Scott, O. V. Livingston, P. J. Balducci, J. M. Roop, 
and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, 
PNNL-18412, Pacific Northwest National Laboratory (2009) (Available 
at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------

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

V. Analytical Results and Conclusions

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

A. Trial Standard Levels

1. Trial Standard Level Formulation Process and Criteria
    DOE developed six efficiency levels, including a baseline level, 
for each equipment class analyzed in the LCC, NIA, and MIA. TSL 5 was 
selected at the max-tech level for these equipment classes, and also 
represented the highest energy savings, NPV, and net benefit to the 
nation scenario. TSL 1, TSL 2, TSL 3, and TSL 4 provide intermediate 
efficiency levels between the baseline efficiency level and TSL 5 and 
allow for an evaluation of manufacturer impact at each level. As 
discussed in section IV.A.2.a, for the RSV equipment classes, DOE set 
the baseline and max-tech levels equal to those established in Europe, 
but did not develop intermediate efficiency levels or TSLs due to lack 
of available cost data for this equipment. Moreover, as discussed in 
section IV.A.2.b, DOE set the baseline and max-tech levels for the 
VTS.1800 equipment class equal to those for VTS.3600, but did not 
develop intermediate efficiency levels or TSLs, again due to lack of 
available data. As a result, for the RSV and VTS.1800 equipment 
classes, TSLs 1 through 4 map to the baseline efficiency level, EL 0, 
and TSL 5 maps to the max-tech level, EL 5. Table V.1 shows the mapping 
between TSLs and efficiency levels for all equipment classes.

                              Table V.1--Mapping Between TSLs and Efficiency Levels
----------------------------------------------------------------------------------------------------------------
          Equipment Class             Baseline      TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
ESCC.3600.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
ESFM.1800.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
ESFM.3600.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
IL.1800...........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
IL.3600...........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
RSV.1800*.........................         EL 0         EL 0         EL 0         EL 0         EL 0         EL 5
RSV.3600*.........................         EL 0         EL 0         EL 0         EL 0         EL 0         EL 5
VTS.1800*.........................         EL 0         EL 0         EL 0         EL 0         EL 0         EL 5

[[Page 4406]]

 
VTS.3600..........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
----------------------------------------------------------------------------------------------------------------
* Equipment classes not analyzed due to lack of available data (in the case of RSV) or lack of market share (in
  the case of VTS.1800).

2. Trial Standard Level Equations
    Because the efficiency metric, PEI, is a normalized metric targeted 
to create a standard level of 1.00, DOE has expressed its efficiency 
levels in terms of C-values. Each C-value represents a normalized 
efficiency for all size pumps, across the entire equipment class. (See 
section III.C.1 for more information about C-values and the related 
equations.) Table V.2 shows the appropriate C-values for each equipment 
class, at each TSL.

                                         Table V.2 C--Values at Each TSL
----------------------------------------------------------------------------------------------------------------
          Equipment Class             Baseline      TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.........................       134.43       131.63       128.47       126.67       125.07       123.71
ESCC.3600.........................       135.94       134.60       130.42       128.92       127.35       125.29
ESFM.1800.........................       134.99       132.95       128.85       127.04       125.12       123.71
ESFM.3600.........................       136.59       134.98       130.99       129.26       127.77       126.07
IL.1800...........................       135.92       133.95       129.30       127.30       126.00       124.45
IL.3600...........................       141.01       138.86       133.84       131.04       129.38       127.35
RSV.1800*.........................       129.63       129.63       129.63       129.63       129.63       124.73
RSV.3600*.........................       133.20       133.20       133.20       133.20       133.20       129.10
VTS.1800*.........................       138.78       138.78       138.78       138.78       138.78       127.15
VTS.3600..........................       138.78       136.92       134.85       131.92       129.25       127.15
----------------------------------------------------------------------------------------------------------------
* Equipment classes not analyzed due to lack of available data (in the case of RSV) or lack of market share (in
  the case of VTS.1800).

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Consumers
    DOE analyzed the economic impacts on pump consumers by looking at 
the effects potential new standards would have on the LCC and PBP, when 
compared to the no-new-standards case described in section IV.F.1. DOE 
also examined the impacts of potential new standards on consumer 
subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency equipment would affect consumers in 
two ways: (1) Purchase price would increase over the price of less 
efficient equipment currently in the market, and (2) annual operating 
costs would decrease as a result of increased energy savings. Inputs 
used for calculating the LCC and PBP include total installed costs 
(i.e., equipment price plus installation costs), and operating costs 
(i.e., annual energy savings, energy prices, energy price trends, 
repair costs, and maintenance costs). The LCC calculation also uses 
equipment lifetime and a discount rate. Chapter 8 of the final rule TSD 
provides detailed information on the LCC and PBP analyses.
    Table V.3 through Table V.16 show the LCC and PBP results for all 
efficiency levels considered for all analyzed equipment classes. The 
average costs at each TSL are calculated considering the full sample of 
consumers that have levels of efficiency in the no-new-standards case 
equal to or above the given TSL (who are not affected by a standard at 
that TSL), as well as consumers who had non-compliant pumps in the no-
new-standards case and purchase more expensive and efficient redesigned 
pumps in the standards case. The simple payback and LCC savings are 
measured relative to the no-new-standards case efficiency distribution 
in the compliance year (see section IV.F.1 for a description of the no-
new-standards case).

                                        Table V.3--Average LCC and PBP Results by Efficiency Level for ESCC.1800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                            Efficiency   ----------------------------------------------------------------     Simple          Average
                   TSL                         level                       First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0          $1,661          $2,224         $17,558         $19,219  ..............              13
1.......................................               1           1,695           2,234          17,482          19,176             3.4              13
2.......................................               2           1,728           2,214          17,328          19,056             2.2              13
3.......................................               3           1,792           2,196          17,188          18,981             2.7              13
4.......................................               4           1,889           2,172          17,008          18,897             3.2              13
5.......................................               5           2,054           2,147          16,807          18,861             4.0              13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards case.


[[Page 4407]]


               Table V.4--Average LCC Savings Relative to the No-New-Standards Case for ESCC.1800
----------------------------------------------------------------------------------------------------------------
                                                                                                    Percent of
                                                                    Efficiency      Average LCC   consumers that
                               TSL                                     level         savings*       experience
                                                                                      (2014$)        net cost
----------------------------------------------------------------------------------------------------------------
1...............................................................               1             $43              12
2...............................................................               2             163              11
3...............................................................               3             238              24
4...............................................................               4             322              30
5...............................................................               5             357              43
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.5--Average LCC and PBP Results by Efficiency Level for ESCC.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2014$
                                            Efficiency   ----------------------------------------------------------------     Simple          Average
                   TSL                         level                       First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0          $1,108          $1,574          $9,800         $10,908              --              11
1.......................................               1           1,113           1,570           9,777          10,890             1.5              11
2.......................................               2           1,126           1,556           9,689          10,816             1.0              11
3.......................................               3           1,157           1,546           9,630          10,787             1.8              11
4.......................................               4           1,186           1,533           9,544          10,730             1.9              11
5.......................................               5           1,233           1,510           9,400          10,633             2.0              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards case.


               Table V.6--Average LCC Savings Relative to the No-New-Standards Case for ESCC.3600
----------------------------------------------------------------------------------------------------------------
                                                                                                    Percent of
                                                                    Efficiency      Average LCC   consumers that
                               TSL                                     level         savings*       experience
                                                                                      (2014$)        net cost
----------------------------------------------------------------------------------------------------------------
1...............................................................               1             $17            0.68
2...............................................................               2              92             1.8
3...............................................................               3             121              14
4...............................................................               4             178              14
5...............................................................               5             275              13
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.7--Average LCC and PBP Results by Efficiency Level for ESFM.1800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                            Efficiency   ----------------------------------------------------------------     Simple          Average
                   TSL                         level                       First year's      Lifetime                      payback years  lifetime years
                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0          $1,917          $3,384         $41,409         $43,326              --              23
1.......................................               1           1,920           3,383          41,398          43,318             2.5              23
2.......................................               2           1,970           3,365          41,182          43,152             2.9              23
3.......................................               3           2,032           3,344          40,919          42,950             2.9              23
4.......................................               4           2,181           3,302          40,403          42,584             3.2              23
5.......................................               5           2,347           3,262          39,908          42,254             3.5              23
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards-case.


               Table V.8--Average LCC Savings Relative to the No-New-Standards Case for ESFM.1800
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                              Efficiency       Average LCC       consumers that
                            TSL                                  level       savings* (2014$)    experience net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               1               $8.0               0.27
2.........................................................               2                174                6.6
3.........................................................               3                376                 15
4.........................................................               4                742                 24

[[Page 4408]]

 
5.........................................................               5              1,072                 26
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.9--Average LCC and PBP Results by Efficiency Level for ESFM.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                      Efficiency                     First year's      Lifetime                         payback        lifetime
                                               level      Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0          $1,367          $5,215         $51,540         $52,907  ..............              20
1.......................................               1           1,375           5,208          51,473          52,848             1.3              20
2.......................................               2           1,415           5,155          50,943          52,358             0.8              20
3.......................................               3           1,460           5,109          50,481          51,941             0.9              20
4.......................................               4           1,549           5,055          49,940          51,489             1.1              20
5.......................................               5           1,670           4,976          49,150          50,820             1.3              20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards-case.


               Table V.10--Average LCC Savings Relative to the No-New-Standards Case for ESFM.3600
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                              Efficiency       Average LCC       consumers that
                            TSL                                  level      savings * (2014$)    experience net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               1                $58               0.30
2.........................................................               2                549                1.9
3.........................................................               3                966                4.8
4.........................................................               4              1,418                7.2
5.........................................................               5              2,087                8.6
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                         Table V.11--Average LCC and PBP Results by Efficiency Level for IL.1800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                      Efficiency                     First year's      Lifetime                         payback        lifetime
                                               level      Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0          $2,157          $1,869         $16,817         $18,974  ..............              16
1.......................................               1           2,175           1,861          16,748          18,923             2.4              16
2.......................................               2           2,225           1,846          16,602          18,827             2.9              16
3.......................................               3           2,312           1,831          16,465          18,777             4.1              16
4.......................................               4           2,466           1,814          16,311          18,776             5.6              16
5.......................................               5           2,650           1,790          16,096          18,747             6.2              16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards-case.


                Table V.12--Average LCC Savings Relative to the No-New-Standards Case for IL.1800
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                              Efficiency       Average LCC       consumers that
                            TSL                                  level      savings * (2014$)    experience net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               1                $51                1.9
2.........................................................               2                147                7.3
3.........................................................               3                197                 15
4.........................................................               4                198                 26
5.........................................................               5                227                 36
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


[[Page 4409]]


                                         Table V.13--Average LCC and PBP Results by Efficiency Level for IL.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                      Efficiency                     First year's      Lifetime                         payback        lifetime
                                               level      Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0          $1,494          $2,021         $14,198         $15,692  ..............              13
1.......................................               1           1,504           2,013          14,142          15,646             1.4              13
2.......................................               2           1,546           1,994          14,008          15,554             2.0              13
3.......................................               3           1,600           1,972          13,852          15,452             2.2              13
4.......................................               4           1,673           1,955          13,734          15,407             2.8              13
5.......................................               5           1,822           1,922          13,497          15,320             3.3              13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards-case.


                Table V.14--Average LCC Savings Relative to the No-New-Standards Case for IL.3600
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                              Efficiency       Average LCC       consumers that
                            TSL                                  level      savings * (2014$)    experience net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               1                $45                2.1
2.........................................................               2                138                 13
3.........................................................               3                239                 11
4.........................................................               4                285                 14
5.........................................................               5                372                 20
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.15--Average LCC and PBP Results by Efficiency Level for VTS.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ----------------------------------------------------------------     Simple          Average
                   TSL                      Efficiency                     First year's      Lifetime                         payback        lifetime
                                               level      Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
--......................................               0            $706          $1,084          $6,255          $6,961  ..............              11
1.......................................               1             712           1,080           6,231           6,943             1.3              11
2.......................................               2             727           1,077           6,218           6,944             3.1              11
3.......................................               3             747           1,061           6,128           6,875             1.8              11
4.......................................               4             787           1,044           6,029           6,817             2.0              11
5.......................................               5             838           1,028           5,937           6,775             2.4              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the no-new-standards-case.


               Table V.16--Average LCC Savings Relative to the No-New-Standards Case for VTS.3600
----------------------------------------------------------------------------------------------------------------
                                                                                                   Percent of
                                                              Efficiency       Average LCC       consumers that
                            TSL                                  level      savings * (2014$)    experience net
                                                                                                      cost
----------------------------------------------------------------------------------------------------------------
1.........................................................               1                $18               0.51
2.........................................................               2                 17                 27
3.........................................................               3                 86                7.4
4.........................................................               4                144                 10
5.........................................................               5                186                 13
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).

b. Consumer Subgroup Analysis
    As shown in Table V.17 through Table V.23, the results of the life-
cycle cost subgroup analysis indicate that for all equipment classes 
analyzed, the VFD subgroup fared slightly worse than the average 
consumer, with the VFD subgroup being expected to have lower LCC 
savings and longer payback periods than average. This occurs mainly 
because with power reduction through use of a VFD, consumers use and 
save less energy from pump efficiency improvements than do consumers 
who do not use VFDs and so would benefit less from the energy 
savings.\72\ Chapter 11 of the final rule TSD provides more detailed 
discussion on the LCC subgroup analysis and results.
---------------------------------------------------------------------------

    \72\ In this analysis, DOE does not count energy savings of 
switching from throttling a pump to using a VFD, as this is not a 
design option. Instead, DOE analyzes the life-cycle costs of 
consumers who use VFDs with their pumps.

[[Page 4410]]



                  Table V.17--Comparison of Impacts for VFD Users With Non-VFD Users, ESCC.1800
----------------------------------------------------------------------------------------------------------------
                                  Energy           LCC savings (2014$) *       Simple payback period (years)
             TSL                efficiency   ----------------------------------------------------------------
                                   level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
-------------------------------------------------------------------------------------------------------------
1...........................               1            $9.3             $43             6.0             3.4
2...........................               2              64             163             3.9             2.2
3...........................               3              80             238             4.7             2.7
4...........................               4              88             322             5.5             3.2
5...........................               5              40             357             7.0             4.0
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                  Table V.18--Comparison of Impacts for VFD Users With Non-VFD Users, ESCC.3600
----------------------------------------------------------------------------------------------------------------
                                      Energy           LCC savings (2014$) *       Simple payback period (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
----------------------------------------------------------------------------------------------------------------
1...............................               1            $8.0             $17             2.5             1.5
2...............................               2              48              92             1.7             1.0
3...............................               3              53             121             3.0             1.8
4...............................               4              76             178             3.2             1.9
5...............................               5             116             275             3.3             2.0
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                  Table V.19--Comparison of Impacts for VFD Users With Non-VFD Users, ESFM.1800
----------------------------------------------------------------------------------------------------------------
                                      Energy           LCC savings (2014$)*        Simple payback period (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
----------------------------------------------------------------------------------------------------------------
1...............................               1            $4.0            $8.0             4.2             2.5
2...............................               2              81             175             4.9             2.9
3...............................               3             175             376             4.9             2.9
4...............................               4             334             742             5.5             3.2
5...............................               5             462            1072             6.0             3.5
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                  Table V.20--Comparison of Impacts for VFD Users With Non-VFD Users, ESFM.3600
----------------------------------------------------------------------------------------------------------------
                                      Energy           LCC savings (2014$)*        Simple payback period (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
----------------------------------------------------------------------------------------------------------------
1...............................               1             $32             $58             2.1             1.3
2...............................               2             306             549             1.4             0.8
3...............................               3             533             966             1.5             0.9
4...............................               4             764           1,418             1.9             1.1
5...............................               5           1,110           2,087             2.1             1.3
----------------------------------------------------------------------------------------------------------------
*Parentheses indicate negative values.


                   Table V.21--Comparison of Impacts for VFD Users with Non-VFD Users, IL.1800
----------------------------------------------------------------------------------------------------------------
                                      Energy           LCC savings (2014$)*        Simple payback period (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
----------------------------------------------------------------------------------------------------------------
1...............................               1             $23             $51             3.9             2.4
2...............................               2              61             147             4.8             2.9
3...............................               3              53             197             6.8             4.1
4...............................               4            (11)             198             9.5             5.6
5...............................               5            (71)             227              11             6.2
----------------------------------------------------------------------------------------------------------------
*Parentheses indicate negative values.


[[Page 4411]]


                   Table V.22--Comparison of Impacts for VFD Users with Non-VFD Users, IL.3600
----------------------------------------------------------------------------------------------------------------
                                      Energy           LCC savings (2014$)*        Simple payback period (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
----------------------------------------------------------------------------------------------------------------
1...............................               1             $23             $45             2.4             1.4
2...............................               2              61             138             3.3             2.0
3...............................               3             100             239             3.7             2.2
4...............................               4              97             285             4.6             2.8
5...............................               5              88             372             5.6             3.3
----------------------------------------------------------------------------------------------------------------
*Parentheses indicate negative values.


                  Table V.23--Comparison of Impacts for VFD Users with Non-VFD Users, VTS.3600
----------------------------------------------------------------------------------------------------------------
                                      Energy           LCC savings (2014$)*        Simple payback period (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users     Non-VFD users     VFD-users     Non-VFD users
----------------------------------------------------------------------------------------------------------------
1...............................               1            $9.7             $18             1.9             1.3
2...............................               2             3.8              17             4.7             3.1
3...............................               3              41              86             2.8             1.8
4...............................               4              62             144             3.2             2.0
5...............................               5              69             186             3.7             2.4
----------------------------------------------------------------------------------------------------------------
*Parentheses indicate negative values.

c. Rebuttable Presumption Payback
    As discussed in section III.G.2, EPCA provides a rebuttable 
presumption that, in essence, an energy conservation standard is 
economically justified if the increased purchase cost for a product 
that meets the standard is less than three times the value of the 
first-year energy savings resulting from the standard. However, DOE 
routinely conducts a full economic analysis that considers the full 
range of impacts, including those to the consumer, manufacturer, 
nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) 
and 6316(a). The results of this analysis serve as the basis for DOE to 
evaluate the economic justification for a potential standard level, 
thereby supporting or rebutting the results of any preliminary 
determination of economic justification. For comparison with the more 
detailed analytical results, DOE calculated a rebuttable presumption 
payback period for each TSL. Table V.24 shows the rebuttable 
presumption payback periods for the pump equipment classes.

                  Table V.24--Rebuttable Presumption Payback Periods for Pump Equipment Classes
----------------------------------------------------------------------------------------------------------------
                                                      Rebuttable presumption payback (years)
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.......................             3.5             2.2             2.7             3.2             4.0
ESCC.3600.......................             1.5             1.0             1.8             1.9             1.9
ESFM.1800.......................             2.5             2.8             2.9             3.2             3.5
ESFM.3600.......................             1.3             0.8             0.9             1.1             1.3
IL.1800.........................             2.3             2.9             4.1             5.6             6.2
IL.3600.........................             1.4             2.0             2.2             2.7             3.3
VTS.3600........................             1.3             3.1             1.9             2.1             2.4
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    As noted above, DOE performed an MIA to estimate the impact of 
energy conservation standards on manufacturers of pumps. The following 
section summarizes the expected impacts on manufacturers at each 
considered TSL. Chapter 12 of the final rule TSD explains the analysis 
in further detail.
a. Industry Cash-Flow Analysis Results
    Table V.25 and Table V.26 depict the financial impacts (represented 
by changes in INPV) of energy standards on manufacturers of pumps, as 
well as the conversion costs that DOE expects manufacturers would incur 
for all equipment classes at each TSL. To evaluate the range of cash 
flow impacts on the CIP industry, DOE modeled two different mark-up 
scenarios using different assumptions that correspond to the range of 
anticipated market responses to energy conservation standards: (1) The 
flat markup scenario; and (2) the cost recovery markup scenario. Each 
of these scenarios is discussed immediately below.
    Under the flat markup scenario, DOE maintains the same markup in 
the no-new-standards case and standards case. This results in no price 
change at a given efficiency level for the manufacturer's first 
consumer. Because this markup scenario assumes that manufacturers would 
not increase their pricing as a result of a standard even as they incur 
conversion costs, this markup scenario is the most negative

[[Page 4412]]

and results in the most negative impacts on INPV.
    In the cost recovery markup scenario, manufacturer markups are set 
so that manufacturers recover their conversion costs over the analysis 
period. That cost recovery is enabled by an increase in mark-up, which 
results in higher sales prices for pumps even as manufacturer product 
costs stay the same. The cost recovery calculation assumes 
manufacturers raise prices on models where a redesign is necessitates 
by the standard. This cost recovery scenario results in more positive 
results than the flat markup scenario.
    The set of results below shows potential INPV impacts for pump 
manufacturers; Table V.25 reflects the lower bound of impacts (i.e., 
the flat markup scenario), and Table V.26 represents the upper bound 
(the cost recovery markup scenario).
    Each of the modeled scenarios results in a unique set of cash flows 
and corresponding industry values at each TSL. In the following 
discussion, the INPV results refer to the difference in industry value 
between the no-new-standards case and each standards case that results 
from the sum of discounted cash flows from the base year 2015 through 
2049, the end of the analysis period.
    To provide perspective on the short-run cash flow impact, DOE 
includes in the discussion of the results below a comparison of free 
cash flow between the no-new-standards case and the standards case at 
each TSL in the year before new standards would take effect. This 
figure provides an understanding of the magnitude of the required 
conversion costs relative to the cash flow generated by the industry in 
the no-new-standards case.

                                        Table V.25--Manufacturer Impact Analysis for Pumps--Flat Markup Scenario*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                               Units          No-new-    -------------------------------------------------------------------------------
                                                          standards case         1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................              $M           120.0           110.3            80.5            20.9          (86.1)         (229.0)
Change in INPV..........................              $M  ..............           (9.7)          (39.5)          (99.1)         (206.1)         (349.0)
                                                       %  ..............           (8.1)          (32.9)          (82.6)         (171.8)         (290.9)
Total Conversion Costs..................              $M  ..............            22.8            81.2           177.2           337.9           550.6
Free Cash Flow (2018)...................              $M            11.8             4.9          (16.6)          (58.3)         (128.2)         (220.6)
Free Cash Flow (2018)...................      % Decrease  ..............            58.7           241.1           594.5          1186.7          1970.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.


                                    Table V.26--Manufacturer Impact Analysis for Pumps--Cost Recovery Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              No-new-                                  Trial standard level
                                               Units         standards   -------------------------------------------------------------------------------
                                                               case              1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................              $M           120.0           120.4           128.3           124.5           113.0            93.5
Change in INPV..........................              $M  ..............             0.5             8.4             4.6           (6.9)          (26.5)
                                                       %  ..............             0.4             7.0             3.8           (5.8)          (22.1)
Total Conversion Costs..................              $M  ..............            22.8            81.2           177.2           337.9           550.6
Free Cash Flow (2018)...................              $M            11.8             4.9          (16.6)          (58.3)         (128.2)         (220.6)
Free Cash Flow (2018)...................      % Decrease  ..............            58.7           241.1           594.5          1186.7          1970.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.

    TSL 1 represents EL 1 for all equipment classes except for 
RSV.1800, RSV.3600 and VTS.1800 classes, which are set at EL 0. At TSL 
1, DOE estimates impacts on INPV for pump manufacturers to range from -
8.1 percent to 0.4 percent, or a change in INPV of -$9.7 million to 
$0.5 million. At this potential standard level, industry free cash flow 
is estimated to decrease by approximately 58.7 percent to $4.9 million, 
compared to the no-new-standards case value of $11.8 million in the 
year before the compliance date (2019). The industry would need to 
either drop product lines or engage in redesign of approximately 10% of 
their models. DOE estimates that manufacturers would incur conversion 
costs totaling $22.8 million, driven by hydraulic redesigns.
    TSL 2 represents EL 2 across all equipment classes except for 
RSV.1800, RSV.3600 and VTS.1800 classes, which are set at EL 0. At TSL 
2, DOE estimates impacts on INPV for pump manufacturers to range from -
39.5 percent to 8.4 percent, or a change in INPV of -$32.9 million to 
$7.0 million. At this potential standard level, industry free cash flow 
is estimated to decrease by approximately 241.1 percent to -$16.6 
million, compared to the no-new-standards case value of $11.8 million 
in the year before the compliance date (2019). Conversion costs for an 
estimated 25% of model offerings would be approximately $81.2 million 
for the industry. At TSL 2, the industry's annual free cash flow is 
estimated to drop below zero in 2018 and 2019, the years where 
conversion investments are the greatest. The negative free cash flow 
indicates that at least some manufacturers in the industry would need 
to access cash reserves or borrow money from capital markets to cover 
conversion costs.
    TSL 3 represents EL 3 for all equipment classes except for 
RSV.1800, RSV.3600 and VTS.1800 classes, which are set at EL 0. At TSL 
3, DOE estimates impacts on INPV for pump manufacturers to range from -
82.6 percent to 3.8 percent, or a change in INPV of -$99.1 million to 
$4.6 million. At TSL 3, industry conversion costs for an estimated 40% 
of model offerings would be approximately $177.2 million. As conversion 
costs increase, free cash flow continues to drop in the years before 
the standard year. This increases the likelihood that manufacturers 
will need to seek outside capital to support their conversion efforts. 
Furthermore, as more models require redesign, technical resources for 
hydraulic redesign could become an industry-wide constraint. 
Participants in the CIP Working Group noted that the industry as a 
whole relies on a limited pool of hydraulic redesign engineers and 
consultants. These

[[Page 4413]]

specialists can support only a limited number of redesigns per year. 
Industry representatives stated that TSL 3 could be an upper bound to 
the number of redesigns possible in the four years between announcement 
and effective year of the final rule.
    TSL 4 represents EL4 across all equipment classes except for 
RSV.1800, RSV.3600 and VTS.1800 classes, which are set at EL 0. At TSL 
4, DOE estimates impacts on INPV for pump manufacturers to range from -
171.8 percent to -5.8 percent, or a change in INPV of -$206.1 million 
to -$6.9 million. At this potential standard level, industry free cash 
flow is estimated to decrease by approximately 1186.7 percent relative 
to the no-new-standards case value of $11.8 million in the year before 
the compliance date (2019). The total industry conversion costs for an 
estimated 55% of model offerings would be approximately $337.9 million. 
The 1186.7% drop in free cash flow in 2019 indicates that the 
conversion costs are a very large investment relative to typical 
industry operations. As noted above, at TSL 2 and TSL 3, manufacturers 
may need to access cash reserves or outside capital to finance 
conversion efforts. Additionally, the industry may not be able to 
convert all necessary models before the compliance date of the 
standard.
    TSL 5 represents max-tech across all equipment classes. The 
following economic results reflect all equipment classes except for 
RSV.1800, RSV.3600 and VTS.1800 classes, for which DOE had insufficient 
data to conduct the analysis. At TSL 5, DOE estimates impacts on INPV 
for pump manufacturers to range from -290.9 percent to -22.1 percent, 
or a change in INPV of -$349.0 million to -$26.5 million. At this 
potential standard level, industry free cash flow is estimated to 
decrease by approximately 1970.3 percent relative to the no-new-
standards case value of $11.8 million in the year before the compliance 
date (2019). At max-tech, DOE estimates total industry conversion costs 
for an estimated 70% of model offerings, would be approximately $550.6 
million. The negative impacts related to cash availability, need for 
outside capital, and technical resources constraints at TSLs 2, 3, and 
4 would increase at TSL 5.
    In section VI.A, DOE adopts labeling requirements recommended by 
the CIP Working Group. DOE recognizes that such requirements may result 
in costs to manufacturers. Costs of updating marketing materials for 
redesigned pumps in each standards case were included in the conversion 
costs for the industry and are accounted for in the industry cash-flow 
analysis results and industry valuation figures presented in this 
section.
b. Labeling Costs
    Section VI.A of this rule discusses the labeling requirements for 
pumps. Manufacturers would need to update labels and literature that 
make representations of energy use (PEI) for all covered pumps, 
including both pumps that are redesigned to meet the standard and pumps 
that do not require redesign. For pumps that require redesign, the 
industry provided estimates of the cost to produce all-new marketing 
materials and labels as a part of their conversion costs feedback. 
Conversion costs were accounted for in DOE's financial modeling of the 
industry. For pumps that will not need to be redesigned, a much smaller 
effort is needed to update literature to include the PEI metric when 
making representations of energy use. DOE did not receive information 
on the cost to update labels and literature for equipment models that 
are already compliant with the energy conservation standard. As a 
result, these costs are not explicitly included in the analysis. DOE 
believes the labeling costs for compliant pumps to be significantly 
less than the certification costs and that those costs would not 
significantly impact the financial modeling results.
c. Impacts on Direct Employment
    To quantitatively assess the impacts of energy conservation 
standards on direct employment in the pumps industry, DOE used the GRIM 
to estimate the domestic labor expenditures and number of employees in 
the no-new-standards case and at each TSL from 2015 through 2049. DOE 
used statistical data from the U.S. Census Bureau's 2011 Annual Survey 
of Manufacturers (ASM),\73\ the results of the engineering analysis, 
and interviews with manufacturers to determine the inputs necessary to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures related to manufacturing of the product are 
a function of the labor intensity of the product, the sales volume, and 
an assumption that wages remain fixed in real terms over time. The 
total labor expenditures in each year are calculated by multiplying the 
MPCs by the labor percentage of MPCs. Based on feedback from 
manufacturers, DOE believes that 99% of the covered pumps are produced 
in the U.S. Therefore, 99% of the total labor expenditures contribute 
to domestic production employment.
---------------------------------------------------------------------------

    \73\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau 
(2011) (Available at: www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------

    The total domestic labor expenditures in the GRIM were then 
converted to domestic production employment levels by dividing 
production labor expenditures by the annual payment per production 
worker (production worker hours multiplied by the labor rate found in 
the U.S. Census Bureau's 2011 ASM). The estimates of production workers 
in this section cover workers, including line-supervisors directly 
involved in fabricating and assembling a product within the 
manufacturing facility. Workers performing services that are closely 
associated with production operations, such as materials handling tasks 
using forklifts, are also included as production labor. DOE's estimates 
only account for production workers who manufacture the specific 
products covered by this rulemaking. DOE estimates that in the absence 
of energy conservation standards, there would be 415 domestic 
production workers for covered pumps.
    In the standards case, DOE estimates an upper and lower bound to 
the potential changes in employment that result from the standard. 
Table V.27 shows the range of the impacts of potential energy 
conservation standards on U.S. production workers of pumps.

[[Page 4414]]



                                                     Table V.27--Potential Changes in the Total Number of Pump Production Workers in 2020 *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Trial standard level
                                  --------------------------------------------------------------------------------------------------------------------------------------------------------------
                                    No-new- standards  case               1                          2                          3                         4                         5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Changes in Domestic      .........................  (41) to 0................  (104) to 0...............  (166) to 0..............  (228) to 0..............  (290) to 0.
 Production Workers in 2020
 (relative to a no-new-standards
 case employment of 415).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    Based on the engineering analysis, MPCs and labor expenditures do 
not vary with efficiency and increasing TSLs. Additionally, the 
shipments analysis models consistent shipments at all TSLs. As a 
result, the GRIM predicts no change in employment in the standards 
case. DOE considers this to be the upper bound for change in 
employment. For a lower bound, DOE assumes a loss of employment that is 
directly proportional to the portion of pumps being eliminated from the 
market. Additional detail can be found in chapter 12 of the final rule 
TSD.
    DOE notes that the direct employment impacts discussed here are 
independent of the indirect employment impacts to the broader U.S. 
economy, which are documented in chapter 15 of the final rule TSD.
d. Impacts on Manufacturing Capacity
    Based on the engineering analysis, DOE concludes that higher 
efficiency pumps require similar production facilities, tooling, and 
labor as baseline efficiency pumps. Based on the engineering analysis 
and interviews with manufacturers, a new energy conservation standard 
is unlikely to create production capacity constraints.
    However, industry representatives, in interviews and in the CIP 
Working Group meetings, expressed concern about the industry's ability 
to complete the necessary number of hydraulic redesigns required to 
comply with a new standard. (EERE-2013-BT-NOC-0039-0109, pp. 280-283) 
In the industry, not all companies have the in-house capacity to 
redesign pumps. Many companies rely on outside consultants for a 
portion or all of their hydraulic design projects. Manufacturers were 
concerned that a new standard would create more demand for hydraulic 
design technical resources than are available in the industry.
    The number of pumps that require redesign is directly tied to the 
adopted standard level. The level adopted today is based on a level 
that the CIP Working Group considered feasible for the industry.
e. Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be affected disproportionately. Using 
average cost assumptions developed for an industry cash-flow estimate 
is inadequate to assess differential impacts among manufacturer 
subgroups.
    For the CIP industry, DOE identified and evaluated the impact of 
energy conservation standards on one subgroup--small manufacturers. The 
SBA defines a ``small business'' as having 500 employees or less for 
NAICS 333911, ``Pump and Pumping Equipment Manufacturing.'' Based on 
this definition, DOE identified 39 manufacturers in the CIP industry 
that qualify as small businesses. For a discussion of the impacts on 
the small manufacturer subgroup, see the regulatory flexibility 
analysis in section VII.B of this document and chapter 12 of the final 
rule TSD.
f. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of recent or impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and lead companies 
to abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    For the cumulative regulatory burden analysis, DOE looks at 
product-specific Federal regulations that could affect pumps 
manufacturers and with which compliance is required approximately three 
years before or after the 2019 compliance date of standard adopted in 
this document. The Department was not able to identify any additional 
regulatory burdens that met these criteria.
3. National Impact Analysis
a. Significance of Energy Savings
    For each TSL, DOE projected energy savings for pumps purchased in 
the 30-year period that begins in the year of compliance with new 
standards (2020-2049). The savings are measured over the entire 
lifetime of equipment purchased in the 30-year period. DOE quantified 
the energy savings attributable to each TSL as the difference in energy 
consumption between each standards case and the no-new-standards case 
described in section IV.H.2.
    Table V.28 presents the estimated primary energy savings and FFC 
energy savings for each considered TSL. The approach is further 
described in section IV.H.1.

[[Page 4415]]



    Table V.28--Cumulative National Energy Savings for Pump Trial Standard Levels for Units Sold in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                           Trial standard level (quads)
      All equipment classes      -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
Primary energy..................           0.074            0.28            0.53            0.88            1.28
FFC energy......................           0.077            0.29            0.55            0.91            1.34
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.

    OMB Circular A-4 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.\74\ Circular A-4 also 
directs agencies to consider the variability of key elements underlying 
the estimates of benefits and costs. For this rulemaking, DOE undertook 
a sensitivity analysis using nine rather than 30 years of equipment 
shipments. The choice of a nine-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.\75\ 
The review timeframe established in EPCA is generally not synchronized 
with the equipment lifetime, product manufacturing cycles, or other 
factors specific to pumps. Thus, such results are presented for 
informational purposes only and are not indicative of any change in 
DOE's analytical methodology. The NES results based on a nine-year 
analytical period are presented in Table V.29. The impacts are counted 
over the lifetime of equipment purchased in 2020-2028.
---------------------------------------------------------------------------

    \74\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/omb/circulars_a004_a-4/).
    \75\ EPCA requires DOE to review its standards at least once 
every six years, and requires, for certain products, a three-year 
period after any new standard is promulgated before compliance is 
required, except that in no case may any new standards be required 
within six years of the compliance date of the previous standards. 
(42 U.S.C. 6295(m) and 6313(a)(6)(C)). While adding a six-year 
review to the three-year compliance period adds up to nine years, 
DOE notes that it may undertake reviews at any time within the six-
year period and that the three-year compliance date may yield to the 
six-year backstop. A nine-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 five years rather than three years.

  Table V.29--Cumulative National Primary Energy Savings for Pump Trial Standard Levels for Units Sold in 2020-
                                                      2028
----------------------------------------------------------------------------------------------------------------
                                                           Trial standard level (quads)
         Equipment class         -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
Primary energy..................           0.020           0.074            0.14            0.24            0.35
FFC energy......................           0.021           0.078            0.15            0.25            0.36
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.

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 pumps. In 
accordance with OMB's guidelines on regulatory analysis,\76\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V.30 shows the consumer NPV results for each TSL considered 
for pumps. In each case, the impacts cover the lifetime of equipment 
purchased in 2020-2049.
---------------------------------------------------------------------------

    \76\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/omb/circulars_a004_a-4).

  Table V.30--Cumulative Net Present Value of Consumer Benefit for Pump Trial Standard Levels for Units Sold in
                                                    2020-2049
----------------------------------------------------------------------------------------------------------------
                                                       Trial standard level (billion 2014$*)
          Discount rate          -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
3 percent.......................            0.29             1.1             1.9             3.0             4.2
7 percent.......................            0.11            0.39            0.69             1.1             1.4
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
Note: Components may not sum to total due to rounding.

    The NPV results based on the aforementioned nine-year analytical 
period are presented in Table V.31. The impacts are counted over the 
lifetime of equipment purchased in 2020-2028. As mentioned previously, 
this information is presented for informational purposes only and is 
not indicative of any change in DOE's analytical methodology or 
decision criteria.

[[Page 4416]]



  Table V.31--Cumulative Net Present Value of Consumer Benefit for Pump Trial Standard Levels for Units Sold in
                                                    2020-2028
----------------------------------------------------------------------------------------------------------------
                                                      Trial standard level  (billion 2014$*)
          Discount rate          -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
3 percent.......................           0.094            0.35            0.63            0.99             1.4
7 percent.......................           0.049            0.18            0.31            0.48            0.64
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
Note: Components may not sum to total due to rounding.

    The results presented in this section reflect an assumption of no 
change in pump prices over the forecast period. In addition, DOE 
conducted sensitivity analyses using alternative price trends: one in 
which prices decline over time, and one in which prices increase. These 
price trends, and the associated NPV results, are described in appendix 
10B of the final rule TSD.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for pumps to reduce 
energy costs for equipment owners, with the resulting net savings being 
redirected to other forms of economic activity. Those shifts in 
spending and economic activity could affect the demand for labor. As 
described in section IV.N, DOE used an input/output model of the U.S. 
economy to estimate indirect employment impacts of the TSLs that DOE 
considered in this rulemaking. DOE understands that there are 
uncertainties involved in projecting employment impacts, especially 
changes in the later years of the analysis. Therefore, DOE generated 
results for near-term time frames (2020-2024), where these 
uncertainties are reduced.
    The results suggest that these adopted standards would be likely to 
have negligible impact on the net demand for labor in the economy. The 
projected net change in jobs is so small that it would be imperceptible 
in national labor statistics and might be offset by other, 
unanticipated effects on employment. Chapter 16 of the final rule TSD 
presents more detailed results about anticipated indirect employment 
impacts.
4. Impact on Utility or Performance of Equipment
    Any technology option expected to lessen the utility or performance 
of pumps was removed from consideration in the screening analysis. As a 
result, DOE considered only one design option in this final rule, 
hydraulic redesign. This design option does not involve geometry 
changes affecting installation of the pump (i.e., the flanges that 
connect it to external piping)--hence, there is no utility difference 
that might affect use of the more-efficient pumps for replacement 
applications. Further, the design option would not reduce the 
acceptable performance envelope of the pump (e.g., the combinations of 
pressure and flow for which the pump can be operated, restrictions to 
less corrosive environments, restrictions on acceptable operating 
temperature range). The hydraulic redesign would affect only the 
required power input, making no change to pump utility or performance.
5. Impact of Any Lessening of Competition
    DOE has also considered any lessening of competition that is likely 
to result from new 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. (42 U.S.C. 6313(a)(6)(B)(ii)(V) and 6316(a).) DOE transmitted a 
copy of its proposed rule to the Attorney General with a request that 
the Department of Justice (DOJ) provide its determination on this 
issue.
    In a letter dated July 10, 2015, DOJ stated that it did not have 
sufficient information to conclude that the proposed energy 
conservation standards or test procedure likely will substantially 
lessen competition in any particular product or geographic market. 
However, DOJ noted that the possibility exists that the proposed energy 
conservation standards and test procedure may result in anticompetitive 
effects in certain pump markets. Specifically in relation to the 
proposed standards, DOJ expressed concern that ``by design, the bottom 
quartile of pumps in each class of covered pumps will not meet the new 
standards. The non-compliance of the bottom quartile of pump models may 
result in some manufacturers stopping production of pumps altogether 
and fewer firms producing models that comply with the new standards. At 
this point, it is not possible to determine the impact on any 
particular product or geographic market.''
    As stated in section III.G.1.e, in all energy conservation 
standards rulemakings that set new standards or amend standards, a 
certain percentage of the market is affected by the standard. The 
percentage of affected pumps is represented by any models below the 
amended standard, which may have a distribution of efficiencies (i.e., 
some pump models will be closer to the new or amended standard level 
than others). It is not unusual for a large fraction of models 
(sometimes greater than 25%) to be at or near the baseline. As in all 
rulemakings, manufacturers have a choice between re-designing a non-
compliant model to meet the standard and discontinuing it.
    The ASRAC working group indicated that between 5 and 10% of models 
requiring redesign may be dropped because current sales are very low. 
(Docket No. EERE-2013-BT-NOC-0039, May 28 Pumps Working Group Meeting, 
p.61-63) Manufacturers indicated that additional models may be dropped 
where they can be replaced by another existing equivalent model 
currently made by the same manufacturer, often under an alternative 
brand. (Docket No. EERE-2013-BT-NOC-0039, April 29 Pumps Working Group 
Meeting, p.100) In either case, the elimination of these models would 
not have an adverse impact on the market or overall availability of 
pumps to serve particular applications.
    For these reasons, DOE concludes that the standard levels included 
in this final rule will not result in adverse impacts on competition 
within the pump marketplace. The remaining concerns in the DOJ letter 
regarding the test procedure have been addressed in the parallel test 
procedure rulemaking (Docket No. EERE-2013-BT-TP-0055). The Attorney 
General's assessment is available at http://www.regulations.gov/#!documentDetail;D=EERE-2011-BT-STD-0031-0053.

[[Page 4417]]

6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of the equipment subject to 
this rule is likely to improve the security of the nation's energy 
system by reducing the overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system. 
Reductions in national electric generating capacity estimated for each 
considered TSL are reported in chapter 15 of the final rule TSD.
    Energy savings from new standards for the pump equipment classes 
covered in this rulemaking could also produce environmental benefits in 
the form of reduced emissions of air pollutants and greenhouse gases 
associated with electricity production. Table V.32 provides DOE's 
estimate of cumulative emissions reductions projected to result from 
the TSLs considered in this rulemaking. The table includes both power 
sector emissions and upstream emissions. The upstream emissions were 
calculated using the multipliers discussed in section IV.K. DOE reports 
annual CO2, NOX, and Hg emissions reductions for 
each TSL in chapter 13 of the final rule TSD. As discussed in section 
IV.L, DOE did not include NOX emissions reduction from power 
plants in States subject to CAIR, because an energy conservation 
standard would not affect the overall level of NOX emissions 
in those States due to the emissions caps mandated by CSAPR.

                    Table V.32--Cumulative Emissions Reduction for Pumps Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                        TSL
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             4.4              16              31              52              75
SO2 (thousand tons).............             2.5             9.3              18              30              43
NOX (thousand tons).............             4.9              18              35              57              84
Hg (tons).......................           0.009           0.035           0.066            0.11            0.16
CH4 (thousand tons).............            0.36            1.35            2.58            4.28            6.26
N2O (thousand tons).............           0.051            0.19            0.36            0.60            0.88
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            0.25            0.93            1.78            2.95            4.33
SO2 (thousand tons).............            0.05            0.17            0.33            0.55            0.80
NOX (thousand tons).............             3.6              13              25              42              62
Hg (tons).......................          0.0001          0.0004          0.0007          0.0012          0.0017
CH4 (thousand tons).............              20              74             141             234             343
N2O (thousand tons).............           0.002           0.008           0.016           0.027           0.040
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             4.6              17              33              54              80
SO2 (thousand tons).............             2.6             9.5              18              30              44
NOX (thousand tons).............             8.4              31              60             100             146
Hg (tons).......................           0.009           0.035           0.067            0.11            0.16
CH4 (thousand tons).............              20              75             143             238             349
N2O (thousand tons).............           0.054            0.20            0.38            0.63            0.92
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this rulemaking, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX estimated for each of the TSLs considered for pumps. 
As discussed in section IV.L, for CO2, DOE used values for 
the SCC developed by an interagency process. The interagency group 
selected four sets of SCC values for use in regulatory analyses. Three 
sets are based on the average SCC from three integrated assessment 
models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The 
fourth set, which represents the 95th-percentile SCC estimate across 
all three models at a 3-percent discount rate, is included to represent 
higher-than-expected impacts from temperature change further out in the 
tails of the SCC distribution. 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 environmental) as the projected magnitude 
of climate change increases.
    Table V.33 presents the global value of CO2 emissions 
reductions at each TSL. DOE calculated domestic values as a range from 
7 percent to 23 percent of the global values, and these results are 
presented in chapter 14 of the final rule TSD. See Section IV.L. for 
further details.

[[Page 4418]]



     Table V.33--Estimates of Global Present Value of CO2 Emissions Reduction for Pumps Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                  SCC Scenario * (million 2014$)
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                  rate,  average  rate,  average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................              29             134             214             410
2...............................................             104             492             787            1501
3...............................................             199             942            1506            2872
4...............................................             329            1559            2494            4753
5...............................................             482            2282            3651            6957
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             1.6             7.6              12              23
2...............................................             5.9              28              45              85
3...............................................              11              53              86             163
4...............................................              19              89             142             270
5...............................................              27             130             208             395
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................              30             142             227             433
2...............................................             110             520             832            1586
3...............................................             211             995            1592            3035
4...............................................             348            1647            2636            5023
5...............................................             509            2411            3858            7353
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3 and $117
  per metric ton (2014$).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other greenhouse gas (GHG) emissions 
to changes in the future global climate and the potential resulting 
damages to the world economy continues to evolve rapidly. Thus, any 
value placed in this rulemaking on reducing CO2 emissions is 
subject to change. DOE, together with other Federal agencies, will 
continue to review various methodologies for estimating the monetary 
value of reductions in CO2 and other GHG emissions. This 
ongoing review will consider the comments on this subject that are part 
of the public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this rulemaking the 
most recent values and analyses resulting from the interagency review 
process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX emissions reductions 
anticipated to result from new standards for the pump equipment that is 
the subject of this rulemaking. The dollar-per-ton values that DOE used 
are discussed in section IV.L. Table V.34 presents the cumulative 
present value ranges for NOX emissions reductions for each 
TSL calculated using seven-percent and three-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.36.

  Table V.34--Estimates of Present Value of NOX Emissions Reduction for
                       Pumps Shipped in 2020-2049
------------------------------------------------------------------------
                                                      Million 2014$
                                               -------------------------
                      TSL                       3% discount  7% discount
                                                    rate         rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.............................................           15          5.8
2.............................................           55           21
3.............................................          104           40
4.............................................          172           65
5.............................................          252           95
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.............................................           11          4.1
2.............................................           40           15
3.............................................           76           28
4.............................................          125           46
5.............................................          183           67
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.............................................           26          9.9
2.............................................           94           35
3.............................................          180           67
4.............................................          297          111
5.............................................          435          162
------------------------------------------------------------------------

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 
6316(a).) In developing the proposed standard, DOE considered the term 
sheet of recommendations voted on by the CIP Working Group and approved 
by the ASRAC. (See EERE-2013-BT-NOC-0039-0092.) DOE weighed the value 
of such negotiation in establishing the standards proposed in in the 
NOPR. DOE encouraged the negotiation of proposed standard levels, in 
accordance with the FACA and the NRA, as a means for interested 
parties, representing diverse points of view, to analyze and recommend 
energy conservation standards to DOE. Such negotiations

[[Page 4419]]

may often expedite the rulemaking process. In addition, standard levels 
recommended through a negotiation may increase the likelihood for 
regulatory compliance, while decreasing the risk of litigation. The 
standards adopted in this final rule reflect the proposed standards and 
therefore the term sheet of recommendations voted on by the CIP Working 
Group and approved by the ASRAC.
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.35 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 considered in this 
rulemaking, at both a seven-percent and a three-percent discount rate. 
The CO2 values used in the columns of each table correspond 
to the four scenarios for the valuation of CO2 emission 
reductions discussed above.

Table V.35--Net Present Value of Consumer Savings Combined With Net Present Value of Monetized Benefits From CO2
                                          and NOX Emissions Reductions
                                                 [Billion 2014$]
----------------------------------------------------------------------------------------------------------------
                                                           Consumer NPV at 3% Discount Rate added with:
                                                 ---------------------------------------------------------------
                                                   SCC Value of    SCC Value of    SCC Value of    SCC Value of
                       TSL                         $12.2/metric    $40.0/metric    $62.3/metric     $117/metric
                                                  ton CO2 and 3%  ton CO2 and 3%  ton CO2 and 3%  ton CO2 and 3%
                                                   Low Value for   Low Value for   Low Value for   Low Value for
                                                        NOX             NOX             NOX             NOX
----------------------------------------------------------------------------------------------------------------
1...............................................             0.3             0.5             0.5             0.7
2...............................................             1.3             1.7             2.0             2.7
3...............................................             2.3             3.1             3.7             5.2
4...............................................             3.7             5.0             6.0             8.4
5...............................................             5.2             7.1             8.5              12
----------------------------------------------------------------------------------------------------------------
                                                  Consumer NPV at 7% Discount Rate added with:
                                                 ---------------------------------------------------------------
                       TSL                         SCC Value of    SCC Value of    SCC Value of    SCC Value of
                                                   $12.2/metric    $40.0/metric    $62.3/metric     $117/metric
                                                  ton CO2 and 7%  ton CO2 and 7%  ton CO2 and 7%  ton CO2 and 7%
                                                   Low Value for   Low Value for   Low Value for   Low Value for
                                                        NOX             NOX             NOX             NOX
----------------------------------------------------------------------------------------------------------------
1...............................................             0.1             0.3             0.3             0.6
2...............................................             0.5             0.9             1.3             2.0
3...............................................             1.0             1.8             2.3             3.8
4...............................................             1.5             2.8             3.8             6.2
5...............................................             2.1             4.0             5.4             8.9
----------------------------------------------------------------------------------------------------------------
Note: These label values represent the global SCC in 2015, in 2014$.

    In considering the above results, two issues are relevant. 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 in 2020 to 2049. Because CO2 emissions have 
a very long residence time in the atmosphere,\77\ the SCC values in 
future years reflect future climate-related impacts that continue 
beyond 2100.
---------------------------------------------------------------------------

    \77\ 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 standards, the new or amended energy conservation 
standard that DOE adopts for any type (or class) of covered equipment 
shall be designed to achieve the maximum improvement in energy 
efficiency that the Secretary of Energy determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 
6316(a)). In determining whether a standard is economically justified, 
the Secretary must determine whether the benefits of the standard 
exceed its burdens, considering, to the greatest extent practicable, 
the seven statutory factors discussed previously. (42 U.S.C. 
6295(o)(2)(B)(i) and 6316(a)). The new or amended standard must also 
``result in significant conservation of energy.'' (42 U.S.C. 
6295(o)(3)(B) and 6316(a)).
    For this final rule, DOE considered the impacts of new standards 
for pumps at each TSL, beginning with the maximum technologically 
feasible level, to determine whether that level was economically 
justified. Where the max-tech level was not justified, DOE then 
considered the next-most-efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, tables in this section summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed herein. The efficiency levels contained in each TSL are 
described in section I.A. In addition to the quantitative results 
presented in the tables, DOE also considers other burdens and benefits 
that affect economic justification. These include the impacts on 
identifiable subgroups of consumers who may be disproportionately 
affected by a national

[[Page 4420]]

standard, and impacts on employment. Section V.B.1.b presents the 
estimated impacts of each TSL for these subgroups. DOE discusses the 
impacts on direct employment in pump manufacturing in section 0, and 
the indirect employment impacts in section V.B.3.c.
1. Benefits and Burdens of Trial Standard Levels Considered for Pumps 
Standards
    Table V.36 and Table V.37 summarize the quantitative impacts 
estimated for each TSL for pumps. The national impacts are measured 
over the lifetime of pumps purchased in the 30-year period that begins 
in the year of compliance with new standards (2020-2049). The energy 
savings, emissions reductions, and value of emissions reductions refer 
to full-fuel-cycle results.

                                          Table V.36--Summary of Analytical Results for Pumps: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                      TSL 1                    TSL 2                    TSL 3                   TSL 4                   TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
National FFC Energy Savings     0.077..................  0.29...................  0.55..................  0.91..................  1.34.
 quads.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Consumer Benefits (2014$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate..............  0.29...................  1.1....................  1.9...................  3.0...................  4.2.
7% discount rate..............  0.11...................  0.39...................  0.69..................  1.1...................  1.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).....  4.6....................  17.....................  33....................  54....................  80.
SO2 (thousand tons)...........  2.6....................  9.5....................  18....................  30....................  44.
NOX (thousand tons)...........  8.4....................  31.....................  60....................  100...................  146.
Hg (tons).....................  0.009..................  0.035..................  0.067.................  0.11..................  0.16.
CH4 (thousand tons)...........  20.....................  75.....................  143...................  238...................  349.
N2O (thousand tons)...........  0.054..................  0.20...................  0.38..................  0.63..................  0.92.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2014$ million) *.........  30 to 433..............  110 to 1586............  211 to 3035...........  348 to 5023...........  509 to 7353.
NOX--3% discount rate (2014$    26 to 57...............  94 to 208..............  180 to 398............  297 to 658............  435 to 963.
 million).
NOX--7% discount rate (2014$    10 to 22...............  35 to 79...............  67 to 151.............  111 to 248............  162 to 362.
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
Note: Parentheses indicate negative values.


                                 Table V.37--Summary of Analytical Results for Pumps: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         TSL 1                    TSL 2                    TSL 3                   TSL 4                   TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV relative to a no-  110.3 to 120.4.........  80.5 to 128.3..........  20.9 to 124.5.........  (86.1) to 113.0.......  (229.0) to 93.5
 new-standards case value of
 120.0 (2014$ million).
Industry NPV (% change).......  (8.1) to 0.4...........  (32.9) to 7.0..........  (82.6) to 3.8.........  (171.8) to (5.8)......  (290.9) to (22.1)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Consumer Mean LCC Savings (2014$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.....................  $43....................  $163...................  $238..................  $322..................  $357
ESCC.3600.....................  $17....................  $92....................  $121..................  $178..................  $275
ESFM.1800.....................  $8.0...................  $174...................  $376..................  $742..................  $1,072
ESFM.3600.....................  $58....................  $549...................  $966..................  $1,418................  $2,087
IL.1800.......................  $51....................  $147...................  $197..................  $198..................  $227
IL.3600.......................  $45....................  $138...................  $239..................  $285..................  $372
VTS.3600......................  $18....................  $17....................  $86...................  $144..................  $186
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.....................  3.4....................  2.2....................  2.7...................  3.2...................  4.0
ESCC.3600.....................  1.5....................  1.0....................  1.8...................  1.9...................  2.0
ESFM.1800.....................  2.5....................  2.9....................  2.9...................  3.2...................  3.5
ESFM.3600.....................  1.3....................  0.8....................  0.9...................  1.1...................  1.3
IL.1800.......................  2.4....................  2.9....................  4.1...................  5.6...................  6.2
IL.3600.......................  1.4....................  2.0....................  2.2...................  2.8...................  3.3
VTS.3600......................  1.3....................  3.1....................  1.8...................  2.0...................  2.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Percent Consumers with Net Cost (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.....................  12.....................  11.....................  24....................  30....................  43
ESCC.3600.....................  0.68...................  1.8....................  14....................  14....................  13
ESFM.1800.....................  0.27...................  6.6....................  15....................  24....................  26
ESFM.3600.....................  0.30...................  1.9....................  4.8...................  7.2...................  8.6
IL.1800.......................  1.9....................  7.3....................  15....................  26....................  36
IL.3600.......................  2.1....................  13.....................  11....................  14....................  20

[[Page 4421]]

 
VTS.3600......................  0.51...................  27.....................  7.4...................  10....................  13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative values.

    First, DOE considered TSL 5, which would save an estimated total of 
1.34 quads of energy, an amount DOE considers significant. TSL 5 has an 
estimated NPV of consumer benefit of $1.4 billion using a 7-percent 
discount rate, and $4.2 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 5 are 80 million metric tons of 
CO2, 146 thousand tons of NOX, and 0.16 tons of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 5 ranges from $509 million to $7,353 million. At TSL 
5, the average LCC savings ranges from $186 to $2,087 depending on 
equipment class. The fraction of consumers with negative LCC impacts 
ranges from 8.6 percent to 43 percent depending on equipment class. At 
TSL 5, the projected change in INPV ranges from a decrease of $349.0 
million to a decrease of $26.5 million. At TSL 5, DOE recognizes the 
risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached, TSL 5 could result in a net loss of up to 290.9 
percent in INPV for manufacturers.
    Accordingly, the Secretary concludes that, at TSL 5 for pumps, the 
benefits of energy savings, national net present value of consumer 
benefit, LCC savings, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the fraction of consumers with negative LCC impacts and the significant 
burden on the industry. Consequently, DOE has concluded that TSL 5 is 
not economically justified.
    Next, DOE considered TSL 4, which would save an estimated total of 
0.91 quads of energy, an amount DOE considers significant. TSL 4 has an 
estimated NPV of consumer benefit of $1.1 billion using a 7-percent 
discount rate, and $3.0 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 4 are 54 million metric tons of 
CO2, 100 thousand tons of NOX, and 0.11 tons of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 4 ranges from $348 million to $5,023 million. At TSL 
4, the average LCC savings ranges from $144 to $1,418 depending on 
equipment class. The fraction of consumers with negative LCC impacts 
ranges from 7.2 percent to 30 percent depending on equipment class. At 
TSL 4, the projected change in INPV ranges from a decrease of $206.1 
million to a decrease of $6.9 million. At TSL 4, DOE recognizes the 
risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached, TSL 4 could result in a net loss of up to 171.8 
percent in INPV for manufacturers.
    Accordingly, the Secretary concludes that at TSL 4 for pumps, the 
benefits of energy savings, national net present value of consumer 
benefit, LCC savings, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the fraction of consumers with negative LCC impacts and the significant 
burden on the industry. Consequently, DOE has concluded that TSL 4 is 
not economically justified.
    Next, DOE considered TSL 3, which would save an estimated total of 
0.55 quads of energy, an amount DOE considers significant. TSL 3 has an 
estimated NPV of consumer benefit of $0.69 billion using a 7-percent 
discount rate, and $1.9 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 3 are 33 million metric tons of 
CO2, 60 thousand tons of NOX, and 0.07 tons of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 3 ranges from $211 million to $3,035 million. At TSL 
3, the average LCC savings range from $86 to $966 depending on 
equipment class. The fraction of consumers with negative LCC impacts 
ranges from 4.8 percent to 24 percent depending on equipment class. At 
TSL 3, the projected change in INPV ranges from a decrease of $99.1 
million to an increase of $4.6 million. If the lower bound of the range 
of impacts is reached, TSL 3 could result in a net loss of up to 82.6 
percent in INPV for manufacturers.
    Accordingly, the Secretary concludes that at TSL 3 for pumps, the 
benefits of energy savings, national net present value of consumer 
benefit, LCC savings, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the fraction of consumers with negative LCC impacts and the significant 
burden on the industry. Consequently, DOE has concluded that TSL 3 is 
not economically justified.
    Next, DOE considered TSL 2, which would save an estimated total of 
0.29 quads of energy, an amount DOE considers significant. TSL 2 has an 
estimated NPV of consumer benefit of $0.39 billion using a 7-percent 
discount rate, and $1.1 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 2 are 17 million metric tons of 
CO2, 31 thousand tons of NOX, and 0.035 tons of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 3 ranges from $110 million to $1,586 million. At TSL 
2, the average LCC savings range from $17 to $549 depending on 
equipment class. The fraction of consumers with negative LCC impacts 
ranges from 1.8 percent to 27 percent depending on equipment class. At 
TSL 2, the projected change in INPV ranges from a decrease of $39.5 
million to an increase of $8.4 million. If the lower bound of the range 
of impacts is reached, TSL 2 could result in a net loss of up to 32.9 
percent in INPV for manufacturers.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has concluded that at TSL 2 for pumps, the benefits of 
energy savings, positive NPV of consumer benefit, positive average 
consumer LCC savings, emission reductions, and the estimated monetary 
value of the emissions reductions would outweigh the fraction of 
consumers with negative LCC impacts and the potential reduction in INPV 
for manufacturers.
    In addition, TSL 2 is consistent with the recommendations voted on 
by the CIP Working Group and approved by the ASRAC. (See EERE-2013-BT-
NOC-0039-0092.) DOE has encouraged the negotiation of new standard 
levels, in accordance with the FACA and the NRA, as a means for 
interested parties, representing diverse points of view, to analyze and 
recommend energy conservation standards to DOE. Such negotiations may 
often expedite the rulemaking process. In addition, standard levels 
recommended through a negotiation may increase the likelihood for 
regulatory compliance, while decreasing the risk of litigation.
    The Secretary of Energy has concluded that TSL 2 would save a 
significant amount of energy and is

[[Page 4422]]

technologically feasible and economically justified. Therefore, DOE 
adopts the energy conservation standards for pumps at TSL 2. Table V.38 
presents the new energy conservation standards for pumps.

         Table V.38--New Energy Conservation Standards for Pumps
------------------------------------------------------------------------
                                                  Adopted
                Equipment class                   standard    Adopted C-
                                                  level *       value
------------------------------------------------------------------------
ESCC.1800.CL..................................         1.00       128.47
ESCC.3600.CL..................................         1.00       130.42
ESCC.1800.VL..................................         1.00       128.47
ESCC.3600.VL..................................         1.00       130.42
ESFM.1800.CL..................................         1.00       128.85
ESFM.3600.CL..................................         1.00       130.99
ESFM.1800.VL..................................         1.00       128.85
ESFM.3600.VL..................................         1.00       130.99
IL.1800.CL....................................         1.00       129.30
IL.3600.CL....................................         1.00       133.84
IL.1800.VL....................................         1.00       129.30
IL.3600.VL....................................         1.00       133.84
RSV.1800.CL...................................         1.00       129.63
RSV.3600.CL...................................         1.00       133.20
RSV.1800.VL...................................         1.00       129.63
RSV.3600.VL...................................         1.00       133.20
VTS.1800.CL...................................         1.00       138.78
VTS.3600.CL...................................         1.00       134.85
VTS.1800.VL...................................         1.00       138.78
VTS.3600.VL...................................         1.00       134.85
------------------------------------------------------------------------
* A pump model is compliant if its PEI rating is less than or equal to
  the adopted standard.

2. Summary of Annualized Benefits and Costs of the Adopted Standards
    The benefits and costs of these adopted 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 equipment that meets the 
adopted standards (consisting primarily of operating cost savings from 
using less energy, minus increases in equipment purchase costs, which 
is another way of representing consumer NPV), and (2) the monetary 
value of the benefits of emission reductions, including CO2 
emission reductions.\78\ The value of the CO2 reductions 
(i.e., SCC), is calculated using a range of values per metric ton of 
CO2 developed by a recent interagency process. See section 
IV.L.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 reductions provides a useful perspective, two issues 
should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions, while the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and SCC are performed with different methods that use different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of equipment shipped in 2020-2049. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of 
CO2 in each year. These impacts continue well beyond 2100.
    Table V.39 shows the annualized values for the adopted standards 
for pumps. 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 cost of the standards adopted in this rule is $17 million per year 
in increased equipment costs, while the benefits are $58 million per 
year in reduced equipment operating costs, $30 million in 
CO2 reductions, and $3.7 million in reduced NOX 
emissions. In this case, the net benefit amounts to $74 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 cost of 
the standards adopted in this rule is $17 million per year in increased 
equipment costs, while the benefits are $78 million per year in reduced 
operating costs, $30 million in CO2 reductions, and $5.4 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $96 million per year.

                             Table V.39--Annualized Benefits and Costs of Adopted Energy Conservation Standards for Pumps *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2014$/year
                                              Discount rate          -----------------------------------------------------------------------------------
                                                                           Primary estimate        Low net benefits estimate  High net benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  58........................  52........................  68.
                                    3%..............................  78........................  70........................  94.
CO2 Reduction Value ($12.2/t case)  5%..............................  8.7.......................  8.1.......................  9.5.
 **.
CO2 Reduction Value ($40.0/t case)  3%..............................  30........................  28........................  33.
 **.
CO2 Reduction Value ($62.3/t case)  2.5%............................  44........................  41........................  48.
 **.
CO2 Reduction Value ($117/t case)   3%..............................  91........................  84........................  99.
 **.
NOX Reduction Value [dagger]......  7%..............................  3.7.......................  3.5.......................  9.0.
                                    3%..............................  5.4.......................  5.0.......................  13.
Total Benefits [dagger][dagger]...  7% plus CO2 range...............  70 to 152.................  64 to 140.................  86 to 176.
                                    7%..............................  91........................  83........................  109.
                                    3% plus CO2 range...............  92 to 174.................  83 to 159.................  116 to 206.
                                    3%..............................  113.......................  102.......................  139.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment      7%..............................  17........................  19........................  17.
 Costs.
                                    3%..............................  17........................  20........................  18.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger]............  7% plus CO2 range...............  53 to 136.................  45 to 121.................  69 to 159.

[[Page 4423]]

 
                                    7%..............................  74........................  65........................  92.
                                    3% plus CO2 range...............  75 to 157.................  63 to 139.................  99 to 189.
                                    3%..............................  96........................  83........................  122.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with pumps shipped in 2020-2049. These results include benefits to consumers which
  accrue after 2049 from the pumps purchased from 2020-2049. The results account for the incremental variable and fixed costs incurred by manufacturers
  due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize
  projections of energy prices and shipments from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In
  addition, incremental equipment costs reflect constant real prices in the Primary Estimate, an increase in the Low Benefits Estimate, and a decrease
  in the High Benefits Estimate. The methods used to derive projected price trends are explained in IV.F.2.a.
** 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.2. 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. 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 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.

VI. Labeling and Certification Requirements

A. Labeling

    EPCA includes provisions for labeling. (42 U.S.C. 6315). EPCA 
authorizes DOE to establish labeling requirements only if certain 
criteria are met. Specifically, DOE must determine that: (1) Labeling 
in accordance with section 6315 is technologically and economically 
feasible with respect to any particular equipment class; (2) 
significant energy savings will likely result from such labeling; and 
(3) labeling in accordance with section 6315 is likely to assist 
consumers in making purchasing decisions. (42 U.S.C. 6315(h)).
    If these criteria are met, EPCA specifies certain aspects of 
equipment labeling that DOE must consider in any rulemaking 
establishing labeling requirements for covered equipment. At a minimum, 
such labels must include the energy efficiency of the affected 
equipment, as tested under the prescribed DOE test procedure. The 
labeling provisions may also consider the addition of other 
requirements, including: Directions for the display of the label; a 
requirement to display on the label additional information related to 
energy efficiency or energy consumption, which may include instructions 
for maintenance and repair of the covered equipment, as necessary to 
provide adequate information to purchasers; and requirements that 
printed matter displayed or distributed with the equipment at the point 
of sale also include the information required to be placed on the 
label. (42 U.S.C. 6315(b) and 42 U.S.C. 6315(c)).
    The CIP Working Group recommended labeling requirements in the term 
sheet. (See EERE-2013-BT-NOC-0039-0092, recommendation #12.) 
Specifically, the working group recommended that pumps be labeled based 
on the configuration in which they are sold. Table VI.1 shows the 
information that the CIP Working Group recommended be included on a 
pump nameplate. (See EERE-2013-BT-NOC-0039-0092, recommendation #12.)

          Table VI.1--Labeling Requirements for Pump Nameplate
------------------------------------------------------------------------
                                                       Bare pump + motor
            Bare pump              Bare pump + motor      + controls
------------------------------------------------------------------------
PEICL...........................  PEICL.............  PEIVL
Model number....................  Model number......  Model number
Impeller diameter for each unit.  Impeller diameter   Impeller diameter
                                   for each unit.      for each unit
------------------------------------------------------------------------
Note: The impeller diameter referenced is the actual diameter of each
  unit as sold, not the full impeller diameter at which the pump is
  rated.

    DOE reviewed the recommendations of the working group with respect 
to the three requirements that must be met for DOE to promulgate 
labeling rules. (42 U.S.C. 6315(h)). In the NOPR, DOE determined that 
all three criteria had been met and proposed the labeling requirements 
as recommended by the working group. 80 FR 17826, 17882 (April 2, 2015) 
In response to the NOPR, HI agreed with the labeling requirements 
proposed. (HI, No. 45 at p. 6). The Advocates and the CA IOUs agreed 
that requiring labels may increase demand for more efficient pumps and 
facilitate comparison of expected performance of bare pumps and pumps 
with controls for consumers. (The Advocates, No. 49 at p. 1; CA IOUs, 
No. 50 at p. 1-2)
    The changes made in this final rule, as described in the 
methodology sections, did not significantly impact DOE's analysis of 
the labeling proposals.

[[Page 4424]]

For these reasons, DOE is adopting the labeling requirements 
recommended by the CIP Working Group, and proposed in the NOPR, as 
shown in Table VI.1. Additionally, DOE requires the same labeling 
requirements for marketing materials as for the pump nameplate. See 42 
U.S.C. 6315(c)(3).
    DOE adopts the following requirements for display of information: 
All orientation, spacing, type sizes, typefaces, and line widths to 
display this required information must be the same as or similar to the 
display of the other performance data on the pump's permanent 
nameplate. The PEICL or PEIVL, as appropriate to 
a given pump model, must be identified in the form ``PEICL 
[certified value of PEICL]'' or ``PEIVL 
[certified value of PEIVL].'' The model number shall be in 
one of the following forms: ``Model [model number]'' or ``Model number 
[model number]'' or ``Model No. [model number].'' The unit's impeller 
diameter must be in the form either ``Imp. Dia. [actual diameter] 
(in.).'' or ``Imp. Dia.__ (in.)'' as discussed below.
    DOE is aware that when pump manufacturers sell a bare pump to a 
distributor, the distributor may trim the impeller prior to selling the 
pump to a customer. In response to the NOPR, Wilo commented that the 
labeling of the impeller diameter should be filled in by the final 
distributor. (Wilo, No. 44 at pp. 7-8) Similarly, HI commented that the 
impeller diameter field should be left blank and filled in by the final 
distributor or manufacturer. (HI, No. 45 at p. 6; NOPR public meeting 
transcript, Mark Handzel, on behalf of HI, No. 51 at pp. 52-55) HI's 
comments indicate that in some cases the pump manufacturer will act as 
the ``final distributor,'' and sell directly to the end-user. DOE 
agrees with HI's indication that most, but not all, pumps are sold 
through distributors. Consequently, in this final rule, DOE adopts the 
requirement that manufacturers must mark each pump's actual impeller 
diameter on the label, if distributed in commerce directly to end-user; 
otherwise this field must be left blank. DOE has concluded that this 
requirement meets the original intent of the CIP working group, while 
also addressing the concerns voiced HI and Wilo.

B. Certification Requirements

    In the NOPR, DOE proposed to adopt the reporting requirements in a 
new Sec.  429.59 within subpart B of 10 CFR part 429. This section also 
includes sampling requirements, which are discussed in the test 
procedure final rule. Consistent with other types of covered products 
and equipment, the proposed section (10 CFR 429.59) would specify that 
the general certification report requirements contained in 10 CFR 
429.12 apply to pumps. The additional requirements proposed in 10 CFR 
429.59 would require manufacturers to supply certain additional 
information to DOE in certification reports for pumps to demonstrate 
compliance with any energy conservation standards established as a 
result of this rulemaking.
    The CIP Working Group recommended that the following data be 
included in the certification reports:
     Manufacturer name;
     Model number(s);
     Equipment class;
     PEICL or PEIVL as applicable;
     BEP flow rate and head;
     Rated speed;
     Number of stages tested;
     Full impeller diameter (in.);
     Whether the PEICL or PEIVL is 
calculated or tested; and
     Input power to the pump at each load point i (P 
ini).
    (See EERE-2013-BT-NOC-0039-0092, recommendation No. 13.)
    In the NOPR, DOE proposed some modifications and additions to the 
certification report for clarity and to assist with verification. The 
proposed items included:
     Manufacturer name;
     Model number(s);
     Equipment class;
     PEICL or PEIVL as applicable;
     BEP flow rate in gallons per minute (gpm) and head in feet 
when operating at nominal speed;
     Rated (tested) speed in revolutions per minute (rpm) at 
the BEP of the pump;
     Number of stages tested;
     Full impeller diameter (in.);
     Whether the PEICL or PEIVL is 
calculated or tested;
     Driver power input at each required load point i 
(Pini), corrected to nominal speed, in horsepower (hp);
     Nominal speed for certification in revolutions per minute 
(rpm);
     The configuration in which the pump is being rated (i.e., 
bare pump, a pump sold with a motor, or a pump sold with a motor and 
continuous or non-continuous controls);
     For pumps sold with electric motors regulated by DOE's 
energy conservation standards for electric motors at Sec.  431.25 other 
single-phase induction motors (with or without controls): Motor 
horsepower (hp) and nominal motor efficiency, in percent (%);
     PERCL or PERVL, as applicable;
     Pump efficiency at BEP; and
     For VTS pumps, the bowl diameter in inches (in.).
    (80 FR 17826, 17891 (April 2, 2015))
    In reviewing the certification report requirements for the final 
rule, DOE has determined that the requirements of Sec.  429.12(b) 
already require reporting of manufacturer name, model number(s), and 
equipment class for all covered products and equipment. For these 
reasons, DOE is withdrawing its proposal to include these requirements 
in Sec.  429.59. With respect to the certification requirements, the 
equipment class reported refers to those listed in the table in Sec.  
431.465(b); e.g., ESCC.1800.CL, ESCC.1800.VL, IL.1800.CL, etc.
    With respect to reporting model number(s), a certification report 
must include a basic model number and the manufacturer's (individual) 
model number(s). A manufacturer's model number (individual model 
number) is the identifier used by a manufacturer to uniquely identify 
what is commonly considered a ``model'' in industry--all units of a 
particular design. The manufacturer's (individual) model number 
typically appears on the product nameplate, in product catalogs and in 
other product advertising literature. In contrast, the basic model 
number is a number used by the manufacturer to indicate to DOE how the 
manufacturer has grouped its individual models for the purposes of 
testing and rating; many manufacturers choose to use a model number 
that is similar to the individual model numbers in the basic model, but 
that is not required. The manufacturer's individual model number(s) in 
each basic model must reference not only the bare pump, but also any 
motor and controls with which the pump is being rated. This may be 
accomplished in one of two ways, depending on the manufacturer's normal 
business practices. Specifically: (1) Pumps distributed in commerce as 
a bare pump require the bare pump individual model number reported; (2) 
pumps distributed in commerce as a bare pump with driver require the 
bare pump and driver individual model numbers reported; and (3) pumps 
distributed in commerce as a bare pump with driver and controls require 
the bare pump, driver, and controls individual model numbers reported. 
Alternatively, the manufacturer may specify a single manufacturer 
individual model number for the bare pump with driver and/or controls 
if the manufacturer routinely uses that model number in marketing 
materials and on the product to indicate a particular combination of 
bare pump and driver or bare pump, driver and controls. For example, 
one manufacturer

[[Page 4425]]

may certify basic model ABC as including individual model ABC + EZB12 + 
AC2, where ABC is the bare pump model number, EZB12 is the driver model 
number, and AC2 is the control model number. Another manufacturer may 
certify basic model DEF as including individual model number 
DEF12DQ45Z, which is the model number the manufacturer routinely uses 
to indicate the bare pump DEF with a particular driver and set of 
controls.
    After further review, DOE has also determined that the use of the 
term ``rated speed'' in the CIP working group term sheet was ambiguous. 
In the NOPR, DOE interpreted this to mean tested speed, and also added 
an additional requirement for nominal speed, as discussed previously. 
After reviewing the transcripts of the working group meetings, DOE has 
determined that it is unclear whether the CIP Working Group actually 
intended to refer to tested or nominal speed of the pump. DOE has 
determined that reporting tested speed is not necessary as no two pumps 
in a sample are likely to be tested at exactly the same speed. 
Therefore, DOE does not require reporting of ``rated (tested) speed''. 
However, DOE does require reporting of nominal speed.
    In response to the NOPR, HI and Wilo commented against the 
inclusion of pump efficiency at BEP in certification reports. (HI, No. 
45 at p. 7; Wilo, No. 44 at p. 8) HI agreed with only the certification 
reporting requirements agreed to by the ASRAC CIP working group. 
Conversely, EEI requested additional data, such as watts per gpm or 
annual kWh per gpm, to help the public better understand the relative 
efficiencies of pumps. (EEI, No. 46 ] at p. 2)
    DOE notes that in the NOPR, six requirements were added beyond 
those agreed to by the CIP working group. Of these, four were added in 
order for DOE to conduct verification (i.e., nominal speed; 
configuration; electric motor information; and for VTS pumps, bowl 
diameter). As noted previously, DOE has determined that nominal speed 
was a duplicative requirement and has withdrawn that proposal. However, 
DOE does require configuration, electric motor information, and bowl 
diameter to conduct verification. DOE maintains these three 
requirements in the final rule; however, DOE will not post this 
information on its Web site.
    In response to HI and Wilo's comments, DOE is adopting a reporting 
option for PER and pump efficiency at BEP, the two reporting 
requirements that are not required for DOE to conduct enforcement 
testing and were not recommended by the CIP Working Group. DOE does not 
add the information requested by EEI, because consumers of pumps in the 
scope of this rulemaking typically rely on more sophisticated 
information, and the suggested metrics may be more relevant to 
commodity-type pumps in the residential sector.
    In summary, DOE is modifying required data for certification 
reports in this final rule based on feedback from interested parties 
and review of its requirements. The following data is required for 
certification reports and will be made public on DOE's Web site:
     PEICL or PEIVL as applicable;
     Number of stages tested;
     Full impeller diameter (in);
     Whether the PEICL or PEIVL is 
calculated or tested;
     BEP flow rate in gallons per minute (gpm) and head in feet 
when operating at nominal speed;
     Nominal speed of rotation in revolutions per minute (rpm); 
and
     Driver power input at each required load point i 
(P\in\i), corrected to nominal speed, in horsepower (hp).
    The following data will be required, but will not be posted on 
DOE's Web site:
     The configuration in which the pump is being rated (i.e., 
bare pump, a pump sold with a motor, or a pump sold with a motor and 
continuous or non-continuous controls);
     For pumps sold with electric motors regulated by DOE's 
energy conservation standards for electric motors at Sec.  431.25 (with 
or without controls): Motor horsepower (hp) and nominal motor 
efficiency, in percent (%);
     For pumps sold with submersible motors (with or without 
controls): Motor horsepower (hp); and
     For VTS pumps, bowl diameter in inches (in.).
    Additionally, the following data will be optional for inclusion in 
certification reports, and if provided, will be public:
     PERCL or PERVL, as applicable; and
     Pump efficiency at BEP.
    In response to the NOPR, the Advocates and the CA IOUs requested 
that DOE set up the certification database early for voluntary 
certification in order for utilities to gather data and incentivize 
high efficiency pumps. (Advocates, No. 49 at p. 1-2; CA IOUs, No. 50 at 
p. 2) DOE typically provides templates for certification early and 
allows for early voluntary certification.

C. Representations

    In response to the NOPR, HI expressed concern with the general 
language around 42 U.S.C. 6314(d) prohibited representation. HI 
suggested that pump manufacturers be allowed to continue using pre-
existing efficiency curves and sizing software that is used directly by 
end users and distributors to purchase pumps. HI requested that DOE 
clearly state in the final rule that prohibited representation only 
applies to PEI and PER representation. (HI, No. 45 at p. 2) As 
representations are explicitly discussed in the pumps test procedure 
rulemaking, DOE has addressed these comments in the test procedure 
final rule. (See EERE-2013-BT-TP-0055)

VII. 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 adopted standards for pumps 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 equipment that are not captured by the users of such 
equipment. 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 qualify some of the external benefits through 
the 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.

[[Page 4426]]

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) EO 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 final rule is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of a final regulatory flexibility analysis (FRFA) for any 
rule that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel). DOE 
has prepared the following FRFA for the products that are the subject 
of this rulemaking.
    For manufacturers of pumps, the Small Business Administration (SBA) 
has set a size threshold, which defines those entities classified as 
``small businesses'' for the purposes of the statute. DOE used the 
SBA's small business size standards to determine whether any small 
entities would be subject to the requirements of the rule. See 13 CFR 
part 121. The size standards are listed by North American Industry 
Classification System (NAICS) code and industry description and are 
available at www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Manufacturing of pumps is classified under 
NAICS 333911, ``Pump and Pumping Equipment Manufacturing.'' The SBA 
sets a threshold of 500 employees or less for an entity to be 
considered as a small business for this category.
1. Description on Estimated Number of Small Entities Regulated
    To estimate the number of small business manufacturers of equipment 
covered by this rulemaking, DOE conducted a market survey using 
available public information to identify potential small manufacturers. 
DOE's research involved industry trade association membership 
directories (including HI), industry conference exhibitor lists, 
individual company and buyer guide Web sites, and market research tools 
(e.g., Hoovers reports) to create a list of companies that manufacture 
products covered by this rulemaking. DOE presented its list to 
manufacturers in MIA interviews and asked industry representatives if 
they were aware of any other small manufacturers during manufacturer 
interviews and at DOE public meetings. DOE reviewed publicly-available 
data and contacted select companies on its list, as necessary, to 
determine whether they met the SBA's definition of a small business 
manufacturer of pumps that would be regulated by the adopted standards. 
DOE screened out companies that do not offer products covered by this 
rulemaking, do not meet the definition of a ``small business,'' or are 
foreign-owned and operated.
    DOE identified 86 manufacturers of covered pump products sold in 
the U.S. Thirty-eight of these manufacturers met the 500-employee 
threshold defined by the SBA to qualify as a small business, but only 
25 were domestic companies. DOE notes that manufacturers interviewed 
stated that there are potentially a large number of small pumps 
manufacturers that serve small regional markets. These unidentified 
small manufacturers are not members of HI and typically have a limited 
marketing presence. The interviewed manufacturers and CIP Working Group 
participants were not able to name these smaller players, and no 
commenters to the proposed rule provided information on any other 
potential small manufacturers.
    Two small business manufacturers of pumps responded to DOE's 
request for an interview prior to publication of the proposed standard. 
These manufacturers provided extensive data on product availability, 
product efficiency, and product pricing. This content was critical to 
the modeling of the industry and was used to estimate impacts on small 
businesses.

[[Page 4427]]

    DOE also obtained qualitative information about small business 
impacts while interviewing large manufacturers. Specifically, DOE 
discussed with large manufacturers the extent to which new standards 
might require small businesses to acquire new equipment or cause 
manufacturing process changes that could destabilize their business. 
Responses and information provided by small and large manufacturers 
informed DOE's description and estimate of compliance requirements, 
which are presented in section VII.B.2.
    DOE's final standards reflect the recommendation of the CIP Working 
Group, which consisted of 16 members, including one small manufacturer. 
DOE selected the 16 members of the working group after issuing a notice 
of intent to establish a CIP Working Group (78 FR 44036) and receiving 
19 nominations for membership. DOE notes that the three nominated 
parties who were not selected for the working group did not represent 
small businesses. Prior to the formation of the CIP Working Group, DOE 
issued an RFI (76 FR 34192), a Framework Document (78 FR 7304), and 
held a public meeting on February 20, 2013, to discuss the Framework 
Document in detail--all of which publicly laid out DOE's efforts to set 
out standards for pumps. The leading industry trade association, HI, 
was engaged in each of these stages and helped spread awareness of the 
rulemaking process to all of its members, which includes both small and 
large manufacturers.\79\
---------------------------------------------------------------------------

    \79\ Though as noted above, some small businesses may not be 
members of HI, HI membership includes 48 manufacturers of product 
within the scope of this rulemaking, of which 10 are small domestic 
manufacturers.
---------------------------------------------------------------------------

    DOE made key assumptions about the market share and product 
offerings of small manufacturers in its analysis and requested comment 
in the NOPR. Specifically, DOE estimated that small manufacturers 
accounted for approximately 36% of the total industry model offerings. 
The Department did not receive feedback on this assumption, which was 
based on product listing data.
2. Description and Estimate of Compliance Requirements
    At TSL 2, the level adopted in this document, DOE estimates total 
conversion costs of $0.8 million for an average small manufacturer, 
compared to total conversion costs of $1.4 million for an average large 
manufacturer. DOE notes that it estimates a lower total conversion cost 
for small manufacturers, because of the previous assumption that small 
manufacturers offer fewer models than their larger competitors, which 
means small manufacturers would likely have fewer product models to 
redesign. DOE's conversion cost estimates were based on industry data 
collected by HI (see section IV.C.5 for more information on the 
derivation of industry conversion costs). DOE applied the same per-
model product conversion costs for both large and small manufacturers. 
Table VII.1 below shows the relative impacts of conversion costs on 
small manufacturers relative to large manufacturers over the four-year 
conversion period between the announcement year and the effective year 
of the adopted standard.

               Table VII.1--Impacts of Conversion Costs on a Manufacturers at the Adopted Standard
----------------------------------------------------------------------------------------------------------------
                                                      Product conversion
                                  Capital conversion    cost/conversion    Total conversion    Total conversion
                                    cost/conversion       period R&D        cost/conversion     cost/conversion
                                     period CapEx           expense       period revenue (%)    period EBIT (%)
----------------------------------------------------------------------------------------------------------------
Average large manufacturer......                  76                 405                   8                 149
----------------------------------------------------------------------------------------------------------------
Average small Manufacturer......                  94                 260                   6                 118
----------------------------------------------------------------------------------------------------------------

    The total conversion costs are approximately 6% of revenue and 118% 
of earnings before interest and tax (EBIT) for a small manufacturer 
over the four year conversion period. For large manufacturers, the 
total conversion costs are approximately 8% of revenue and 149% of EBIT 
over the conversion period. These initial findings indicate that small 
manufacturers face conversion costs that are proportionate relative to 
larger competitors.
    However, as noted in section V.B.2.a, the GRIM free cash flow 
results in 2019 indicated that some manufacturers may need to access 
the capital markets in order to fund conversion costs directly related 
to the adopted standard. Given that small manufacturers have a greater 
difficulty securing outside capital \80\ and that the necessary 
conversion costs are not insignificant to the size of a small business, 
it is possible the small manufacturers will be forced to retire a 
greater portion of product models than large competitors. Also, smaller 
companies often have a higher cost of borrowing due to higher risk on 
the part of investors, largely attributed to lower cash flows and lower 
per unit profitability. In these cases, small manufacturers may observe 
higher costs of debt than larger manufacturers.
---------------------------------------------------------------------------

    \80\ Simon, Ruth, and Angus Loten, ``Small-Business Lending Is 
Slow to Recover,'' Wall Street Journal, August 14, 2014. Accessed 
August 2014, available at http://online.wsj.com/articles/small-business-lending-is-slow-to-recover-1408329562.
---------------------------------------------------------------------------

    Though conversion costs are similar in magnitude for small and 
large manufacturers, small manufacturers may not have the same 
resources to make the required conversions. For example, some small 
pump manufacturers may not have the technical expertise to perform 
hydraulic redesigns in-house. These small manufacturers would need to 
hire outside consultants to support their re-design efforts. This could 
be a disadvantage relative to companies that have internal resources 
and personnel for the redesign process.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is unaware of any rules or regulations that duplicate, overlap, 
or conflict with the rule being considered today.
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 2. In 
reviewing alternatives to the proposed rule, DOE examined energy 
conservation standards set at a lower efficiency level. While TSL 1 
would reduce the impacts on small business manufacturers, it would come 
at the expense of a reduction in energy savings. TSL 1 achieves 73 
percent lower energy

[[Page 4428]]

savings compared to the energy savings at TSL 2.
    DOE believes that establishing standards at TSL 2 balances the 
benefits of the energy savings at TSL 2 with the potential burdens 
placed on pumps 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 the final 
rule 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 431.401). 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

    Pump manufacturers must certify to DOE that their products comply 
with any applicable energy conservation standards as of the compliance 
date for standards. In certifying compliance, manufacturers must test 
their products according to the applicable DOE test procedures for 
pumps that DOE adopts to measure the energy efficiency of this 
equipment, 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 pumps. 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 for pumps 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 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); Sec.  1021.410(b) and app. B, B(1)-(5). The rule fits within 
this category of actions because it is a rulemaking that establishes 
energy conservation standards for consumer products or industrial 
equipment, and for which none of the exceptions identified in CX 
B5.1(b) apply. Therefore, DOE has made a CX determination for this 
rulemaking, and DOE does not need to prepare an Environmental 
Assessment or Environmental Impact Statement for this rule. DOE's CX 
determination for this rule is available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 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 
rule and has determined that it would not have a substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. EPCA governs 
and prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of this final rule. 
States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) 
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 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 final rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a 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

[[Page 4429]]

(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    This final rule does not contain a Federal intergovernmental 
mandate, nor is it expected to require expenditures of $100 million or 
more in any one year on the private sector. (Such expenditures may 
include: (1) Investment in research and development and in capital 
expenditures by 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 
equipment.) As a result, the analytical requirements of UMRA do not 
apply.

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

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

I. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights'' 53 FR 
8859 (March 18, 1988), DOE has determined that this 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

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

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 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 significant energy action, the 
agency must give a detailed statement of any adverse effects on energy 
supply, distribution, or use should the proposal be implemented, and of 
reasonable alternatives to the action and their expected benefits on 
energy supply, distribution, and use.
    DOE has concluded that this regulatory action, which sets forth new 
energy conservation standards for pumps, is not a significant energy 
action because the 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 final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as ``scientific information 
the agency reasonably can determine will have, or does have, a clear 
and substantial impact on important public policies or private sector 
decisions.'' Id at 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.

M. Congressional Notification

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

VIII. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 429

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

10 CFR Part 431

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


[[Page 4430]]


    Issued in Washington, DC, on December 31, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.

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

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

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

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


0
2. Section 429.12 is amended by revising paragraphs (b)(13) and (d) to 
read as follows:


Sec.  429.12  General requirements applicable to certification reports.

* * * * *
    (b) * * *
    (13) Product specific information listed in Sec. Sec.  429.14 
through 429.60 of this chapter.
* * * * *
    (d) Annual filing. All data required by paragraphs (a) through (c) 
of this section shall be submitted to DOE annually, on or before the 
following dates:

------------------------------------------------------------------------
                                                   Deadline for data
              Product category                        submission
------------------------------------------------------------------------
Fluorescent lamp ballasts, Medium base        Mar. 1.
 compact fluorescent lamps, Incandescent
 reflector lamps, General service
 fluorescent lamps, General service
 incandescent lamps, Intermediate base
 incandescent lamps, Candelabra base
 incandescent lamps, Residential ceiling
 fans, Residential ceiling fan light kits,
 Residential showerheads, Residential
 faucets, Residential water closets, and
 Residential urinals.
Residential water heater, Residential         May 1.
 furnaces, Residential boilers, Residential
 pool heaters, Commercial water heaters,
 Commercial hot water supply boilers,
 Commercial unfired hot water storage tanks,
 Commercial packaged boilers, Commercial
 warm air furnaces, Commercial unit heaters
 and Residential furnace fans.
Residential dishwashers, Commercial prerinse  June 1.
 spray valves, Illuminated exit signs,
 Traffic signal modules, Pedestrian modules,
 and Distribution transformers.
Room air conditioners, Residential central    July 1.
 air conditioners, Residential central heat
 pumps, Small duct high velocity system,
 Space constrained products, Commercial
 package air-conditioning and heating
 equipment, Packaged terminal air
 conditioners, Packaged terminal heat pumps,
 and Single package vertical units.
Residential refrigerators, Residential        Aug. 1.
 refrigerators-freezers, Residential
 freezers, Commercial refrigerator, freezer,
 and refrigerator-freezer, Automatic
 commercial automatic ice makers,
 Refrigerated bottled or canned beverage
 vending machine, Walk-in coolers, and Walk-
 in freezers.
Torchieres, Residential dehumidifiers, Metal  Sept. 1.
 halide lamp fixtures, External power
 supplies, and Pumps.
Residential clothes washers, Residential      Oct. 1.
 clothes dryers, Residential direct heating
 equipment, Residential cooking products,
 and Commercial clothes washers.
------------------------------------------------------------------------

* * * * *


0
3. Section 429.59 is amended by adding paragraphs (b) and (c) to read 
as follows:


Sec.  429.59  Pumps.

* * * * *
    (b) Certification reports. (1) The requirements of Sec.  429.12 are 
applicable to pumps; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report must 
include the following public product-specific information:
    (i) For a pump subject to the test methods prescribed in section 
III of appendix A to subpart Y of part 431 of this chapter: 
PEICL; pump total head in feet (ft.) at BEP and nominal 
speed; volume per unit time (flow rate) in gallons per minute (gpm) at 
BEP and nominal speed; the nominal speed of rotation in revolutions per 
minute (rpm); calculated driver power input at each load point i 
(Pini), corrected to nominal speed, in horsepower (hp); full impeller 
diameter in inches (in.); and for RSV and ST pumps, the number of 
stages tested.
    (ii) For a pump subject to the test methods prescribed in section 
IV or V of appendix A to subpart Y of part 431 of this chapter: 
PEICL; pump total head in feet (ft.) at BEP and nominal 
speed; volume per unit time (flow rate) in gallons per minute (gpm) at 
BEP and nominal speed; the nominal speed of rotation in revolutions per 
minute (rpm); driver power input at each load point i (Pini), corrected 
to nominal speed, in horsepower (hp); full impeller diameter in inches 
(in.); whether the PEICL is calculated or tested; and for 
RSV and ST pumps, number of stages tested.
    (iii) For a pump subject to the test methods prescribed in section 
VI or VII of appendix A to subpart Y of part 431 of this chapter: 
PEIVL; pump total head in feet (ft.) at BEP and nominal 
speed; volume per unit time (flow rate) in gallons per minute (gpm) at 
BEP and nominal speed; the nominal speed of rotation in revolutions per 
minute (rpm); driver power input (measured as the input power to the 
driver and controls) at each load point i (Pini), corrected to nominal 
speed, in horsepower (hp); full impeller diameter in inches (in.); 
whether the PEIVL is calculated or tested; and for RSV and 
ST pumps, the number of stages tested.
    (3) Pursuant to Sec.  429.12(b)(13), a certification report may 
include the following public product-specific information:
    (i) For a pump subject to the test methods prescribed in section 
III of appendix A to subpart Y of part 431 of this chapter: Pump 
efficiency at BEP in percent (%) and PERCL.
    (ii) For a pump subject to the test methods prescribed in section 
IV or V of appendix A to subpart Y of part 431 of this chapter: Pump 
efficiency at BEP in percent (%) and PERCL.
    (iii) For a pump subject to the test methods prescribed in section 
VI or VII of appendix A to subpart Y of part 431 of this chapter: Pump 
efficiency at BEP in percent (%) and PERVL.
    (4) Pursuant to Sec.  429.12(b)(13), a certification report will 
include the following product-specific information:
    (i) For a pump subject to the test methods prescribed in section 
III of appendix A to subpart Y of part 431 of this chapter: The pump 
configuration (i.e., bare pump); and for ST pumps, the bowl diameter in 
inches (in.).
    (ii) For a pump subject to the test methods prescribed in section 
IV or V of appendix A to subpart Y of part 431 of this chapter: The 
pump configuration (i.e., pump sold with an electric motor); for pumps 
sold with electric motors regulated by DOE's energy conservation 
standards for electric motors at Sec.  431.25, the nominal motor 
efficiency in percent (%) and the motor horsepower (hp) for the motor 
with which the pump is being

[[Page 4431]]

rated; and for ST pumps, the bowl diameter in inches (in.).
    (iii) For a pump subject to the test methods prescribed in section 
VI or VII of appendix A to subpart Y of part 431 of this chapter: The 
pump configuration (i.e., pump sold with a motor and continuous or non-
continuous controls); for pumps sold with electric motors regulated by 
DOE's energy conservation standards for electric motors at Sec.  
431.25, the nominal motor efficiency in percent (%) and the motor 
horsepower (hp) for the motor with which the pump is being rated; and 
for ST pumps, the bowl diameter in inches (in.).
    (c) Individual model numbers. (1) Each individual model number 
required to be reported pursuant to Sec.  429.12(b)(6) must consist of 
the following:

----------------------------------------------------------------------------------------------------------------
                                                                     Individual model number(s)
  Equipment configuration (as      Basic model    --------------------------------------------------------------
   distributed in commerce)           number                1                    2                    3
----------------------------------------------------------------------------------------------------------------
Bare pump.....................  Number unique to   Bare Pump..........  N/A................  N/A.
                                 the basic model.
Bare pump with driver.........  Number unique to   Bare Pump..........  Driver.............  N/A.
                                 the basic model.
Bare pump with driver and       Number unique to   Bare Pump..........  Driver.............  Controls.
 controls.                       the basic model.
----------------------------------------------------------------------------------------------------------------

    (2) Or must otherwise provide sufficient information to identify 
the specific driver model and/or controls model(s) with which a bare 
pump is distributed.

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

0
4. The authority citation for part 431 continues to read as follows:

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


0
5. Section 431.465 is added to read as follows:


Sec.  431.465  Pumps energy conservation standards and their compliance 
dates.

    (a) For the purposes of paragraph (b) of this section, 
``PEICL'' means the constant load pump energy index and 
``PEIVL'' means the variable load pump energy index, both as 
determined in accordance with the test procedure in Sec.  431.464. For 
the purposes of paragraph (c) of this section, ``BEP'' means the best 
efficiency point as determined in accordance with the test procedure in 
Sec.  431.464.
    (b) Each pump that is manufactured starting on January 27, 2020 and 
that:
    (1) Is in one of the equipment classes listed in the table in 
paragraph (b)(4) of this section;
    (2) Meets the definition of a clean water pump in Sec.  431.462;
    (3) Is not listed in paragraph (c) of this section; and
    (4) Conforms to the characteristics listed in paragraph (d) of this 
section must have a PEICL or PEIVL rating of not 
more than 1.00 using the appropriate C-value in the table in this 
paragraph (b)(4):

------------------------------------------------------------------------
                                            Maximum PEI
           Equipment class \1\                  \2\         C-value \3\
------------------------------------------------------------------------
ESCC.1800.CL............................            1.00          128.47
ESCC.3600.CL............................            1.00          130.42
ESCC.1800.VL............................            1.00          128.47
ESCC.3600.VL............................            1.00          130.42
ESFM.1800.CL............................            1.00          128.85
ESFM.3600.CL............................            1.00          130.99
ESFM.1800.VL............................            1.00          128.85
ESFM.3600.VL............................            1.00          130.99
IL.1800.CL..............................            1.00          129.30
IL.3600.CL..............................            1.00          133.84
IL.1800.VL..............................            1.00          129.30
IL.3600.VL..............................            1.00          133.84
RSV.1800.CL.............................            1.00          129.63
RSV.3600.CL.............................            1.00          133.20
RSV.1800.VL.............................            1.00          129.63
RSV.3600.VL.............................            1.00          133.20
ST.1800.CL..............................            1.00          138.78
ST.3600.CL..............................            1.00          134.85
ST.1800.VL..............................            1.00          138.78
ST.3600.VL..............................            1.00          134.85
------------------------------------------------------------------------
\1\ Equipment class designations consist of a combination (in sequential
  order separated by periods) of: (1) An equipment family (ESCC = end
  suction close-coupled, ESFM = end suction frame mounted/own bearing,
  IL = in-line, RSV = radially split, multi-stage, vertical, in-line
  diffuser casing, ST = submersible turbine; all as defined in Sec.
  431.462); (2) nominal speed of rotation (1800 = 1800 rpm, 3600 = 3600
  rpm); and (3) an operating mode (CL = constant load, VL = variable
  load). Determination of the operating mode is determined using the
  test procedure in appendix A to this subpart.
\2\ For equipment classes ending in .CL, the relevant PEI is PEICL. For
  equipment classes ending in .VL, the relevant PEI is PEIVL.
\3\ The C-values shown in this table must be used in the equation for
  PERSTD when calculating PEICL or PEIVL, as described in section II.B
  of appendix A to this subpart.

    (c) The energy efficiency standards in paragraph (b) of this 
section do not apply to the following pumps:
    (1) Fire pumps;
    (2) Self-priming pumps;
    (3) Prime-assist pumps;
    (4) Magnet driven pumps;
    (5) Pumps designed to be used in a nuclear facility subject to 10 
CFR part 50, ``Domestic Licensing of Production and Utilization 
Facilities'';
    (6) Pumps meeting the design and construction requirements set 
forth in Military Specification MIL-P-17639F, ``Pumps, Centrifugal, 
Miscellaneous Service, Naval Shipboard Use'' (as amended); MIL-P-
17881D, ``Pumps,

[[Page 4432]]

Centrifugal, Boiler Feed, (Multi-Stage)'' (as amended); MIL-P-17840C, 
``Pumps, Centrifugal, Close-Coupled, Navy Standard (For Surface Ship 
Application)'' (as amended); MIL-P-18682D, ``Pump, Centrifugal, Main 
Condenser Circulating, Naval Shipboard'' (as amended); MIL-P-18472G, 
``Pumps, Centrifugal, Condensate, Feed Booster, Waste Heat Boiler, And 
Distilling Plant'' (as amended). Military specifications and standards 
are available for review at http://everyspec.com/MIL-SPECS.
    (d) The energy conservation standards in paragraph (b) of this 
section apply only to pumps that have the following characteristics:
    (1) Flow rate of 25 gpm or greater at BEP at full impeller 
diameter;
    (2) Maximum head of 459 feet at BEP at full impeller diameter and 
the number of stages required for testing;
    (3) Design temperature range from 14 to 248 [deg]F;
    (4) Designed to operate with either:
    (i) A 2- or 4-pole induction motor; or
    (ii) A non-induction motor with a speed of rotation operating range 
that includes speeds of rotation between 2,880 and 4,320 revolutions 
per minute and/or 1,440 and 2,160 revolutions per minute; and
    (iii) In either case, the driver and impeller must rotate at the 
same speed;
    (5) For ST pumps, a 6-inch or smaller bowl diameter; and
    (6) For ESCC and ESFM pumps, specific speed less than or equal to 
5,000 when calculated using U.S. customary units.
0
6. Section 431.466 is added to read as follows:

Sec.  431.466  Pumps labeling requirements.

    (a) Pump nameplate--(1) Required information. The permanent 
nameplate of a pump for which standards are prescribed in Sec.  431.465 
must be marked clearly with the following information:
    (i) For bare pumps and pumps sold with electric motors but not 
continuous or non-continuous controls, the rated pump energy index--
constant load (PEICL), and for pumps sold with motors and 
continuous or non-continuous controls, the rated pump energy index--
variable load (PEIVL);
    (ii) The bare pump model number; and
    (iii) If transferred directly to an end-user, the unit's impeller 
diameter, as distributed in commerce. Otherwise, a space must be 
provided for the impeller diameter to be filled in.
    (2) Display of required information. All orientation, spacing, type 
sizes, typefaces, and line widths to display this required information 
must be the same as or similar to the display of the other performance 
data on the pump's permanent nameplate. The PEICL or 
PEIVL, as appropriate to a given pump model, must be 
identified in the form ``PEICL ____'' or ``PEIVL 
____.'' The model number must be in one of the following forms: ``Model 
____'' or ``Model number ____'' or ``Model No. ____.'' The unit's 
impeller diameter must be in the form ``Imp. Dia. ____(in.).''
    (b) Disclosure of efficiency information in marketing materials. 
(1) The same information that must appear on a pump's permanent 
nameplate pursuant to paragraph (a)(1) of this section, must also be 
prominently displayed:
    (i) On each page of a catalog that lists the pump; and
    (ii) In other materials used to market the pump.
    (2) [Reserved]


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

U.S. Department of Justice
Antitrust Division
William J. Baer
Assistant Attorney General
RFK Main Justice Building
950 Pennsylvania Ave., NW
Washington, DC 20530-0001
(202)514-2401/(202)616-2645 (Fax)

July 10, 2015

Anne Harkavy
Deputy General Counsel for Litigation, Regulation and Enforcement
U.S. Department of Energy
1000 Independence Ave, S.W.
Washington, DC 20585

Dear Deputy General Counsel Harkavy:
    I am responding to your April 2, 2015 letters seeking the views of 
the Attorney General about the potential impact on competition of 
proposed energy conservation standards for pumps and a test procedure 
to be utilized in connection with the new standards.
    Your request relating to the proposed energy conservation standards 
was submitted under Section 325(o)(2)(B)(i)(V) of the Energy Policy and 
Conservation Act, as amended (ECPA), 42 U.S.C. 6295(o)(2)(B)(i)(V), 
which requires the Attorney General to make a determination of the 
impact of any lessening of competition that is likely to result from 
the imposition of proposed energy conservation standards. Your request 
relating to the test procedure was submitted under Section 32(c) of the 
Federal Energy Administration Act of 1974, as amended by the Federal 
Energy Administration Authorization Act of 1977, and codified at 15 
U.S.C. 788(c), which requires DOE to consult with the Attorney General 
concerning the impact of proposed test procedures on competition. The 
Attorney General's responsibility for responding to requests from other 
departments about the effect of a program on competition has been 
delegated to the Assistant Attorney General for the Antitrust Division 
in 28 CFR Sec.  0.40(g).
    In conducting its analysis, the Antitrust Division examines whether 
a proposed standard or test procedure may lessen competition, for 
example, by substantially limiting consumer choice or increasing 
industry concentration. A lessening of competition could result in 
higher prices to manufacturers and consumers.
    We have reviewed the proposed energy conservation standards 
contained in the Notice of Proposed Rulemaking (80 Fed. Reg. 17825, 
April 2, 2015) and the related Technical Support Document as well as 
the proposed test procedure contained in the Notice of Proposed 
Rulemaking (80 Fed. Reg. 17585, April 1, 2015). We have also 
interviewed industry participants, reviewed information provided by 
industry participants, and attended the public meetings held on the 
proposed standards and test procedure on April 29, 2015. We further 
reviewed additional information provided by the Department of Energy.
    Based on our review, we do not have sufficient information to 
conclude that the proposed energy conservation standards or test 
procedure likely will substantially lessen competition in any 
particular product or geographic market. However, the possibility 
exists that the proposed energy conservation standards and test 
procedure--which will apply to a broad range of pumps--may result in 
anticompetitive effects in certain pump markets. As explained below, 
the standards and test procedure could cause some manufacturers to halt 
production, reduce the number of manufacturers of pumps covered by the 
new standards, and deter companies who do not currently manufacture 
pumps covered by the new standards from entering the market.
    Regarding the proposed standards, by design, the bottom quartile of 
pumps in each class of covered pumps will not meet the new standards. 
The non-compliance of the bottom quartile of pump models may result in 
some manufacturers stopping production of pumps altogether and fewer 
firms producing models that comply with the new standards. At this 
point, it is not possible to determine the impact on any particular 
product or geographic market.

[[Page 4433]]

    As for the proposed test procedure, we are concerned about the 
possibility of anticompetitive effects resulting from the burden and 
expense of compliance. The Department of Energy has estimated it will 
cost manufacturers as much as $277,000 to construct a facility capable 
of performing the test procedure for all covered classes of pumps. Some 
industry participants have estimated that their actual costs of 
building such a facility will be significantly higher, largely due to 
the test procedure's requirements related to data collection and power 
supply characteristics.
    The Department of Energy has suggested that manufacturers can test 
their pumps at third-party facilities at lower expense rather than 
constructing their own facilities. However, pump manufacturers are 
concerned that third-party facilities do not currently meet the 
proposed test procedure requirements, and they question whether, when, 
and how many third-party facilities will meet the requirements. It is 
also uncertain whether third-party facilities that meet the test 
procedure requirements will test all--or only some--of the pumps 
covered by the proposed standards. Thus, the proposed test procedure 
could cause a significant number of manufacturers of covered pumps to 
exit the business or stop producing certain models of pumps and deter 
companies who do not currently manufacture pumps covered by the 
proposed standards from making such pumps. At this point, we cannot 
determine whether pump manufacturers can expect vigorous competition, 
and affordable prices, for third-party testing services.
    By the time the proposed test procedure is required, manufacturers 
may be able to test at least some pumps covered by the proposed 
standards at third-party facilities. Additionally, the Department of 
Energy stated at the April 29, 2015 public meetings that it may 
reconsider certain requirements of the proposed test procedure to ease 
the burden on pump manufacturers who choose to test their products 
themselves. If the burden and expense of constructing a facility 
capable of performing the test procedure was reduced by changing the 
requirements related to data collection and power supply 
characteristics, or if using third-party test facilities proved to be a 
feasible alternative, our concerns would be lessened.
    We ask that the Department of Energy take these concerns into 
account in determining its final energy conservation standards and test 
procedure.

Sincerely,

William J. Baer

[FR Doc. 2016-00324 Filed 1-25-16; 8:45 am]
BILLING CODE 6450-01-P