[Federal Register Volume 81, Number 97 (Thursday, May 19, 2016)]
[Proposed Rules]
[Pages 31680-31768]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11337]



[[Page 31679]]

Vol. 81

Thursday,

No. 97

May 19, 2016

Part II





Department of Energy





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10 CFR Parts 429 and 430





Energy Conservation Program: Energy Conservation Standards for 
Compressors; Proposed Rule

  Federal Register / Vol. 81 , No. 97 / Thursday, May 19, 2016 / 
Proposed Rules  

[[Page 31680]]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2013-BT-STD-0040]
RIN 1904-AC83


Energy Conservation Program: Energy Conservation Standards for 
Compressors

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

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

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment. EPCA also 
authorizes DOE to establish standards for certain other types of 
industrial equipment, including compressors. Such standards must be 
technologically feasible and economically justified, and must save a 
significant amount of energy. In this document, DOE proposes energy 
conservation standards for compressors and announces a public meeting 
to receive comment on the proposed standards and associated analyses 
and results.

DATES: Meeting: DOE will hold a public meeting on Monday, June 20, 2016 
from 1:00 p.m. to 5:00 p.m. in Washington, DC. The test procedure 
portion will be held in the morning. The meeting will also be broadcast 
as a webinar. See section VIII, ``Public Participation,'' for webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants.
    Comments: DOE will accept comments, data, and information regarding 
this notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than July 18, 2016. See section VIII, ``Public 
Participation,'' for details.
    Comments regarding the likely competitive impact of the proposed 
standard should be sent to the Department of Justice contact listed in 
the ADDRESSES section before June 20, 2016.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585.
    Instructions: Any comments submitted must identify the NOPR on 
Energy Conservation Standards for compressors, and provide docket 
number EERE-2013-BT-STD-0040 and/or regulatory information number (RIN) 
1904-AC83. Comments may be submitted using any of the following 
methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: [email protected]. Include the docket 
number and/or RIN in the subject line of the message. Submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and 
avoid the use of special characters or any form of encryption.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue 
SW., Washington, DC, 20585-0121. If possible, please submit all items 
on a compact disc (CD), in which case it is not necessary to include 
printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Office, 950 L'Enfant Plaza, SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    No telefacsimilies (faxes) will be accepted. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see section VIII of this document (``Public 
Participation'').
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
[email protected].
    EPCA requires the Attorney General to provide DOE with a written 
determination of whether the proposed standard is likely to lessen 
competition. The U.S. Department of Justice Antitrust Division invites 
input from market participants and other interested persons with views 
on the likely competitive impact of the proposed standard. Interested 
persons may contact the Division at [email protected] before 
June 20, 2016. Please indicate in the ``Subject'' line of your email 
the title and Docket Number of this rulemaking notice.
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at www.regulations.gov. 
All documents in the docket are listed in the www.regulations.gov 
index. However, some documents listed in the index may not be publicly 
available, such as those containing information that is exempt from 
public disclosure.
    A link to the docket Web page can be found at: https://www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0040. This Web 
page contains a link to the docket for this document on the 
www.regulations.gov site. The www.regulations.gov Web page contains 
simple instructions on how to access all documents, including public 
comments, in the docket. See section VIII, ``Public Participation,'' 
for further information on how to submit comments through 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: James Raba, U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, Building Technologies 
Office, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. 
Telephone: (202) 586-8654. Email: [email protected].
    Peter Cochran, U.S. Department of Energy, Office of the General 
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 586-9496. Email: [email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
[email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Compressors
III. General Discussion
    A. Definition of Covered Equipment
    B. Scope of the Energy Conservation Standards in This Rulemaking
    1. Equipment System Boundary
    2. Compressed Gas
    3. Compression Principle
    4. Driver Type
    a. Combustion Engines
    b. Motor Phase Count
    c. Styles of Electric Motor
    5. Equipment Capacity

[[Page 31681]]

    6. Full-load Operating Pressure
    C. Test Procedure
    D. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    E. Compliance Date
    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 Equipment
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
    H. Compressor Industry Recommendation
    1. Summary
    2. Specific Provisions
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Equipment Classes
    a. Compression Principle
    b. Lubricant Presence
    c. Cooling Method
    d. Motor Speed
    e. Motor Phase Count
    f. List of Proposed Equipment Classes
    2. European Union Regulatory Action
    a. Specific Suggested Requirements
    b. Next Steps
    3. Technology Options
    a. Multi-Staging
    b. Air-End Improvement
    c. Auxiliary Component Improvement
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Summary of Significant Data Sources
    a. CAGI Data Sheets
    b. Lot 31--European Union Ecodesign Preparatory Study on 
Compressors
    c. Confidential Manufacturer Equipment Data
    d. Online Retailer Price Data
    2. Harmonization With Lot 31
    3. Representative Equipment
    4. Design Options and Available Energy Efficiency Improvements
    5. Efficiency Levels
    a. Direct From Lot 31
    b. Developed From CAGI Database
    c. Scaled From Other Equipment Classes, Using U.S. Data
    6. Manufacturer Selling Price
    a. Direct Scaling From Lot 31
    b. Scaling With U.S. MSP Data
    c. MSPs for Water-Cooled Equipment
    d. New Relationships From U.S. Data
    7. Manufacturer Production Cost
    8. Other Analytical Outputs
    D. Markups Analysis
    E. Energy Use Analysis
    1. Applications
    2. Annual Hours of Operation
    3. Load Profiles
    4. Capacity Control Strategies
    5. Compressor Sizing
    F. Life-Cycle Cost and Payback Period Analysis
    1. Equipment Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Repair and Maintenance Costs
    6. Equipment Lifetime
    7. Discount Rates
    8. Efficiency Distribution in the No-New-Standards Case
    9. Payback Period Analysis
    G. Shipments Analysis
    H. National Impact Analysis
    1. Equipment Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis
    a. GRIM Key Inputs
    b. GRIM Scenarios
    3. Manufacturer Interviews
    a. Conversion Requirements
    b. Engineering Constraints and Development Cycle Times
    c. Relationship to the Draft European Union Energy Efficiency 
Standards
    d. Unfair Advantages for Replacement Technologies
    e. Uncertainty of Compliance Cost for Reciprocating Equipment
    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. Social Cost of Other Air Pollutants
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    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. Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on 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 TSLs Considered for Compressor 
Standards
    2. Summary of Annualized Benefits and Costs of the Proposed 
Standards
VI. Certification Requirements
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
    a. Methodology for Estimating the Number of Small Entities
    b. Compressor Industry Structure and Nature of Competition
    c. Manufacturer Participation
    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
VIII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
    IX. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    Title III of the Energy Policy and Conservation Act of 1975, as 
amended (``EPCA'' or, in context, ``the Act''), sets forth a variety of 
provisions designed to improve energy efficiency. (42 U.S.C. 6291, et 
seq.) 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.'' EPCA provides that DOE may include a type of 
industrial equipment as covered equipment if it determines that to do 
so is necessary to carry out the purposes of Part A-1. (42 U.S.C. 
6312(b)). DOE has proposed such a determination for compressors, the 
subject of this document (see section II.A for further discussion).
    EPCA authorizes DOE to prescribe energy conservation standards for 
those types of industrial equipment which the Secretary classifies as 
covered equipment. (42 U.S.C. 6311(2) and 6312). Pursuant to EPCA, any 
new or amended energy conservation standard must be designed to achieve 
the maximum improvement in energy

[[Page 31682]]

efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A) and 6316(a)). Furthermore, the new or amended 
standard must result in a significant conservation of energy. (42 
U.S.C. 6295(o)(3)(B) and 6316(a)).
    In accordance with the relevant EPCA provisions, DOE proposes new 
energy conservation standards for compressors. The proposed standards, 
which are expressed in terms of package isentropic efficiency (i.e., a 
parameter used to measure the degree of degradation of energy in 
steady-flow devices), or the ratio of the theoretical isentropic power 
required for a compression process to the actual power required for the 
same process, are shown in Table I.1. Table I.2 through Table I.5 
provide mathematical coefficients required to calculate package 
isentropic efficiency in Table I.1. For ``Fixed-speed compressor'' 
equipment classes, the relevant Package Isentropic Efficiency is Full-
Load Package Isentropic Efficiency; for ``Variable-speed compressor'' 
equipment classes, the relevant Package Isentropic Efficiency is Part-
Load Package Isentropic Efficiency. Both Full- and Part-Load Package 
Isentropic Efficiency are determined in accordance with the test 
methods proposed in the April 2016 Compressors Test Procedure Notice of 
Proposed Rulemaking (``test procedure NOPR'') 81 FR 27220.\1\ These 
proposed standards, if adopted, would apply to all compressors listed 
in Table I.1 and manufactured in, or imported into, the United States 
starting five years after the publication of the final rule for this 
rulemaking.
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    \1\ See https://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/78.
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    V1 denotes the full-load actual volume flow rate \2\ of 
the compressor, in actual cubic feet per minute (``acfm'').\3\ Standard 
levels are expressed as a function of full-load actual volume flow rate 
for each equipment class, and may be calculated by inserting values 
from rightmost two columns into the second leftmost column. Doing so 
will yield an efficiency-denominated function of actual volume flow 
rate in acfm.
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    \2\ The test procedure NOPR defines a term ``actual volume flow 
rate'' to characterize compressor output flow as ``the volume flow 
rate of air, compressed and delivered at the standard discharge 
point, referred to conditions of total temperature, total pressure 
and composition prevailing at the standard inlet point.'' It also 
proposes a procedure for identifying a compressor's full-load actual 
volume flow rate.
    \3\ Actual cubic feet per minute (``acfm'') is an industry 
convention that describes the actual volume of air emerging from a 
compressor, but expressed as though the air were allowed to expand 
to ambient conditions at the compressor inlet.

                        Table I.1--Proposed Energy Conservation Standards for Compressors
----------------------------------------------------------------------------------------------------------------
                                                                                [eta]Regr
                                                                                 (package
             Equipment class                 Minimum package isentropic         isentropic       d  (percentage
                                                     efficiency                 efficiency      loss reduction)
                                                                             reference curve)
----------------------------------------------------------------------------------------------------------------
Rotary; Lubricated; Air-cooled; Fixed-    [eta]Regr + (1- [eta]Regr) * (d/         -0.00928 *                -15
 speed.                                    100).                             ln(.472 * V1)\2\
                                                                            + 0.139 * ln(.472
                                                                                * V1) + 0.271
Rotary; Lubricated; Air-cooled; Variable- [eta]Regr + (1- [eta]Regr) * (d/  -0.0155 * ln(.472                -10
 speed.                                    100).                             * V1)\2\ + 0.216
                                                                            * ln(.472 * V1) +
                                                                                      0.00905
Rotary; Lubricated; Water-cooled; Fixed-  .0235 + [eta]Regr + (1-                  -0.00928 *                -15
 speed.                                    [eta]Regr) * (d/100).             ln(.472 * V1)\2\
                                                                            + 0.139 * ln(.472
                                                                                * V1) + 0.271
Rotary; Lubricated; Water-cooled;         .0235 + [eta]Regr + (1-           -0.0155 * ln(.472                -15
 Variable-speed.                           [eta]Regr) * (d/100).             * V1)\2\ + 0.216
                                                                            * ln(.472 * V1) +
                                                                                      0.00905
Rotary; Lubricant-free; Air-cooled;       [eta]Regr + (1- [eta]Regr) * (d/     A1 * ln(.472 *                -11
 Fixed-speed.                              100).                                V1)\2\ + B1 *
                                                                              ln(.472 * V1) +
                                                                                           C1
Rotary; Lubricant-free; Air-cooled;       [eta]Regr + (1- [eta]Regr) * (d/     A2 * ln(.472 *                -13
 Variable-speed.                           100).                                V1)\2\ + B2 *
                                                                              ln(.472 * V1) +
                                                                                           C2
Rotary; Lubricant-free; Water-cooled;     A3 * ln(.472 * V1)\2\ + B3 *         A1 * ln(.472 *                -11
 Fixed-speed.                              ln(.472 * V1) + C3 + [eta]Regr       V1)\2\ + B1 *
                                           + (1- [eta]Regr) * (d/100).        ln(.472 * V1) +
                                                                                           C1
Rotary; Lubricant-free; Water-cooled;     A4 * ln(.472 * V1)\2\ + B4 *         A2 * ln(.472 *                -13
 Variable-speed.                           ln(.472 * V1) + C4 + [eta]Regr       V1)\2\ + B2 *
                                           + (1- [eta]Regr) * (d/100).        ln(.472 * V1) +
                                                                                           C2
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 Table I.2--Coefficients for Proposed Energy Conservation Standards for Rotary, Lubricant-free, Air- and Water-
                                         Cooled, Fixed-Speed Compressors
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 Full-load actual volume flow rate range (actual cubic feet per
                         minute (acfm))                                 A1              B1              C1
----------------------------------------------------------------------------------------------------------------
0 <= V1 <= 161..................................................        -0.00928          0.139            0.191
161 <= V1 <= 2125...............................................         0.00281          0.0344           0.417
2125 <= V1......................................................        -0.00928          0.139            0.271
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[[Page 31683]]


 Table I.3--Coefficients for Proposed Energy Conservation Standards for Rotary, Lubricant-Free, Air- and Water-
                                       Cooled, Variable-Speed Compressors
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         Full-Load Actual Volume Flow Rate Range (acfm)                 A2              B2              C2
----------------------------------------------------------------------------------------------------------------
0 <= V1 <= 102..................................................         -0.0155          0.216         -0.0984
102 <= V1 <= 1426...............................................          0.000           0.0958         0.134
1426 <= V1......................................................         -0.0155          0.216          0.00905
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  Table I.4--Coefficients for Proposed Energy Conservation Standards for Rotary, Lubricant-Free, Water-Cooled,
                                             Fixed-Speed Compressors
----------------------------------------------------------------------------------------------------------------
         Full-Load Actual Volume Flow Rate Range (acfm)                 A3              B3              C3
----------------------------------------------------------------------------------------------------------------
0 <= V1 < 102...................................................         0                     0               0
102 <= V1.......................................................        -0.00924           0.117          -0.315
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  Table I.5--Coefficients for Proposed Energy Conservation Standards for Rotary, Lubricant-Free, Water-Cooled,
                                           Variable-Speed Compressors
----------------------------------------------------------------------------------------------------------------
         Full-Load Actual Volume Flow Rate Range (acfm)                 A4              B4              C4
----------------------------------------------------------------------------------------------------------------
0 <= V1 < 74....................................................               0               0               0
74 <= V1........................................................        0.000173         0.00783         -0.0300
----------------------------------------------------------------------------------------------------------------

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. DOE further notes that air 
compressors achieving these standard levels are already commercially 
available for all proposed equipment classes. Based on the analyses 
described in this preamble, DOE has tentatively concluded that the 
benefits of the proposed standards to the nation (energy savings, 
positive NPV of consumer benefits, consumer LCC savings, and emission 
reductions) would outweigh the burdens (large loss of INPV for 
manufacturers and LCC increases for some consumers).
    DOE is also seriously considering the adoption of a more-stringent 
energy efficiency standard in this rulemaking. Based on consideration 
of the public comments DOE receives in response to this notice and 
related information collected and analyzed during the course of this 
rulemaking effort, DOE may adopt energy efficiency levels presented in 
this notice that is higher than the proposed standards, or some 
combination of level(s) that incorporate the proposed standards in 
part. As discussed in more detail in section V.C.1, DOE is strongly 
considering a TSL 3 standard for a compressor standard as an option 
with greater than two times the annual net benefits of DOE's current 
proposed TSL 2.
    The proposed standards correspond to trial standard level (TSL) 2. 
As discussed in section V.C, DOE has tentatively concluded that TSL 3, 
which is comprised of more stringent energy efficiency standards than 
TSL 2, is not economically justified. However, because TSL 3 has 
significant benefits, including much higher national energy savings, 
national NPV, and emissions reductions than those resulting from TSL 2 
(see Table V.36), DOE is still considering the merits of standards at 
TSL 3. Accordingly, DOE invites comments on whether DOE should adopt 
standards for compressors at TSL 3 instead of at TSL 2. This is 
identified as Issue 1 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''

A. Benefits and Costs to Consumers

    Table I.6 presents DOE's evaluation of the economic impacts of the 
proposed standards on end users of compressors, as measured by the 
average life-cycle cost (LCC) savings and the simple payback period 
(PBP).\4\ The average LCC savings are positive for all equipment 
classes for which a standard has been proposed, and the PBP is less 
than the average lifetime of compressors, which is estimated to be 
between 9 to 13 years (see section IV.F.6).
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    \4\ The average LCC savings are measured relative to the no-new 
standards case efficiency distribution in the no-new-standards case, 
which depicts the market in the compliance year in the absence of 
standards (see section IV.F.9). The simple PBP, which is designed to 
compare specific efficiency levels, is measured relative to the 
baseline model (see section IV.C.1.a).

   Table I.6--Impacts of Proposed Energy Conservation Standards on End
                          Users of Compressors
------------------------------------------------------------------------
                                            Average LCC       Simple
             Equipment Class                  Savings         Payback
                                              (2015$)     Period (years)
------------------------------------------------------------------------
Rotary, Fixed Speed, Lubricated, Air              $8,902             1.7
 Cooled.................................
(RP_FS_L_AC )...........................
Rotary, Fixed Speed, Lubricated, Water            15,011             2.4
 Cooled.................................
(RP_FS_L_WC )...........................
Rotary, Fixed Speed, Lubricant-Free Air             n.a.            n.a.
 Cooled.................................
(RP_FS_LF_AC) *.........................
Rotary, Fixed Speed, Lubricant-Free                 n.a.            n.a.
 Water Cooled (RP_FS_LF_WC) *...........
Rotary, Variable Speed, Lubricated, Air            6,061             2.5
 Cooled.................................
(RP_VS_L_AC )...........................

[[Page 31684]]

 
Rotary, Variable Speed, Lubricated,               13,865             3.4
 Water Cooled...........................
(RP_VS_L_WC )...........................
Rotary, Variable Speed, Lubricant-Free              n.a.            n.a.
 Air Cooled (RP_VS_LF_AC) *.............
Rotary, Variable Speed, Lubricant-Free              n.a.            n.a.
 Water Cooled (RP_VS_LF_WC) *...........
Reciprocating, Single-Phase, Lubricated.            n.a.            n.a.
(R1_FS_L_XX) **.........................
Reciprocating, Three-Phase, Lubricated..            n.a.            n.a.
(R3_FS_L_XX) **.........................
------------------------------------------------------------------------
* No increase in efficiency is proposed for this equipment class.
** No new standard is proposed for this equipment class.

    DOE's analysis of the impacts of the proposed standards on end 
users is described in section V.B.1 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 2051). Using a real discount rate of 8.7 
percent, DOE estimates that the INPV for manufacturers of compressors 
in the case without standards is $497.1 million in 2014$. Under the 
proposed standards, DOE expects that manufacturers may lose up to 11.6 
percent of this INPV, or approximately $57.8 million.
    DOE's analysis of the impacts of the proposed standards on 
manufacturers is described in section IV.J of this document.

C. National Benefits and Costs 5
---------------------------------------------------------------------------

    \5\ All monetary values in this document are expressed in 2015 
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 proposed energy conservation 
standards for compressors would save a significant amount of energy. 
Relative to the case without new standards, the lifetime energy savings 
for compressors purchased in the 30-year period that begins in the 
anticipated first full year of compliance with the new standards (2022-
2051) \6\ amount to 0.18 quadrillion British thermal units (Btu), or 
quads.\7\ This represents a savings of 0.4 percent relative to the 
energy use of these equipment in the case without new standards 
(referred to as the ``no-new-standards case'').
---------------------------------------------------------------------------

    \6\ The analysis uses January 1st, 2022 to represent the 
expected compliance date in late 2021. Therefore, the 30-year 
analysis period is referred to as 2022-2051.
    \7\ 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 proposed standards for compressors ranges from $0.21 
billion (at a 7-percent discount rate) to $0.62 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 compressors purchased in 2022-2051.
    In addition, the proposed standards for compressors would have 
significant environmental benefits. DOE estimates that the proposed 
standards would result in cumulative emission reductions (over the same 
period as for energy savings) of 10.6 million metric tons (Mt) \8\ of 
carbon dioxide (CO2), 5.8 thousand tons of sulfur dioxide 
(SO2), 19.5 thousand tons of nitrogen oxides 
(NOX), 46.7 thousand tons of methane (CH4), 0.1 
thousand tons of nitrous oxide (N2O), and 0.02 tons of 
mercury (Hg).\9\ The cumulative reduction in CO2 emissions 
through 2030 amounts to 1.2 Mt, which is equivalent to the emissions 
resulting from the annual electricity use of 0.11 million homes.
---------------------------------------------------------------------------

    \8\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \9\ 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. AEO 2015 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.\10\ The derivation of the SCC values is discussed 
in section IV.L. Using discount rates appropriate for each set of SCC 
values (see Table I.X), DOE estimates the present monetary value of the 
CO2 emissions reduction (not including CO2 
equivalent emissions of other gases with global warming potential) is 
between $0.06 billion and $0.99 billion, with a value of $0.32 billion 
using the central SCC case represented by $40.0/t in 2015. DOE also 
estimates the present monetary value of the NOX emissions 
reduction to be $0.01 billion at a 7-percent discount rate and $0.03 
billion at a 3-percent discount rate.\11\ DOE is investigating 
appropriate valuation of the reduction in methane and other emissions, 
and did not include any values in this rulemaking.
---------------------------------------------------------------------------

    \10\ United States Government--Interagency Working Group on 
Social Cost of Carbon. Technical Support Document: Technical Update 
of the Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. May 2013. Revised July 2015. https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
    \11\ DOE estimated the monetized value of NOX 
emissions reductions associated with electricity savings using 
benefit per ton estimates from the Regulatory Impact Analysis for 
the Clean Power Plan Final Rule, published in August 2015 by EPA's 
Office of Air Quality Planning and Standards. Available at http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See section IV.L.2 for further discussion. The U.S. 
Supreme Court has stayed the rule implementing the Clean Power Plan 
until the current litigation against it concludes. Chamber of 
Commerce, et al. v. EPA, et al., Order in Pending Case, 136 S.Ct. 
999 (Mem). However, the benefit-per-ton estimates established in the 
Regulatory Impact Analysis for the Clean Power Plan are based on 
scientific studies that remain valid irrespective of the legal 
status of the Clean Power Plan. Note that DOE is primarily using a 
national benefit-per-ton estimate for NOX 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.
---------------------------------------------------------------------------

    Table I.7 summarizes the economic benefits and costs expected to 
result from the proposed standards for compressors.

[[Page 31685]]



  Table I.7.--Summary of Economic Benefits and Costs of Proposed Energy
                 Conservation Standards for Compressors
                                [TSL 2] *
------------------------------------------------------------------------
                                         Present value    Discount rate
               Category                 (billion 2015$)     (percent)
------------------------------------------------------------------------
Benefits:
    Consumer Operating Cost Savings...              0.3                7
                                                    0.8                3
    CO2 Reduction (using mean SCC at                0.1                5
     5% discount rate) \**\...........
    CO2 Reduction (using mean SCC at                0.3                3
     3% discount rate) \**\...........
    CO2 Reduction (using mean SCC at                0.5              2.5
     2.5% discount rate) \**\.........
    CO2 Reduction (using 95th                       1.0                3
     percentile SCC at 3% discount
     rate) \**\.......................
    NOX Reduction [dagger]............              0.0                7
                                                    0.0                3
    Total Benefits [Dagger]...........              0.7                7
                                                    1.2                3
Costs:
    Consumer Incremental Installed                  0.1                7
     Costs............................
                                                    0.2                3
Total Net Benefits:
    Including CO2 and NOX Reduction                 0.6                7
     Monetized Value [Dagger].........
                                                    1.0                3
------------------------------------------------------------------------
\*\ This table presents the costs and benefits associated with
  compressors shipped in 2022-2051. These results include benefits to
  consumers which accrue after 2048 from the equipment purchased in 2022-
  2051. 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 interagency group selected four sets of SCC values for use in
  regulatory analyses. Three sets of values are based on the average SCC
  from the integrated assessment models, at discount rates of 5%, 3%,
  and 2.5%. For example, for 2015 emissions, these values are $12.4/t,
  $40.6/t, and $63.2/t, in 2015$, respectively. The fourth set ($118/t
  in 2015$ for 2015 emissions), which represents the 95th percentile of
  the SCC distribution calculated using a 3% discount rate, is included
  to represent higher-than-expected impacts from temperature change
  further out in the tails of the SCC distribution. The SCC values are
  emission year specific. See section IV.L.1 for more details.
[dagger] DOE estimated the monetized value of NOX emissions reductions
  using benefit per ton estimates from the Regulatory Impact Analysis
  for the Clean Power Plan Final Rule, published in August 2015 by EPA's
  Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. Note that
  DOE is primarily using a national benefit-per-ton estimate for NOX
  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.
[Dagger] Total Benefits for both the 3% and 7% cases are presented using
  only the average SCC with 3-percent discount rate.

    The benefits and costs of the proposed standards, for compressors 
sold in 2022-2051, 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 consumer 
operating costs, minus (2) the increase in equipment purchase prices 
and installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\12\
---------------------------------------------------------------------------

    \12\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2016, 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 2016. 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.
---------------------------------------------------------------------------

    The national operating savings are domestic U.S. consumer monetary 
savings that occur as a result of purchasing the covered products. The 
national operating cost savings is measured for the lifetime of 
compressors shipped in 2022-2051. The CO2 reduction is a 
benefit that accrues globally due to decreased domestic energy 
consumption that is expected to result from this rule. Because 
CO2 emissions have a very long residence time in the 
atmosphere, the SCC values in future years reflect future 
CO2-emissions impacts that continue beyond 2100 through 
2300.
    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.8. The results under the primary 
estimate are as follows.
    Using a 7-percent discount rate for benefits and costs other than 
CO2 reduction (for which DOE used a 3-percent discount rate 
along with the average SCC series that has a value of $40.0/t in 2015), 
the estimated cost of the standards proposed in this rule is 10.4 
million per year in increased equipment costs, while the estimated 
annual benefits are $36.0 million in reduced equipment operating costs, 
$19.2 million in CO2 reductions, and $1.4 million in reduced 
NOX emissions. In this case, the net benefit amounts to $46 
million per year.
    Using a 3-percent discount rate for all benefits and costs and the 
average SCC series that has a value of $40.0/t in 2015, the estimated 
cost of the proposed standards is $10.9 million per year in increased 
equipment costs, while the estimated annual benefits are $48.4 million 
in reduced operating costs, $19.2 million in CO2 reductions, 
and $2.0 million in reduced NOX emissions. In this case, the 
net benefit amounts to $59 million per year.

[[Page 31686]]



                           Table I.8--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Compressors
                                                                         [TSL 2]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Million 2015$/year
                                                             -------------------------------------------------------------------------------------------
                                       Discount rate                                                                         High net benefits  estimate
                                                                    Primary estimate *        Low net benefits  estimate *                *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost        7%...........................  36.0.........................  29.3.........................  43.7
 Savings.
                               3%...........................  48.4.........................  38.9.........................  60.4
CO2 Reduction (using mean SCC  5%...........................  5.7..........................  4.8..........................  6.9
 at 5% discount rate) \**\.
CO2 Reduction (using mean SCC  3%...........................  19.2.........................  16.0.........................  23.2
 at 3% discount rate) \**\.
CO2 Reduction (using mean SCC  2.5%.........................  28.1.........................  23.3.........................  33.9
 at 2.5% discount rate) \**\.
CO2 Reduction (using 95th      3%...........................  58.5.........................  48.6.........................  70.6
 percentile SCC at 3%
 discount rate ) \**\.
NOX Reduction [dagger].......  7%...........................  1.4..........................  1.2..........................  3.7
                               3%...........................  2.0..........................  1.6..........................  5.4
    Total Benefit              7% plus CO2 range............  43 to 96.....................  35 to 79.....................  54 to 118
     [dagger][dagger].
                               7%...........................  57...........................  46...........................  71
                               3% plus CO2 range............  56 to 109....................  45 to 89.....................  73 to 136
                               3%...........................  70...........................  57...........................  89
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental           7%...........................  10.4.........................  8.9..........................  11.8
 Installed Equipment Costs.    3%...........................  10.9.........................  9.2..........................  12.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Total [dagger][dagger]...  7% plus CO2 range............  33 to 85.....................  26 to 70.....................  42 to 106
                               7%...........................  46...........................  38...........................  59
                               3% plus CO2 range............  45 to 98.....................  36 to 80.....................  60 to 124
                               3%...........................  59...........................  47...........................  77
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with compressors shipped in 2022-2051. These results include benefits to consumers
  which accrue after 2051 from the equipment purchased in 2022-2051. The Primary, Low Benefits, and High Benefits Estimates utilize projections of
  energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental
  product costs reflect a constant trend in the Primary Estimate, an increasing trend in the Low Benefits Estimate, and a decreasing trend in the High
  Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.1.]. Note that the Benefits and Costs may not sum
  to the Net Benefits due to rounding.
** The CO2 reduction benefits are calculated using 4 different sets of SCC values. The first three use the average SCC calculated using 5%, 3%, and 2.5%
  discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC values
  are emission year specific. See section IV.L.1 for more details.
[dagger] DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean
  Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For DOE's Primary Estimate and Low
  Net Benefits Estimate, the agency is using a national benefit-per-ton estimate for NOX 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.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
  rate ($40.0/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
  labeled discount rate, and those values are added to the full range of CO2 values.

    DOE's analysis of the national impacts of the proposed standards is 
described in sections IV.H, IV.K and IV.L of this document.

D. Conclusion

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. DOE further notes that air 
compressors achieving these standard levels are already commercially 
available for all proposed equipment classes. Based on the analyses 
described in this preamble, DOE has tentatively concluded that the 
benefits of the proposed standards to the nation (energy savings, 
positive NPV of consumer benefits, consumer LCC savings, and emission 
reductions) would outweigh the burdens (large loss of INPV for 
manufacturers and LCC increases for some consumers).
    DOE is also seriously considering the adoption of a more -stringent 
energy efficiency standard in this rulemaking. Based on consideration 
of the public comments DOE receives in response to this notice and 
related information collected and analyzed during the course of this 
rulemaking effort, DOE may adopt energy efficiency levels presented in 
this notice that is higher than the proposed standards, or some 
combination of level(s) that incorporate the proposed standards in 
part. As discussed in more detail in section V.C.1, DOE is strongly 
considering a TSL 3 standard for a compressor standard as an option 
with greater than two times the annual net benefits of DOE's current 
proposed TSL 2.

[[Page 31687]]

II. Introduction

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

A. Authority

    EPCA provides that DOE may include a type of industrial equipment, 
including compressors, as covered equipment if it determines that to do 
so is necessary to carry out the purposes of Part A-1. (42 U.S. 
6311(2)(B)(i) and 6312(b)). The purpose of Part A-1 is to improve the 
efficiency of electric motors and pumps and certain other industrial 
equipment in order to conserve the energy resources of the Nation. (42 
U.S.C. 6312(a)). DOE has proposed to determine that because (1) DOE may 
only prescribe energy conservation standards for covered equipment; and 
(2) energy conservation standards for compressors would improve the 
efficiency of such equipment more than would be likely to occur in the 
absence of standards, including compressors as covered equipment is 
necessary to carry out the purposes of Part A-1. 77 FR 76972 (Dec. 31, 
2012).
    Pursuant to EPCA, any new or amended energy conservation standard 
for compressors must be designed to achieve the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)). Furthermore, the new 
or amended standard must result in a significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B) and 6316(a)).
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. For commercial and industrial 
products, DOE is primarily responsible for labeling requirements. 
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 6314) Manufacturers of covered products must use the 
prescribed DOE test procedure as the basis for certifying to DOE that 
their products comply with the applicable energy conservation standards 
adopted under EPCA and when making representations to the public 
regarding the energy use or efficiency of those products. (42 U.S.C. 
6293(c), 6295(s) and 6316(a)) Similarly, DOE must use these test 
procedures to determine whether the products comply with standards 
adopted pursuant to EPCA. (42 U.S.C. 6295(s) and 6316(a)) There are 
currently no DOE test procedures for compressors. DOE issued a test 
procedure NOPR for Compressors in April 2016. Upon finalization, any 
DOE test procedure for compressors will appear at title 10 of the Code 
of Federal Regulations (CFR) part 431, subpart T, appendix A.
    DOE follows specific statutory criteria for prescribing new or 
amended standards for covered equipment, including compressors. 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. 6316(a), and 
6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard 
that would not result in the significant conservation of energy. (42 
U.S.C. 6295(o)(3) and 6316(a)) Moreover, DOE may not prescribe a 
standard: (1) For certain products, including compressors, if no test 
procedure has been established for the product, or (2) if DOE 
determines by rule that the standard is not technologically feasible or 
economically justified. (42 U.S.C. 6295(o)(3)(A)-(B) and 6316(a)) In 
deciding whether a proposed standard is economically justified, DOE 
must determine whether the benefits of the standard exceed its burdens. 
(42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) DOE must make this 
determination after receiving comments on the proposed standard, and by 
considering, to the greatest extent practicable, the following seven 
statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy 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 amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1) 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, 42 U.S.C. 6295(q)(1) and 6316(a) specifies 
requirements when promulgating an energy conservation standard for a 
covered product that has two or more subcategories. DOE must specify a 
different standard level for a type or class of product that has the 
same function or intended use, if DOE determines that products within 
such group: (A) Consume a different kind of energy from that consumed 
by other covered products within such type (or class); or (B) have a 
capacity or other performance-related feature which other products 
within such type (or class) do not have and such feature justifies a 
higher or lower standard. (42 U.S.C. 6295(q)(1) and 6316(a)) In 
determining whether a performance-related feature justifies a different 
standard for a group of products, DOE must consider such factors as the 
utility to the consumer of the feature and other factors DOE deems 
appropriate. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2) and 6316(a))
    Federal energy conservation requirements generally supersede State

[[Page 31688]]

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) and 6316(a)).

B. Background

1. Current Standards
    DOE does not currently have a test procedure or energy conservation 
standard for compressors. In considering whether to establish standards 
for compressors, DOE issued a Proposed Determination of Coverage on 
December 31, 2012. 77 FR 76972.
2. History of Standards Rulemaking for Compressors
    DOE initiated its rulemaking efforts to examine the possibility of 
setting energy conservation standards for compressors by publishing a 
notice that announced the availability of a framework document and a 
public meeting to discuss that document and invite comment from 
interested parties.\13\ 79 FR 06839. The Framework Document described 
the procedural and analytical approaches that DOE anticipated using to 
evaluate energy conservation standards for compressors, and also 
identified and solicited comment on various issues to be resolved in 
the rulemaking. DOE held that public meeting on March 3, 2014. Comments 
received both in response to the Framework Document and public meeting 
are discussed later in this document. In April 2016, DOE published a 
Notice of Proposed Rulemaking to address a potential test procedure for 
compressors.\14\
---------------------------------------------------------------------------

    \13\ Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0002.
    \14\ Available at: https://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/78.
---------------------------------------------------------------------------

III. General Discussion

    DOE developed this proposal after considering verbal and written 
comments, data, and information from interested parties representing a 
variety of interests. The following discussion addresses issues raised 
by these commenters. Commenters, are listed in Table III.1.

                 Table III.1--Commenters and Affiliation
------------------------------------------------------------------------
            Commenter                           Affiliation
------------------------------------------------------------------------
Air-Conditioning, Heating, and     Trade Association.
 Refrigeration Institute.
American Council for an Energy     Advocacy Organization.
 Efficient Economy.
Appliance Standards Awareness      Advocacy Organization.
 Project.
Association of Equipment           Trade Association.
 Manufacturers.
Atlas Copco......................  Manufacturer.
California Investor Owned          Utility Association.
 Utilities (Pacific Gas and
 Electric Company, San Diego Gas,
 Southern California Edison).
Compressed Air and Gas Institute.  Trade Association.
Edison Electric Institute........  Utility Association.
G.H.S. Corporation (parent to      Manufacturer.
 Saylor-Beall and Sullivan-
 Palatek).
Ingersoll-Rand...................  Manufacturer.
Jenny Products, Inc..............  Manufacturer.
Kaeser Compressors...............  Manufacturer.
Natural Resource Defense Council.  Advocacy Organization.
Northwest Energy Efficiency        Utility Association.
 Alliance.
Southern California Gas Company..  Utility.
Sullair Distributor Council......  Manufacturer.
Sullair, LLC.....................  Manufacturer.
William Scales, P.E..............  Consultant.
------------------------------------------------------------------------

A. Definition of Covered Equipment

    Although compressors are listed as one type of industrial equipment 
under 42 U.S.C. 6311(2) that DOE may regulate provided certain 
conditions are met, the term ``compressor'' is not defined in EPCA. In 
the Framework Document, DOE introduced a possible a definition for 
``compressor'' which centered on a mechanical device that uses a 
pressure ratio of 1.1.\15\ This value had the possible advantage of 
consistency with International Organization for Standardization (ISO) 
Technical Report 12942:2012, ``Compressors--Classification--
Complementary information to ISO 5390'' (ISO/TR 12942:2012).
---------------------------------------------------------------------------

    \15\ DOE has previously used both the terms ``pressure ratio'' 
and ``pressure-increase ratio'' to refer to the ratio of absolute 
discharge pressure to absolute inlet pressure. DOE notes that, while 
it considers the terms to mean the same thing, only ``pressure 
ratio'' will be used in this document in order to preserve clarity.
---------------------------------------------------------------------------

    In response to the Framework Document, the American Council for an 
Energy-Efficient Economy (ACEEE), the Appliance Standards Awareness 
Project (APSP), the Northwest Energy Efficiency Alliance (NEEA), and 
the Alliance to Save Energy (ASE) (hereafter referred to as the Joint 
Commenters), as well as the National Resources Defense Council (NRDC), 
and the California Investor Owned Utilities (CAIOU) recommended that, 
with respect to pressure-increase ratio, DOE take, as a lower limit for 
compressors, the upper limit (1.2) for Commercial and Industrial Fans 
and Blowers suggested in that equipment's 2013 Framework Document.\16\ 
(Joint Comment, No. 0016 at p. 1; NRDC, No. 0019 at p. 1; CAIOU, No. 
0018 at p. 2) The commenters noted that this would avoid creating a 
coverage gap, wherein certain air processing equipment would be 
uncovered if its pressure ratio fell between the respective scope limit 
of fans/blowers and compressors. (Docket No. EERE-2013-BT-STD-0006) DOE 
agreed that no gap in coverage should exist between this and the fans 
and blowers rulemaking and proposed a definition for ``compressor'' 
with a pressure ratio of 1.3 in the test procedure NOPR as follows:
---------------------------------------------------------------------------

    \16\ http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-
STD-0006-0001.
---------------------------------------------------------------------------

    ``Compressor'' means a machine or apparatus that converts different 
types of energy into the potential energy of gas pressure for 
displacement and compression of gaseous media to any higher pressure 
values above

[[Page 31689]]

atmospheric pressure and has a pressure ratio \17\ greater than 1.3.
---------------------------------------------------------------------------

    \17\ DOE proposes to use terminology consistent with ISO 
1217:2009 in describing the ratio of discharge to inlet pressures as 
``pressure ratio,'' as opposed to ``pressure-increase ratio,'' which 
is the term used in some other industry documents. However, for the 
purpose of this document ``pressure-increase ratio'' and ``pressure 
ratio'' are synonymous.
---------------------------------------------------------------------------

    In order to objectively and unambiguously determine which equipment 
meets the definition of ``compressor,'' DOE also proposed, in the test 
procedure NOPR, a definition of the term ``pressure ratio'' as ``the 
ratio of discharge pressure to inlet pressure, determined at full-load 
operating pressure . . .'' Such a definition allows DOE to 
quantitatively establish which equipment meet the pressure ratio 
requirement proposed in the definition of compressor.
    This definition of ``pressure ratio'' relies on the terms discharge 
pressure and inlet pressure. Definitions for these, and several other 
technical terms specific to testing of compressors are established in 
of ISO 1217:2009 and DOE proposed in the test procedure NOPR to adopt 
those definitions as part of incorporating by reference certain 
portions of ISO 1217:2009.

B. Scope of the Energy Conservation Standards in This Rulemaking

    DOE notes that while the definition of ``compressor,'' as proposed 
in the test procedure NOPR, is broad, the styles of compressors to 
which the proposed test procedure applies would be limited to a more 
narrow range of equipment. Specifically, after consideration of 
feedback from interested parties, as well as DOE research, DOE limited 
the scope of analysis of this document to compressors that meet the 
following criteria:
     Are air compressors, as described in section III.B.1,
     Are rotary or reciprocating compressors, as described in 
section III.B.3,
     Are driven by a brushless electric motor, as described in 
section III.B.4,
     Are distributed in commerce with a compressor motor 
nominal horsepower greater than or equal to 1 and less than or equal to 
500 horsepower (hp), as described in section III.B.4, and
     Operate at a full-load operating pressure of greater than 
or equal to 31 and less than or equal to 225 pounds per square inch 
gauge (psig), as defined in section III.B.6.
    DOE notes that ultimately, based on the results of the analyses 
performed for this NOPR, DOE does not propose to establish energy 
conservation standards for reciprocating compressors in this document. 
Section V provides further details on this decision. Consequently, the 
complete scope of the energy conservation standards proposed in this 
rulemaking is as follows:
     Are air compressors, as described in section III.B.1,
     Are rotary compressors, as described in section III.B.3,
     Are driven by a brushless electric motor, as described in 
section III.B.4,
     Are distributed in commerce with a compressor motor 
nominal horsepower greater than or equal to 1 and less than or equal to 
500 horsepower (hp), as described in section III.B.4, and
     Operate at a full-load operating pressure of greater than 
or equal to 31 and less than or equal to 225 pounds per square inch 
gauge (psig), as defined in section III.B.6.
    The following subsections discuss interested party comments related 
to the DOE's scope of analysis and ultimate scope of proposed energy 
conservation standards.
1. Equipment System Boundary
    In the Framework Document, DOE discussed three separate boundary 
levels of compressor equipment--``bare'' compressor, compressor 
``package,'' and compressed air system (CAS)--and requested comment 
regarding the feasibility of covering each boundary level of compressor 
equipment. Saylor-Beall commented that ``while it might be possible to 
rate the air compressor package, attention needs to be given to the 
entire compressed air system of the end user;'' whereas, Jenny 
Compressors (``Jenny'') stated that ``covering the entire `CAS' may 
prove nearly impossible since many systems include components from many 
different manufacturers, and no two systems are the same.'' (Saylor-
Beall, No. 0003 at p. 2; Jenny, No. 0005 at p. 2) Compressed Air and 
Gas Institute (CAGI) and the Joint Commenters agreed that DOE should 
cover the compressor package as part of this rulemaking. (CAGI, No. 
0009 at p. 3; Joint Comment, No. 0016 at p. 2) the Joint Commenters 
also stated that, if DOE covers the package, DOE would need to ensure 
companies that assemble packages from purchased components are also 
covered under this rulemaking. (Joint Comment, No. 0016 at p. 2-3) In 
this NOPR, DOE proposes to align with the scope of applicability of the 
test procedure NOPR and cover the compressor ``package.'' DOE considers 
covering a ``bare'' compressor to represent significantly lower energy 
savings compared to the other two compressor equipment levels. DOE also 
understands that, while the CAS represents the largest available energy 
savings, covering the CAS has significant drawbacks that weigh against 
its adoption as the basis for an equipment classification for the 
following reasons:
     Each CAS is often unique to a specific installation;
     Each CAS may include equipment from several different 
manufacturers; and
     A single CAS can include several different compressors, of 
different types, which may all have different full-load operating 
pressures.
    Implementing a broader, CAS-based approach to compressor efficiency 
would require DOE to (1) establish a methodology for measuring losses 
in a given air-distribution network; and (2) assess what certification, 
compliance, or enforcement practices would be required for a large 
variety of system designs, and potential waiver criteria. For these 
reasons, DOE does not believe the CAS to be a viable equipment 
classification for coverage and proposes to cover only compressor 
``packages.''
    In the test procedure NOPR, DOE proposed to use the following 
definition for ``air compressor,'' which is based on the concept of a 
compressor package and borrows language from the definitions used by 
the European Union's (EU) Lot 31 Ecodesign Study on Compressors (``Lot 
31 Study,'' discussed further in section IV.A.2):
    ``Air compressor'' means a compressor designed to compress air that 
has an inlet open to the atmosphere or other source of air, and is made 
up of a compression element (bare compressor), driver(s), mechanical 
equipment to drive the compressor element, and any ancillary equipment.
    Also in the test procedure NOPR, DOE proposed the following 
definitions which give meaning to terms used in the definition of ``air 
compressor'':
    ``Bare compressor'' means the compression element and auxiliary 
devices (e.g., inlet and outlet valves, seals, lubrication system, and 
gas flow paths) required for performing the gas compression process, 
but does not include the driver; speed-adjusting gear(s); gas 
processing apparatuses and piping; or compressor equipment packaging 
and mounting facilities and enclosures.\18\
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    \18\ The compressor industry frequently uses the term ``air-
end'' or ``air end'' to refer to the bare compressor. DOE uses 
``bare compressor'' in the regulatory text of this proposed rule but 
clarifies that, for the purposes of this rulemaking, it considers 
the terms to be synonymous.
---------------------------------------------------------------------------

    ``Driver'' means the machine providing mechanical input to drive a

[[Page 31690]]

bare compressor directly or through the use of mechanical equipment.
    ``Mechanical equipment'' means any component of an air compressor 
that transfers energy from the driver to the bare compressor.
    ``Ancillary equipment'' means any equipment distributed in commerce 
with an air compressor that is not a bare compressor, driver, or 
mechanical equipment. Ancillary equipment is considered to be part of a 
given air compressor, regardless of whether the ancillary equipment is 
physically attached to the bare compressor, driver, or mechanical 
equipment at the time when the air compressor is distributed in 
commerce.
    DOE seeks comment on its proposal to limit the scope of energy 
conservation standard proposed in this document to only equipment that 
is made up of a compression element (bare compressor), driver(s), 
mechanical equipment to drive the compressor element, and any ancillary 
equipment (i.e., a ``packaged compressor''), through the use of the 
defined term, ``air compressors.'' This is identified as Issue 2 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
2. Compressed Gas
    Broadly, compressors are used to compress a wide variety of gases. 
In the Framework Document,\19\ DOE requested comment on limiting the 
scope to only ``air compressors'' and stated that information gathered 
to that point indicated that non-air compressing equipment accounted 
for a relatively small fraction of the overall compressors market, in 
terms of both shipments and annual energy consumption. DOE received 
conflicting feedback on the topic from stakeholders. The Edison 
Electric Institute (EEI) recommended covering all compressor types 
regardless of gas type because natural gas compressor energy use is 
projected to increase, while CAGI agreed that DOE should cover only air 
compressors. (EEI, No. 0012 at p. 1-2; CAGI, No. 0009 at p. 1) The Air-
Conditioning, Heating, and Refrigeration Institute (AHRI) requested 
that compressors used in heating, ventilation, and air-conditioning 
(HVAC) equipment be specifically excluded. (AHRI No. 0015, at p. 1)
---------------------------------------------------------------------------

    \19\ Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0001.
---------------------------------------------------------------------------

    After the publication of the Framework Document, DOE announced 
several new initiatives to modernize the country's natural gas 
transmission and distribution infrastructure, including one to explore 
establishing efficiency standards for natural gas compressors.\20\ As 
part of that effort, DOE's Appliance Standards Program published a 
Request for Information (RFI), on August 5, 2014, to help determine 
both the feasibility of energy conservation standards for natural gas 
compressors and whether they are similar enough to air compressors to 
be considered within the scope of this rulemaking. 79 FR 25377. 
Additionally, DOE announced the availability of some preliminary, high-
level description of the market and technology for natural gas 
compressors. DOE also published a notice of public meeting \21\ (NOPM), 
held on December 17, 2014, to present and seek comment on the content 
of that data. Based upon the feedback received from the RFI, NOPM, and 
public meeting, DOE opted to consider natural gas compressors 
separately from air compressors. (Docket No. EERE-2014-BT-STD-0051)
---------------------------------------------------------------------------

    \20\ See: http://energy.gov/articles/department-energy-announces-steps-help-modernize-natural-gas-infrastructure.
    \21\ Available at: http://www.regulations.gov/?s#!documentDetail;D=EERE-2014-BT-STD-0051-0005.
---------------------------------------------------------------------------

    Regarding refrigerant compressors, DOE considers refrigerant 
compressors to have the same basic function as air compressors in that 
they both compress a working fluid to a higher pressure, but with the 
working fluid of refrigerant compressors being refrigerant instead of 
air. Refrigerant compressors are usually only included in equipment 
where cooling or heating is required, such as heating, ventilation, 
air-conditioning and refrigeration (HVACR) equipment. Similar to 
natural gas compressors, DOE has determined that refrigerant 
compressors serve a specific and unique application and also 
necessitate unique standards. As a result, DOE has opted not to 
consider refrigerant compressors in this rulemaking.
    Furthermore, DOE's research found no large market segments or 
applications for compressor equipment used on gases other than air or 
natural gas. Information gathered during confidential manufacturer 
interviews indicated that non-air and non-natural gas compressing 
equipment represented relatively low sales volume and annual energy 
consumption.
    Because air compressors comprise a significant portion of the 
compressor market and DOE intends to consider natural gas equipment as 
part of a separate rulemaking,\22\ DOE proposes to consider standards 
for only air compressors in this rulemaking. DOE believes that 
compressors for other fluids serve different applications and are 
technically very different equipment than air compressors. As a result, 
compressors for gases other than air would likely require separate test 
procedures and energy conservation standards analyses. Consequently, 
DOE proposes to align with the scope of applicability of the test 
procedure NOPR, and limit the scope of energy conservation standards to 
only compressors that are designed to compress air and that have inlets 
open to the atmosphere or other source of air, through the use of the 
defined term, ``air compressors.'' As discussed in Section III.B.1, DOE 
proposed a definition for the term ``air compressor'' in the test 
procedure NOPR.
---------------------------------------------------------------------------

    \22\ Docket viewable here: http://www.regulations.gov/#!docketDetail;D=EERE-2014-BT-STD-0051.
---------------------------------------------------------------------------

    DOE seeks comment on its proposal to limit the scope of energy 
conservation standard proposed in this document to only compressors 
that are designed to compress air and that have inlets open to the 
atmosphere or other source of air, through the use of the defined term, 
``air compressors.'' This is identified as Issue 3 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
3. Compression Principle
    Compressor equipment can be classified by compression principle, 
and on that basis can include dynamic compressors, rotary compressors, 
and reciprocating compressors. In the Framework Document, DOE offered 
definitions for each:
    ``Dynamic compressor'' means ``a compressor in which the gas 
pressure increase is achieved in continuous flow essentially by 
increasing its kinetic energy in the flow path of the machine due to 
acceleration to the high velocities by mechanical action of blades 
placed on a rapid rotating wheel and further transformation of the 
kinetic energy into the potential energy of the elevated pressure by 
successive deceleration of the said flow.'' The definition for dynamic 
compressor is consistent with the definition included in ISO/TR 
12942:2012 and aligns with industry standards.
    ``Rotary compressor'' means ``a positive displacement compressor in 
which gas admission and diminution of its successive volumes or its 
forced discharge are performed cyclically by rotation of one or several 
rotors in a compressor casing.'' The definition for rotary compressor 
is consistent with the definition included in ISO/TR 12942:2012 and 
aligns with industry standards.
    ``Reciprocating compressor'' means ``a positive displacement 
compressor in which gas admission and diminution of its successive 
volumes are performed

[[Page 31691]]

cyclically by straight-line alternating movements of a moving member(s) 
in a compression chamber(s).'' The definition for reciprocating 
compressor is consistent with the definition included in ISO/TR 
12942:2012 and aligns with industry standards.
    DOE's test procedure NOPR proposes those definitions for ``rotary 
compressor,'' and ``reciprocating compressor,'' and added a proposed 
definition for ``positive-displacement compressor.'' The test procedure 
NOPR did not propose a definition for ``dynamic compressor,'' as no 
test methods were proposed for equipment commonly referred to as 
``dynamic compressors.'' In the test procedure NOPR, the term 
``positive-displacement compressor'' is proposed to mean ``a compressor 
in which the admission and diminution of successive volumes of the 
gaseous medium are performed periodically by forced expansion and 
diminution of a closed space(s) in a working chamber(s) by means of 
displacement of a moving member(s) or by displacement and forced 
discharge of the gaseous medium into the high-pressure area.''
    In response to the Framework Document, several stakeholders agreed 
that DOE should cover all three compressor types. (Joint Comment, No. 
0016 at p. 2; CAGI, No. 0009 at p. 1) Scales commented that DOE should 
focus on centrifugal and rotary screw compressors above 350-hp. (W. 
Scales, No. 0020 at p. 1) DOE also received annual shipments data in 
industry stakeholder submittals. This shipments data are discussed in 
detail in section IV.G. DOE used these data to estimate the overall 
size of the air compressors market. The shipments data for 2013 
provided to DOE suggest that rotary and reciprocating compressors 
account for the majority of the air compressors market by units 
shipped. By contrast, dynamic compressors account for fewer than 300 
total units shipped, or roughly one percent of the total market.
    DOE research indicated that dynamic compressors are typically 
larger in power than positive displacement compressors, and commonly 
engineered specifically for an order. Due to specialization and size, 
little cost and performance data are publicly available, as both will 
vary from unit to unit. Further, DOE found that the standard 
international test procedure for dynamic compressors, ISO 5389, was 
considered complicated and not widely used by industry. This fact may 
also contribute to the general lack of publicly available performance 
data.
    Due to the lack of available data and relatively small market share 
of dynamic compressors, DOE did not include dynamic compressors within 
the scope of analysis of this energy conservation standards rulemaking; 
rather, DOE aligned with the scope of applicability of the test 
procedure NOPR, and analyzed and considered standards for rotary and 
reciprocating compressors. Although DOE considered reciprocating 
compressors within its scope of analysis, based on the results of DOE's 
analyses, DOE does not propose to establish standards for reciprocating 
compressors in this document. Consequently, in this NOPR, DOE proposes 
to establish energy conversation standards for only rotary compressors. 
Section V of this document provides further details on this decision. 
DOE notes that it may explore in the future whether standards for 
reciprocating or dynamic compressors are warranted.
4. Driver Type
    Compressors can be powered using several types of drivers, commonly 
including electric motors and internal combustion engines. Electric 
motor-driven equipment may use either single-phase or three-phase 
electric motors. Combustion engine-driven air compressors can be 
powered by using different kinds of fuels, commonly including diesel, 
gasoline, and natural gas. In the Framework Document, DOE considered 
establishing standards for compressors regardless of driver type and 
requested stakeholder comments.
a. Combustion Engines
    DOE received varying comments regarding the inclusion of combustion 
engine \23\ driven compressors. Jenny, the Association of Equipment 
Manufacturers (AEM), and Sullair recommended excluding engine-driven 
compressors due to the burden imposed by current emissions regulations 
and overall low energy consumption by these products. (Jenny, No. 0005 
at p. 2; AEM, No. 0011 at p. 1-2; Sullair, No. 0013 at p. 2) EEI and 
the CAIOU urged DOE to include engine-driven compressors to avoid 
creating a market trend towards engine-driven compressors. (EEI, No. 
0012 at p. 2-3; CAIOU, No. 0018 at p. 2) The Joint Commenters 
recommended that DOE examine engine-driven compressors to evaluate 
possible energy savings but noted that generally they are used in low-
duty cycle applications. (Joint Comment, No. 0016 at p. 2)
---------------------------------------------------------------------------

    \23\ For the purposes of this document, the term ``engine'' 
means ``combustion engine,'' equipment which can convert chemical 
energy into mechanical energy by combusting fuel in the presence of 
air.
---------------------------------------------------------------------------

    Engine-driven air compressors are generally portable and designed 
to be used in environments where access to electricity is limited or 
non-existent, particularly at the current or voltage levels required by 
comparable electric motor-driven compressors. Engine-driven compressors 
are also typically used as on-demand units, with a low duty cycle and 
annual energy consumption. Additionally, engine-driven compressors, by 
nature of their portability, are less able to be optimized for a 
specific set of operating conditions, which may harm efficiency 
relative to a stationary unit that is designed or selected with a 
specific load profile in mind. Consequently, engine-driven and electric 
motor-driven compressors do not serve the same applications and are not 
mutual substitutes.
    DOE is aware that engine-driven compressors are currently covered 
by the Environmental Protection Agency's Tier 4 emissions regulations 
(40 CFR 1039).\24\ DOE understands that these Tier 4 regulations have 
resulted in market-wide redesigns for the engines typically used in 
these compressors, which has required compressor manufacturers to 
redesign some of their own equipment. Based on the relatively lower 
annual energy consumption, non-overlapping applications of motor- and 
engine-driven equipment, and potentially competing priorities between 
current emissions regulations and potential energy conservation 
standards, DOE proposes to align with the scope of applicability of the 
test procedure NOPR and not include engine-driven equipment in the 
scope of this energy conservation standards this rulemaking. DOE may 
explore in the future whether standards for engine-driven units are 
warranted.
---------------------------------------------------------------------------

    \24\ See also: http://www.epa.gov/otaq/nonroad-diesel.htm.
---------------------------------------------------------------------------

b. Motor Phase Count
    In the Framework Document, DOE also considered excluding single-
phase electric motor-driven equipment. Stakeholders generally agreed 
with excluding these products. (Saylor-Beall, No. 0003 at p. 2; CAGI, 
No. 0009 at p. 3; Joint Comment, No. 0016 at p. 2). Other stakeholders 
commented that compressors under 10-hp are generally packaged with 
single-phase electric motors. (CAGI, No. 0009 at p. 3; Jenny, No. 0005 
at p. 2). Saylor-Beall commented that, particularly for compressors 
under 5-hp, three-phase shipment volumes are low. (Saylor-Beall, No. 
0003 at p. 2) The Lot 31 Study estimated that single-phase compressors 
in the EU represent less than one

[[Page 31692]]

percent of total compressor annual energy consumption. DOE research 
suggests that the U.S. compressors market exhibits similar trends.
    However, DOE is aware that some reciprocating compressors can be 
packaged with either single- or three-phase electric motors. 
Establishing energy conservation standards for only one variation of a 
shared platform (e.g., three-phase motor-driven reciprocating 
compressors) could create a market shift towards less efficient single-
phase motor-driven reciprocating compressors. Consequently, in this 
document, DOE analyzed energy conservations standards for both single-
phase and three-phase reciprocating compressors. Ultimately, based on 
the results of its analyses, DOE does not propose to establish 
standards for either single- or three-phase motor-driven reciprocating 
compressors in this document.
    For rotary compressors, DOE understands that a very small fraction 
of the market may be shipped as single-phase. DOE currently has no data 
on the performance of single-phase rotary equipment. If the applicable 
single-phase motors are less efficient than their three-phase 
counterparts, it is possible that single-phase compressor packages may 
be less efficient as well.
    In the absence of more information on the relative cost and 
efficiency of single- and three-phase compressors, DOE wishes to avoid 
the risk of a substitution incentive. As a result, DOE proposes, in 
this document, to consider standards for single-phase and three-phase 
rotary compressors in this rulemaking.
    DOE requests comment on its proposal to consider standards for both 
single- and three-phase compressor equipment. DOE also requests comment 
on any market trends that may affect the efficiency of such equipment 
in the future. DOE requests data that may aid in characterizing the 
relative cost and performance of equipment of different motor phase 
counts, so that DOE can better evaluate whether a substitution 
incentive is likely to be created. This is identified as Issue 4 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
c. Styles of Electric Motor
    DOE is aware that some small compressors intended for very low 
duty-cycles may be manufactured with motors which use sliding electric 
contacts, or ``brushes.'' Although brushes are simple to control and 
inexpensive to construct, they are rarely used in applications with 
significant operating hours, for several reasons. First, brushes 
generally impose a reduction in efficiency, relative to brushless 
technology, and are thereby suitable only for applications with low 
duty cycles. Second, brushes wear and require replacement at regular 
intervals, which may pose risk of inducing costly downtime in an 
industrial process. Third, brushes may create electrical arcing, 
rendering them unsuitable for certain industrial environments where 
combustible or explosive gases or dust may exist. Finally, brushes may 
create greater acoustic noise than brushless technology, which can be 
viewed as a form of utility to the end user.
    All of these factors limit the applications for which any 
compressors distributed in commerce with brushed motors are suitable. 
However, DOE recognizes the applications for which brushed motors are 
appropriate as a unique market segment serving specific applications 
where, in particular, operating life and durability are not important 
criteria.
    DOE also notes that compressors sold with brushed motors play a 
niche role in the market and, as a result, DOE does is electing to 
focus on the dominant brushless motor technology in developing the 
energy conservation standards proposed herein. Consequently, DOE 
proposes to align with the scope of applicability of the test procedure 
NOPR, and limit the scope of energy conservation standards to only 
those compressors that are driven by brushless motors.\25\ DOE may 
consider energy conservation standards for compressors sold with 
brushed electric motors as part of a separate, future, rulemaking, if 
it determines such actions are warranted.
---------------------------------------------------------------------------

    \25\ In the test procedure NOPR, DOE proposed to define 
``brushless electric motor'' as a machine that coverts electrical 
power into rotational mechanical power without use of sliding 
electrical contacts.'' DOE considers ``brushless'' motors to 
include, but not be limited to, what are commonly known as 
``induction,'' ``brushless DC,'' ``permanent magnet,'' 
``electrically commutated,'' and ``reluctance'' motors. The term 
``brushless'' motors would not include what are commonly known as 
``brushed DC'' and ``universal'' motors.
---------------------------------------------------------------------------

5. Equipment Capacity
    Compressors are sold in a very wide range of capacities. Compressor 
capacity refers to the overall rate at which a compressor can perform 
work. Although the ultimate end-user requirement is a specific output 
volume flow rate of air at a certain pressure, industry typically 
describes compressor capacity in terms of the ``nominal'' horsepower of 
the motor. As a result, in the test procedure NOPR, DOE proposed to 
consider equipment capacity in terms of the ``nominal'' horsepower of 
the motor with which the compressor is distributed in commerce.
    However, DOE recognizes that although the term nominal motor 
horsepower is commonly used within the compressor industry, it is not 
explicitly defined in ISO 1217:2009. To alleviate any ambiguity 
associated with these terms, DOE proposed in the test procedure NOPR to 
define the term ``compressor motor nominal horsepower'' to mean the 
motor horsepower of the electric motor, as determined in accordance 
with the applicable procedures in subpart B and subpart X of 10 CFR 
431, with which the rated compressor is distributed in commerce.
    In the Framework Document, DOE discussed limiting the scope of 
applicability based on equipment capacity as measured in horsepower 
(hp) to units with capacities of between 1 to 500 hp in order to align 
the scope of compressor standards with the scope of DOE's electric 
motors standards. See 10 CFR 431.25. Commenters generally recommended 
expanding the scope to cover compressors larger than 500 hp, in order 
to capture the maximum possible energy savings. (EEI, No. 0012 at p. 3; 
Joint Comment, No. 0016 at p. 2; Natural Resource Defense Council 
(NRDC), No. 0019 at p. 1; CA IOUs, No. 0018 at p. 2) Jenny and the 
Joint Commenters also recommended that the lower hp limit should be 
increased due to the low annual energy usage of compressors under 10 
hp. (Jenny, No. 0005 at p. 3; Joint Comment, No. 0016 at p. 2)
    DOE considered the comments of interested parties regarding the 
range of equipment capacities. Shipment data, broken down by rated 
capacity and compression principle (i.e., rotary, reciprocating, and 
dynamic) indicate that units above 400 hp represent less than 1 percent 
of the rotary market and virtually none of the reciprocating market. 
Although it is possible to build positive displacement compressors 
above 500 hp, shipments are very low and the equipment is typically 
custom-ordered. DOE notes that, above 500 hp, dynamic compressors are 
the dominant choice for industrial compressed air service. Furthermore, 
as discussed in section III.B.3, little performance data is available 
on units with capacities greater than 500 hp. Due to this lack of data 
and the small market share for positive displacement compressors with 
capacities greater than 500 hp, DOE proposes to align with the scope of 
applicability of the test procedure NOPR and limit the scope of this 
energy conservation rulemaking to compressors with a compressor motor 
nominal horsepower of greater than or equal to 1 and less than or equal 
to 500 hp. Based on available shipment data,

[[Page 31693]]

DOE's proposal is expected to cover nearly the entirety of the rotary 
and reciprocating compressor market.
    DOE requests comment on the proposal to include only compressors 
with a compressor motor nominal horsepower of greater than or equal to 
1 and less than or equal to 500 within the scope of this energy 
conservation standard. This is identified as Issue 5 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
6. Full-Load Operating Pressure
    Because different compressed air applications require air to be 
delivered at specific pressure ranges, output pressure is a critical 
characteristic in equipment selection and compressed air system design. 
DOE notes that there may be several ways to characterize output 
pressure. In the test procedure NOPR, DOE proposed to use ``full-load 
operating pressure'' as the most relevant metric, where ``full-load 
operating pressure'' is a declared pressure, which must be greater than 
or equal to 90 percent and less than or equal to 100 percent of the 
maximum full-flow operating pressure.
    The test procedure NOPR also proposed a definition and test method 
for finding ``maximum full-flow operating pressure,'' which is a term 
needed to characterize ``full-load operating pressure.'' DOE proposed 
that ``maximum full-flow operating pressure'' means the maximum 
discharge pressure at which the compressor is capable of operating.
    Industry convention holds that when output pressure is cited 
absolutely or in ``gauge'' (i.e., not as a ratio), the input pressure 
is assumed to be that at which a compressor would ingest ambient air at 
sea level.\26\ ``Gauge'' pressure, whether given in U.S. or metric 
units, normally means ``the amount above intake pressure.'' A 
compressor described as delivering 100 psig,\27\ then, can be assumed 
to produce 114.7 psi in absolute terms when operated in a standard 
atmosphere. Gauge pressure is commonly used because for most purposes, 
the pressure differential is more critical to the application than the 
absolute measurement. Another commonly-used pressure descriptor is 
``pressure ratio.'' Simply, it is the ratio of the absolute output 
(discharge) and absolute input (suction) pressures. For compressors 
operating in the same conditions, this value expresses identical 
information.
---------------------------------------------------------------------------

    \26\ Commonly approximated in pounds per square inch (psi) as 
14.7.
    \27\ i.e., psi in gauge terms.
---------------------------------------------------------------------------

    In response to discussions of operating pressure in the Framework 
Document, CAGI provided the following detailed breakdown of output 
pressures in the rotary compressors market. (CAGI, No. 0030 at p. 4):
     Approximately 4.4 to 30 pounds per square inch gauge 
(psig) (pressure ratio greater than 1.3 and less than or equal to 3.0): 
The compressors industry generally refers to these products as 
blowers--a term DOE is considering defining as part of its fans and 
blowers rulemaking (Docket No. EERE-2013-BT-STD-0006). The majority of 
these units are typically distributed in commerce as bare compressors 
and do not include a driver, mechanical equipment, or controls.
     31 to 79 psig (pressure ratio greater than 3.1 and less 
than or equal to 6.4): There are relatively few compressed air 
applications in this pressure range, contributing to both low product 
shipment volume and low annual energy consumption.
     80 to 139 psig (pressure ratio greater than 6.4 and less 
than or equal to 10.5): This range represents the majority of general 
compressed air applications, shipments, and annual energy use.
     140 to 215 psig (pressure ratio greater than 10.5 and less 
than or equal to 15.6): This range represents certain specialized 
applications, relatively lower sales volumes and annual energy 
consumption when compared to the 80 to 139 psig rotary compressor 
segment.
     Greater than 215 psig (pressure ratio greater than 15.6): 
This range represents even more specialized applications, which require 
highly engineered rotary compressors that vary based on each 
application.
    DOE did not receive any additional information that separated the 
market of reciprocating compressors by pressure. According to the Lot 
31 preparatory study final report,\28\ single- and two-stage 
reciprocating compressors typically operate from 0.8 to 12 bar (12 to 
174 psig; pressure ratio 1.8 to 13), and multi-stage reciprocating 
compressors typically operate from 12 to 700 bar (174 to 10,152 psig; 
pressure ratio 13 to 701). However, based on market research and 
discussions with various compressor manufacturers, DOE believes that 
pressure ranges for reciprocating compressors are similar to rotary 
compressors.
---------------------------------------------------------------------------

    \28\ The European Union regulatory body is also exploring 
standards for compressors, which is part of a product group which it 
refers to as ``Lot 31.'' For copies of the EU Lot 31 Final Report of 
a study on Compressors please go to: www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031. For copies of the EU 
Lot 31 draft regulation: www.regulations.gov/contentStreamer?documentId=EERE-2013-BT-STD-0040-0031&disposition=attachment&contentType=pdf.
---------------------------------------------------------------------------

    In the test procedure NOPR, DOE proposed defining a ``compressor'' 
as equipment with a pressure ratio exceeding 1.3. Furthermore, in the 
test procedure NOPR, DOE proposed that the test procedure only be 
applicable to compressors with full-load operating pressures greater 
than or equal to 31 psig and less than or equal to 225 psig. In this 
document, DOE proposes to align with the scope of applicability of the 
test procedure NOPR, and limit the scope of energy conversation 
standards to compressors with full-load operating pressures of between 
31 and 225 psig (pressure ratios greater than ~3.1 and less than or 
equal to 16.3). DOE notes that while some commenters suggested an upper 
limit of 215 psig, full-load operating pressure values may be generated 
differently by each manufacturer and it is not clear that they are 
completely comparable between manufacturers.\29\ For example, a product 
listed at 215 psig from one manufacturer may compete with a product 
listed at 217 psig from another, which may compete with one listed at 
212 psig from a third. Although DOE's proposed test procedure seeks to 
eliminate this issue, DOE must still account for the current lack of 
consistent pressure rating methodology in the compressor industry. As a 
result, DOE proposes to adopt an upper limit of 225 psig to include the 
majority of non-special purpose equipment DOE could identify on the 
market. Compressor equipment with full-load operating pressures below 
31 psig and above 225 psig generally represent a different equipment 
type and serve applications that do not often overlap with the 31-225 
psig compressor market, and do not represent a significant volume of 
sales.
---------------------------------------------------------------------------

    \29\ DOE notes that there is no universally accepted procedure 
for establishing full-load operating pressure and, thus, no 
assurances that values are comparable.
---------------------------------------------------------------------------

C. Test Procedure

    DOE is currently conducting a rulemaking to establish a uniform 
test procedure for determining the energy efficiency of compressors. 
DOE proposed a test method for calculating the package isentropic 
efficiency of compressors, by measuring the delivered power (in the 
form of compressed air) and the electric input power to the motor or 
controls. DOE proposed that the methods be based on International 
Organization for Standardization (ISO) Standard 1217:2009, 
``Displacement

[[Page 31694]]

compressors--Acceptance tests,'' (hereinafter referred to as ``ISO 
1217:2009'') with modifications. In response to the Framework, Jenny 
recommended that compressors not be separated based on rated 
horsepower, as they do not always run at full horsepower. (Jenny, No. 
0005 at p. 2) The Joint Commenters recommended that a metric using both 
package specific power \30\ and package isentropic efficiency be used 
to provide useful information for consumers. (Joint Comment, No. 0016 
at p. 3)
---------------------------------------------------------------------------

    \30\ In the test procedure NOPR, DOE proposes to define the term 
``package specific power'' as ``the compressor power input at a 
given load point, divided by the actual volume flow rate at the same 
load point, as determined in accordance with the test procedures 
prescribed in Sec.  431.344.''
---------------------------------------------------------------------------

    In the test procedure NOPR, DOE proposed that the energy 
conservation standards for compressors be expressed in terms of fixed-
speed package isentropic efficiency ([eta]isen,FS) for 
fixed-speed compressors and variable-speed package isentropic 
efficiency ([eta]isen,VS) for variable-speed compressors. 
The terms [eta]isen,FS and [eta]isen,VS describe 
the power required for an ideal isentropic compression process, divided 
by the actual input power of the packaged compressor. The 
[eta]isen,FS considers this ratio at full-load operating 
pressure and [eta]isen,VS considers this ratio at a 
weighted-average of full-load and part-load operating pressures. The 
metrics are defined in Equations 1 and 2 as follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.000

Where:

 [eta]isen,FS is the package isentropic efficiency at full-
load operating pressure;
 Pisen,FL is the isentropic power required for compression 
at full-load operating pressure, as determined in accordance with 
the DOE test procedure. This metric applies only to fixed-speed 
compressors, and;
 Preal,FL is the packaged compressor power input at full-
load operating pressure, as tested in accordance with the DOE test 
procedure. This metric applies only to fixed-speed compressors.
[GRAPHIC] [TIFF OMITTED] TP19MY16.001

Where:

 [eta]isen,VS is the package isentropic efficiency as 
applied to variable-speed compressors;
 Pisen,i is the isentropic power required for compression at 
rating point i, as determined in accordance with the DOE test 
procedure. This metric applies only to variable-speed compressors;
 Preal,i is the packaged compressor power input at rating 
point i, as tested in accordance with the DOE test procedure. This 
metric applies only to variable-speed compressors;
 [omega]i is the weighting at each rating point, as 
described in the DOE test procedure; and
 i are the load points corresponding to 40-, 470-, and 100-
percent of the full-load actual volume flow rate.

    The measured value of package isentropic efficiency would then be 
compared to DOE's proposed energy conservation standard. A value 
greater than the proposed standard indicates that the compressor 
exceeds the minimum efficiency standard, while a value lower than the 
proposed standard indicates that the compressor fails to meet the 
proposed standard.

D. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially-available products or in working prototypes to be 
technologically feasible. See, e.g., 10 CFR part 430, subpart C, 
appendix A, section 4(a)(4)(i).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on product utility or availability; and (3) adverse impacts on 
health or safety. See, e.g., 10 CFR part 430, subpart C, appendix A, 
section 4(a)(4)(ii)-(iv). Additionally, DOE generally does not include 
in its analysis any proprietary technology that is a unique pathway to 
achieving a certain efficiency level. Section IV.B of this document 
discusses the results of the screening analysis for compressors, 
particularly with respect to the designs DOE considered, those it 
screened out, and those serving as the basis for the proposed standards 
being considered. For further details on the screening analysis for 
this rulemaking, see chapter 4 of the NOPR technical support document 
(TSD).
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt a new standard for a type or class of 
covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1) and 6316(a)) 
Accordingly, in the engineering analysis, DOE determined the maximum 
technologically feasible (``max-tech'') improvements in energy 
efficiency for compressors, using the design parameters for the most 
efficient products available on the market or in working prototypes. 
The max-tech levels that DOE determined for this rulemaking are 
described in section IV.C of this proposed rule and in chapter 5 of the 
NOPR TSD.

E. Compliance Date

    DOE estimates that any final rule would publish in late 2016. 
Therefore, DOE has used an estimated compliance date for this 
rulemaking in late 2021.\31\
---------------------------------------------------------------------------

    \31\ DOE's analysis begins in the first full year of compliance 
with new standards, 2022.

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

[[Page 31695]]

F. Energy Savings

1. Determination of Savings
    For each trial standard level (TSL), DOE projected energy savings 
from applying the TSL to compressors purchased in the 30-year period 
that begins in the first full-year of compliance with the proposed 
standards (2022-2051).\32\ The savings are measured over the entire 
lifetime of compressors purchased during this 30-year period. DOE 
quantified the energy savings attributable to each TSL as the 
difference in energy consumption between each standards case and the 
no-new-standards case. The no-new-standards case represents a 
projection of energy consumption that reflects how the market for a 
product would likely evolve in the absence of new energy conservation 
standards.
---------------------------------------------------------------------------

    \32\ Each TSL is comprised of specific efficiency levels for 
each product class. The TSLs considered for this NOPR are described 
in section V.A. DOE conducted a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate national energy savings (NES) from potential for compressors. 
The NIA spreadsheet model (described in section IV.H of this document) 
calculates energy savings in terms of site energy, which is the energy 
directly consumed by products at the locations where they are used. 
Based on the site energy, DOE calculates NES)in terms of primary energy 
savings at the site or at power plants, and also in terms of full-fuel-
cycle (FFC) energy savings. The FFC metric includes the energy consumed 
in extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and thus presents a more complete 
picture of the impacts of energy conservation standards.\33\ DOE's 
approach is based on the calculation of an FFC multiplier for each of 
the energy types used by covered products or equipment. For more 
information on FFC energy savings, see section IV.H.1 of this document.
---------------------------------------------------------------------------

    \33\ The FFC metric is discussed in DOE's statement of policy 
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as 
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
    To adopt any new or amended standards for a covered product, DOE 
must determine that such action would result in ``significant'' energy 
savings. (42 U.S.C. 6295(o)(3)(B) 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), opined 
that Congress intended ``significant'' energy savings in the context of 
EPCA to be savings that were not ``genuinely trivial.'' The energy 
savings for all of the TSLs considered in this rulemaking, including 
the proposed standards (presented in section V), are nontrivial, and, 
therefore, DOE considers them ``significant'' within the meaning of 
section 325 of EPCA.

G. Economic Justification

1. Specific Criteria
    As noted in this preamble, EPCA provides seven factors to be 
evaluated in determining whether a potential energy conservation 
standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-
(VII) 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
    DOE considers the economic impacts of its potential standards on 
both manufacturers and consumers. See 42 U.S.C. 6295(o)(2)(B)(i)(I) and 
6316(a). In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 
discussed in section IV.J. DOE first uses an annual cash-flow approach 
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation--and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include: (1) 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 consumer costs and benefits expected 
to result from particular standards. DOE also evaluates the impacts of 
potential standards on identifiable subgroups of consumers that may be 
affected disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    DOE considers the savings in operating costs throughout the 
estimated average life of the covered equipment in the type (or class) 
compared to any increase in the price, initial charges, or maintenance 
expenses of that equipment 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 expense (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 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 
amended standards. The LCC savings for the considered efficiency levels 
are calculated relative to the case that reflects projected market 
trends in the absence of amended 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

[[Page 31696]]

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 III.D, DOE uses the NIA spreadsheet 
models to project national energy savings.
d. Lessening of Utility or Performance of Equipment
    In establishing equipment classes and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen equipment utility or performance. (42 
U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316) Based on data available 
to DOE, the standards proposed in this document would not reduce the 
utility or performance of the products under consideration in this 
rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, which is 
likely to result from a proposed 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 proposed standard and to transmit such determination 
to the Secretary within 60 days of the publication of a proposed rule, 
together with an analysis of the nature and extent of the impact. (42 
U.S.C. 6295(o)(2)(B)(ii) and 6316(a)) DOE will transmit a copy of this 
proposed rule to the Attorney General with a request that the 
Department of Justice (DOJ) provide its determination on this issue. 
DOE will include the Attorney General's response in the docket for this 
rulemaking and will respond to the Attorney General's determination in 
the final rule.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a)) The energy 
savings from the proposed standards are likely to provide improvements 
to the security and reliability of the nation's energy system. 
Reductions in the demand for electricity also may result in reduced 
costs for maintaining the reliability of the nation's electricity 
system. DOE conducts a utility impact analysis to estimate how 
standards may affect the nation's needed power generation capacity, as 
discussed in section IV.M.
    The proposed standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with energy production and use. DOE 
conducts an emissions analysis to estimate how potential standards may 
affect these emissions, as discussed in section IV.K; the emissions 
impacts are reported in section V.L 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
    In determining whether an energy conservation standard is 
economically justified, DOE may 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 there are other factors relevant to evaluating 
whether the proposed standards are economically justified, DOE may 
consider other factors that fall outside of the categories discussed 
above.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a), EPCA 
creates a rebuttable presumption that an energy conservation standard 
is economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. DOE's LCC and PBP 
analyses generate values used to calculate the effects that proposed 
energy conservation standards would have on the payback period for 
consumers. These analyses include, but are not limited to, the 3-year 
payback period contemplated under the rebuttable-presumption test. In 
addition, DOE routinely conducts an economic analysis that considers 
the full range of impacts to consumers, manufacturers, the nation, and 
the environment. See 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 calculation 
is discussed in section V.B.1.c of this proposed rule.

H. Compressor Industry Recommendation

    DOE received a comment on proposed standards and test methods from 
CAGI, the primary compressor trade association. That recommendation is 
summarized below.\34\ DOE responds to the points made within the 
comment in the appropriate sections of this document.
---------------------------------------------------------------------------

    \34\ Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0030.
---------------------------------------------------------------------------

1. Summary
    CAGI recommended making mandatory the use of standardized test 
methods and reporting formats that are presently voluntary. With 
respect to scope, CAGI suggested that DOE address lubricated, rotary 
compressors operating from 80-139 psig and with ``flows'' from 35 to 
2000 cfm. (CAGI, No. 0030 at p. 1) The benefits, according to CAGI, 
include energy savings, regulatory simplicity, and granting industry 
the ability to continue energy efficiency efforts undisrupted. Id.
2. Specific Provisions
    CAGI makes the following comments and recommendations in its 
submission:
     With respect to European efforts, that the Lot 31 Study 
made use of CAGI-published data, and that those efforts can inform the 
work being done by DOE. (CAGI, No. 0030 at p. 3)
     The biggest part of the compressed air industry serves 
``general industrial air'' customers which primarily use rotary 
equipment, rated from 80-139 psig and 35-2000 cfm, and driven by 
electric motors rated from 10 to 500-hp. (CAGI, No. 0030 at p. 3)
     There is little risk of substitution for compressors if 
DOE opts to leave certain market segments unregulated. Customer needs 
generally define which equipment is purchased. (CAGI, No. 0030 at p. 4)
     Lubricant-free \35\ equipment is used in more specialized 
applications and carries significantly smaller market size. As a 
result, regulation carries smaller potential to save energy and greater 
risk of negative impact to manufacturers and consumers. (CAGI, No. 0030 
at p. 5) DOE, like EU Lot 31, should not include lubricant-free 
equipment.
---------------------------------------------------------------------------

    \35\ Although industry frequently uses the term ``oil-free'' to 
describe equipment with substances injected during the compression 
process, not all of the substances used are oils, in the chemical 
sense, and so DOE will use the term ``lubricant-free'' to refer to 
such equipment.
---------------------------------------------------------------------------

     Reciprocating compressors should not be included in the 
rulemaking. Low duty cycle and small average capacity means that energy 
savings potential is

[[Page 31697]]

significantly lower than for other compressor types. The market is 
highly fragmented, with many assemblers purchasing parts from a variety 
of suppliers. Finally, low production volumes could generate large 
negative impacts to manufacturers forced to redesign in order to comply 
with a standard. (CAGI, No. 0030 at p. 6)
     CAGI supplies proposed definitions for ``basic package 
compressor,'' ``standard air compressor,'' and ``rotary standard air 
compressor.'' (CAGI, No. 0030 at p. 8)
     With respect to measurement, CAGI proposes use of ISO 
1217:2009 for both fixed- (Annex C) and variable-speed (Annex E) 
equipment. For variable-speed equipment, CAGI proposes a weighted 
average performance across certain load points, also proposed for use 
by EU Lot 31. (CAGI, No. 0030 at p. 8-9)
     In CAGI's view, standardizing measurement and data 
publication will be sufficient to drive continued energy conservation 
in compressors. CAGI asserts that the market already self-establishes a 
de facto minimum performance standard, and attempts by DOE to introduce 
one may be counterproductive to both energy savings and manufacturer 
welfare. (CAGI, No. 0030 at p. 9)

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed in this 
rulemaking for compressors. Separate subsections address each component 
of DOE's analyses.
    DOE used several analytical tools to estimate the impact of the 
standards proposed in this document. The first tool is a spreadsheet 
that calculates the LCC savings and PBP of potential amended or new 
energy conservation standards. The national impacts analysis uses a 
second spreadsheet set that provides shipments forecasts and calculates 
national energy savings and net present value of total end user costs 
and savings expected to result from potential energy conservation 
standards. DOE uses the third spreadsheet tool, the Government 
Regulatory Impact Model (GRIM), to assess manufacturer impacts of 
potential standards. These spreadsheet tools are available at http://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/78. Additionally, DOE used output from the latest version of 
EIA's Annual Energy Outlook (AEO), a widely known energy forecast for 
the United States, for the emissions and utility impact analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
concerned, including the purpose of the equipment, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the equipment. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly-available 
information (e.g., manufacturer specification sheets, and 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) A determination 
of the scope of the rulemaking and equipment classes; (2) manufacturers 
and industry structure; (3) existing efficiency programs; (4) shipments 
information; (5) market and industry trends; and (6) technologies or 
design options that could improve the energy efficiency of compressors. 
The key findings of DOE's market assessment are summarized below. See 
chapter 3 of the NOPR TSD for further discussion of the market and 
technology assessment.
1. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
divides covered products into equipment classes by the type of energy 
used or by capacity or other performance-related features that justify 
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q) and 6316(a)) DOE 
proposes dividing compressors based on the following factors, which are 
discussed in sections IV.A.1.a through IV.A.1.e:
     Compression principle,
     Lubricant presence,
     Cooling method,
     Motor speed type, and
     Motor phase count.
    In the Framework Document, DOE requested stakeholder comment 
regarding whether and how compressors should be divided into separate 
classes. Stakeholder comments regarding equipment classes, the specific 
separation of equipment classes based on the listed factors, and the 
final list of proposed equipment classes are discussed further in the 
following sections. Generally, the notion of establishing separate 
equipment classes was supported by commenters.
a. Compression Principle
    In response to the Framework Document, Saylor-Beall and Jenny 
compressors commented that rotary compressors are generally high-duty 
cycle equipment, while reciprocating compressors are generally low-duty 
cycle equipment. (Saylor-Beall, No. 0003 at p. 3; Jenny, No. 0005 at p. 
4) As noted in section III.A, DOE considered standards for both 
reciprocating and rotary compressors as part of this rulemaking. DOE 
also proposes to divide these two compressor types into separate 
equipment classes. Rotary and reciprocating compressors have 
significantly different operating characteristics; as a result these 
equipment types are used in different applications and have different 
levels of attainable efficiency. Both rotary and reciprocating are 
considered to be positive displacement compressors, which act by 
compressing successive trapped volumes of air.
    Reciprocating compressors compress air using the repeated linear 
motion of a moving member (e.g., a piston) within a sealed compression 
chamber. Reciprocating compressors do not require a warm up period and 
can be operated using an on/off control scheme, making them best suited 
for intermittent and low duty cycle applications. This is because low 
cycles require frequent starting and stopping. Equipment which required 
warming up to operate properly would operate inefficiently, wear 
prematurely, or both. Reciprocating compressors use actuated valves to 
seal the compression chamber, which holds air leakage (a form of energy 
loss) to modest levels even when operating cold. Rotary compressors, by 
contrast, do not use valves but rely on carefully designed and 
manufactured rotor clearances, which are efficient after the rotor has 
heated and expanded to design specifications, in order to limit air 
leakage. Customers with low duty cycles may find additional utility, 
therefore, in reciprocating compressors. By contrast, reciprocating 
compressors, by nature of their reciprocating motion, produce more 
vibration and, therefore, may wear more quickly and, therefore, may 
offer reduced utility to customers with higher duty cycles and high 
cost of downtime.
    Rotary compressors compress air progressively as it moves from the 
inlet point to the discharge point using the cyclical motion of one or 
several rotors. Rotary compressors may require a warm-up period to 
operate properly, and are therefore better suited for high duty cycle 
applications, in which equipment is less frequently cycled on

[[Page 31698]]

and off and, therefore, in which design operating temperatures may be 
maintained. Rotary compressors typically cannot be operated using an 
on/off control scheme; rather, they may be controlled by other methods 
such as load/unload, inlet flow modulation, and variable displacement 
drives. As mentioned in the previous paragraph, rotary compressors rely 
on reaching a certain operating temperature, or ``warming up,'' to 
allow mechanical parts to expand to reach the proper design clearances. 
Operating a rotary compressor in a low-duty, on/off manner, may cause 
the compressor to operate inefficiently, wear prematurely, or both. 
These control methods are discussed further in chapter 3 of the NOPR 
TSD.
    Although reciprocating compressors typically have lower isentropic 
efficiencies than rotary compressors, reciprocating compressors excel 
in low duty cycle or intermittent applications and may consume less 
overall energy than a rotary compressor when deployed in such settings. 
Alternatively, to provide air for intermittent loads, a rotary 
compressor would be required to remain running in a modulated or 
unloaded condition, even at times of low or zero load. This is inherent 
in the scheme; a technology which cannot start and stop (either 
literally or because doing so would cause adverse consequences such as 
premature wear) must employ other capacity-reducing measures such as 
modulation or unloading to match supply to demand. Consequently, DOE 
concludes that dividing rotary and reciprocating compressors into 
separate equipment classes on the basis of suitability for different 
duty cycles is appropriate.
    DOE requests comment on its proposal to establish separate 
equipment classes for rotary and reciprocating equipment, and on 
whether and why utility or performance differences exist between the 
two types of equipment. This is identified as Issue 6 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
b. Lubricant Presence
    In response to the Framework Document, Atlas Copco commented that 
compressors can be divided into two separate groups, lubricated and 
lubricant-free.\36\ (Atlas-Copco, No. 0008 at p. 3) DOE proposes to 
divide lubricated and lubricant-free into separate equipment classes. 
Compressors are manufactured in both lubricated and lubricant-free 
configurations. For the purposes of this rulemaking, DOE is proposing 
to define these lubrication types as follows:
---------------------------------------------------------------------------

    \36\ Although industry frequently uses the term ``oil-free'' to 
describe equipment with substances injected during the compression 
process, not all of the substances used are oils, in the chemical 
sense, and so DOE will use the term ``lubricant-free'' to refer to 
such equipment.
---------------------------------------------------------------------------

    ``Lubricated compressor'' means a compressor that introduces an 
auxiliary substance into the compression chamber during compression.
    ``Lubricant-free compressor'' means a compressor that does not 
introduce any auxiliary substance into the compression chamber at any 
time during operation.
    For the purposes of this rulemaking, DOE proposes to define 
``auxiliary substance'' as follows:
    ``Auxiliary substance'' means any substance deliberately introduced 
into a compression process to aid in compression of a gas by any of the 
following: Lubricating, sealing mechanical clearances, or absorbing 
heat.
    DOE notes that lubricant-free compressors may still use lubricant 
within other portions of the compressor, as long as the lubricant does 
not enter the compression chamber at any point during operation. DOE 
also notes that, under the proposed definitions, compressors would be 
considered ``lubricated'' if an auxiliary substance of any sort were 
introduced into the compression chamber. This would include oil, and 
water, which is not typically described as a lubricant within the 
compressor industry.
    DOE's analysis and research found that lubricated compressors are 
generally more efficient than lubricant-free compressors. In lubricated 
compressors, the lubricant is injected into the compression chamber to 
serve two primary purposes:
    1. Sealing the compression chamber mechanical clearances and reduce 
air leakage by using the surface tension of the liquid to form a 
barrier to air escape, and
    2. Cooling the compressed air during compression, increasing 
efficiency by bringing the compression process closer to a 
thermodynamic ideal.
    Due to their inherently lower efficiencies and comparatively higher 
costs, lubricant-free compressors do not compete directly with 
lubricated compressors for general-purpose compressed air applications. 
However, certain applications with specific air purity requirements 
cannot use lubricated compressors due to the presence of residual 
lubricant that cannot be effectively removed from the output air using 
filtration. Examples of these applications include food processing 
equipment, clean-room manufacturing, and air for medical uses. 
Lubricant-free compressors are necessary to meet the air purity 
requirements of these applications. By contrast, a lubricant-free 
compressor could likely be used with no loss of utility in applications 
traditionally served by lubricated compressors. Because of their higher 
cost, however, they are typically deployed only when called for by 
customer utility requirements.
    Lacking lubricant to aid in sealing clearances, lubricant-free 
compressors are usually manufactured with smaller clearances. Although 
this practice adds cost, it reduces some of the air leakage that result 
from a lack of lubrication. However, reducing clearances too far may 
result in increased friction and maintenance requirements. This limits 
how tight the clearances of lubricant-free compressors can be. As such, 
lubricant-free compressors still allow more leakage relative to 
lubricated compressors. This leakage reduces efficiency, because as the 
air is lost, so is the energy that was used to treat it. Further, 
lubricant-free compressors may require larger after-coolers than 
lubricated compressors. An after-cooler is used to cool the compressed 
air after compression and prior to discharge. The after-cooler causes 
package pressure losses and decreases in efficiency.
    DOE notes that an ISO standard, 8573-1:2010,\37\ exists and is used 
by industry to measure and describe the purity of air. Air is described 
as being ``class zero'' if it is determined to meet the most stringent 
air purity levels recognized by this standard. DOE is aware that some 
compressors that meet the proposed definition of lubricated in this 
document may also be able to meet the class zero standard of ISO 8573-
1:2010. For example, the compressor may include an advanced lubricant 
filtration system to bring lubricant concentration below a certain 
threshold. Alternatively, the compressor may inject only water into the 
chamber, which may be removed with ordinary cooling and drying 
equipment.
---------------------------------------------------------------------------

    \37\ See: http://www.iso.org/iso/catalogue_detail.htm?csnumber=46418
---------------------------------------------------------------------------

    DOE requests comment on separating equipment classes by lubricant 
presence, and specifically on whether ISO 8573-1:2010 is suitable for 
characterizing compressors on that basis. DOE also requests comments on 
the proposed definitions for lubricated compressor, lubricant-free 
compressors, and auxiliary substance. This is identified as Issue 7 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''

[[Page 31699]]

c. Cooling Method
    DOE proposes to divide air-cooled and water-cooled rotary 
compressors into separate equipment classes. Due to considerable heat 
created during compression, compressors are normally packaged with 
cooling systems for both the air itself, and, if applicable, the 
lubricant. The cooling system may utilize either air or water to remove 
heat from the system. For the purposes of this rulemaking, DOE proposes 
to define the two cooling methods as follows:
    ``Air-cooled compressor'' means a compressor that utilizes air to 
cool both the compressed air and, if present, any auxiliary substance 
used to facilitate compression.
    ``Water-cooled compressor'' means a compressor that utilizes 
chilled water provided by an external system to cool both the 
compressed air and, if present, any auxiliary substance used to 
facilitate compression.
    DOE's research and analysis of industry data indicates that water-
cooled compressors are typically more efficient than air-cooled 
compressors, as measured by ISO 1217:2009.
    Air-cooled compressors circulate ambient air through the heat 
exchangers to cool both the compressed air and lubricant. Air-cooled 
compressors usually require fans to circulate air through the heat 
exchangers; these fans increase the total package energy consumption, 
thus decreasing the total package efficiency.
    Water-cooled compressors circulate chilled water from an external 
water supply through heat exchangers to cool both the compressed air 
and lubricant. The chilled water heat exchanger does not cause any 
additional energy consumption within the compressor package, as the 
cooling water is chilled and pumped from a remote location. However, 
water-cooled compressors can only be used in locations where chilled 
water is available, thus limiting the utility and applicability of 
water-cooled compressors. Conversely, air-cooled compressors require 
only air for cooling and can be used in locations where chilled water 
may not be available. Therefore, air-cooled compressors present a 
utility advantage to customers without access to a cooling water 
supply.
    DOE notes that efficiency, as measured by the proposed test 
procedure NOPR, would reflect slightly different concepts for air- and 
water-cooled compressors. In both cases, a cooling medium is being 
actively circulated to remove heat from the unit and energy is being 
consumed to circulate the medium. But only in the case of air-cooled 
units is that energy consumption reflected in the efficiency metric. 
The consumption occurs remotely for water-cooled units. Without further 
analysis, it is difficult to assess which consumption may be greater 
overall. But this difference is what is measured by efficiency, in 
addition to the difference in end user utility already discussed, and 
offers a second justification for establishment of separate equipment 
classes.
    DOE is not aware of any water-cooled reciprocating compressors 
currently available in the U.S. market. However, if such equipment does 
exist, or enters the market in the future, the data presented earlier 
in this section suggest that water-cooled compressors may be more 
efficient than similar air-cooled units. As a result, DOE proposes to 
consider both air- and water-cooled reciprocating compressors in a 
single equipment class and to base any energy conservation standards 
for both only on available air-cooled data. Based on comparison of air- 
and water-cooled rotary compressors, DOE concludes that it is 
technologically feasible for any water-cooled reciprocating compressor 
introduced to the market to meet an energy conservation standard set 
based on the current air-cooled reciprocating compressors market.
    DOE requests comment on its proposal to establish separate 
equipment classes for air- and water-cooled equipment. DOE also 
requests comments on the proposed definitions for air- and water-cooled 
compressor. This is identified as Issue 8 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
d. Motor Speed
    DOE's research indicates that electric motor-driven compressors can 
be further separated by the style of electric driver used in the 
package. Specifically, DOE found that compressors are sold with either 
a variable-speed driver, which can operate across a continuous range of 
driver speeds, or a fixed-speed driver, which can operate at only a 
single fixed-speed. In the test procedure NOPR, DOE proposed 
definitions for ``fixed-speed compressor'' and ``variable-speed 
compressor.''
    The term ``fixed-speed compressor'' means an air compressor that is 
not capable of adjusting the speed of the driver continuously over the 
driver operating speed range in response to incremental changes in the 
required compressor flow rate.
    The term ``variable-speed compressor'' means an air compressor that 
is capable of adjusting the speed of the driver continuously over the 
driver operating speed range in response to incremental changes in the 
required compressor actual volume flow rate.
    DOE found that variable-speed compressors are typically less 
efficient at full load than comparable fixed-speed compressors, 
partially due to efficiency losses within the variable-speed drive. 
Variable-speed compressors are typically intended for use in systems 
where air demand is expected to vary over the course of operation; this 
takes advantage of the unit's ability to operate more efficiently at 
part load. For this reason, variable-speed compressors are sometimes 
optimized for efficiency at part-load; this will typically result in 
full-load efficiencies lower than those of comparable fixed-speed 
units. Additionally, they may function as ``trim'' compressors in 
multi-unit installations. Trim compressors are normally the first ones 
to adjust their capacity output when overall system air demand changes. 
If the overall system air demand changes outside what the trim 
compressor is able to accommodate, additional compressors may be turned 
on and off according to which configuration would produce most 
efficient operation. By contrast, a ``base load'' compressor is 
expected to be operated either on or off a large fraction; this 
compressors is a poor candidate for variable-speed functionality, 
because of both the financial and full-load performance cost of adding 
that capability. Due to the difference in utility and attainable 
efficiency between fixed and variable-speed compressors, DOE proposes 
to separate these two compressor styles into separate equipment 
classes.
e. Motor Phase Count
    DOE also proposes to divide single- and three-phase reciprocating 
compressors into separate equipment classes. Lower power reciprocating 
compressors, typically less than 10 hp, can be packaged with either 
single-phase or three-phase electric motors. Reciprocating compressors 
packaged with single-phase electric motors are typically less efficient 
than those packaged with three-phase electric motors due to the 
inherent lower efficiency of single-phase motors. Single-phase 
reciprocating compressors are generally used in applications with lower 
duty cycles and no access to three-phase power, such as tire inflation 
at a local service station, or oral surgery at a dental office. Three-
phase reciprocating compressors typically see higher duty cycles and 
can only be used for applications in which three-phase power is 
available. An automotive body shop or very light industrial production

[[Page 31700]]

may have such compressors, but they would likely not be found as the 
primary air source for a high-volume industrial production application. 
Few residential applications have access to three-phase power. As a 
result, DOE concludes that single- and three-phase compressors offer 
different end user utility. Consequently, DOE proposes to divide 
reciprocating compressors packaged with single-phase and three-phase 
electric motors into separate equipment classes.
    By contrast, DOE was able to find little data on single-phase 
rotary compressors, which appear to form a very small fraction of the 
market. As a result, DOE was not able to determine whether such 
equipment was able to meet the same performance levels as three-phase 
equipment. To avoid the risk of in advertently incentivizing the market 
to shift to single-phase rotary equipment (if separated or not 
included), DOE proposes in this NOPR not to separate rotary equipment 
classes by motor phase count. As such, each rotary equipment class 
encompasses both single- and three-phase equipment.
    Based on interviews with manufacturers, DOE is aware that single-
phase rotary equipment may be gaining popularity in European markets. 
If such equipment is being chosen to conserve energy, and if the 
adoption of increased standards may hinder the adoption or development 
of single-phase rotary equipment to save energy, DOE may consider 
establishing a separate standard for single-phase rotary equipment in 
the final rule.
    DOE requests comment on the establishment of separate equipment 
classes, by motor phase count, for reciprocating equipment. This is 
identified as Issue 9 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
    DOE also requests comment on the proposal to combine single- and 
three-phase rotary equipment in each rotary equipment class. This is 
identified as Issue 10 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
f. List of Proposed Equipment Classes
    DOE's list of proposed equipment classes is provided in Table IV.1:

                                              Table IV.1--List of DOE Proposed Compressor Equipment Classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                     Equipment class
     Compressor type          Lubrication type        Cooling method             Driver type                  Motor phase              designation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rotary..................  Lubricated..............  Air-Cooled........  Fixed-Speed..................  Any.....................  RP_FS_L_AC
                                                                        Variable-speed...............  ........................  RP_VS_L_AC
                                                    Water-Cooled......  Fixed-Speed..................  ........................  RP_FS_L_WC
                                                                        Variable-speed...............  ........................  RP_VS_L_WC
                          Lubricant-Free..........  Air-Cooled........  Fixed-Speed..................  ........................  RP_FS_LF_AC
                                                                        Variable-speed...............  ........................  RP_VS_LF_AC
                                                    Water-Cooled......  Fixed-Speed..................  ........................  RP_FS_LF_WC
                                                                        Variable-speed...............  ........................  RP_VS_LF_WC
Reciprocating...........  Lubricated..............  Air-Cooled or       Fixed-Speed..................  Three-Phase.............  R3_FS_L_XX
                                                     Water-Cooled.                                     Single-Phase............  R1_FS_L_XX
                          Lubricant-Free..........  ..................  .............................  Three-Phase.............  R3_FS_LF_XX
                                                                                                       Single-Phase............  R1_FS_LF_XX
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. European Union Regulatory Action
    The EU Ecodesign directive established a framework under which 
manufacturers of energy-using products are obliged to reduce the energy 
consumption and other negative environmental impacts occurring 
throughout the product life cycle.\38\ Products are broken out in to 
different ``Lots,'' with compressors studied in Lot 31. In June 2014, 
the EU completed and published its final technical and economic study 
of Lot 31 compressors.\39\
---------------------------------------------------------------------------

    \38\ Source: www.eceee.org/ecodesign/products/Compressors.
    \39\ For copies of the EU Lot 31 Final Report on Compressors, 
please go to: www.regulations.gov/#!documentDetail;D=EERE-2013-BT-
STD-0040-0031.
---------------------------------------------------------------------------

    As part of its study, the EU examined the entire compressors market 
to determine an appropriate scope of coverage for its energy 
conservation standards. The results of this study led the Commission of 
the European Communities to establish a working document proposing 
possible energy efficiency requirements for compressors. The EU draft 
regulation \40\ proposed to cover the following compressor types:
---------------------------------------------------------------------------

    \40\ For copies of the EU draft regulation: www.regulations.gov/contentStreamer?documentId=EERE-2013-BT-STD-0040-0031&disposition=attachment&contentType=pdf.
---------------------------------------------------------------------------

     Oil-lubricated Rotary Air Compressor Packages with:
    [cir] Rated output flow rate of between 5 to 1,280 liters per 
second,\41\
---------------------------------------------------------------------------

    \41\ When express in terms of inlet conditions, as is industry 
convention.
---------------------------------------------------------------------------

    [cir] Three-phase electric motors,
    [cir] Fixed or variable-speed drives, and
    [cir] Full-load operating pressure of between 7 to 14 bar gauge.
     Oil-lubricated Reciprocating Air Compressor Packages with:
    [cir] Rated output flow rate of between 2 to 64 liters per second,
    [cir] Three-phase electric motors,
    [cir] Fixed-speed drives, and
    [cir] Full-load operating pressure of between 7 to 14 bar gauge.
    The Lot 31 study used data collected from CAGI Performance 
Verification Program data sheets to determine the market distribution 
of compressor efficiency for rotary compressors and data collected from 
a confidential survey conducted of European manufacturers for 
reciprocating compressors.
    The EU draft regulation proposed to separate the covered products 
into the following three equipment classes and to set a different 
standard level, based on package isentropic efficiency, for each class:
     Fixed-speed Rotary Standard Air Compressors--Standard 
level set as package isentropic efficiency at full-load operating 
conditions;
     Variable-speed Rotary Standard Air Compressors--Standard 
level set as a weighted average of package isentropic efficiency at 
100-percent, 70-percent, and 40-percent of full-load operating 
conditions; and
     Piston Standard Air Compressors--Standard level set as 
package isentropic efficiency at full-load operating conditions.
a. Specific Suggested Requirements
    The EU draft proposal suggests compliance beginning in 2018, and 
are increased in 2020 for certain compressor

[[Page 31701]]

types, as explain in Table IV.2 and Table IV.3:

 Table IV.2--Draft First Tier Minimum Energy Efficiency Requirements for
              Standard Air Compressors From January 1, 2018
------------------------------------------------------------------------
                                   Formula to calculate
                                   the minimum package
                                  isentropic efficiency,   Proportional
  Standard air compressor type    depending on the flow     loss factor
                                       rate (V1) an       (d) to be used
                                    proportional loss     in the formula
                                        factor (d)
------------------------------------------------------------------------
Fixed-speed Rotary Standard Air  (-.0928 ln\2\ (V1) +                 -5
 Compressor.                      13.911 ln (V1) +
                                  27.110) + (100-(-.0928
                                  ln\2\ (V1) + 13.911 ln
                                  (V1) + 27.110) * d/100.
Variable-speed Rotary Standard   (-1.549 ln\2\ (V1) +                 -5
 Air Compressor.                  21.573 ln (V1) +
                                  0.905) + (100-(-1.549
                                  ln\2\ (V1) + 21.573 ln
                                  (V1) + 0.905) * d/100.
Piston Standard Air Compressor.  (8.931 ln (V1) +                     -5
                                  31.477) + (100-(8.931
                                  ln (V1) + 31.477) * d/
                                  100.
------------------------------------------------------------------------


Table IV.3--Draft Second Tier Minimum Energy Efficiency Requirements for
              Standard Air Compressors From January 1, 2020
------------------------------------------------------------------------
                                   Formula to calculate
                                   the minimum package
                                  isentropic efficiency,   Proportional
  Standard air compressor type    depending on the flow     loss factor
                                       rate (V1) an       (d) to be used
                                    proportional loss     in the formula
                                        factor (d)
------------------------------------------------------------------------
Fixed-speed Rotary Standard Air  (-0.928 ln\2\ (V1) +                  0
 Compressor.                      13.911 ln (V1) +
                                  27.110) + (100-(-0.928
                                  ln\2\ (V1) + 13.911 ln
                                  (V1) + 27.110) * d/100.
Variable-speed Rotary Standard   (-1.549 ln\2\ (V1) +                  0
 Air Compressor.                  21.573 ln (V1) +
                                  0.905) + (100-(-1.549
                                  ln\2\ (V1) + 21.573 ln
                                  (V1) + 0.905) * d/100.
Piston Standard Air Compressor.  (8.931 ln (V1) +                      0
                                  31.477) + (100-(8.931
                                  ln (V1) + 31.477) * d/
                                  100.
------------------------------------------------------------------------

b. Next Steps
    The outcome of this draft regulation is undetermined, based on 
publicly available information. Based on the process outlined on the 
Ecodesign Web site, the document may need to be reviewed internally by 
the European Commission, sent to the World Trade Organization, 
submitted to the Regulatory Committee (composed of one representative 
from each EU Member State), and the finally sent to the European 
Parliament and Council for scrutiny.\42\
---------------------------------------------------------------------------

    \42\ As detailed here: www.eceee.org/ecodesign/products/Ecodesign135lg.png.
---------------------------------------------------------------------------

    In parallel, the EU has announced \43\ a second compressors study 
focusing on low-pressure and oil-free equipment. From the Web site,\44\ 
the study was kicked off on 17 June, 2015, draft publications for 
``Task 1-4'' were posted on 31 March, 2016, and additional draft 
publications and stakeholder meetings are planned for the future (with 
dates yet to be determined). Publication of the final report is 
scheduled for April 2017.
---------------------------------------------------------------------------

    \43\ As viewed here: http://www.eco-compressors.eu/documents.htm.
    \44\ As viewed here: http://www.eco-compressors.eu/documents.htm.
---------------------------------------------------------------------------

3. Technology Options
    In the Framework Document, DOE identified several design options 
that could be used to improve compressor package efficiency including:
     Improved controls;
     Improved bare compressor \45\ efficiency;
---------------------------------------------------------------------------

    \45\ Frequently described in the compressor industry as an 
``air-end'' or ``airend.'' For the purposes of this rulemaking, DOE 
considers the terms to be synonymous.
---------------------------------------------------------------------------

     Improved cooling fan efficiency;
     Improved part-load efficiency;
     Improved electric motors; and
     The use of multistage compressors.
    In response to the Framework Document, the Joint Commenters 
recommended that DOE consider equipment that affect compressor 
efficiency, such as zero-loss condensate traps and waste heat recovery 
technologies. (Joint Comment, No. 0016 at p. 3-4) Further, DOE research 
indicated that even though all of the options listed in the Framework 
Document were valid paths to higher efficiency, in practice, they were 
not considered independently by manufacturers but, rather, deployed as 
needed depending on the specifics of the compressor design and ultimate 
desired efficiency level. As for this document, DOE is altering its 
proposed categorization of options to improve efficiency. This is 
because the options listed above are in some cases able to be deployed 
independently (e.g., cooling fan efficiency) and in other cases require 
coordination (e.g., using a more efficient motor). Instead of a bottom-
up approach, wherein DOE could attempt to assign a characteristic 
improvement, DOE's proposed approach ``top-down,'' where the primary 
consideration is the overall package efficiency and exploration is of 
the overall cost required to achieve certain efficiencies. Instead of 
independent options, DOE will generally consider all efficiency 
improvement to come from a ``package redesign'' which could include 
any, or all of the listed options from the Framework Document. This 
package redesign can be thought of as including three broad categories 
of improvements:
     Multi-staging;
     Air-end Improvement; and
     Auxiliary Component Improvement.
    These package redesign options are addressed separately in the 
sections that follow.

[[Page 31702]]

a. Multi-Staging
    Compressors ingest air at ambient conditions and compress it to a 
higher pressure required by the specific application. Compressors can 
perform this compression in one or multiple stages, where a stage 
corresponds to a single air-end and offers the opportunity for heat 
removal before the next stage. Units that compress the air from ambient 
to the specified design pressure of the compressor in one step are 
referred to as single-stage compressors, while units that use multiple 
steps are referred to as multistage compressors.
    The act of compression generates inherent heat in a gas. If the 
process occurs quickly enough to limit the transfer of that heat to the 
environment, the compression is known as ``adiabatic.'' By contrast, 
compression may be performed slowly such that heat flows from the gas 
at the same rate it is generated, and such that the temperature of the 
gas never exceeds that of the environment. This process is called 
``isothermal.'' DOE notes that a hotter gas is conceptually ``harder'' 
to compress; the compressor must overcome the heat energy present in 
the gas in order to continue the compression process. As a result, 
compression to a given volume requires less work if performed 
isothermally. ``Real'' (i.e., not idealized in any respect) compressors 
are neither adiabatic nor isothermal, and dissipate some portion of 
compressive heat during the process. If a compressor is able to 
dissipate more heat, the resulting act of compression becomes easier 
and the compressor requires less input energy.
    Multi-stage compressors are specifically designed to take advantage 
of this principle and split the compression process into two or more 
stages (each performed in a single air-end) to allow heat removal 
between the stages using a heat-exchange device sometimes called an 
``intercooler.'' The more stages used, the closer the compressor 
behavior comes to the isothermal ideal. Eventually, however, the 
benefits to adding further stages diminish; gains from each marginal 
stage is countered by the inherent inefficiencies of using smaller 
compressor units. Depending on the specific pressure involved, the 
optimal number of stages may vary widely. Most standard industrial air 
applications, however, do not use more than two stages.
    Lubricant-free compressors typically realize greater efficiency 
gains than lubricated compressors, as the lubricant used, usually oil, 
acts as a coolant during the compression process, thus reducing the 
benefit of intercooling between stages.
b. Air-End Improvement
    The efficiency of any given air-end depends upon a number of 
factors, including:
     Rated compressor output capacity;
     Compression chamber geometry;
     Operating speed;
     Surface finish;
     Manufacturing precision; and
     Designed equipment tolerances.
    Each individual air-end has a best efficiency operating point based 
upon the characteristics listed. However, because air-ends can operate 
at multiple flow rates, manufacturers commonly utilize a given air-end 
in multiple compressor packages to reduce overall costs. This results 
in air-ends operating outside of the best efficiency point. Using one 
air-end in multiple compressor packages reduces the total number of 
air-ends a manufacturer needs to provide across the entire market, 
reducing costs at the price of reduced efficiency for those packages 
operating outside of the best efficiency point for the air-end. 
However, a manufacturer could redesign and optimize air-ends for any 
given flow rate and discharge pressure, increasing the overall 
efficiency of the compressor package.
    Manufacturers can use two viable design pathways to increase 
compressor efficiency via air-end improvement. The first is to enhance 
a given air-end design's properties that affect efficiency, which could 
include manufacturing precision, surface finish, mechanical design 
clearances, and overall aerodynamic efficiency. The second is to more 
appropriately match air-ends and applications by building an overall 
larger number of air-end designs. As a result, a given air-end will be 
used less frequently in applications requiring it to operate further 
from its optimal operating point. These two practices may be employed 
independently or jointly; the option that is prioritized will depend on 
the specifics of a manufacturer's equipment line and the ultimate 
efficiency level desired.
c. Auxiliary Component Improvement
    As discussed in the previous section, compressor manufacturers 
normally use one air-end in multiple compressor packages that are 
designed to operate at different discharge pressures and flow rates. 
Each compressor package consists of multiple design features that 
affect package efficiency, including valves, piping system, motor, 
capacity controls, fans, fan motors, filtration, drains, and driers. 
This equipment, for example, may control the flow of air, moisture, or 
oil, or the temperature and humidity of output air, or regulate 
temperature and operation, Compressor manufacturers do not normally 
provide the option to replace any individual part of a compressor 
package to increase efficiency, as each feature also has a direct 
effect on compressor performance. However, improving the operating 
characteristics of any of these ``auxiliary'' parts may offer a chance 
to improve the overall efficiency of the compressor package.
    For example, package isentropic efficiency can be increased by 
reducing the internal pressure drop of the package using improved 
valves and pipe systems, or by improving the efficiency of (1) both the 
drive and fan motors (if present), (2) the fan, itself, (3) condensate 
drains, (4) both air and lubricant filters (if present), (4) air 
driers, and (5) controls. The improvement must be considered relative 
to a starting point, however. Even if the modifications could be 
deployed independently of each other, and not all can, the spread of 
efficiencies available in the market likely already reflects the more 
cost effective choice for improving efficiency at any given point. 
Perhaps one manufacturer, by virtue of features of its product lines, 
finds that reaching a given efficiency level in a particular equipment 
class, is most cost effectively done by improving Technology X. Another 
may find that it is more cost effective to improve Technology Y. And 
both could be correct, because each may have had a different starting 
point. Adding to this difficulty in ascertaining exactly when a given 
technology should be deployed (as with a bottom-up technology option 
approach) is a manufacturing reality--it is not cost effective to offer 
an infinite number of combinations and equipment sizes. Perhaps a 
compressor of output level between two others would most optimally use 
a fan sized specifically for that compressor. Because it is not cost 
effective for that compressor's manufacturer to stock another fan size, 
however, the compressor ends up sub-optimally using a fan either 
slightly too large or slightly too small, at some small cost to 
efficiency. So, less may be learned by scrutinizing the design choices 
of a specific model that is learned by considering the overall spread 
of costs and efficiencies available in the market at-large.
    DOE notes that, because the compressor packages function as an 
ensemble of complementary parts, changing one part often calls for

[[Page 31703]]

changing others. A special case may come with more efficient electric 
motors. Compressors normally use induction motors, which generally vary 
operating speed as efficiency is improved. Using a more efficient (but 
otherwise identical) induction motor without considering the rest of 
the compressor design could be counterproductive if the gains in motor 
efficiency were more than offset by subsequent loss in performance of 
the air-end and other parts. DOE's proposal assumes that the best-
performing compressors on the market are built using the most-efficient 
available electric motors that are suited to the task. However, it 
could not confirm instances of a manufacturer using ``super premium'' 
or ``IE4'' induction motors, which appear to only recently have been 
made available commercially.\46\ These terms (``super premium'' and 
``IE4'') have been used (in the U.S. and Europe, respectively) to 
describe the motor industry's ``next tier'' of efficiency. Possible 
reasons for this include the motors not being suitable for use in 
compressors, manufacturers are still exploring the relatively new 
motors and have not yet introduced equipment redesigned to make use of 
them, or that manufacturers are already, in fact, using them in the 
most efficient compressor offerings.
---------------------------------------------------------------------------

    \46\ One manufacturer, for example, describes its IE4 offerings 
here: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-
STD-0040-0033.
---------------------------------------------------------------------------

    As an example of the influence of auxiliary componentry, the 
European Union Draft Standard offers a list of equipment with which the 
unit must be tested in order to certify compliance with standards.\47\ 
It does not provide definitions for the terms, but as an example, for 
fixed-speed rotary compressors, required equipment includes:
---------------------------------------------------------------------------

    \47\ See page 12 of http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0032.

1. Electric motor
2. Cooling fan
3. Compression element
4. Transmission (Belt, Gear, Coupling . . .), (if applicable)
5. Inlet filter
6. Inlet valve
7. Minimum pressure check valve/backflow check valve
8. Oil separator
9. Air piping
10. Oil piping
11. Oil pump (if applicable)
12. Oil filter
13. Oil cooler
14. Thermostatic valve
15. Electrical switchgear
16. Compressor after-cooler
17. Compressor control device (pressure switch, pressure transducer, 
etc.)

    The list implies that each component affects efficiency, but does 
not say whether improvement of any particular component is possible. 
Nonetheless, it is illustrative of the set of componentry that needs to 
function harmoniously in order for the package to perform well.
    DOE also requests comment specifically on IE4 or ``super premium'' 
electric motors, their suitability for compressors, and on any efforts 
to incorporate them into newly developed equipment. This is identified 
as Issue 11 in section VIII.E, ``Issues on Which DOE Seeks Comment.''

B. Screening Analysis

    DOE generally uses the following four screening criteria to 
determine which technology options are suitable for further 
consideration in an energy conservation standards rulemaking:
    1. Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    2. Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    3. Impacts on product utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further.
    See 10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
    Technologies that pass through the screening analysis are referred 
to as ``design options'' in the engineering analysis. The screening 
analysis and engineering analysis are discussed in detail, 
respectively, in Chapters 4 and 5 of the TSD.
    The subsequent sections include comments from interested parties 
pertinent to the screening criteria, DOE's evaluation of each 
technology option against the screening analysis criteria, and whether 
DOE screened out a particular technology option based on the above 
criteria.
1. Screened-Out Technologies
    Of the identified technology options, DOE was not able to identify 
any that would fail the screening criteria. The cost of additional 
engineering resources is considered in the Manufacturer Impact Analysis 
of section IV.J. DOE seeks comment on whether sufficient resources 
would be available such that criterion 2 of the screening analysis is 
satisfied. This is identified as Issue 12 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
2. Remaining Technologies
    After reviewing each technology, DOE tentatively concludes that all 
of the identified technologies listed in section IV.A.3 met all four 
screening criteria to be examined further as design options in DOE's 
NOPR analysis. In summary, DOE did not screen out the following 
technology options:

 Multi-staging
 Air-end Improvement
 Auxiliary Component Improvement

    DOE determined that these technology options are technologically 
feasible because they are being used or have previously been used in 
commercially-available products or working prototypes. DOE also finds 
that all of the remaining technology options meet the other screening 
criteria (i.e., practicable to manufacture, install, and service and do 
not result in adverse impacts on consumer utility, equipment 
availability, health, or safety). For additional details, see chapter 4 
of the NOPR TSD.

C. Engineering Analysis

    In the engineering analysis, DOE describes the relationship between 
manufacturer selling price (MSP) to improved compressor package 
isentropic efficiency. This relationship serves as the basis for cost-
benefit calculations for individual end users, manufacturers, and the 
Nation. DOE typically structures the engineering analysis using one of 
three approaches: (1) Design-option; (2) efficiency level; or (3) 
reverse-engineering (or cost assessment). The design-option approach 
involves adding the estimated cost and associated efficiency of various 
efficiency-improving design changes to the baseline equipment to model 
different levels of efficiency. The

[[Page 31704]]

efficiency level approach uses estimates of costs and efficiencies of 
equipment available on the market at distinct efficiency levels to 
develop the cost-efficiency relationship. The reverse-engineering 
approach involves testing equipment for efficiency and determining cost 
from a detailed bill of materials (BOM) derived from reverse-
engineering representative equipment. The efficiency ranges from that 
of the least-efficient compressor sold today (i.e., the baseline) to 
the maximum technologically feasible efficiency level. At each 
efficiency level examined, DOE determines the MSP; this relationship is 
referred to as a cost-efficiency curve.
    DOE conducted the engineering analysis for this rulemaking using an 
efficiency level approach. The decision to use this approach was made 
due to several factors, including the wide variety of equipment sizes 
analyzed, the availability of reliable performance data, the 
availability of a comparable European Union study, and the nature of 
the design options available for the equipment.
1. Summary of Significant Data Sources
    For the engineering analysis, DOE utilized four principal data 
sources: (1) A database of compressor performance data from CAGI data 
sheets; (2) results from the EU Lot 31--Ecodesign Preparatory Study on 
Compressors; (3) a dataset of confidential manufacturer price data; and 
(4) a dataset of online retailer prices. The following subsections 
provide a brief description of each significant data source. Complete 
details are found in Chapter 5 of the NOPR TSD.
a. CAGI Data Sheets
    CAGI's Performance Verification program provides manufacturers a 
standardized test method and performance data reporting format for 
rotary compressors.\48\ DOE compiled into one database the information 
contained in every CAGI Performance Verification data sheet found on 
the Web sites of individual manufacturers. The resulting database 
contains performance data on each verified individual compressor and is 
referred to as the ``CAGI database'' throughout this NOPR.
---------------------------------------------------------------------------

    \48\ For more information regarding CAGI's Performance 
Verification program, please see: http://www.cagi.org/performance-verification/
---------------------------------------------------------------------------

b. Lot 31--European Union Ecodesign Preparatory Study on Compressors
    The Lot 31 study, described in section IV.A.2, investigated three 
types of compressors: Fixed-speed rotary standard air compressors, 
variable-speed rotary standard air compressors, and piston standard air 
compressors. For each compressor type, the Lot 31 study established two 
types of relationships between package isentropic efficiency and flow 
rate. The first relationship represents the market average package 
isentropic efficiency, as a function of flow, for each compressor type; 
this relationship is referred to as the ``Lot 31 regression curve.'' 
Generally the Lot 31 regression curves show an increase in package 
isentropic efficiency with an increase in flow rate.\49\ The second 
relationship is derived from each Lot 31 regression curve and is known 
as the ``Lot 31 regulation curve.'' Lot 31 regulation curves are scaled 
from the Lot 31 regression curves using ``d-values'', which are 
explained further in section IV.C.5. The regression curves allowed the 
Lot 31 study to evaluate various standard levels, similar to how DOE 
would typically investigate various efficiency and trial standard 
levels. Chapter 5 and chapter 3 of the NOPR TSD provide further detail 
on the Lot 31 regression and regulation curves.
---------------------------------------------------------------------------

    \49\ See the Lot 31 Ecodesign Preparatory Study on Compressors 
Task 6 section 1.3.9, 1.3.10, and 1.3.11 here: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    To evaluate the energy savings potential of these efficiency 
levels, the Lot 31 study established relationships between compressor 
package isentropic efficiency, flow rate, and list price for each 
compressor type. List price represents the price paid by the final 
customer. To determine the manufacturer selling price (MSP), or the 
price paid by the manufacturer's first customer, the Lot 31 study 
scaled the list price by a constant markup factor. Throughout this NOPR 
these relationships will be referred to as the ``Lot 31 MSP-Flow-
Efficiency Relationships.'' Chapters 5 and chapter 3 of the NOPR TSD 
provide further detail on the Lot 31 MSP-Flow-Efficiency Relationships.
c. Confidential Manufacturer Equipment Data
    DOE's contractor collected MSP and performance data for a range of 
compressor sizes and equipment classes from manufacturers.\50\ These 
data are confidential and covered under non-disclosure agreement 
between the DOE contractor and the manufacturers. Data collected 
included pressure, flow rate, motor horsepower, full-load power (kW), 
motor efficiency, package specific power, and MSP for individual 
compressor models. Throughout this NOPR these will be referred to as 
the ``confidential, U.S. MSP data.''
---------------------------------------------------------------------------

    \50\ In developing standards, DOE may choose to contract with 
third party organizations who specialized in various functions.
---------------------------------------------------------------------------

d. Online Retailer Price Data
    DOE collected price data for compressors sold by the online 
retailers Grainger,\51\ Air Compressors Direct,\52\ and Compressor 
World.\53\ DOE also collected price and performance data for electric 
motors from Grainger to develop the scaling relationship for the 
R1_FS_L_XX equipment class described in section IV.C.5.c. These data 
are publicly available on each retailer's Web site and were compiled 
into a database that will be referred to as the ``online retailer price 
database'' throughout this NOPR.
---------------------------------------------------------------------------

    \51\ http://www.grainger.com/.
    \52\ http://www.aircompressorsdirect.com/.
    \53\ http://www.compressorworld.com/.
---------------------------------------------------------------------------

2. Harmonization With Lot 31
    The Lot 31 study resulted in a working document which proposed 
energy conservation standards for compressors. The current working 
document has not been formally adopted as a final regulation.
    Many manufacturers participate in both the EU and U.S. markets, and 
during confidential interviews multiple manufacturers indicated that 
they have begun preparation to meet the requirements of the draft 
proposal, despite its not having been formally adopted as a regulation. 
Additionally DOE received comments from Atlas Copco that, due to the 
global nature of the industry, DOE should consider the findings in Lot 
31 study. (Atlas-Copco, No. 0008 at p.2) And CAGI commented that it is 
important for regulations between the U.S. and EU to be similar given 
the global nature of the industry and many of its customers. (CAGI, No. 
0030 at p. 1)
    DOE recognizes that where applicable and justifiable it is 
beneficial to align with the Lot 31 study, because manufacturers have 
begun preparation for the Lot 31 proposal, the findings of the Lot 31 
study can be useful, and it is important to have similar U.S. and EU 
regulations.
3. Representative Equipment
    In the engineering analysis, DOE analyzed the MSP-efficiency 
relationships for the equipment classes specified in section IV.A.1. 
For both rotary and reciprocating equipment classes, DOE concluded, 
consistent with the EU Lot 31 study, that both incremental MSPs and 
attainable efficiency are independent of full-load

[[Page 31705]]

operating pressure.\54\ However, DOE understands that absolute 
equipment MSP may vary by pressure. As such, DOE selected 
representative pressures as the basis for the development of their MSP-
efficiency relationships. The representative pressures are 125 psig for 
rotary equipment classes, and 175 psig for reciprocating equipment 
classes. These pressures were selected because they represent the 
majority of equipment available in the CAGI database, and online 
retailer price database. Additionally, Chapter 5 of the NOPR TSD 
provides information regarding the distribution of pressures among 
available rotary and reciprocating models.
---------------------------------------------------------------------------

    \54\ See the Lot 31 Ecodesign Preparatory Study on Compressors 
Task 6 section 1.2.2 and Task 7 section 2.4.1 here: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    DOE requests comment on the use of 125 and 175 psig as 
representative pressures to establish absolute MSPs for rotary and 
reciprocating equipment classes, respectively. This is identified as 
Issue 13 in section VIII.E, ``Issues on Which DOE Seeks Comment.''
    As mentioned previously, DOE concluded, consistent with the EU Lot 
31 study, that attainable efficiency is independent of full-load 
operating pressure.\55\ Consequently, DOE used data from all full-load 
operating pressures represented in the CAGI database to establish 
efficiency levels for rotary air compressors. The CAGI database 
contains performance data for compressors ranging from 73 to 200 psig 
of full-load operating pressure and is representative of the full range 
of rotary compressor pressures available on the market. For 
reciprocating air compressors, DOE used a modified version of the EU 
Lot 31 regression and regulation curve for piston standard air 
compressors. The EU Lot 31 curves were recommended by the study author 
to be applicable to the full range of pressures proposed in the EU 
standard, ~101.5 - 203 psig (nominally: 7-14 bar (gauge)).\56\ Section 
IV.C.5 contains complete details on the development of efficiency 
levels.
---------------------------------------------------------------------------

    \55\ See the Lot 31 Ecodesign Preparatory Study on Compressors 
Task 6 section 1.2.2 here: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
    \56\ See the definition of standard air compressor in the 
working document here: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    DOE requests comment on DOE's proposal to establish efficiency 
levels that are independent of pressure. This is identified as Issue 14 
in section VIII.E, ``Issues on Which DOE Seeks Comment.''
    DOE also requests comment on DOE's proposal to establish 
incremental MSPs that are independent of pressure. This is identified 
as Issue 15 in section VIII.E, ``Issues on Which DOE Seeks Comment.''
4. Design Options and Available Energy Efficiency Improvements
    Section IV.A.2 identifies package redesign as the primary design 
option available to improve compressor efficiency. Multi-staging, air-
end improvement, and auxiliary component improvement can be considered 
specialized cases of package redesign. In the first case, an additional 
air-end is introduced to the package, which affords the opportunity to 
dissipate heat after the first compression so that the second 
compression requires less work. Air-end improvement permits fine tuning 
of the air-end to the specific pressure and flow range in which it is 
expected to operate. The auxiliary component improvement option 
represents optimization of auxiliary components such as drives, motors, 
filters, valves, and piping. Ultimately, a manufacturer can implement a 
full package redesign to incrementally improve efficiency to any 
efficiency level, up to max-tech, as discussed in subsequent sections.
5. Efficiency Levels
    For each equipment class, DOE established and analyzed six 
efficiency levels and a baseline to assess the relationship between MSP 
and package isentropic efficiency. As discussed previously, DOE's 
proposed efficiency levels are independent of full-load operating 
pressure. However, DOE concluded, consistent with the Lot 31 study,\57\ 
that attainable package isentropic efficiency is a function of flow 
rate at full-load operating pressure. DOE notes that the test procedure 
NOPR proposed to define the term ``full-load actual volume flow rate'' 
to represent the actual volume flow rate of the compressor at the full-
load operating pressure. As such, each efficiency level is defined by a 
mathematical relationship between full-load actual volume flow rate and 
package isentropic efficiency. Similarly to the Lot 31 study, DOE 
defines a regression curve (market average package isentropic 
efficiency, as a function of full-load actual volume flow rate) for 
each equipment class and uses specific ``d-values'' to shift the 
regression curve and establish efficiency levels for each equipment 
class, as discussed in section IV.C.1.b.
---------------------------------------------------------------------------

    \57\ Discussed often, e.g., Task 6 Section 1.3. See: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    Similar to the approach used by the Lot 31 study, DOE defined the 
``d-value,'' as a percentage reduction in losses from the regression 
curve to theoretical 100 percent package isentropic efficiency. The d-
value is used as a metric to characterize compressor package isentropic 
efficiency with respect to the mean efficiency of the market (i.e., the 
regression curve), and establish and evaluate various efficiency levels 
for all equipment classes. A positive d-value shifts the regression 
curve to a higher package isentropic efficiency for all full-load 
actual volume flow rates, and a negative d-value shifts the regression 
curve to lower package isentropic efficiency. A d-value of 100 would 
generate an efficiency level at 100 percent package isentropic 
efficiency for all full-load actual volume flow rates. Alternatively, a 
d-value of 50 would generate an efficiency level that falls halfway 
between the regression curve and 100 percent package isentropic 
efficiency for all full-load actual volume flow rates. And a d-value of 
zero would generate an efficiency level equal to the regression curve.
    For each equipment class, DOE established efficiency levels at max-
tech and a d-value of zero. DOE also established two intermediary 
efficiency levels between the baseline and a d-value of zero, and two 
efficiency levels between the d-value of zero level and max-tech.
    For all equipment classes, efficiency level (EL) 6 represents the 
max-tech efficiency level. 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 considers 
compressors a mature technology, with all available design options 
already existing in the marketplace. Therefore, for compressors, the 
max-tech efficiency level coincides with the maximum available 
efficiency already offered in the marketplace. As a result, DOE 
performed market-based analyses to determine max-tech/max-available 
levels. As with efficiency level, the max-tech/max-available levels are 
defined by d-values for each equipment class. Discussion of the process 
used to determine max-tech efficiency levels is in section IV.C.5 as 
well as chapter 5 of the NOPR TSD.
    For all equipment classes, the baseline defines the lowest 
efficiency

[[Page 31706]]

equipment present in the market for each equipment class. DOE 
established baselines, represented by d-values, for each equipment 
class by reviewing available compressor performance data. Chapter 5 of 
the NOPR TSD provides additional information on the process used to 
select baseline efficiency levels.
    Jenny commented that with the variety of air compressors available 
on the market, selecting baseline levels is difficult. Jenny added that 
larger manufacturers are more likely to test equipment efficiency--and 
as a result, Jenny cautioned that they may be unfairly represented in 
the baseline because smaller manufacturers are less likely to test 
equipment. (Jenny, No. 0005 at p. 4)
    DOE recognizes that there are a variety of compressors available on 
the market that represent a range of efficiency levels. For this 
rulemaking, the baseline represents the lowest efficiency equipment 
commonly sold on the market; independent of the manufacturer. DOE used 
all available data to select the baseline. DOE requests additional data 
which can be used to refine its current baseline, max-tech, and 
efficiency level assumptions. This is identified as Issue 16 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
    For all equipment classes, EL 3 corresponds to a d-value of zero, 
which represents the mean efficiency available on the market. The 
European Union draft regulation proposed a d-value of zero for a 
minimum energy efficiency requirement in 2020.\58\ DOE notes that 
although the EU Lot 31 draft regulation proposes to cover only fixed-
speed rotary standard air compressors, variable-speed rotary standard 
air compressors, and piston standard air compressors, DOE chose to 
evaluate a d-value of zero for all equipment classes.
---------------------------------------------------------------------------

    \58\ For more information regarding the draft regulation see: 
http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-
0031.
---------------------------------------------------------------------------

    EL 1 and EL 2 are established as intermediary efficiency levels 
one-third and two-thirds of the way, respectively, between the baseline 
and EL 3. EL 4 is an efficiency level established slightly above EL 3 
to evaluate the sensitivity of going above the EU Lot 31 draft 
regulation. EL 5 is an intermediary efficiency level established 
approximately halfway between EL 3 and EL 6. The specific d-values for 
EL 1, 2, 4, and 5 vary for each equipment class.
    As discussed in section IV.C.3, efficiency levels for each 
equipment class are independent of full-load operating pressure.
    DOE pursued different analytical methods to establish efficiency 
levels for different equipment classes. These analytical methods can be 
grouped into three general categories presented in Table IV.4.

             Table IV.4--Efficiency Level Analytical Methods
------------------------------------------------------------------------
              Method                    Applicable equipment classes
------------------------------------------------------------------------
Direct from Lot 31...............  RP_FS_L_AC
                                   RP_VS_L_AC
                                   R3_FS_L_XX
Developed from CAGI Database.....  RP_FS_LF_AC
                                   RP_VS_LF_AC
Scaled from Other Equipment        RP_FS_L_WC
 Classes, Using U.S. Data.         RP_VS_L_WC
                                   RP_FS_LF_WC
                                   RP_VS_LF_WC
                                   R1_FS_L_XX
------------------------------------------------------------------------

    The following sections present the analytical methods used by DOE 
to develop the efficiency levels for each equipment class.
a. Direct From Lot 31
    Table IV.5 shows the three equipment classes for which efficiency 
levels are derived from analogous EU Lot 31 regression curves.

    Table IV.5--Equipment Class Efficiency Levels Derived From Lot 31
------------------------------------------------------------------------
            Equipment Class                EU Lot 31 regression curve
------------------------------------------------------------------------
RP_FS_L_AC............................  Fixed speed rotary standard air
                                         compressors.
RP_VS_L_AC............................  Variable-speed rotary standard
                                         air compressors.
R3_FS_L_XX............................  Piston standard air compressors.
------------------------------------------------------------------------

    The analogous EU Lot 31 regression curves for the RP_FS_L_AC and 
RP_VS_L_AC equipment classes are based on CAGI data for equipment sold 
in the United States at the time of the Lot 31 study.\59\ DOE regressed 
the CAGI database data for these two equipment classes and compared the 
results to the analogous EU Lot 31 regression curves. DOE found that 
the shape of the new CAGI database curves were a close approximation to 
the Lot 31 regression curves and the magnitude (or y-axis scaling) of 
the curves were also a close fit with the EU curve. Generally, the 
RP_FS_L_AC CAGI database regression curve was within one efficiency 
point of the EU curve and the RP_VS_L_AC CAGI database curve was within 
two efficiency points of the EU curve for flow rates where CAGI data 
was available. Ultimately, due to the similarity of the regressions and 
the overall benefits of harmonizing with the European Union, DOE 
decided to use Lot 31 regressions, rather than the regressions obtained 
from the current CAGI database. DOE notes that differences between the 
CAGI database regression curves and the EU Lot 31

[[Page 31707]]

regression curves can be compensated through use of d-values to scale 
to alternative efficiencies. Chapter 5 of the NOPR TSD provides 
complete details on the relationships between the EU Lot 31 regression 
curves and the current CAGI database regression curves.
---------------------------------------------------------------------------

    \59\ See Task 6 Section 1.3: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    Unlike rotary air compressors, DOE lacks publicly available 
performance data for reciprocating air compressors. Furthermore, 
discussions with industry experts indicate that the EU reciprocating 
air compressor markets may not be directly analogous or representative 
of the U.S. market. Specifically, industry experts indicate that EU 
reciprocating air compressors are predominantly single-stage units 
designed for lower operating pressures and duty cycles. Alternatively, 
industry experts indicate that U.S. reciprocating compressors are a 
more balanced mix of single- and two-stage units, typically designed 
for higher duty cycles. As described in section IV.A.3.a, single-stage 
units are inherently less efficient than two-stage units, and single-
stage units tend to be designed for lower flow rates. These inherent 
differences in efficiency and flow rate make it difficult to use 
aggregated EU market data as a proxy for the U.S. market.
    Ultimately, in the absence of sufficient U.S. efficiency data, DOE 
based efficiency levels for the R3_FS_L_XX equipment class on the EU 
Lot 31 regression curve for piston standard air compressors. However, 
DOE increased the max-tech level for R3_FS_L_XX beyond that of the Lot 
31 study, based on limited confidential performance data collected by 
DOE's contractor. Chapter 5 of the NOPR TSD provides complete details 
on derivation of efficiency levels and max-tech for the R3_FS_L_XX 
equipment class.
    DOE requests comment on the use of the EU Lot 31 regression curve 
for piston standard air compressors to define the regression curve of 
the R3_FS_L_XX equipment class. This is identified as Issue 17 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
i. RP_FS_L_AC Efficiency Levels
    The proposed regression curve for the RP_FS_L_AC equipment class is 
as follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.002

Where:

 [eta]Isen\Regr\RP_FS_L_AC is the regression 
curve package isentropic efficiency for the RP_FS_L_AC equipment 
class, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

    The proposed efficiency levels for the RP_FS_L_AC equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.6.
[GRAPHIC] [TIFF OMITTED] TP19MY16.003

Where:

 [eta]Ise\STD\RP_FS_L_AC is package isentropic 
efficiency for the RP_FS_L_AC equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr\RP_FS_L_AC is the regression 
curve package isentropic efficiency for the RP_FS_L_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.6.

   Table IV.6--Efficiency Levels Analyzed for Rotary, Lubricated, Air-
                    Cooled, Fixed-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -49
EL 1..........................................................       -30
EL 2..........................................................       -15
EL 3..........................................................         0
EL 4..........................................................         5
EL 5..........................................................        13
EL 6..........................................................        30
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 4 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, 5.1,
  5.2, and 5.3. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.

ii. RP_VS_L_AC Efficiency Levels
    The proposed regression curve for the RP_VS_L_AC equipment is as 
follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.004


[[Page 31708]]


Where:

 [eta]Isen\Regr\RP_VS_L_AC is the regression 
curve package isentropic efficiency for the RP_VS_L_AC equipment 
class, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

    The proposed efficiency levels for the RP_VS_L_AC equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.7.
[GRAPHIC] [TIFF OMITTED] TP19MY16.005

Where:

 [eta]Isen\STD\RP_VS_L_AC is package isentropic 
efficiency for the RP_VS_L_AC equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr\RP_VS_L_AC is the regression 
curve package isentropic efficiency for the RP_VS_L_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.7.

   Table IV.7--Efficiency Levels Analyzed for Rotary, Lubricated, Air-
                   Cooled, Variable-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -30
EL 1..........................................................       -20
EL 2..........................................................       -10
EL 3..........................................................         0
EL 4..........................................................         5
EL 5..........................................................        15
EL 6..........................................................        33
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 4 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, 5.1,
  5.2, and 5.3. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.

iii. R3_FS_L_XX Efficiency Levels
    The proposed regression curve for the R3_FS_L_XX equipment class is 
as follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.007

Where:

 [eta]Isen\Regr\R3_FS_L_XX is the regression 
curve package isentropic efficiency for the R3_FS_L_XX equipment 
class, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

    The proposed efficiency levels for the R3_FS_L_XX equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.8.
[GRAPHIC] [TIFF OMITTED] TP19MY16.008

Where:

 [eta]Isen\STD\R3_FS_L_XX is package isentropic 
efficiency for the R3_FS_L_XX equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr\R3_FS_L_XX is the regression 
curve package isentropic efficiency for the R3_FS_L_XX equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.8.

  Table IV.8--Efficiency Levels Analyzed for Reciprocating, Lubricated,
          Air-Cooled or Water-Cooled, Fixed-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -18
EL 1..........................................................       -15
EL 2..........................................................        -5
EL 3..........................................................         0
EL 4..........................................................         5
EL 5..........................................................        20
EL 6..........................................................        60
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 4 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, 5.1,
  5.2, and 5.3. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.


[[Page 31709]]

    DOE requests comment and supporting data on the efficiency levels 
established for the RP_FS_L_AC, RP_VS_L_AC, and R3_FS_L_XX equipment 
classes. This is identified as Issue 18 in section VIII.E, ``Issues on 
Which DOE Seeks Comment.''
b. Developed From CAGI Database
    The proposed regression curve and efficiency levels for the 
RP_FS_LF_AC and RP_VS_LF_AC equipment classes are derived from data 
within the CAGI database. DOE notes that available CAGI data in each 
equipment class does not span the entire range of full-load actual 
volume flow rates evaluated. There was a lack of data at low and high 
full-load actual volume flow rates, so DOE based portions of the 
RP_FS_LF_AC and RP_VS_LF_AC equipment class regression curves on the 
analogous lubricated equipment classes. Consequently, the regression 
curves for the RP_FS_LF_AC and RP_VS_LF_AC equipment classes are 
composed of three piece-wise continuous functions. Chapter 5 of the 
NOPR TSD provides complete details on the curves developed based on the 
CAGI database.
i. RP_FS_LF_AC Efficiency Levels
    The proposed regression curve for the RP_FS_LF_AC equipment class 
is as follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.009

Where:

 [eta]Isen\Regr\RP_FS_LA is the regression curve 
package isentropic efficiency for the RP_FS_LF_AC equipment class,
 aRP\FS\LF\AC is a coefficient from Table IV.9,
 bRP\FS\LF\AC is a coefficient from Table IV.9,
 cRP\FS\LF\AC is a coefficient from Table IV.9, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

                            Table IV.9--Coefficients for RP_FS_LF_AC Regression Curve
----------------------------------------------------------------------------------------------------------------
     Full-load actual volume flow rate range (acfm)         aRP\FS\LF\AC       bRP\FS\LF\AC       cRP\FS\LF\AC
----------------------------------------------------------------------------------------------------------------
0 [eta]Isen\STD\RP_FS_LF_AC is package isentropic 
efficiency for the RP_FS_LF_AC equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr\RP_FS_LF_AC is the regression 
curve package isentropic efficiency for the RP_FS_LF_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.10.

Table IV.10--Efficiency Levels Analyzed for Rotary, Lubricant-Free, Air-
                    Cooled, Fixed-Speed, Three-Phase
------------------------------------------------------------------------
                   Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline................................................             -11
EL 1....................................................             -10
EL 2....................................................              -5
EL 3....................................................               0
EL 4....................................................             2.5
EL 5....................................................             7.5
EL 6....................................................              10
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 1 auxiliary efficiency level, beyond the
  primary efficiency levels listed in this table; this is EL 4.1. This
  auxiliary efficiency level was maintained in the spreadsheets to
  increase the granularity and improve analytical accuracy of the
  economic analyses, however, they are not carried beyond the
  spreadsheets. To maintain a consistent analytical structure with other
  equipment classes the spreadsheets contain EL 5.1, 5.2, and 5.3 which
  are equal to EL 6. Cost-efficiency relationships for these ELs are
  provided in Chapters 5 of the NOPR TSD.

ii. RP_VS_LF_AC Efficiency Levels
    The proposed regression curve for the RP_VS_LF_AC equipment class 
is as follows:

[[Page 31710]]

[GRAPHIC] [TIFF OMITTED] TP19MY16.011

Where:
 [eta]Isen\Regr_RP_VP_LF_AC is the regression 
curve package isentropic efficiency for the RP_VS_LF_AC equipment 
class,
 [alpha]RP\VS\LF\AC is a coefficient from Table IV.11,
 bRP\VS\LF\AC is a coefficient from Table IV.11,
 cRP\VS\LF\AC is a coefficient from Table IV.11, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

                           Table IV.11--Coefficients for RP_VS_LF_AC Regression Curve
----------------------------------------------------------------------------------------------------------------
    Full-load actual volume flow rate range (acfm)      [alpha]RP\VP\LF\AC     bRP\VP\LF\AC       cRP\VP\LF\AC
----------------------------------------------------------------------------------------------------------------
0 [eta]Isen\STD_RP_VS_LF_AC is package isentropic 
efficiency for the RP_VS_LF_AC equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr_RP_VS_LF_AC is the regression 
curve package isentropic efficiency for the RP_VS_LF_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.12.

Table IV.12--Efficiency Levels Analyzed for Rotary, Lubricant-Free, Air-
                   Cooled, Variable-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -13
EL 1..........................................................       -10
EL 2..........................................................        -5
EL 3..........................................................         0
EL 4..........................................................       2.5
EL 5..........................................................       7.5
EL 6..........................................................        13
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 1 auxiliary efficiency level, beyond the
  primary efficiency levels listed in this table; this is EL 4.1. This
  auxiliary efficiency level was maintained in the spreadsheets to
  increase the granularity and improve analytical accuracy of the
  economic analyses, however, they are not carried beyond the
  spreadsheets. To maintain a consistent analytical structure with other
  equipment classes the spreadsheets contain EL 5.1, 5.2, and 5.3 which
  are equal to EL 6. Cost-efficiency relationships for these ELs are
  provided in Chapters 5 of the NOPR TSD.

    DOE notes that the proposed regression curve and efficiency levels 
for the RP_VS_LF_AC equipment class were established with a limited set 
of data from the CAGI database. Specifically, the CAGI database 
included data for 13 RP_VS_LF_AC air compressors as compared to 60 for 
RP_FS_LF_AC compressors, and 835 for RP_FS_L_AC compressors. Chapter 5 
of the NOPR TSD contains complete details on the datasets and 
regression methodologies.
    DOE requests comment on the proposed efficiency levels selected for 
the RP_VS_LF_AC equipment class regarding their representation of the 
market, and any data that could improve the analysis. This is 
identified as Issue 19 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
c. Scaled From Other Equipment Classes, Using U.S. Data
    DOE scaled efficiency levels for water-cooled rotary from analogous 
air-cooled rotary equipment classes based on relationships developed 
from the CAGI database. Additionally, DOE scaled R1_FS_L_XX efficiency 
levels from R3_FS_L_XX efficiency levels based on motor data in the 
online retailer price database.
    Many air-cooled rotary air compressors are also offered in a water-
cooled variant. These variants are typically identical, except for the 
cooling method employed. The air-cooled variant will utilize one or 
more cooling fans and heat exchangers to remove heat from the 
compressed air. Alternatively, a water-cooled variant utilizes chilled 
water (from a separate chilled water system) and one or more heat 
exchanges to remove heat from the compressed air. Typically, both 
variants will remove the same amount of heat and offer the same output 
flow and pressure. The key difference is that the fan(s) used in the 
air-cooled unit are within the compressor package and cause the air-
cooled unit to consume more energy than the water-cooled unit, which 
receives water pumped from a chiller external to the compressor 
package. This means that for water-cooled units the energy used to 
remove heat by external pumps and chillers is not accounted for in the 
test procedure and not reflected in package isentropic efficiency. 
Consequently, DOE established its proposed efficiency levels for water-
cooled equipment classes by scaling analogous air-cooled efficiency 
levels to account for the lack of a fan motor. Specifically, for each 
equipment class, DOE developed a scaling relationship using the CAGI 
database and applied it to efficiency levels from the associated air-
cooled equipment class.
    Many reciprocating air compressors with motor power <=7.5-hp are 
offered with both single- and three-phase induction motors. These 
variants are typically identical, except for the motor. Consequently, 
DOE established its proposed efficiency levels for single-

[[Page 31711]]

phase equipment classes by scaling the analogous three-phase efficiency 
levels to account for inherent efficiency differences between single- 
and three-phase motors. DOE developed a scaling relationship using the 
online retailer price database and applied it to efficiency levels from 
R3_FS_L_XX. Ultimately, DOE established the proposed single- and three-
phase equipment classes and efficiency levels, such that analogous 
single- and three-phase equipment would be rated at approximately the 
same efficiency level, when evaluated with the proposed DOE test 
procedure.
    The following subsections provide the equations and d-values used 
to establish the proposed efficiency levels for the RP_FS_L_WC, 
RP_VS_L_WC, RP_FS_LF_WC, RP_VS_LF_WC, and R1_FS_L_XX equipment classes. 
Chapter 5 of the NOPR TSD provides complete details on the scaling 
relationships used to develop the proposed efficiency levels for 
equipment classes discussed in this section.
i. RP_FS_L_WC Efficiency Levels
    The proposed efficiency levels for the RP_FS_L_WC equipment class 
are derived from the RP_FS_L_AC equipment class.
    The proposed efficiency levels for the RP_FS_L_WC equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.13.
[GRAPHIC] [TIFF OMITTED] TP19MY16.013

Where:

 [eta]Isen\STD_RP_FS_L_WC is package isentropic 
efficiency for the RP_FS_L_WC equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr_RP_FS_L_AC is the regression 
curve package isentropic efficiency for the RP_FS_L_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.13.

 Table IV.13--Efficiency Levels Analyzed for Rotary, Lubricated, Water-
                    cooled, Fixed-Speed, Three-phase
------------------------------------------------------------------------
                   Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline................................................             -49
EL 1....................................................             -30
EL 2....................................................             -15
EL 3....................................................               0
EL 4....................................................               5
EL 5....................................................              13
EL 6....................................................              30
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 4 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, 5.1,
  5.2, and 5.3. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.

ii. RP_VS_L_WC Efficiency Levels
    The proposed efficiency levels for the RP_VS_L_WC equipment class 
are derived from the RP_VS_L_AC equipment class.
    The proposed efficiency levels for the RP_VS_L_WC equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.14.
[GRAPHIC] [TIFF OMITTED] TP19MY16.014

Where:

 [eta]Isen_STD_RP_VS_L_WC is package isentropic 
efficiency for the RP_VS_L_WC equipment class, for a selected 
efficiency level,
 [eta]Isen_Regr_RP_VS_L_AC is the regression 
curve package isentropic efficiency for the RP_VS_L_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.14.

 Table IV.14--Efficiency Levels Analyzed for Rotary, Lubricated, Water-
                   Cooled, Variable-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -45
EL 1..........................................................       -30
EL 2..........................................................       -15
EL 3..........................................................         0
EL 4..........................................................         5
EL 5..........................................................        15
EL 6..........................................................        34
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 4 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, 5.1,
  5.2, and 5.3. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.


[[Page 31712]]

iii. RP_FS_LF_WC Efficiency Levels
    The proposed efficiency levels for the RP_FS_LF_WC equipment class 
are derived from the RP_FS_LF_AC equipment class.
    The proposed efficiency levels for the RP_FS_LF_WC equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.16.
[GRAPHIC] [TIFF OMITTED] TP19MY16.015

Where:

 [eta]Isen\STD_RP_FS_LF_WC is package isentropic 
efficiency for the RP_FS_LF_WC equipment class, for a selected 
efficiency level,
 [alpha]RP\FS\LF\WC is a coefficient from Table IV.15,
 bRP\FS\LF\WC is a coefficient from Table IV.15,
 cRP\FS\LF\WC is a coefficient from Table IV.15,
 V1 is full-load actual volume flow rate (cubic 
feet per minute),
 [eta]Isen\Regr_RP_FS_LF_AC is the regression curve package 
isentropic efficiency for the RP_FS_LF_AC equipment class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.16.

                           Table IV.15--Coefficients for RP_FS_LF_WC Efficiency Level
----------------------------------------------------------------------------------------------------------------
    Full-load actual volume flow rate range (acfm)      [alpha]RP\FS\LF\WC     bRP\FS\LF\WC       cRP\FS\LF\WC
----------------------------------------------------------------------------------------------------------------
0 < V1 < 102..........................................                   0                  0                  0
102 <= V1.............................................            -0.00924              0.117             -0.315
----------------------------------------------------------------------------------------------------------------


   Table IV.16--Efficiency Levels Analyzed for Rotary, Lubricant-Free,
                 Water-Cooled, Fixed-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -11
EL 1..........................................................       -10
EL 2..........................................................        -5
EL 3..........................................................         0
EL 4..........................................................       2.5
EL 5..........................................................       7.5
EL 6..........................................................        10
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 2 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, and
  5.1. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. To maintain a consistent analytical structure
  with other equipment classes the spreadsheets contain EL 5.2, and 5.3
  which are equal to EL 6. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.

iv. RP_VS_LF_WC Efficiency Levels
    The proposed efficiency levels for the RP_VS_LF_WC equipment class 
are derived from the RP_VS_LF_AC equipment class.
    The proposed efficiency levels for the RP_VS_LF_WC equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.18.
[GRAPHIC] [TIFF OMITTED] TP19MY16.016

Where:

 [eta]Isen\STD_RP_VS_LF_WC is package isentropic 
efficiency for the RP_VS_LF_WC equipment class, for a selected 
efficiency level,
 [alpha]RP\VS\LF\WC is a coefficient from Table IV.17,
 bRP\VS\LF\WC is a coefficient from Table IV.17,
 cRP\VS\LF\WC is a coefficient from Table IV.17,
 V1 is full-load actual volume flow rate (cubic 
feet per minute),
 [eta]Isen\Regr_RP_VS_LF_AC is the regression 
curve package isentropic efficiency for the RP_VS_LF_AC equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.18.

[[Page 31713]]



                           Table IV.17--Coefficients for RP_VS_LF_WC Efficiency Level
----------------------------------------------------------------------------------------------------------------
    Full-load actual volume flow rate range (acfm)      [alpha]RP\VS\LF\WC     bRP\VS\LF\WC       cRP\VS\LF\WC
----------------------------------------------------------------------------------------------------------------
0 < V1 < 74...........................................                   0                  0                  0
74 <= V1..............................................            0.000173            0.00783            -0.0300
----------------------------------------------------------------------------------------------------------------


   Table IV.18--Efficiency Levels Analyzed for Rotary, Lubricant-Free,
                Water-Cooled, Variable-Speed, Three-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -13
EL 1..........................................................       -10
EL 2..........................................................        -5
EL 3..........................................................         0
EL 4..........................................................       2.5
EL 5..........................................................       7.5
EL 6..........................................................        13
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 2 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, and
  5.1. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. To maintain a consistent analytical structure
  with other equipment classes the spreadsheets contain EL 5.2, and 5.3
  which are equal to EL 6. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.

    DOE notes that the proposed regression curve and efficiency levels 
for the RP_VS_LF_WC equipment class were established with a limited set 
of data from the CAGI database. Specifically, the CAGI database 
included data for 13 RP_VS_LF_WC air compressors as compared to 63 for 
RP_FS_LF_WC compressors, and 440 for RP_FS_L_WC compressors. Chapter 5 
of the NOPR TSD contains complete details on the datasets and 
regression methodologies.
    DOE requests comment on the proposed efficiency levels selected for 
the RP_VS_LF_WC equipment class regarding their representation of the 
market, and any data that could improve the analysis. This is 
identified as Issue 20 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
v. R1_FS_L_XX Efficiency Levels
    The proposed efficiency levels for the R1_FS_L_XX equipment class 
are defined by the following equation, in conjunction with the d-values 
in Table IV.19.
[GRAPHIC] [TIFF OMITTED] TP19MY16.017

Where:
 [eta]Isen\STD_R1_FS_L_XX is package isentropic 
efficiency for the R1_FS_L_XX equipment class, for a selected 
efficiency level,
 [eta]Isen\Regr_R3_FS_L_XX is the regression 
curve package isentropic efficiency for the R3_FS_L_XX equipment 
class, and
 d is the d-value for each proposed efficiency level, as 
specified in Table IV.19.

 Table IV.19--Efficiency Levels Analyzed for Reciprocating, Lubricated,
          Air-Cooled or Water-Cooled, Fixed-Speed, Single-Phase
------------------------------------------------------------------------
                      Efficiency level *                         d-Value
------------------------------------------------------------------------
Baseline......................................................       -18
EL 1..........................................................       -15
EL 2..........................................................        -5
EL 3..........................................................         0
EL 4..........................................................         5
EL 5..........................................................        20
EL 6..........................................................        60
------------------------------------------------------------------------
* DOE notes that in this NOPR, the spreadsheets for the downstream
  economic analyses contain 4 auxiliary efficiency levels, beyond the
  primary efficiency levels listed in this table; these are EL 4.1, 5.1,
  5.2, and 5.3. These auxiliary efficiency levels were maintained in the
  spreadsheets to increase the granularity and improve analytical
  accuracy of the economic analyses, however, they are not carried
  beyond the spreadsheets. Cost-efficiency relationships for these ELs
  are provided in Chapters 5 of the NOPR TSD.

    DOE requests comment and supporting data on the proposed efficiency 
levels established for the R1_FS_L_XX equipment class. This is 
identified as Issue 21 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
6. Manufacturer Selling Price
    This section presents the MSP-efficiency relationship for each 
equipment class and discusses the analytical methods used to develop 
these relationships. For all equipment classes, DOE defines MSP by a 
mathematical relationship between full-load actual volume flow rate and 
package isentropic efficiency. However, for the purposes of DOE's 
analysis, package isentropic efficiency is represented indirectly 
through the use of a d-value. For a complete discussion of the d-value, 
please refer to section IV.C.5.
    DOE pursued different analytical methods to find the MSP-efficiency 
relationships for different equipment classes. These analytical methods 
can be grouped into four general categories, as presented in Table 
IV.20.

[[Page 31714]]



       Table IV.20--Manufacturer Selling Price Analytical Methods
------------------------------------------------------------------------
                 Method                    Applicable equipment classes
------------------------------------------------------------------------
Direct Scaling from Lot 31.............  RP_FS_L_AC
                                         RP_VS_L_AC
Scaling with U.S. MSP Data.............  RP_FS_LF_AC
                                         RP_VS_LF_AC
MSPs for Water-Cooled Equipment........  RP_FS_L_WC
                                         RP_VS_L_WC
                                         RP_FS_LF_WC
                                         RP_VS_LF_WC
New Relationships from U.S. Data.......  R3_FS_L_XX
                                         R1_FS_L_XX
------------------------------------------------------------------------

    Jenny commented that pricing information that is publicly available 
may not be accurate or contain consistent information between 
manufacturers. Specifically, key pricing and costing information such 
as labor may be inconsistent because manufacturers operate in different 
countries with different costs of labor. (Jenny, No. 0005 at p. 4)
    DOE's analysis includes MSP information gathered from a variety of 
sources. These sources include publicly available data as well as 
confidential manufacturer data collected by a DOE contractor. Data 
collected under non-disclosure agreement was vetted by DOE's contractor 
for accuracy and consistency between manufacturers. DOE used all 
available datasets to establish MSP-efficiency relationships for each 
equipment class. The following sections present the analytical methods 
DOE applied to each equipment class to develop an MSP-efficiency 
relationship.
a. Direct Scaling From Lot 31
    When possible, DOE used the Lot 31 study's MSP-Flow-Efficiency 
Relationships as a starting point to construct analogous MSP-Flow-
Efficiency Relationships for U.S. equipment. To do so, DOE scaled Lot 
31 MSP-Flow-Efficiency Relationships with analogous equipment classes 
(i.e., RP_FS_L_AC, and RP_VS_L_AC) using confidential, U.S. MSP data. 
Specifically, DOE scaled the Lot 31 study's absolute equipment MSPs to 
a magnitude that represents MSPs offered in the U.S. market. Although 
MSP magnitudes were scaled, DOE maintained the incremental MSP trends 
established in the Lot 31 study. Chapter 5 of the NOPR TSD provides 
details on the calculation of MSP for each rotary equipment class.
    DOE requests comment on the use of Lot 31 MSP-Flow-Efficiency 
Relationships to develop MSP-flow-efficiency relationships for the 
proposed RP_FS_L_AC and RP_VS_L_AC equipment classes. This is 
identified as Issue 22 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
i. RP_FS_L_AC MSP-Flow-Efficiency Relationship
    The MSP-flow-efficiency relationship for the RP_FS_L_AC equipment 
class is as follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.018

Where:

 MSPRP_FS_L_AC is the manufacturer selling price 
for the RP_FS_L_AC at a selected efficiency level and full-load 
actual volume flow rate,
 [eta]Isen\STD_RP_FS_L_AC is package isentropic 
efficiency for the RP_FS_L_AC equipment class, for a selected 
efficiency level and full-load actual volume flow rate, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

    MSP for each efficiency level for the RP_FS_L_AC equipment class is 
presented in Table IV.21 at representative full-load actual volume flow 
rates.

                                           Table IV.21--Representative MSPs for the RP_FS_L_AC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full-load actual volume flow rate (acfm)     Baseline          EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
10......................................          $2,166          $2,351          $2,618          $3,024          $3,195          $3,510          $4,368
20......................................           2,437           2,784           3,192           3,742           3,960           4,349           5,349
50......................................           3,350           4,007           4,680           5,506           5,818           6,357           7,677
100.....................................           4,975           6,039           7,063           8,264           8,707           9,460          11,257
200.....................................           8,517          10,319          11,983          13,877          14,562          15,716          18,414
500.....................................          20,350          24,243          27,719          31,572          32,943          35,230          40,484
1000....................................          41,492          48,764          55,158          62,159          64,633          68,739          78,091
2000....................................          84,566          98,510         110,668         123,888         128,539         136,240         153,696
5000....................................         208,211         242,244         271,856         304,004         315,302         333,997         376,324
--------------------------------------------------------------------------------------------------------------------------------------------------------

ii. RP_VS_L_AC MSP-Flow-Efficiency Relationship
    The MSP-flow-efficiency relationship for the RP_VS_L_AC equipment 
class is as follows:

[[Page 31715]]

[GRAPHIC] [TIFF OMITTED] TP19MY16.019

Where:

     MSPRP_VS_L_AC is the manufacturer selling 
price for the RP_VS_L_AC at a selected efficiency level and full-
load actual volume flow rate,
     [eta]Isen\STD_RP_VS_L_AC is package 
isentropic efficiency for the RP_VS_L_AC equipment class, for a 
selected efficiency level and full-load actual volume flow rate, and
     V1 is full-load actual volume flow rate 
(cubic feet per minute).

    MSP for each efficiency level for the RP_VS_L_AC equipment class is 
presented in Table IV.22 at representative full-load actual volume flow 
rates.

                                           Table IV.22--Representative MSPs for the RP_VS_L_AC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full-load actual volume flow rate (acfm)     Baseline          EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
10......................................          $3,330          $3,386          $3,514          $3,742          $3,904          $4,340          $5,587
20......................................           3,606           3,818           4,131           4,565           4,834           5,488           7,109
50......................................           4,935           5,474           6,139           6,943           7,401           8,437          10,743
100.....................................           7,577           8,526           9,624          10,883          11,576          13,097          16,314
200.....................................          13,526          15,189          17,044          19,101          20,209          22,590          27,461
500.....................................          33,464          37,092          41,031          45,292          47,548          52,317          61,802
1000....................................          68,234          75,013          82,293          90,093          94,193         102,806         119,743
2000....................................         135,819         148,853         162,796         177,678         185,481         201,831         233,842
5000....................................         312,284         344,330         378,745         415,616         434,998         475,708         555,762
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Scaling With U.S. MSP Data
    For rotary equipment classes with no Lot 31 study analogues (i.e., 
RP_FS_LF_AC and RP_VS_LF_AC), DOE used confidential, U.S. MSP data from 
representative lubricant-free units to scale the lubricated MSP-flow-
efficiency relationship, presented in section I.A.1.a, to represent the 
U.S. lubricant-free MSP-flow-efficiency relationship.
i. RP_FS_LF_AC MSP-Flow-Efficiency Relationship
    DOE used MSP data from equipment of the same full-load actual 
volume flow rate and d-value to scale the RP_FS_L_AC MSP-flow-
efficiency relationship to a new RP_FS_LF_AC MSP-flow-efficiency 
relationship. The new relationship resulted in significantly larger 
absolute MSP for RP_FS_LF_AC, as compared to RP_FS_L_AC. The new 
relationship also resulted in significantly larger incremental MSP for 
RP_FS_LF_AC, as compared to RP_FS_L_AC. Equation 20 provides the 
mathematical relationship between RP_FS_L_AC and RP_FS_LF_AC MSP for a 
given d-value and full-load actual volume flow rate. Chapter 5 of the 
NOPR TSD provides details on the calculation of MSP for each rotary 
equipment class.
    DOE requests comment on the methods used to develop RP_FS_LF_AC 
(lubricant-free) incremental MSP. Specifically, DOE requests comment on 
the use of RP_FS_L_AC (lubricated) incremental MSP relationship to 
develop a lubricant-free incremental MSP relationship. This is 
identified as Issue 23 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
    The MSP relationship for the RP_FS_LF_AC equipment class is as 
follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.020


Where:

 MSPRP_FS_LF_AC is the manufacturer selling price 
for the RP_FS_LF_AC at a selected d-value and full-load actual 
volume flow rate, and
 MSPRP_FS_L_AC is the manufacturer selling price 
for the RP_FS_L_AC at the same d-value and full-load actual volume 
flow rate.

    MSP for each efficiency level for the RP_FS_LF_AC equipment class 
is presented in Table IV.25 at representative full-load actual volume 
flow rates.

[[Page 31716]]



                                          Table IV.23--Representative MSPs for the RP_FS_LF_AC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full-load actual volume flow rate (acfm)     Baseline          EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
10......................................         $37,453         $37,488         $37,678         $37,893         $38,010         $38,265         $38,403
20......................................          38,316          38,365          38,623          38,905          39,055          39,376          39,547
50......................................          40,516          40,591          40,978          41,392          41,608          42,061          42,298
100.....................................          44,013          44,122          44,686          45,280          45,588          46,227          46,558
200.....................................          51,202          51,376          52,265          53,193          53,671          54,656          55,163
500.....................................          74,101          74,456          76,266          78,137          79,095          81,060          82,066
1000....................................         113,933         114,580         117,869         121,256         122,987         126,523         128,330
2000....................................         194,459         195,681         201,892         208,275         211,531         218,175         221,563
5000....................................         428,595         431,568         446,672         462,185         470,096         486,231         494,456
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE requests comment and supporting data on the MSPs established 
for the RP_FS_LF_AC equipment class. This is identified as Issue 24 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
ii. RP_VS_LF_AC MSP-Flow-Efficiency Relationship
    As with RP_FS_LF_AC, DOE used MSP data from equipment of the same 
full-load actual volume flow rate and d-value to scale the RP_VS_L_AC 
MSP-flow-efficiency relationship to a new RP_VS_LF_AC MSP-flow-
efficiency relationship. The new relationship resulted in significantly 
larger absolute MSP for RP_VS_LF_AC, as compared to RP_VS_L_AC. The new 
relationship also resulted in significantly larger incremental MSP for 
RP_VS_LF_AC, as compared to RP_VS_L_AC. Equation 21 provides the 
mathematical relationship between RP_VS_L_AC and RP_FS_VF_AC MSP, for a 
given d-value and full-load actual volume flow rate. Chapter 5 of the 
NOPR TSD provides details on the calculation of MSP for each rotary 
equipment class.
    DOE requests comment on the methods used to develop RP_VS_LF_AC 
(lubricant-free) incremental MSP. Specifically, DOE requests comment on 
the use of RP_VS_L_AC (lubricated) incremental MSP relationship to 
develop a lubricant-free incremental MSP relationship. This is 
identified as Issue 25 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
    The MSP relationship for the RP_VS_LF_AC equipment class is as 
follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.021


Where:

 MSPRP_VS_LF_AC is the manufacturer selling price 
for the RP_VS_LF_AC at a selected d-value and full-load actual 
volume flow rate,
 MSPRP_FS_LF_AC is the manufacturer selling price 
for the RP_FS_LF_AC at the same d-value and full-load actual volume 
flow rate, and
 V1 is full-load actual volume flow rate (cubic 
feet per minute).

    MSP for each efficiency level for the RP_VS_LF_AC equipment class 
is presented in Table IV.24 at representative full-load actual volume 
flow rates.

                                          Table IV.24--Representative MSPs for the RP_VS_LF_AC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full-load actual volume flow rate (acfm)     Baseline          EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
10......................................         $37,751         $37,854         $38,044         $38,259         $38,376         $38,631         $38,944
20......................................          38,854          38,998          39,255          39,538          39,688          40,009          40,393
50......................................          41,804          42,025          42,412          42,826          43,042          43,495          44,025
100.....................................          46,567          46,892          47,456          48,050          48,358          48,996          49,735
200.....................................          56,300          56,816          57,706          58,633          59,111          60,096          61,225
500.....................................          86,851          87,908          89,718          91,589          92,548          94,512          96,747
1000....................................         139,459         141,386         144,676         148,063         149,794         153,330         157,338
2000....................................         245,550         249,196         255,407         261,790         265,046         271,690         279,202
5000....................................         556,337         565,206         580,311         595,824         603,735         619,870         638,105
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE requests comment and supporting data on the MSPs established 
for the RP_VS_LF_AC equipment class. This is identified as Issue 26 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
c. MSPs for Water-Cooled Equipment
    As discussed in section IV.C.5.c, many air-cooled rotary air 
compressors are also offered in a water-cooled variant. These variants 
are typically identical, except for the cooling method employed. The 
air-cooled variant will utilize one or more cooling fans and heat 
exchangers to remove heat from the compressed air. Alternatively, a 
water-cooled variant utilizes chilled water (from a separate chilled 
water system) and one or more heat exchanges to remove heat from the 
compressed air. As such, the MSP of analogous air- and water-cooled 
equipment, not factoring in the cooling system, is expected to be 
equivalent. Furthermore, DOE expects that any difference in incremental 
MSP between air- and water-cooled systems will not be significant, when 
compared to the incremental MSP of the greater package. Consequently, 
DOE concluded

[[Page 31717]]

that the incremental cost and price of efficiency will be the same for 
both air-cooled and water-cooled equipment classes at each efficiency 
level. Thus, DOE did not develop unique MSP-flow-efficiency 
relationships for water-cooled equipment classes.
    Specifically, for all water-cooled equipment classes, DOE used 
incremental MSPs equivalent to analogous air-cooled equipment classes.
    DOE requests comment on the use of incremental MSP for air-cooled 
equipment classes to represent incremental MSP for water-cooled 
equipment classes. This is identified as Issue 27 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
d. New Relationships From U.S. Data
    As discussed in section IV.C.5.a, DOE compared the Lot 31 study 
MSP-Flow-Efficiency Relationship for three-phase reciprocating air 
compressors to U.S. equipment data and concluded that the Lot 31 study 
relationship was not representative of the U.S. market. Consequently, 
DOE used the online retailer price database and confidential U.S. MSP 
data from representative units to establish a new relationship between 
MSP, d-value, and full-load actual volume flow rate for three-phase 
reciprocating air compressors. Chapter 5 of the NOPR TSD provides 
additional information on the calculation of MSP for each reciprocating 
equipment class.
i. R3_FS_L_XX MSP-Flow-Efficiency Relationship
    The MSP-Flow-Efficiency Relationship for the R3_FS_L_XX equipment 
class is as follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.022


Where:

     MSPR3_FS_L_XX is the manufacturer selling 
price for the R3_FS_L_XX at a selected efficiency level,
 V1 is full-load actual volume flow rate (cubic 
feet per minute), and
 d is the d-value for each efficiency level.

    MSP for each efficiency level for the R3_FS_L_XX equipment class is 
presented in Table IV.25 at representative full-load actual volume flow 
rates.

                                           Table IV.25--Representative MSPs for the R3_FS_L_XX Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
Full-load actual volume flow rate (acfm)     Baseline          EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
5.......................................            $429            $456            $544            $588            $632            $764          $1,117
10......................................             722             767             915             989           1,063           1,286           1,880
25......................................           1,437           1,526           1,821           1,969           2,116           2,559           3,740
50......................................           2,419           2,568           3,065           3,313           3,562           4,307           6,295
75......................................           3,279           3,482           4,155           4,492           4,829           5,840           8,535
100.....................................           4,070           4,321           5,158           5,576           5,994           7,248          10,594
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE requests comment and supporting data on the MSPs established 
for the R3_FS_L_XX equipment class. This is identified as Issue 28 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
ii. R1_FS_L_XX MSP-Flow-Efficiency Relationship
    As discussed in section IV.C.5.c, many reciprocating air 
compressors with motor power <=7.5-hp are offered with both single- and 
three-phase induction motors. These variants are typically identical, 
except for the motor. Consequently, the MSP of analogous single- and 
three-phase equipment, not factoring the motor price, is expected to be 
equivalent. Furthermore, DOE expects that any difference in incremental 
MSP between single- and three-phase motors will not be significant when 
compared to the incremental MSP of the greater package. Consequently, 
DOE concluded that the incremental cost and price of efficiency will be 
the same for single- and three-phase equipment classes at each 
efficiency level. DOE notes that the efficiency levels for single- and 
three-phase equipment are defined by the same d-values, but are scaled 
to account for the inherent differences in attainable efficiency 
between single- and three-phase equipment.
    Specifically, DOE used the MSPs for the R3_FS_L_XX equipment class 
to directly represent the MSPs for the R1_FS_L_XX equipment class. This 
means that the incremental cost to move from one d-value (or efficiency 
level) to another, is identical between single- and three-phase units 
of the same full-load actual volume flow rate.
    The MSP relationship for the R1_FS_L_XX equipment class is 
identical to the equation for the R3_FS_L_XX equipment class, and is as 
follows:
[GRAPHIC] [TIFF OMITTED] TP19MY16.023

Where:

 MSPR1_FS_L_XX is the manufacturer selling price 
for the R1_FS_L_XX at a selected efficiency level,
 V1 is full-load actual volume flow rate (cubic 
feet per minute), and
 d is the d-value for each efficiency level.

    MSP for each efficiency level for the R1_FS_L_XX equipment class at 
representative full-load actual volume flow rates is equivalent to the 
MSPs in

[[Page 31718]]

Table IV.25 for the R3_FS_L_XX equipment class.
    DOE requests comment on the use of incremental MSP for the 
R3_FS_L_XX equipment classes to represent incremental MSP for the 
R1_FS_L_XX equipment classes. This is identified as Issue 29 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
7. Manufacturer Production Cost
    As discussed in the previous section, DOE developed MSP-flow-
efficiency relationships for each equipment class. However, certain 
downstream analyses, such as the MIA, require DOE to also assess the 
relationship between manufacturer production costs (MPCs), flow, and 
efficiency. To determine the MPC-flow-efficiency relationship, DOE 
backed out manufacturer markups from each MSP-flow-efficiency 
relationship. The manufacturer markup is defined as the ratio of MSP to 
MPC and covers non-production costs such as selling, general and 
administrative expenses (SG&A); research and development expenses 
(R&D), interest expenses, and profit. DOE developed estimates of 
manufacturer markups based on confidential data obtained during 
confidential manufacturer interviews. DOE's estimates of markups are 
presented in Table IV.26.

                 Table IV.26--Baseline Markup Estimates
------------------------------------------------------------------------
                     Equipment class                          Markup
------------------------------------------------------------------------
RP_FS_L_AC..............................................            1.35
RP_VS_L_AC
RP_FS_L_WC..............................................
RP_VS_L_WC..............................................
RP_FS_LF_AC.............................................            1.40
RP_VS_LF_AC
RP_FS_LF_WC.............................................
RP_VS_LF_WC.............................................
R3_FS_L_XX..............................................            1.26
R1_FS_L_XX
------------------------------------------------------------------------

    The MIA also requires MPCs to be disaggregated the MPCs into 
material, labor, depreciation, and overhead costs. DOE estimated MPC 
breakdowns based on information gathered from consultants familiar with 
the compressor manufacturing industry. Table IV.27 presents DOE's 
estimates for material, labor, depreciation, and overhead breakdown.

              Table IV.27--Breakdown of MPC for Compressors
------------------------------------------------------------------------
                                                           Percentage of
                        Category                             total MPC
------------------------------------------------------------------------
Materials...............................................            53.8
Labor...................................................            23.1
Depreciation............................................             4.1
Overhead................................................            19.0
------------------------------------------------------------------------

    DOE requests comment on its estimates for manufacturer markups, as 
well as material, labor, depreciation, and overhead breakdowns. This is 
identified as Issue 30 in section VIII.E, ``Issues on Which DOE Seeks 
Comment.''
8. Other Analytical Outputs
    In the engineering analysis DOE calculated values for full-load 
power and no load power for use in cost-benefit calculations for 
individual end users, manufacturers, and the Nation. Full-load power 
was calculated for each equipment classes using the formula proposed 
for package isentropic efficiency in the test procedure NOPR and the 
outputs of efficiency, full-load actual volume flow rate, and pressure 
from the engineering analysis. DOE used the CAGI database to establish 
a relationship and calculate values for no load power based on full-
load power. Chapter 5 of the NOPR TSD provides additional information 
on these outputs.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) in the distribution 
chain and sales taxes to convert the MSP estimates derived in the 
engineering analysis to end user prices, which are then used in the LCC 
and PBP analysis and in the manufacturer impact analysis. At each step 
in the distribution channel, companies mark up the price of the 
equipment to cover business costs and profit margin. For compressors, 
the main distribution channels are (1) manufacturers directly to end-
users, (2) manufacturers to distributors to end-users, (3) 
manufacturers to contractors to end-users, and (4) manufacturers to 
end-users through other means. Table IV.28 shows the estimated market 
shares of each channel, based on air equipment type and capacity.

                                                                           Table IV.28--Compressors Distribution Chain
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Rotary
                                                                        Reciprocating
                                      ----------------------------------------------------------------------------------------------------------------------------------------------------------
Channel structure                                                                                                                               <500 ACFM   >=500 ACFM    <100 ACFM   >=100 ACFM
                                                                                                                                                      (%)          (%)          (%)          (%)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer..........................................................................................................  User................          7.5         20.0          5.0         20.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer.........................                            Distributor/Manufacturer Rep                           User................         85.0         77.5         75.0         75.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer.........................  Distributor/Manufacturer Rep.....................  Contractor..................  User................          5.0          2.5         15.0          5.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturer.........................                                       Other                                       User................          2.5          0.0          5.0          0.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    Total...................................................................................................................................          100          100          100          100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE developed separate markups for baseline equipment (baseline 
markups) and for the incremental cost of more-efficient equipment 
(incremental markups). Incremental markups are coefficients that relate 
the change in the MSP of higher-efficiency models to the change in the 
retailer sales price.
    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) \60\ to develop original equipment manufacturer markups; (2) 
the U.S. Census Bureau 2012 Annual Wholesale Trade Survey, Machinery,

[[Page 31719]]

Equipment, and Supplies Merchant Wholesalers \61\ to develop 
distributor markups; and (3) 2013 RS Means Electrical Cost Data \62\ to 
develop mechanical contractor markups.
---------------------------------------------------------------------------

    \60\ U.S. Census Bureau (2007). Economic Census Manufacturing 
Industry Series (NAICS 33 Series). http://www.census.gov/manufacturing/asm.
    \61\ U.S. Census Bureau (2012). Annual Wholesale Trade Survey, 
Machinery, Equipment, and Supplies Merchant Wholesalers (NAICS 
4238). http://www.census.gov/wholesale/index.html.
    \62\ RS Means (2013), Electrical Cost Data, 36th Annual Edition 
(Available at: http://www.rsmeans.com).
---------------------------------------------------------------------------

    In addition to the markups, DOE derived State and local taxes from 
data provided by the Sales Tax Clearinghouse. 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.
    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for compressors.
    Because the identified market channels are complex and their 
characterization required a number of assumptions, DOE seeks input on 
its analysis of market channels listed above in Table IV.28, 
particularly related to whether the channels include all necessary 
intermediate steps, and the estimated market share of each channel. 
This is identified as Issue 31 in section VIII.E, ``Issues on Which DOE 
Seeks Comment.''

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of air compressors at different efficiencies in 
representative U.S. manufacturing and commercial facilities, and to 
assess the energy savings potential of increased air compressor 
efficiency. The energy use analysis estimates the range of energy use 
of air compressors in the field (i.e., as they are actually used by end 
users). The energy use analysis provides the basis for other analyses 
DOE performed, particularly assessments of the energy savings and the 
savings in end user operating costs that could result from adoption of 
new standards.
    Annual energy use of air compressors depends on the utilization of 
the equipment, which is influenced by air compressor application, 
annual hours of operation, load profiles, capacity controls, and 
compressor sizing. The annual energy use is calculated as the sum of 
input power at each load point multiplied by the annual operating hours 
at each respective load point.
1. Applications
    DOE found that air compressors operate in response to system 
demands in three general ways, which were classified as applications. 
DOE determined these applications after examining available field 
assessment data from two database sources: (1) A database of motor 
nameplate and field data compiled by the Washington State University 
(WSU) Extension Energy Program, Applied Proactive Technologies (APT), 
and New York State Energy Research and Development Authority (NYSERDA) 
(``WSU/NYSERDA database'') \63\ and (2) the Northwest Industrial Motor 
Database.\64\ Based on the distribution of compressor-specific 
assessments found in these databases, DOE defined three application 
types to capture variations in air demand and control strategies. The 
three applications types are defined as:
---------------------------------------------------------------------------

    \63\ The motors database is composed of information gathered by 
WSU and APT during 123 industrial motor surveys or assessments: 11 
motor assessments were conducted between 2005 and 2011 and occurred 
in industrial plants; 112 industrial motor surveys were conducted 
between 2005 and 2011 and were funded by NYSERDA and conducted in 
New York State.
    \64\ Northwest Industrial Motor Database Summary, 2009, 
Strategic Energy Group.
---------------------------------------------------------------------------

    Trim: Compressors equipped with controls configured to serve 
fluctuating air demand. The trim application is used to represent 
either the operation of an individual compressor, or a compressor 
within a compressor plant, that serves the fluctuating portion of the 
demand.
    Base load: Compressors equipped with controls configured to serve 
steady-state air demands. The base-load application is used to 
represent a compressor within a compressor plant that serves the 
constant portion of fluctuating demand, while the remaining fluctuating 
portion of demand is covered by a trim application.\65\
---------------------------------------------------------------------------

    \65\ Air demand (in cfm)) can vary considerably during plant 
operations. A portion of this air demand may be steady-state, 
driving equipment that is run constantly, while the remaining 
portion may be fluctuating.
---------------------------------------------------------------------------

    Intermittent: Compressors equipped with controls configured to 
serve sporadic loads. For example, these could be operated as back-up 
compressors for either base-load or trim compressors, or as a dedicated 
air compressor to a specific process such as sand blasting or 
fermentation.
    Table IV.29 shows the distribution of air compressor application 
for both rotary and reciprocating air compressors. DOE seeks comment on 
its distribution of air compressors application. This is identified as 
Issue 32 in section VIII.E, ``Issues on Which DOE Seeks Comment.''

      Table IV. 29--Distribution of Air Compressors by Application
------------------------------------------------------------------------
                                                            Probability
                       Application                              (%)
------------------------------------------------------------------------
Trim....................................................              50
Base-load...............................................              28
Intermittent............................................              22
------------------------------------------------------------------------

2. Annual Hours of Operation
    DOE constructed a probability distribution of average annual hours 
of operation for each of the three application types based on NYSEDA 
and WSU system assessments data discussed previously and Ecodesign 
Preparatory Study on Electric motor systems/Compressors (Lot 31 
Study).\66\
---------------------------------------------------------------------------

    \66\ Ecodesign Preparatory Study on Electric Motor Systems/
Compressors; 2014; Prepared for the European Commission by Van 
Holsteijn en Kemna B.V. (VHK); ENER/C3/413-2010-LOT 31-SI2.612161; 
http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-
0031.
---------------------------------------------------------------------------

    Table IV.30 shows the distribution of annual hours of operation for 
each application by equipment type, where each row is the probability 
of a compressor's annual operating hours when operated at a specific 
application.

                                         Table IV. 30--Distribution of Annual Hours of Operation by Application
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Rotary                                       Reciprocating
                   Probability *  (%)                    -----------------------------------------------------------------------------------------------
                                                             Base-load         Trim        Intermittent      Base-load         Trim        Intermittent
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................           4,000           2,000           1,000           1,100             650             150
20......................................................           6,552           6,552           3,876           1,198             708             202
40......................................................           7,446           7,446           4,400           1,361             804             338
60......................................................           8,400           8,400           5,928           1,535           1,083             368
80......................................................           8,400           8,400           8,064           1,601           1,474             395

[[Page 31720]]

 
100.....................................................           8,400           8,400           8,400           1,601           1,601             731
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE assumes a uniform distribution between the listed values.

    DOE requests comment and information on average annual operating 
hours for the compressor types and applications in the scope of this 
rulemaking. This is identified as Issue 33 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
3. Load Profiles
    Information on typical load profiles for compressors is not 
available in the public domain. DOE reviewed resources provided by 
stakeholders, as well as sample compressed air system assessments of 
commercial and industrial customers. Given the lack of data, DOE 
developed several load profiles based on how typical compressor 
applications would likely be employed in the field. Each compressor 
load profile is approximated by weights that specify the percentage of 
time the compressor operates at one of four load points: 20, 40, 70, 
and 100 percent of its duty point airflow.\67\ Load profiles are then 
mapped to each application type to capture compressor operation in the 
field; this mapping is shown in Table IV.32. The four load profile 
types are described below:
---------------------------------------------------------------------------

    \67\ DOE assumes that 20-percent is the lowest point at which a 
compressor will operate before being cycled by capacity controls 
into its Stop or Unload status. See chapter 7 of the TSD for more 
information on capacity controls.
---------------------------------------------------------------------------

    Flat-load profile: Represents a constant maximum airflow demand. 
All annual hours of operation are assigned to the duty point airflow. 
The flat-load profile is used for most base-load applications, and for 
intermittent applications to represent the event where a intermittent 
compressor is operating in a base-load role. It can also represent a 
situation where intermittent demand has been attenuated due to the 
inclusion of appropriately-sized secondary (demand) air receiver 
storage to the compressed air system.
    High-load profile: Represents a high fraction of annual operating 
hours spent at, or near the maximum airflow demand. The annual hours of 
operation are distributed across the higher airflow load points. The 
high-load profile is used to represent most trim applications, and some 
base-load applications.
    Low-load profile: Represents a low fraction of annual operating 
hours spent at maximum air flow. Annual hours of operation are 
distributed across the lower airflow load points. Low-load profile, 
although undesirable, occurs if a single compressor is supplying 
airflow to a range of tools, with only a small fraction of operating 
hours at which all of these tools are operating. This profile is also 
used with both trim and intermittent applications.
    Even-load profile: Represents an even distribution of annual 
operating hours spent at each airflow load point. This load profile is 
a characteristic of trim or intermittent applications. Table IV.31 
shows the percentage of annual operating hours at each of the load 
points described above for the four load profiles. Table IV.32 shows 
the assumed probability of each type of load profile being selected for 
each application type.

               Table IV. 31--Fraction of Annual Operating Hours (%) as a Fraction of Rated Airflow
----------------------------------------------------------------------------------------------------------------
                                                                           Load profile
                 Load point  (%)                 ---------------------------------------------------------------
                                                     Flat  (%)       High  (%)       Low  (%)        Even  (%)
----------------------------------------------------------------------------------------------------------------
20..............................................               0               0              30               0
40..............................................               0              10              30            33.3
70..............................................               0              40              30            33.3
100.............................................             100              50              10            33.3
----------------------------------------------------------------------------------------------------------------


       Table IV. 32--Distribution of Load Profiles by Application
------------------------------------------------------------------------
                                                           Load profile
            Application                  Load profile       probability
------------------------------------------------------------------------
Trim...............................  Flat.
                                     Even...............              40
                                     Low................              40
                                     High...............              20
Base-load..........................  Flat...............              80
                                     Even.
                                     Low.
                                     High...............              20
Intermittent.......................  Flat...............              30
                                     Even...............              20
                                     Low................              20
                                     High...............              30
------------------------------------------------------------------------

    DOE requests comment and information on typical load profiles for 
the air compressor types and applications in the scope of this 
rulemaking. This is identified as Issue 34 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
4. Capacity Control Strategies
    Facility demands for compressed air rarely match a compressor's 
rated air capacity. To account for this discrepancy, some form of 
compressed air control strategy is necessary. Some forms of capacity 
control only apply to certain compressor designs and are effective over 
a limited range of a compressor's capacity. In addition, some capacity 
controls can be used in combination. As the capacity is regulated, the 
power required for the compressor to meet the airflow demand will 
change depending on the chosen control strategy. Chapter 7 of the NOPR 
TSD describes the implemented control in detail with mathematical 
models for each of the following control strategies: Start/Stop, Load/
Unload (2-step), Inlet Valve Modulation, Variable Displacement, and 
Multi-step. DOE also included the following combined control 
strategies: Inlet Valve Modulation/Unload, Variable Displacement/
Unload, and Multi-step/Unload. DOE modeled these control strategies 
largely on the following

[[Page 31721]]

sources: Analysis Methodology Manual for AIRMaster Compressed Air 
System Audit and Analysis Software,\68\ CAGI's Compressed Air and Gas 
Handbook,\69\ and Compressed Air System Controls.\70\
---------------------------------------------------------------------------

    \68\ Wheeler, G. M., Bessey, E. G. & McGill, R. D. Analysis 
Methodology Manual for AIRMaster Compressed Air System Audit and 
Analysis Software, 1997.
    \69\ McCulloh, D. M. Compressed Air and Gas Handbook. Compressed 
Air and Gas Institute (CAGI), 2003. at <http://www.cagi.org.
    \70\ Compressed Air Challenge, U.S. DOE, Compressed Air System 
Controls, 1998, at <https://www.compressedairchallenge.org/library/factsheets/factsheet06.pdf.
---------------------------------------------------------------------------

5. Compressor Sizing
    In the Framework Document, DOE requested information on compressor 
sizing. CAGI noted that demand of operation dictates whether an 
installed system is adequate, inadequate, or oversized, but was unsure 
whether there are data available as to the number of systems that may 
be potentially oversized at the point of sale. (CAGI, No. 0014 at p. 
210) Kaeser commented that they often see oversizing--specifically 
multiple units running at varying part-load levels. Kaeser stated that 
this is more of an issue of how compressors are controlled. (Kaeser 
Compressors, No. 0014 at p. 212-213) DOE was unable to find any 
information quantifying the degree of oversizing at the point of sale. 
In addition, DOE was unable to find information quantifying the 
frequency that compressors are misconfigured or oversized in the field, 
so DOE assumed that compressors were perfectly sized for this analysis.
    DOE seeks data on the degree that compressors are over- or under-
sized for an intended application. Specifically, DOE requests data on 
the degree that air compressors are operated at duty points other than 
their intended design point. This is identified as Issue 35 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
    Additionally, Scales commented that air compressors are often set 
to operate at an elevated pressure, which increases input power as well 
as compressed air output. (W. Scales, No. 0020 at p. 1) DOE was unable 
to find any information quantifying the impacts of operating air 
compressors at pressures other than at their specified design point. 
DOE requests information and data on the degree that a compressor's 
pressure can be set above or below its design point. Additionally, DOE 
requests information and data on air compressor efficiency when it is 
operated above the design point pressure. This is identified as Issue 
36 in section VIII.E, ``Issues on Which DOE Seeks Comment.''
    Chapter 7 of the NOPR TSD provides details on DOE's energy use 
analysis for air compressors.
F. Life-Cycle Cost and Payback Period Analysis
    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual end users of potential energy conservation standards for 
air compressors. The effect of new or amended energy conservation 
standards on individual end users usually involves a reduction in 
operating cost and an increase in purchase cost. DOE used the following 
two metrics to measure end-user impacts:
     The LCC (life-cycle cost) is the total end user expense of 
an appliance or equipment over the life of that equipment, consisting 
of total installed cost (manufacturer selling price, distribution chain 
markups, sales tax, and installation costs) plus operating costs 
(expenses for energy use, maintenance, and repair). To compute the 
operating costs, DOE discounts future operating costs to the time of 
purchase and sums them over the lifetime of the equipment.
     The PBP (payback period) is the estimated amount of time 
(in years) it takes end users to recover the increased purchase cost 
(including installation) of more-efficient equipment through lower 
operating costs. DOE calculates the PBP by dividing the change in 
purchase cost at higher efficiency levels by the change in annual 
operating cost for the year that amended or new standards are assumed 
to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-standards case, which reflects the 
estimated efficiency distribution of air compressors in the absence of 
new or amended energy conservation standards. In contrast, the PBP for 
a given efficiency level is measured relative to the baseline 
equipment.
    For each considered efficiency level in each equipment class, DOE 
calculated the LCC and PBP for a nationally representative set of air 
compressors. DOE used data from NYSERDA and NW databases, Lot 31 and 
acquired system assessments to define each air compressor's 
application, load profile, annual hours or operation, and combination 
of employed controls.71 72 73 For each of these air 
compressors, DOE determined the energy consumption and the appropriate 
electricity price, thus capturing the variability in energy consumption 
and energy prices associated with the use of air compressors.
---------------------------------------------------------------------------

    \71\ Washington State University Extension Energy Program (WSU) 
and Applied Proactive Technologies (APT). Database of Motor 
Nameplate and Field Measurement Data. New York State Energy Research 
and Development Authority (NYSERDA) (2011).
    \72\ Strategic Energy Group, Northwest Industrial Motor Database 
Summary (2009).
    \73\ Van Holsteijn en Kemna B.V. (VHK). Ecodesign Preparatory 
Study on Electric Motor Systems/Compressors; 2014; Prepared for the 
European Commission by Van Holsteijn en Kemna B.V. (VHK); ENER/C3/
413-2010-LOT 31-SI2.612161, available at http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    Inputs to the calculation of total installed cost include equipment 
costs--which includes MPCs, manufacturer markups, retailer and 
distributor markups, and sales taxes--and installation costs. Inputs to 
the calculation of operating expenses include annual energy 
consumption, energy prices and price projections, repair and 
maintenance costs, equipment lifetimes, and discount rates. DOE created 
distributions of values for equipment lifetime, discount rates, and 
sales taxes, with probabilities attached to each value, to account for 
their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations randomly sample input 
values from the probability distributions and air compressor end user 
sample. The model calculated the LCC and PBP for equipment at each 
efficiency level for 10,000 end users per simulation run.
    DOE calculated the LCC and PBP for all end users as if each were to 
purchase a new equipment in the expected year of compliance with a new 
standard. DOE has tentatively determined that any standards would apply 
to air compressors manufactured five years after the date on which any 
standard is published.\74\ At this time, DOE estimates publication of a 
final rule in the second half of 2016. Therefore, for purposes of its 
analysis, DOE used 2022 as the first

[[Page 31722]]

full year of compliance with any standards for compressors.
---------------------------------------------------------------------------

    \74\ EPCA specifies that the provisions of subsections (l) 
through (s) of section 42 U.S.C. 6295 shall apply to any other type 
of industrial equipment which the Secretary classifies as covered 
equipment, which includes compressors. (42 U.S.C. 6316(a)) 
Subsection (l)(2) of 42 U.S.C. 6295 states that any new or amended 
standard for any other type of consumer product which the Secretary 
classifies as a covered product shall not apply to products 
manufactured within five years after the publication of a final rule 
establishing such standard. DOE believes that this five-year lead 
time also applies to other types of industrial equipment, such as 
compressors.
---------------------------------------------------------------------------

    Table IV. 33 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
of the NOPR TSD and its appendices.
---------------------------------------------------------------------------

    \75\ Edison Electric Institute (EEI), Typical Bills and Average 
Rates Report Summer, and Winger (2014).

Table IV. 33--Summary of Inputs and Methods for the LCC and PBP Analysis
                                    *
------------------------------------------------------------------------
                     Inputs                           Source/method
------------------------------------------------------------------------
Equipment Cost.................................  Derived by multiplying
                                                  MPCs by manufacturer
                                                  and retailer markups
                                                  and sales tax, as
                                                  appropriate. Used
                                                  historical data to
                                                  derive a price scaling
                                                  index to forecast
                                                  equipment costs.
Installation Costs.............................  Baseline installation
                                                  cost determined with
                                                  data from
                                                  stakeholders. Assumed
                                                  no change with
                                                  efficiency level.
Annual Energy Use..............................  The total annual energy
                                                  use multiplied by the
                                                  hours per year.
                                                  Average number of
                                                  hours based on field
                                                  data.
Energy Prices..................................  Electricity: Marginal
                                                  prices derived from
                                                  EEI \75\
Energy Price Trends............................  Based on AEO 2015 price
                                                  forecasts.
Repair and Maintenance Costs...................  Assumed no change with
                                                  efficiency level.
Equipment Lifetime.............................  Assumed average life
                                                  time of 12.5 years for
                                                  rotary, and 8.4 for
                                                  reciprocating air
                                                  compressors.
Discount Rates.................................  Approach involves
                                                  identifying all
                                                  possible debt or asset
                                                  classes that might be
                                                  used to purchase air
                                                  compressors. Primary
                                                  data source was the
                                                  Damodaran Online.
Compliance Date................................  Late 2021.
------------------------------------------------------------------------
\*\ References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the NOPR TSD.

1. Equipment Cost
    To calculate end user equipment costs, DOE multiplied the MPCs 
developed in the engineering analysis by the markups described in 
section IV.D (along with sales taxes). DOE used different markups for 
baseline equipment and higher-efficiency equipment because DOE applies 
an incremental markup to the increase in MSP associated with higher-
efficiency equipment.
    The markup is the percentage increase in price as the air 
compressor equipment passes through distribution channels. As explained 
in section IV.D, DOE assumed that compressors are delivered by the 
manufacturer through one of four distribution channels. The overall 
markups used in the LCC analysis 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 air and gas 
compressor equipment manufacturers over the period 1984-2013.\76\ These 
data show a slight decrease from 1989 through 2004. Since 2004, 
however, there has been an increase 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 
decade is uncertain. Because the observed data do not provide a firm 
basis for projecting future cost trends for compressor equipment, DOE 
used a constant price assumption as the default trend to project future 
compressor prices from 2022. Thus, prices projected for the LCC and PBP 
analysis are equal to the 2014 values for each efficiency level in each 
equipment class.
---------------------------------------------------------------------------

    \76\ Series ID PCU333911333911; http://www.bls.gov/ppi/.
---------------------------------------------------------------------------

    DOE requests comments on the most appropriate trend to use for real 
(inflation-adjusted) compressor prices. This is identified as Issue 37 
in section VIII.E, ``Issues on Which DOE Seeks Comment.''
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. In the Framework 
Document, DOE requested information on whether installation costs would 
be expected to change with efficiency. CAGI responded that there might 
be an added cost of installation related to efficiency (CAGI, No.0009 
at p.8), but CAGI did not provide any rationale for this increase. In 
the absence of data to indicate at what efficiency level DOE may need 
to consider an increase in installation costs, or other drivers that 
would trigger higher installation costs for more efficient equipment, 
DOE has not included an estimate for installation costs for this 
analysis. DOE requests comment on whether any of the efficiency levels 
considered in this NOPR might lead to an increase in installation costs 
and, if so, data regarding the magnitude of the increased cost for each 
relevant efficiency level. This is identified as Issue 38 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
3. Annual Energy Consumption
    For each sampled compressor, DOE determined the energy consumption 
for an air compressor at different efficiency levels using the approach 
described above in section IV.E of this document.
4. Energy Prices
    DOE derived average and marginal annual non-residential (commercial 
and industrial) electricity prices using data from EIA's Form EIA-861 
database (based on ``Annual Electric Power Industry Report''),\77\ EEI 
Typical Bills and Average Rates Reports,\78\ and information from 
utility tariffs. Electricity tariffs for non-residential end users can 
be very complex, with the principal difference from residential rates 
being the incorporation of demand charges. The presence of demand 
charges means that two end users with the same monthly electricity 
consumption may have very different bills, depending on their peak 
demand. For the NOPR analysis DOE used marginal electricity prices to 
estimate the impact of demand charges for end users of air compressors. 
The methodology of use to calculate the marginal electricity rates can 
be found in appendix 8B of the NOPR TSD.
---------------------------------------------------------------------------

    \77\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
    \78\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014: Washington, DC (Last accessed June 2, 2015.) http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 
average national energy prices by the forecast of annual change in 
national-average commercial and industrial energy price in the 
Reference case from AEO 2015,

[[Page 31723]]

which has an end-year of 2040.\79\ To estimate price trends after 2040, 
DOE used the average annual rate of change in prices from 2020 to 2040.
---------------------------------------------------------------------------

    \79\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2015 with Projections to 2040 
(Available at: <http://www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------

5. Repair and Maintenance Costs
    Commenting on the framework document, Kaeser stated that the cost 
of repair for more efficient compressors depends on whether it is 
fixed-speed or variable-speed, and that comparing more efficient fixed-
speed to less efficient fixed-speed shows no variation in costs. 
(Kaeser Compressors, No. 0014 at p. 236-237) CAGI commented in response 
to the Framework document that VSDs can have higher repair and 
troubleshooting costs based on issues of cleanliness of the operating 
site and electrical noise/interference. (CAGI, No. 0006 at p. 8)
    For this analysis DOE is considering separate equipment classes for 
compressors using fixed-speed drives and VSDs, so they are not 
considered as potential replacements for one another in the LCC 
analysis. Based on the comments from Kaeser, DOE does not expect repair 
or maintenance costs to change with increased efficiency, so DOE did 
not estimate either repair or maintenance costs.
6. Equipment Lifetime
    DOE defines ``equipment lifetime'' as the age when a given air 
compressor is retired from service. DOE presented several average 
equipment lifetimes estimates in the framework document. In response, 
CAGI commented that well-cared-for compressors can have lifetimes 
spanning decades, while Kaeser commented that very old equipment 
exists, but some equipment may experience much shorter lifetimes. 
(CAGI, No. 0009 at p.8; Kaeser Compressors, No. 0014 at p. 228) CAGI 
further noted that there are many variables that could affect equipment 
lifetime, such as quality of installation, operating environment, 
quality of replacement parts, and qualifications of maintenance 
technicians. (CAGI, No. 0014 at p. 238) While no stakeholder directly 
commented on the lifetimes presented, Kaeser stated they were 
reasonable as an average over the entire market. (Kaeser Compressors, 
No. 0014 at p. 229)
    For the NOPR, DOE based equipment lifetimes on new information 
published in the Lot31 study.\80\ DOE calculated a distribution of 
lifetimes shown in Table IV.34. DOE also used a distribution of 
mechanical lifetime in hours to allow a negative correlation between 
annual operating hours and lifetime in years--air compressors with more 
annual operating hours tend to have shorter lifetimes. Chapter 8 of the 
NOPR TSD contains a detailed discussion of equipment lifetimes.
---------------------------------------------------------------------------

    \80\ Ecodesign Preparatory Study on Electric Motor Systems/
Compressors; 2014; Prepared for the European Commission by Van 
Holsteijn en Kemna B.V. (VHK); ENER/C3/413-2010-LOT 31-SI2.612161; 
http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-
0031.

                                 Table IV. 34--Air Compressor Lifetimes (years)
----------------------------------------------------------------------------------------------------------------
                                                                      Minimum         Average         Maximum
----------------------------------------------------------------------------------------------------------------
Rotary..........................................................               4            12.5              36
Reciprocating...................................................               1             8.4              25
----------------------------------------------------------------------------------------------------------------

    DOE seeks comment on these minimum, average, and maximum equipment 
lifetimes, and whether or not they are appropriate for all equipment 
classes. This is identified as Issue 39 in section VIII.E, ``Issues on 
Which DOE Seeks Comment.''
7. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. The weighted average cost 
of capital is commonly used to estimate the present value of cash flows 
to be derived from a typical company project or investment. Most 
companies use both debt and equity capital to fund investments, so the 
cost of capital is the weighted-average cost to the firm of equity and 
debt financing. DOE estimated the cost of equity using the capital 
asset pricing model, which assumes that the cost of equity for a 
particular company is proportional to the systematic risk faced by that 
company.
    The primary source of data for this analysis was Damodaran Online, 
a widely used source of information about company debt and equity 
financing for most types of firms.\81\ DOE estimated a separate 
weighted average cost of capital for each business sector that 
purchases compressors. More details regarding DOE's estimates of end 
user discount rates are provided in chapter 8 of the NOPR TSD.
---------------------------------------------------------------------------

    \81\ Damodaran Online, The Data Page: Cost of Capital by 
Industry Sector, 2001-2013. (Last accessed March, 2014.) See: http:/
/pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------

8. Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of end users that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (i.e., market shares) of equipment efficiencies that end 
users purchase in the no-new-standards case (i.e., the case without new 
energy conservation standards). To estimate the efficiency distribution 
of air compressors for 2021, DOE examined the frequency of efficiencies 
made available under CAGI's voluntary testing program for each 
equipment class (CAGI database), and the distribution of efficiencies 
of shipments of commercial and industrial pumps provided,\82\ scaled to 
the capacity range of compressors. DOE found the distribution for both 
samples to be similar, with the distribution of efficiencies of 
shipments for pumps skewed slightly toward higher efficiencies. For the 
NOPR analysis, DOE used the re-scaled distribution of pump 
efficiencies, as it is based on the efficiencies of shipments of a 
durable industrial product, rather than the frequency of efficiency of 
an entry in a catalog, and thus better reflects end user choice. The 
estimated market shares for the no-new-standards case efficiency 
distribution for air compressors are shown in Table IV.35. See chapter 
8 of the NOPR TSD for further information on the derivation of the 
efficiency distributions.
---------------------------------------------------------------------------

    \82\ U.S. Department of Energy. Energy Efficiency and Renewable 
Energy Office. Energy Conservation Program: Energy Conservation 
Standards for Pumps; Notice of proposed rulemaking (NOPR), 2015. 
See: http://www.regulations.gov/#!documentDetail;D=EERE-2011-BT-STD-
0031-0040.

[[Page 31724]]



 Table IV. 35--Distribution of Efficiencies in the No-New-Standards Case
------------------------------------------------------------------------
                                                            Average of
                           EL                               probability
                                                                (%)
------------------------------------------------------------------------
0.......................................................           11.50
1.......................................................           15.50
2.......................................................           15.90
3.......................................................           18.40
4.......................................................           11.30
5.......................................................           22.40
6.......................................................            5.10
------------------------------------------------------------------------

9. Payback Period Analysis
    The payback period is the amount of time it takes the end user to 
recover the additional installed cost of more-efficient equipment, 
compared to baseline equipment, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the equipment mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the equipment and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    As noted above, EPCA, as amended, establishes a rebuttable 
presumption that a standard is economically justified if the Secretary 
finds that the additional cost to the end user of purchasing equipment 
complying with an energy conservation standard level will be less than 
three times the value of the first year's energy savings resulting from 
the standard, as calculated under the applicable test procedure. (42 
U.S.C. 6295(o)(2)(B)(iii) and 6316(a)) For each considered efficiency 
level, DOE determined the value of the first year's energy savings by 
calculating the energy savings in accordance with the applicable DOE 
test procedure, and multiplying those savings by the average energy 
price forecast for the year in which compliance with the new standards 
would be required.

G. Shipments Analysis

    DOE uses forecasts of annual equipment shipments to calculate the 
national impacts of potential energy conservation standards on energy 
use, NPV, and future manufacturer cash flows.\83\ The shipments model 
takes an accounting approach, tracking market shares of each equipment 
class and the vintage of units in the stock. Stock accounting uses 
equipment shipments as inputs to estimate the age distribution of in-
service equipment stocks for all years. The age distribution of in-
service equipment stocks is a key input to calculations of both the NES 
and NPV, because operating costs for any year depend on the age 
distribution of the stock.
---------------------------------------------------------------------------

    \83\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are lacking. In general 
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

    In its proposed Coverage Determination and subsequent Framework 
Document, DOE considered using the shipment data available from the 
U.S. Census Bureau. In reference to the shipments found in the Census 
data, CAGI commented that air compressors used for actual commercial 
and industrial applications are significantly lower, being a fraction 
of the referenced number (CAGI, EERE-2012-BT-DET-0033-0003, pg. 7). In 
response, DOE sought, and received, recent shipments data for rotary 
compressors from a number of stakeholders and subject matter experts. 
DOE was able to find only limited shipments data for reciprocating 
compressors, so DOE continued to use the data from the U.S. Census 
Bureau.\84\ DOE aggregated these data into its shipments estimate for 
2013 (see chapter 9 of the NOPR TSD).
---------------------------------------------------------------------------

    \84\ U.S. Department of Commerce, Census Bureau, Manufacturing 
and Construction Division, Series MA333P(10)-1, Stationary Air 
Compressors, Reciprocating, Single and Double Acting (333912110T), 
2011.
---------------------------------------------------------------------------

    DOE seeks comment on the total 2013 shipments by equipment class. 
This is identified as Issue 40 in section VIII.E, ``Issues on Which DOE 
Seeks Comment.''
    The 2013 shipments estimates were disaggregated by compressor 
capacity in actual cubic feet per minute (ACFM). To project future 
shipments of air compressors, DOE scaled the 2013 values using 
particular forecasts from AEO 2015. DOE understands that air 
compressors are used widely in both commercial, and manufacturing and 
industrial sectors. However, DOE was not able to locate and information 
indication what fraction of equipment was used in either sector. For 
this analysis DOE assumed that industrial/manufacturing processes will 
require a greater volume of compressed air than commercial processes. 
With higher electrical loads in the industrial/manufacturing sector 
than the commercial sector, DOE assumed that compressors greater than 
50 ACFM capacity are mainly used in manufacturing, so DOE used the 
forecast for value of manufacturing shipments for this category. DOE 
assumed compressors equal to or less than 50 ACFM capacity are mainly 
used in commercial buildings, so DOE used the forecast for commercial 
floor space for this category.
    DOE seeks comment on its assumption that air compressors with a 
capacity of no more than 50 ACFM are used in commercial applications, 
and air compressors greater than 50 ACFM are used in industrial 
applications. This is identified as Issue 41 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
    For rotary equipment classes DOE then used CAGI test data for air 
compressors collected directly from manufacturers to distribute 
shipments into the different lubrication and cooling type equipment 
classes. For reciprocating compressors DOE was unable to locate any 
information on the fractions of equipment shipped that are single-phase 
or three-phase. DOE assumed an equal division of shipments between 
single-phase and three-phase reciprocating compressors for equipment 
rated less than or equal to 10-hp,\85\ while any reciprocating 
shipments above 10-hp were considered to be three-phase equipment. The 
equipment classes and their estimated market shares are shown in Table 
IV.36. DOE used the same shares for all years in the projection.
---------------------------------------------------------------------------

    \85\ For this analysis DOE considers 10-hp is the upper nominal 
power limit for single-phase electric motors and air compressors 
driven by these motors, For this analysis DOE approximated as 10-hp 
as 50 ACFM to match available shipment data to the equipment class 
capacities defined in the engineering analysis. Equipment class 
capacities are chapter 5 of the TSD.

           Table IV. 36--Share of Shipments by Equipment Class
------------------------------------------------------------------------
                                                           Market share
        Equipment class                Description              (%)
------------------------------------------------------------------------
RP_FS_L_AC.....................  Rotary Screw, Fixed-               1.62
                                  Speed, Lubricated, Air
                                  Cooled.
RP_FS_L_WC.....................  Rotary Screw, Fixed-               0.29
                                  Speed, Lubricated,
                                  Water-Cooled.
RP_FS_LF_AC....................  Rotary Screw, Fixed-               0.06
                                  Speed, Lubricant Free,
                                  Air Cooled.

[[Page 31725]]

 
RP_FS_LF_WC....................  Rotary Screw, Fixed-               0.04
                                  Speed, Lubricant Free,
                                  Water-Cooled.
RP_VS_L_AC.....................  Rotary Screw, Variable-            0.34
                                  speed, Lubricated, Air
                                  Cooled.
RP_VS_L_WC.....................  Rotary Screw, Variable-            0.06
                                  speed, Lubricated,
                                  Water-Cooled.
RP_VS_LF_AC....................  Rotary Screw, Variable-            0.01
                                  speed, Lubricant Free,
                                  Air Cooled.
RP_VS_LF_WC....................  Rotary Screw, Variable-            0.02
                                  speed, Lubricant Free,
                                  Water-Cooled.
R1_FS_L_XX.....................  Reciprocating 1-phase,            44.02
                                  Fixed-Speed,
                                  Lubricated, Air Cooled.
R3_FS_L_XX.....................  Reciprocating 3-phase,            53.54
                                  Fixed-Speed,
                                  Lubricated, Air Cooled.
------------------------------------------------------------------------

    DOE seeks comment on the share of shipments by equipment class, and 
how these shares may change over time. This is identified as Issue 42 
in section VIII.E, ``Issues on Which DOE Seeks Comment.''
    DOE recognizes that an increase in equipment price resulting from 
energy efficiency standards may affect end user decision-making 
regarding whether to purchase a new compressor, a refurbished one, or 
repair the existing failed unit. DOE has not found any information in 
the literature that indicates a demand price elasticity for commercial 
and industrial firms. For the NOPR, it used a medium elasticity of -0.5 
for commercial customers, and a lower elasticity (-0.25) for industrial 
customers.\86\ DOE used a lower elasticity for industrial customers 
because these customers are likely to place greater value on the 
reliability and efficiency provided by new equipment, over the 
alternative of purchasing used equipment.
---------------------------------------------------------------------------

    \86\ A price elasticity of -0.5 means that for every 1 percent 
increase in price, the demand for the product (i.e., shipments) 
would decline by 0.5 percent. An elasticity of 1 indicates very high 
elasticity of demand, whereas an elasticity of zero indicates no 
elasticity of demand. Elasticities are considered constant over 
time.
---------------------------------------------------------------------------

    DOE seeks comment on whether the assumed price elasticities are 
reasonable for air compressors. This is identified as Issue 43 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''

H. National Impact Analysis

    The NIA assesses the national energy savings (NES) and the national 
net present value (NPV) from a national perspective of total consumer 
costs and savings that would be expected to result from new or amended 
standards at specific efficiency levels. (``Consumer'' in this context 
refers to consumers of the equipment being regulated.) DOE calculates 
the NES and NPV for the potential standard levels considered based on 
projections of annual equipment shipments, along with the annual energy 
consumption and total installed cost data from the energy use and LCC 
analyses.\87\ For the present analysis, DOE forecasted the energy 
savings, operating cost savings, equipment costs, and NPV of consumer 
benefits over the lifetime of air compressors sold from 2022 through 
2051.
---------------------------------------------------------------------------

    \87\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

    DOE evaluates the impacts of potential standards for compressors by 
comparing a case without such standards with standards-case 
projections. For the no-new-standards case, DOE considers historical 
trends in efficiency and various forces that are likely to affect the 
mix of efficiencies over time. For the standards cases, DOE considers 
how a given standard would likely affect the market shares of equipment 
with efficiencies greater than the standard.
    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses typical values 
(as opposed to probability distributions) as inputs.
    Table IV.37 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR TSD for further details.

   Table IV. 37--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                 Inputs                               Method
------------------------------------------------------------------------
Shipments..............................  Annual shipments from shipments
                                          model.
Compliance Date of Standard............  Late 2021.
Efficiency Trends......................  No-new-standards case: constant
                                          market shares.
Annual Energy Consumption per Unit.....  Annual weighted-average values
                                          are a function of energy use
                                          at each TSL.
Total Installed Cost per Unit..........  Annual weighted-average values
                                          are a function of cost at each
                                          TSL.
                                         Incorporates projection of
                                          future equipment prices based
                                          on historical data.
Annual Energy Cost per Unit............  Annual weighted-average values
                                          as a function of the annual
                                          energy consumption per unit
                                          and energy prices.
Repair and Maintenance Cost per Unit...  Annual values do not change
                                          with efficiency level.
Energy Prices..........................  AEO 2015 forecasts (to 2040)
                                          and extrapolation thereafter.
Energy Site-to-Primary Conversion......  A time-series conversion factor
                                          based on AEO 2015.
Discount Rate..........................  Three and seven percent.
Present Year...........................  2015.
------------------------------------------------------------------------

1. Equipment Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and each of the standards 
cases. Section IV.F.8 of this document describes how DOE developed an 
energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered equipment classes for the

[[Page 31726]]

first full year of anticipated compliance with an amended standard.
    Several stakeholders commented that manufacturers will continue to 
increase the efficiency of air compressors in the absence of standards. 
(CAGI, No. 0014 at p. 247-251; Kaeser Compressors, No. 0014 at p. 252-
253; Ingersoll-Rand, No. 0014 at p. 254) Data on the number of air 
compressor designs by efficiency is available for 2006 through 2014 
from manufacturer performance test reports. These data show that in 
some years the number of higher-efficiency designs increases, 
indicating a potential average improvement in efficiency. However, DOE 
has no data indicating what percentage of shipments are attributed to 
these more-efficient air compressors, so no clear trend toward more 
efficient air compressors could be determined. Thus, DOE assumed no 
change in efficiency in the no-new-standards case.
    DOE seeks comment on its assumption of no change over time in the 
market share of more efficient equipment in the no-new-standards case. 
This is identified as Issue 44 in section VIII.E, ``Issues on Which DOE 
Seeks Comment.''
    For each standards case, 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., late 2021). In 
this case, equipment efficiencies in the no-new-standards case that 
were above the standard level under consideration would not be 
affected. After the compliance year, DOE maintained consistency with 
the no-new-standards case and assumed no change in efficiency.
    DOE seeks information on any projected change in equipment 
efficiencies over time, specifically whether or not the market shares 
of air compressors by efficiency would change after the publication of 
a new standard. This is identified as Issue 45 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
2. National Energy Savings
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered equipment between each 
potential standards case (TSL) and the no-new-standards case. DOE 
calculated the national energy consumption by multiplying the number of 
units (stock) of each product (by vintage or age) by the unit energy 
consumption (also by vintage). DOE calculated annual NES based on the 
difference in national energy consumption for the no-new-standards case 
and for each higher efficiency standard. DOE estimated energy 
consumption and savings based on site energy and converted the 
electricity consumption and savings to primary energy (i.e., the energy 
consumed by power plants to generate site electricity) using annual 
conversion factors derived from AEO 2015. Cumulative energy savings are 
the sum of the NES for each year over the timeframe of the analysis.
    In 2011, in response to the recommendations of a committee on 
``Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards'' appointed by the National Academy of Sciences, 
DOE announced its intention to use full-fuel-cycle (FFC) measures of 
energy use and greenhouse gas and other emissions in the national 
impact analyses and emissions analyses included in future energy 
conservation standards rulemakings. 76 FR 51281 (August 18, 2011). 
After evaluating the approaches discussed in the August 18, 2011 
notice, DOE published a statement of amended policy in which DOE 
explained its determination that EIA's National Energy Modeling System 
(NEMS) is the most appropriate tool for its FFC analysis and its 
intention to use NEMS for that purpose. 77 FR 49701 (August 17, 2012). 
NEMS is a public domain, multi-sector, partial equilibrium model of the 
U.S. energy sector \88\ that EIA uses to prepare its Annual Energy 
Outlook. The approach used for deriving FFC measures of energy use and 
emissions is described in appendix 10A of the NOPR TSD.
---------------------------------------------------------------------------

    \88\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview, DOE/EIA-0581 (98) (Feb.1998) 
(Available at: http://www.eia.gov/oiaf/aeo/overview/).
---------------------------------------------------------------------------

3. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are: (1) Total annual installed cost; (2) 
total annual operating costs; and (3) a discount factor to calculate 
the present value of costs and savings. DOE calculates net savings each 
year as the difference between the no-new-standards case and each 
standards case in terms of total savings in operating costs versus 
total increases in installed costs. DOE calculates operating cost 
savings over the lifetime of each product shipped during the forecast 
period. DOE used a discount factor based on real discount rates of 3 
percent and 7 percent to discount future costs and savings to present 
values.
    As discussed in section IV.F.1of this document, DOE did not find a 
firm bases to project a trend in air compressor prices, so DOE used 
constant real prices as the default. To evaluate the effect of 
uncertainty regarding the price trend estimates, DOE investigated the 
impact of different product price forecasts on the consumer NPV for the 
considered TSLs for air compressors. In addition to the default price 
trend, DOE considered two equipment price sensitivity cases--(1) a high 
price decline case based on Air and Gas Compressor Manufacturer 
historical Producer Price Index (PPI) series \89\ and (2) a low price 
decline case based on AEO 2015 industrial equipment price trend. The 
derivation of these price trends and the results of these sensitivity 
cases are described in appendix 10C of the NOPR TSD.
---------------------------------------------------------------------------

    \89\ U.S. Department of Labour, Bureau of Labor Statistics, Air 
& gas compressors, ex. compressors for ice making, refrigeration, or 
a/c equipment, Series ID: PCU33391233391211Z
---------------------------------------------------------------------------

    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the average regional energy 
prices by the forecast of annual national-average residential energy 
price changes in the Reference case from AEO 2015, which has an end 
year of 2040. To estimate price trends after 2040, DOE used the average 
annual rate of change in prices from 2020 to 2040. As part of the NIA, 
DOE also analyzed scenarios that used inputs from the AEO 2015 Low 
Economic Growth and High Economic Growth cases. Those cases have higher 
and lower energy price trends compared to the Reference case. NIA 
results based on these cases are presented in appendix 10C of the NOPR 
TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. DOE uses 
discount factors based on both a 3-percent and a 7-percent real 
discount rate, in accordance with guidance provided by the Office of 
Management and Budget (OMB) to Federal agencies on the development of 
regulatory analysis.\90\ The discount rates for the determination of 
NPV are in contrast to the discount rates used in the LCC analysis, 
which are designed to reflect a consumer's perspective. The 7-percent 
real value is an estimate of the average before-tax rate of return to 
private capital in the U.S. economy. The 3-percent real value 
represents the ``social rate of time

[[Page 31727]]

preference,'' which is the rate at which society discounts future 
consumption flows to their present value.
---------------------------------------------------------------------------

    \90\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis,'' (Sept. 17, 2003), section E (Available at: 
www.whitehouse.gov/omb/memoranda/m03-21.html).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended energy 
conservation standards on consumers, DOE evaluates the impact on 
identifiable subgroups of consumers that may be disproportionately 
affected by a new or amended national standard. The purpose of a 
subgroup analysis is to determine the extent of any such 
disproportional impacts. DOE evaluates impacts on particular subgroups 
of consumers by analyzing the LCC impacts and PBP for those particular 
consumers from alternative standard levels. For this NOPR, DOE analyzed 
the impacts of the considered standard levels on small business 
consumers. DOE used the LCC and PBP spreadsheet model to estimate the 
impacts of the considered efficiency levels on this subgroup. Chapter 
11 in the NOPR TSD describes the consumer subgroup analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of energy 
conservation standards on manufacturers of compressors and to estimate 
the potential impacts of such standards on employment and manufacturing 
capacity.
    The MIA has both quantitative and qualitative aspects and includes 
analyses of forecasted industry cash flows, the industry net present 
value (INPV), investments in research and development (R&D) and 
manufacturing capital, and domestic manufacturing employment. 
Additionally, the MIA seeks to determine how new energy conservation 
standards might affect manufacturing capacity and industry competition, 
as well as how standards contribute to the overall regulatory burden 
facing manufacturers. Finally, the MIA serves to identify any 
disproportionate impacts on manufacturer subgroups, including small 
business manufacturers.
    The quantitative part of the MIA primarily relies on the Government 
Regulatory Impact Model (GRIM), an industry cash flow model with inputs 
specific to this rulemaking. The key GRIM inputs include data on the 
industry cost structure, unit production costs, equipment shipments, 
manufacturer markups, and investments in R&D and manufacturing capital 
required to produce compliant equipment. The key GRIM output is the 
INPV, which is the sum of industry annual cash flows over the analysis 
period, discounted using the industry-weighted average cost of capital. 
The model uses standard accounting principles to estimate the impacts 
of new energy conservation standards on a given industry by comparing 
changes in INPV between a base case and the various standards cases 
(TSLs). To capture the uncertainty relating to manufacturer pricing 
strategy following amended standards, the GRIM estimates a range of 
possible impacts under different markup scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, R&D 
capacity, competition within the industry, cumulative impact of other 
regulations, and impacts on manufacturer subgroups. The complete MIA is 
outlined in chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three-phases. In Phase 
1 of the MIA, DOE prepared a profile of the compressor industry using 
publicly available information, such as Securities and Exchange 
Commission (SEC) 10-K reports,\91\ market research tools (e.g., Hoovers 
\92\), corporate annual reports, the U.S. Census Bureau's 2013 Annual 
Survey of Manufacturers (ASM),\93\ and industry trade association 
membership directories (e.g., CAGI), as well as information obtained 
through DOE's engineering analysis and market and technology assessment 
prepared for this rulemaking.
---------------------------------------------------------------------------

    \91\ U.S. Securities and Exchange Commission, Annual 10-K 
Reports (Various Years) (Available at: www.sec.gov).
    \92\ Hoovers Inc., Company Profiles, Various Companies 
(Available at: www.hoovers.com/).
    \93\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2013) 
(Available at: http://www.census.gov/manufacturing/asm/index.html).
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared a framework industry cash-flow 
analysis to quantify the potential impacts of new energy conservation 
standards on manufacturers. In general, energy conservation standards 
can affect manufacturer cash flow in three distinct ways: (1) Creating 
a need for increased investment; (2) raising production costs per unit; 
and (3) altering revenue due to higher per-unit prices and changes in 
sales volumes. To quantify these impacts, DOE uses the GRIM to estimate 
a series of annual cash flows starting with the announcement of the 
standard and extending over a 30-year period following the compliance 
date of the standard. Inputs to the GRIM include annual expected 
revenues, costs of sales, SG&A expenses, R&D expenses, taxes, and 
capital expenditures.
    In addition, DOE developed interview guides to distribute to 
manufacturers of compressors in order to develop and refine key GRIM 
inputs, including product and capital conversion costs, and to gather 
additional information on the anticipated effects of energy 
conservation standards on revenues, direct employment, capital assets, 
industry competitiveness, and subgroup impacts.
    In Phase 3 of the MIA, DOE conducted structured, detailed 
interviews with 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. A copy of the manufacturer interview guide is provided in 
appendix 12B of NOPR TSD. Additionally, see section IV.J.3 for a 
description of the key issues raised by manufacturers during the 
interviews. As part of Phase 3, DOE also evaluated subgroups of 
manufacturers that may be disproportionately impacted by amended 
standards or that may not be accurately represented by the average cost 
assumptions used to develop the industry cash flow analysis. Such 
manufacturer subgroups may include small business manufacturers, niche 
players, and/or manufacturers exhibiting a cost structure that largely 
differs from the industry average. DOE identified one compressor 
manufacturer subgroup for which average cost assumptions may not hold: 
small businesses. The small business subgroup is discussed in section 
VII.B, ``Review under the Regulatory Flexibility Act,'' and in chapter 
12 of the NOPR 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 
models 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 analysis) 
and continuing to 2051. DOE calculated INPVs by

[[Page 31728]]

summing the stream of annual discounted cash flows during this period. 
DOE applied a discount rate of 8.7 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 base case and each 
TSL (the standards case). The difference in INPV between the base 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 NOPR TSD.
a. GRIM Key Inputs
i. Manufacturer Production Costs
    Manufacturer production costs (MPCs) are those incurred by the 
manufacturer to produce a covered compressor. The cost includes raw 
materials and purchased components, production labor, factory overhead, 
and production equipment depreciation. Changes in the MPCs of the 
analyzed equipment can affect revenues, gross margins, and industry 
cash flows. In the MIA, DOE used the MPCs for each efficiency level 
calculated in the engineering analysis, as described in section IV.C.7 
and further detailed in chapter 5 of the NOPR TSD.
ii. Manufacturer Markups
    Manufacturer selling prices (MSPs) include direct manufacturing 
production costs and all non-production costs (i.e., SG&A, R&D, and 
interest), along with profit. To calculate the MSPs in the GRIM, DOE 
applied non-production cost markups to the MPCs estimated in the 
engineering analysis for each equipment class and efficiency level. For 
the MIA, DOE modeled a baseline markup for the compressor industry in 
both the base case and the standards case.
    With a baseline markup, DOE applied a uniform ``gross margin 
percentage'' for each equipment class, across all efficiency levels. 
This assumes that manufacturers would be able to maintain the same 
amount of profit as a percentage of revenues at all efficiency levels 
within an equipment class. As production costs increase with 
efficiency, the absolute dollar markup will increase as well. As 
discussed in section IV.C.7, DOE estimated the average non-production 
cost baseline markup--which includes SG&A expenses, R&D expenses, 
interest, and profit--to be 1.35 for lubricated rotary compressors, 
1.40 for lubricant-free rotary compressors, and 1.26 for reciprocating 
compressors.
    Jenny commented that markups data only based on publicly available 
information may not be accurate and may not contain key pricing and 
costing information. (Jenny, No. 0005 at p. 4) DOE agrees. To develop 
its estimated baseline markups, DOE used both publicly available 
financial information as well as comments and data received directly 
from manufacturers during confidential interviews.
iii. Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by equipment 
class. Changes in sales volumes and efficiency mix over time can 
significantly affect manufacturer finances. For this analysis, the GRIM 
uses the NIA's annual shipment forecasts derived from the shipments 
analysis from 2015 (the base year) to 2051 (the end year of the 
analysis period). See chapter 9 of the NOPR TSD for additional details.
iv. 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 equipment 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 equipment 
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. Ultimately, for the 
MIA, DOE modeled two standards-case conversion cost scenarios to 
represent uncertainty regarding the potential impacts on manufacturers 
following the implementation of energy conservation standards. These 
scenarios are discussed further in section IV.J.2.b.
v. Financial Parameters
    DOE estimated eight key financial parameters for use in the GRIM. 
Table IV.38 describes these parameters and summarizes DOE's estimated 
values. DOE notes that each estimate represents an industry average 
value.
    Jenny commented that ``deriving baseline information from publicly 
traded companies is problematic at best . . . a very high percentage of 
compressors sold in the US come from small, privately held companies.'' 
(Jenny, No. 0005 at p. 5)
    To estimate the financial parameters outlined in Table IV.38, DOE 
first created estimates based on publicly available financial 
information for manufacturers of compressors. DOE then revised its 
initial estimates based on discussions with both private and public 
compressor companies. Table IV.38 presents the financial parameters 
incorporated into the GRIM, which reflect data from both public and 
private compressor manufacturing companies.

    Table IV.38--Industry Average Financial Parameters for Rotary and Reciprocating Compressor Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                                                                   Estimated
                     Financial parameter                                 Definition             industry average
                                                                                                    value %
----------------------------------------------------------------------------------------------------------------
Income Tax Rate..............................................  Corporate effective income tax               25.0
                                                                paid (percentage of earnings
                                                                before taxes, EBT).
Discount Rate................................................  Weighted average cost of                      8.7
                                                                capital (inflation-adjusted
                                                                weighted average of corporate
                                                                cost of debt and return on
                                                                equity).
Working Capital..............................................  Current assets less current                  17.3
                                                                liabilities (percentage of
                                                                revenues).
Net Property, Plant & Equipment..............................  Fixed assets, or long-lived                  11.4
                                                                assets, including building,
                                                                machinery, and equipment less
                                                                accumulated depreciation
                                                                (percentage of revenues).
SG&A.........................................................  Selling, general, and                        17.2
                                                                administrative expenses
                                                                (percentage of revenues).
R&D..........................................................  Research and development                      2.1
                                                                expenses (percentage of
                                                                revenues).
Depreciation.................................................  Amortization of fixed assets                  3.0
                                                                (percentage of revenues).

[[Page 31729]]

 
Capital Expenditures.........................................  Outlay of cash to acquire or                  3.2
                                                                improve capital assets
                                                                (percentage of revenues, not
                                                                including acquisition or sale
                                                                of business units).
----------------------------------------------------------------------------------------------------------------

    DOE requests comment on its estimates of average industry financial 
parameters. This is identified as Issue 46 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
b. GRIM Scenarios
i. Conversion Cost Scenarios
    As mentioned previously, DOE modeled two standards-case conversion 
cost scenarios to represent uncertainty regarding the potential impacts 
on manufacturers following the implementation of energy conservation 
standards: (1) A low conversion cost scenario; and (2) a high 
conversion cost scenario.
    Specifically, the two scenarios explore uncertainty in conversion 
cost, as it relates to the draft EU minimum energy efficiency standards 
for compressors. During confidential interviews, multiple manufactures 
indicated that they sell similar equipment in the U.S. and the EU. They 
also indicated that if the EU adopted the draft standard for 
compressors, the efficiency of some equipment sold in the U.S. would be 
improved by windfall. As such, if the EU adopts its draft standard, 
which would be phased in from 2018 to 2020,\94\ a significant amount of 
globally marketed equipment would already exhibit improved efficiency, 
regardless of a DOE standard. However, because the EU standard is 
currently in draft stage, and is not yet adopted, DOE chose to use a 
scenario analysis to evaluate its potential impacts on conversion cost.
---------------------------------------------------------------------------

    \94\ See Draft EU Compressors Regulation, Article 3 at p. 4, 
available at: http://www.regulations.gov/#!documentDetail;D=EERE-
2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    DOE notes that conversion costs only vary between the scenarios for 
lubricated rotary equipment, as lubricant-free rotary equipment is not 
proposed for coverage in the EU (but may be evaluated for future 
coverage--see section IV.A.2.b), and DOE is unaware of any 
reciprocating compressor models sold in both the EU and the United 
States.
    The low conversion cost scenario assumes that manufacturers active 
in the EU market will not face additional product conversion costs to 
adapt to a U.S. standard that is at or below the draft EU level (EL 3 
and TSL 3). If the U.S. standard is above the draft EU level, these 
manufacturers would still incur full redesign costs. In the high 
conversion cost scenario, all manufacturers face full product 
conversion costs, regardless of an EU regulation. DOE notes that 
Manufacturers that are not active in the EU market will face the same 
conversion costs, regardless of the scenario.
    To evaluate the magnitude of each product and capital conversion 
cost scenario, DOE relied on cost estimates provided by representative 
manufacturers as well as estimates and appraisals provided by 
consultants familiar with compressor and general industrial 
manufacturing.
    DOE first determined conversion costs for the high scenario. To 
find industry-wide conversion costs for each equipment class, DOE first 
estimated the average cost per manufacturer to redesign all covered 
equipment in its portfolio; this corresponds to the conversion costs 
needed to reach the max-tech efficiency level. For each equipment 
class, DOE then multiplied the per-manufacturer conversion costs by the 
number of manufacturers active in the equipment class with a market 
share greater than three percent. DOE believes its per-manufacturer 
conversion cost estimates were sufficiently conservative such that this 
method yields an estimate of total industry conversion costs to reach 
the max-tech efficiency level for each equipment class.
    Next, DOE scaled the max-tech conversion costs down to each 
efficiency level considered in this NOPR. To do this, DOE multiplied 
the max-tech conversion costs by the percentage of models in each 
equipment class that fail at each efficiency level. For rotary 
equipment classes, DOE estimated the percentage of models failing at 
each efficiency level using the CAGI database.
    For reciprocating equipment classes, no product data was available 
to help estimate the percentage of models failing at each efficiency 
level. In the absence of direct data, failure rates for rotary 
compressor equipment were used as a proxy. DOE selected this approach 
as efficiency levels for reciprocating and rotary compressors were 
established using similar methods, and each efficiency level represents 
the same relative efficiency, with respect to baseline and max-tech (as 
discussed in section IV.C.5). Specifically, for all equipment classes, 
DOE established efficiency levels at baseline (EL 0), max-tech (EL 6), 
and a d-value of zero (EL 3). DOE also established two intermediary 
efficiency levels between the baseline and a d-value of zero (ELs 1 and 
EL 2), and two efficiency levels between the d-value of zero level and 
max-tech (ELs 4 and 5). Furthermore, DOE believes that rotary and 
reciprocating equipment may have similar distributions of efficiency, 
with respect to baseline and max-tech, as indicated by graphical data 
presented in the Lot 31 study.\95\
---------------------------------------------------------------------------

    \95\ See Lot 31 Study, figures 1-1 through 1-3 at pp. 26-28 
available at: http://www.regulations.gov/#!documentDetail;D=EERE-
2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    DOE requests comment on the use of failure rates for rotary 
compressor equipment as a proxy for reciprocating equipment failure 
rates. This is identified as Issue 47 in section VIII.E, ``Issues on 
Which DOE Seeks Comment.''
    To estimate conversion costs for the low scenario, DOE reduced the 
lubricated rotary product conversion costs by 31.25-percent at each 
efficiency level at or below the draft EU level. The value of 31.25-
percent represents DOE's estimate of the percentage of U.S. lubricated 
rotary models that are offered for sale in the EU and may be redesigned 
to meet the draft EU level.
    Table IV.39 and Table IV.40 present the resulting product and 
capital conversion costs at each efficiency level, for three major 
groupings of equipment classes. Due to commonality in design and 
components, DOE is presenting the conversion costs for the following 
equipment classes in aggregate: (1) Rotary, lubricated, fixed-speed and 
variable-speed, air and water cooled; (2) rotary, lubricant-free, VSD, 
fixed-speed and variable-speed, air and water cooled; and (3) 
reciprocating, 1- and 3-

[[Page 31730]]

phase. Complete results by equipment class, as well as details on the 
calculation of industry aggregate product and capital conversion costs 
are found in chapter 12 of the NOPR TSD. A comparison of industry 
financial impacts under the two conversion cost scenarios is presented 
in section V.B.2.a of this document.

   Table IV.39--Aggregate Industry Product Conversion Cost, Excluding Compliance and Testing Costs,** at Each
                                                Efficiency Level
                                                 [In $Millions]
----------------------------------------------------------------------------------------------------------------
  All values in millions of
           dollars                 Scenario        EL 1       EL 2       EL 3       EL 4       EL 5       EL 6
----------------------------------------------------------------------------------------------------------------
RP_FS_L_AC...................  Low............         16         57        144        269        333        424
RP_VS_L_AC...................
RP_FS_L_WC...................  High...........         24         84        210        269        333        424
RP_VS_L_WC...................
----------------------------------------------------------------------------------------------------------------
RP_FS_LF_AC..................  Not Applicable.         10         27         59         75         92        112
RP_VS_LF_AC..................
RP_FS_LF_WC..................
RP_VS_LF_WC..................
----------------------------------------------------------------------------------------------------------------
R3_FS_L_XX...................  Not Applicable.          2          5         13         17         21         27
R1_FS_L_XX...................
----------------------------------------------------------------------------------------------------------------
* Due to commonality in design and components, DOE is presenting conversion costs in three aggregated equipment
  class groups. Complete results by equipment class are available in chapter 12 of the NOPR TSD.
** Note that compliance and testing cost estimates are presented separately, later in this section.


                Table IV.40--Aggregate Industry Capital Conversion Cost at Each Efficiency Level
----------------------------------------------------------------------------------------------------------------
       All values in millions of dollars           EL 1       EL 2       EL 3       EL 4       EL 5       EL 6
----------------------------------------------------------------------------------------------------------------
RP_FS_L_AC....................................          8         29         73         92        113        143
RP_VS_L_AC
RP_FS_L_WC
RP_VS_L_WC
----------------------------------------------------------------------------------------------------------------
Rotary, Non-Lubricated, FS & VSD, AC & WC*....          3          9         20         26         32         38
----------------------------------------------------------------------------------------------------------------
RP_FS_LF_AC...................................          1          3          8         10         12         16
RP_VS_LF_AC
RP_FS_LF_WC
RP_VS_LF_WC
----------------------------------------------------------------------------------------------------------------
* Due to commonality in design and components, DOE is presenting conversion costs in three aggregated equipment
  class groups. Complete results by equipment class are available in chapter 12 of the NOPR TSD.

    DOE also estimated the magnitude of the aggregate industry 
compliance testing costs needed to conform to new energy conservation 
standards. Although compliance testing costs are a subset of product 
conversion costs, DOE estimated these costs separately. DOE pursued 
this approach because no energy conservation standards currently exist 
for compressors; as such, all basic models \96\ will be required to be 
tested and certified to comply with new energy conservation standards 
regardless of the level of such a standard. As a result, the industry-
wide magnitude of these compliance testing costs will be constant, 
regardless of the selected standard level.
---------------------------------------------------------------------------

    \96\ In the test procedure NOPR, DOE proposes to define the term 
``basic model'' as ``all units of a class of compressors 
manufactured by one manufacturer, having the same primary energy 
source, the same compressor motor nominal horsepower, and 
essentially identical electrical, physical, and functional (or 
pneumatic) characteristics that affect energy consumption and energy 
efficiency.''
---------------------------------------------------------------------------

    DOE notes that new energy conservation standards will require every 
model offered for sale to be tested according to the sampling plan 
proposed in the test procedure NOPR. This proposed sampling plan 
specifies that a minimum of two units must be tested to certify a basic 
model as compliant.
    DOE estimated the industry-wide magnitude of compliance testing by 
multiplying the estimated number of models currently in each equipment 
class by the cost to test each model, and doubling this value to 
account for the minimum sample size of two units per basic model. DOE 
estimated the total number of rotary models in the industry by scaling 
the model counts in the CAGI database by CAGI's estimated market share. 
The number of reciprocating models was estimated using data collected 
from manufacturer Web sites. DOE estimated the cost to test each model 
to the method proposed in the test procedure NOPR from discussions with 
third-party compressor test labs as well as information gathered during 
confidential manufacturer interviews. Table IV.41 presents DOE's 
estimates of aggregate industry compliance testing costs for each 
equipment class. Complete details on the calculation of aggregate 
industry compliance testing costs are found in chapter 12 of the NOPR 
TSD.

         Table IV.41--Aggregate Industry Compliance Testing Cost
------------------------------------------------------------------------
                                                             Aggregate
                                                             industry
                     Equipment class                        compliance
                                                           testing cost
                                                            ($Millions)
------------------------------------------------------------------------
RP_FS_L_AC..............................................            4.72
RP_VS_L_AC..............................................            2.48
RP_FS_L_WC..............................................            0.95
RP_VS_L_WC..............................................            0.50
RP_FS_LF_AC.............................................            2.16

[[Page 31731]]

 
RP_VS_LF_AC.............................................            1.34
RP_FS_LF_WC.............................................            0.46
RP_VS_LF_WC.............................................            0.24
R1_FS_L_XX..............................................            5.57
R3_FS_L_XX..............................................            25.1
------------------------------------------------------------------------

    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.
    DOE requests feedback on its conversion cost methodology, including 
quantitative estimates and qualitative descriptions of the capital and 
product conversion costs manufacturers would incur in order to comply 
with amended energy conservation standards. This is identified as Issue 
48 in section VIII.E, ``Issues on Which DOE Seeks Comment.''
3. Manufacturer Interviews
    As part of the MIA, DOE discussed potential impacts of standards 
with nine compressor manufacturers. The interviewed manufacturers 
account for approximately 70 percent of the domestic rotary compressor 
market and approximately 20 percent of the domestic reciprocating 
compressor market. In interviews, DOE asked manufacturers to describe 
their major concerns about this rulemaking. This section highlights 
manufacturer statements that helped shaped DOE's understanding of the 
potential impacts of an energy conservation standard on the industry.
a. Conversion Requirements
    Manufacturers raised concerns over potentially significant 
conversion costs, particularly at higher efficiency levels. Several 
manufacturers of rotary equipment indicated that if U.S. standards 
exceed the levels proposed in the draft EU Lot 31 compressors 
standards, adequate capital may not be available to fund the redesigns 
and manufacturing equipment needed to maintain their current product 
portfolios. At higher efficiency levels, namely those that remove more 
than 75-percent of models from the market, many indicated they would 
consider closing manufacturing facilities rather than make the 
investments necessary to comply with such efficiency standards.
b. Engineering Constraints and Development Cycle Times
    The primary efficiency-improving technology option discussed in 
this NOPR is compressor package redesign. A compressor package redesign 
relies on the expertise of many highly trained engineers to redesign a 
compressor to higher efficiency levels, while still meeting other 
performance and reliability criteria. Many manufacturers of rotary 
equipment expressed concern surrounding insufficient availability of 
engineering resources required to redesign a high volume of compressor 
packages during a short time period. Manufacturers indicated that most 
experienced compressor design engineers are already employed within the 
industry, which limits their ability to rapidly expand their research 
and development teams if faced with a high volume of required 
compressor redesigns. Consequently, manufacturers typically commented 
that at standard levels at or above the equivalent of TSL 3, these 
engineering constraints could create time delays in complying with new 
standards. DOE notes that manufacturers typically discussed this 
constraint with respect to a three-year compliance period.
    Some manufacturers indicated that a longer compliance period, such 
as the five-year compliance period proposed in this document, may ease 
their concern over engineering constraints, as their existing 
engineering teams would be able to accomplish more redesigns if given 
more time. Under business-as-usual conditions most manufacturers 
indicated that a typical lubricated rotary compressor redesign would 
last between 18 and 24 months. This timeframe is expected to extend if 
R&D teams are faced with large numbers of concurrent redesigns.
c. Relationship to the Draft European Union Energy Efficiency Standards
    Some manufacturers emphasized the importance of harmonizing U.S. 
energy conservation standards with proposed EU standards for 
compressors. Some manufacturers have already begun preparations for the 
proposed EU standard. These manufacturers stated that harmonized 
standards would promote regulatory consistency and would enable them to 
better coordinate product redesigns and reduce conversion costs. If 
U.S. and EU standards are not harmonized, these manufacturers noted 
they would either have to carry a greater number of equipment lines to 
comply with efficiency standards in both domestic and European markets, 
or sell a single set of high efficiency equipment in both markets. The 
former adds complexity and cost. The latter may put the manufacturer at 
a competitive disadvantage in the market regulated to a lower 
efficiency.
    Conversely, some manufacturers expressed concern that the proposed 
EU standard levels are too aggressive, and they indicated that such a 
level in the U.S. could result in adverse impacts to manufacturers.
d. Unfair Advantages for Replacement Technologies
    Many manufacturers of rotary equipment expressed concerns that 
energy conservation standards on rotary compressors of 200-hp or 
greater may provide unfair advantages to competing technologies such as 
dynamic compressors (also known as centrifugal compressors). These 
manufacturers contend that both technologies are already competitive 
above 200-hp and both offer certain advantages to the end user. 
Increased prices resulting from a standard on only rotary equipment 
could push more end users to choose dynamic compressors, which would 
remain unregulated and unchanged in price. Furthermore, these 
manufacturers believe that coverage of only rotary compressors will 
unfairly burden them with costs and expenses not seen by their dynamic 
compressor competition.
e. Uncertainty of Compliance Cost for Reciprocating Equipment
    Some manufacturers of reciprocating equipment indicated that most 
reciprocating equipment in the U.S. market are not currently tested or 
labeled for efficiency. These manufacturers expressed two concerns 
related to this issue: (1) Many manufacturers do not currently know the 
efficiency of their equipment, and therefore cannot estimate the impact 
of the standard and the cost to their organization; and (2) many 
manufacturers do not currently have test facilities and will be 
required to either build facilities or utilize third-party test labs, 
both of which are new and unfamiliar costs to them.

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

[[Page 31732]]

due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. The associated emissions are referred 
to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO 2015, as described in 
section IV.M. The methodology is described in chapter 13 and chapter 15 
of the NOPR TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors from the EPA GHG Emissions 
Factors Hub.\97\ The FFC upstream emissions are estimated based on the 
methodology described in chapter 15 of the NOPR TSD. The upstream 
emissions include both emissions from fuel combustion during 
extraction, processing, and transportation of fuel, and ``fugitive'' 
emissions (direct leakage to the atmosphere) of CH4 and 
CO2.
---------------------------------------------------------------------------

    \97\ Available at: http://www2.epa.gov/climateleadership/center-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per megawatt hour (MWh) or million British thermal units (MMBtu) 
of site energy savings. Total emissions reductions are estimated using 
the energy savings calculated in the national impact analysis.
    The AEO 2015 projections incorporate 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.\98\ In 2011, EPA issued a replacement for CAIR, the Cross-State 
Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 
2012, the DC Circuit issued a decision to vacate CSAPR,\99\ and the 
court ordered EPA to continue administering CAIR. On April 29, 2014, 
the U.S. Supreme Court reversed the judgment of the DC Circuit and 
remanded the case for further proceedings consistent with the Supreme 
Court's opinion.\100\ On October 23, 2014, the DC Circuit lifted the 
stay of CSAPR.\101\ Pursuant to this action, CSAPR went into effect 
(and CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \98\ 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).
    \99\ 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).
    \100\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 
(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.
    \101\ 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 significant 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.\102\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \102\ 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.\103\ 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 NOPR for these States.
---------------------------------------------------------------------------

    \103\ CSAPR also applies to NOX and it supersedes 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

[[Page 31733]]

using emissions factors based on AEO 2015, which incorporates the MATS.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed rule, DOE considered 
the estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. In order to make this calculation analogous to 
the calculation of the NPV of consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of equipment 
shipped in the forecast period for each TSL. This section summarizes 
the basis for the monetary values used for CO2 and 
NOX emissions and presents the values considered in this 
NOPR.
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) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, and the value of ecosystem services. 
Estimates of the SCC are provided in dollars per metric ton of 
CO2. A domestic SCC value is meant to reflect the value of 
damages in the United States resulting from a unit change in 
CO2 emissions, while a global SCC value is meant to reflect 
the value of damages worldwide.
    Under section 1(b)(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 these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of challenges. A 
report from the National Research Council \104\ points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of GHGs; (2) the effects of 
past and future emissions on the climate system; (3) the impact of 
changes in climate on the physical and biological environment; and (4) 
the translation of these environmental impacts into economic damages. 
As a result, any effort to quantify and monetize the harms associated 
with climate change will raise questions of science, economics, and 
ethics and should be viewed as provisional.
---------------------------------------------------------------------------

    \104\ National Research Council, Hidden Costs of Energy: 
Unpriced Consequences of Energy Production and Use, National 
Academies Press: Washington, DC (2009).
---------------------------------------------------------------------------

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

[[Page 31734]]

    In 2010, the interagency group selected four sets of SCC values for 
use in regulatory analyses. Three sets of values are based on the 
average SCC from the three integrated assessment models, at discount 
rates of 2.5-, 3-, and 5-percent. The fourth set, which represents the 
95th percentile SCC estimate across all three models at a 3-percent 
discount rate, was included to represent higher-than-expected impacts 
from climate change further out in the tails of the SCC distribution. 
The values grow in real terms over time. Additionally, the interagency 
group determined that a range of values from 7-percent to 23-percent 
should be used to adjust the global SCC to calculate domestic 
effects,\105\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV.42 
presents the values in the 2010 interagency group report,\106\ which is 
reproduced in appendix 14A of the NOPR TSD.
---------------------------------------------------------------------------

    \105\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
    \106\ 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.42--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this 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).\107\ Table IV.43 shows the updated sets of SCC estimates from 
the latest interagency update in 5-year increments from 2010 to 2050. 
The full set of annual SCC values between 2010 and 2050 is reported in 
appendix 14B of the NOPR TSD. The central value that emerges is the 
average SCC across models at the 3-percent discount rate. However, for 
purposes of capturing the uncertainties involved in regulatory impact 
analysis, the interagency group emphasizes the importance of including 
all four sets of SCC values.
---------------------------------------------------------------------------

    \107\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised July 2015) (Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf).

           Table IV.43--Annual SCC Values From 2013 Interagency Update (Revised July 2015), 2010-2050
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              10              31              50              86
2015............................................              11              36              56             105
2020............................................              12              42              62             123
2025............................................              14              46              68             138
2030............................................              16              50              73             152
2035............................................              18              55              78             168
2040............................................              21              60              84             183
2045............................................              23              64              89             197
2050............................................              26              69              95             212
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned previously points out that there is tension 
between the goal of producing quantified estimates of the economic 
damages from an incremental ton of carbon and the limits of existing 
efforts to model these effects. There are a number of analytical 
challenges that are being addressed by the research community, 
including

[[Page 31735]]

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.\108\
---------------------------------------------------------------------------

    \108\ In November 2013, OMB announced a new opportunity for 
public comment on the interagency technical support document 
underlying the revised SCC estimates. 78 FR 70586. In July 2015 OMB 
published a detailed summary and formal response to the many 
comments that were received. https://www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. It 
also stated its intention to seek independent expert advice on 
opportunities to improve the estimates, including many of the 
approaches suggested by commenters.
---------------------------------------------------------------------------

    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 2015$ using 
the implicit price deflator for gross domestic product (GDP) from the 
Bureau of Economic Analysis. For each of the four sets of SCC cases 
specified, the values for emissions in 2015 were $12.2, $40.0, $62.3, 
and $117 per metric ton avoided (values expressed in 2015$). DOE 
derived values after 2050 based on the trend in 2010-2050 in each of 
the four cases.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.

2. Social Cost of Other Air Pollutants

    As noted previously, DOE has estimated how the considered energy 
conservation standards would decrease power sector NOX 
emissions in those 22 States not affected by the CAIR.
    DOE estimated the monetized value of net NOX emissions 
reductions using benefit per ton estimates from the Regulatory Impact 
Analysis for the Clean Power Plan Final Rule, published in August 2015 
by EPA's Office of Air Quality Planning and Standards.\109\ The report 
includes high and low values for NOX (as PM2.5) 
for 2020, 2025, and 2030 discounted at 3 percent and 7 percent; these 
values are presented in chapter 14 of the NOPR TSD. DOE primarily 
relied on the low estimates to be conservative.\110\ 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. 
DOE developed values specific to the end-use category for compressors 
using a method described in appendix 14-C.
---------------------------------------------------------------------------

    \109\ Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See Tables 4A-3, 
4A-4, and 4A-5 in the report.
    \110\ For the monetized NOX benefits associated with 
PM2.5, the related benefits are primarily 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. If the benefit-per-ton estimates were based 
on the Six Cities study (Lepuele et al. 2012), the values would be 
nearly two-and-a-half times larger. (See chapter 14 of the NOPR TSD 
for citations for 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 of the current analysis for the final 
rulemaking.
    DOE is evaluating appropriate monetization of avoided 
SO2 and Hg emissions in energy conservation standards 
rulemakings. DOE has not included monetization of those emissions in 
the current analysis.

M. Utility Impact Analysis

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

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts from new or 
amended energy conservation standards include both direct and indirect 
impacts. Direct employment impacts are any changes in the number of 
employees of manufacturers of the equipment subject to standards, their 
suppliers, and related service firms. The MIA addresses those impacts. 
Indirect employment impacts are changes in national employment that 
occur due to the shift in expenditures and capital investment caused by 
the purchase and operation of more-efficient appliances. Indirect 
employment impacts from standards consist of the net jobs created or 
eliminated in the national economy, other than in the manufacturing 
sector being regulated, caused by: (1) Reduced spending by end users on 
energy; (2) reduced spending on new energy supply by the utility 
industry; (3) increased consumer spending on new equipment to which the 
new standards apply; and (4) the effects of those three factors 
throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS).\111\ 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.\112\ There are many reasons for these differences, 
including wage differences and the fact that the utility sector is more 
capital-intensive and less

[[Page 31736]]

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, the BLS data suggest that net national 
employment may increase due to shifts in economic activity resulting 
from energy conservation standards.
---------------------------------------------------------------------------

    \111\ 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].
    \112\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this NOPR using an input/output model of the U.S. 
economy called Impact of Sector Energy Technologies version 3.1.1 
(ImSET).\113\ ImSET is a special-purpose version of the ``U.S. 
Benchmark National Input-Output'' (I-O) model, which was designed to 
estimate the national employment and income effects of energy-saving 
technologies. The ImSET software includes a computer-based I-O model 
having structural coefficients that characterize economic flows among 
187 sectors most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \113\ J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact 
of Sector Energy Technologies, PNNL-18412, Pacific Northwest 
National Laboratory (2009) (Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------

    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 this rule. Therefore, DOE generated 
results for near-term timeframes, where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the NOPR TSD.

V. Analytical Results and Conclusions

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

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of six TSLs for compressors. 
These TSLs were developed by combining specific efficiency levels for 
each of the equipment classes analyzed by DOE. Table V.1 presents the 
TSLs and the corresponding efficiency levels for compressors. DOE 
presents the results for the TSLs in this document, while the results 
for all efficiency levels that DOE analyzed are in the NOPR TSD.
    For the rotary lubricated equipment classes, the TSLs increase 
directly with the analyzed ELs, from EL 1 through max-tech (EL 6). TSL 
3 is of significance for these equipment classes because it represents 
a combination of efficiency levels that are equivalent to the draft EU 
second tier minimum energy efficiency requirement for rotary lubricated 
compressors.\114\
---------------------------------------------------------------------------

    \114\ For more information regarding the draft regulation see: 
http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-
0031.
---------------------------------------------------------------------------

    For rotary lubricant-free equipment classes, DOE evaluated an 
efficiency levels at the baseline for TSLs 1 through 5. This equipment 
exhibits low potential for national energy savings, which is 
demonstrated at TSL 6, the max-tech TSL for lubricant free equipment. 
At this TSL, the equipment contributes 0.1 quad of energy savings, 
which is less than 5-percent of the total energy savings for the TSL. 
Low potential national energy savings were compounded by significant 
burden to manufacturers at this TSL. Complete economic results for 
lubricant free equipment are discussed further in section V.B of this 
document and the TSD.
    At the ``new standards at baseline'' efficiency level for rotary 
lubricant-free equipment classes, which is evaluated in TSLs 1 through 
5, DOE analyzed the impacts of establishing new standards for this 
equipment at the baseline efficiency levels discussed and established 
in section IV.C.5 of this document and chapter 5 of the NOPR TSD. In a 
``new standards at baseline'' scenario, DOE expects no impacts to the 
end user and no product redesign or capital conversion costs to the 
manufacturing industry. DOE accounts for the testing and compliance 
costs encountered by the manufacturers of this equipment in the MIA. 
These costs are reflected in the results presented in section V.B.2 of 
this document.
    DOE notes that the ``new standards at baseline'' scenario will not 
result in national energy savings that can be captured in the NIA. A 
standard at baseline will, however, prevent potential new, less 
efficient equipment from the entering the market and potentially 
increasing future national energy consumption. As discussed previously, 
the burdens on the manufacturing industry that result from such a 
standard are assessed in the MIA.
    For reciprocating equipment classes, the NPV of consumer benefits 
was negligible or negative for at least one of the classes \115\ at all 
efficiency levels; as such, DOE chose not to evaluate new standards for 
this equipment in TSLs 1 through 5, and evaluated new standards only at 
TSL 6, the max-tech level. Complete economic results for reciprocating 
compressors are discussed further in section V.B, and chapters eight 
and ten of the NOPR TSD.
---------------------------------------------------------------------------

    \115\ When developing TSLs for reciprocating compressors, DOE 
tied the efficiency levels of single-phase and three-phase equipment 
classes together to avoid potential unnecessary market impacts. 
Single- and three-phase reciprocating equipment are typically 
identical, except for their motor; any changes made to one equipment 
class will be pass through to the other. A standard established at 
disparate ELs would essentially result in economic impacts similar 
to the case where both equipment class are tied together at the 
higher EL. As such, DOE found it appropriate to tie the efficiency 
levels together when developing TSLs.
---------------------------------------------------------------------------

    DOE notes that unlike rotary lubricant free, DOE did not evaluate a 
``new standards at baseline'' scenario for its reciprocating TSLs. DOE 
determined that a standard, regardless of level, would not be 
economically justified because of the significant testing and 
compliance burdens encountered by the manufacturers of this equipment. 
Unlike rotary lubricant free, the overwhelming majority of 
reciprocating compressors in the market do not currently make public 
representation of efficiency, nor are they currently tested for 
efficiency. As such, many manufacturers in the reciprocating industry 
expressed concern over the availability and cost of third party test 
labs. These concerns were discussed in detail in section IV.J.3.e. 
Furthermore, DOE estimated that compared to rotary lubricant free, 
there are significantly more reciprocating basic models in the market. 
This results in significantly higher estimated industry testing and 
compliance cost for reciprocating versus rotary lubricant free; $30.7 
versus $2.2 million, respectively. These estimates are detailed in 
section IV.J.2.b.i. In addition, whereas DOE is aware of only 1 
domestic small manufacturer of rotary lubricant free compressors (out 
of seven total), DOE is aware of 13 domestic small manufacturers of 
reciprocating compressors (out of 33 total). Assuming

[[Page 31737]]

equal distribution of basic models per manufacturer, this equates to 
$0.93 million in testing and compliance costs per reciprocating 
manufacturer (including small manufacturers), versus $0.32 million per 
rotary lubricant free manufacturer.
    When DOE proposes to adopt a new standard for a type or class of 
covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1) and 6316(a)) As 
discussed above, TSL 6 reflects that max-tech level for all product 
classes.

                                               Table V.1--Trial Standard Level to Efficiency Level Mapping
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Equipment class (EC)                         TSL 1           TSL 2           TSL 3           TSL 4           TSL 5           TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC..............................................            EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
RP_FS_L_WC..............................................            EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
RP_FS_LF_AC.............................................          * EL 0          * EL 0          * EL 0          * EL 0          * EL 0            EL 6
RP_FS_LF_WC.............................................          * EL 0          * EL 0          * EL 0          * EL 0          * EL 0            EL 6
RP_VS_L_AC..............................................            EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
RP_VS_L_WC..............................................            EL 1            EL 2            EL 3            EL 4            EL 5            EL 6
RP_VS_LF_AC.............................................          * EL 0          * EL 0          * EL 0          * EL 0          * EL 0            EL 6
RP_VS_LF_WC.............................................          * EL 0          * EL 0          * EL 0          * EL 0          * EL 0            EL 6
R1_FS_L_XX..............................................         ** EL 0         ** EL 0         ** EL 0         ** EL 0         ** EL 0            EL 6
R3_FS_L_XX..............................................         ** EL 0         ** EL 0         ** EL 0         ** EL 0         ** EL 0            EL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For the RP_FS_LF_AC, RP_FS_LF_WC, RP_VS_LF_AC, and RP_VS_LF_WC equipment classes, EL 0 represents a scenario in which a standard is set at the
  baseline efficiency level.
** For R1_FS_L_XX, and R3_FS_L_XX, EL 0 represents a scenario in which no new standards are established.

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on compressor consumers by 
looking at the effects potential standards at each TSL would have on 
the LCC and PBP. DOE also examined the impacts of potential standards 
on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency equipment affect consumers in two 
ways: (1) Purchase price increases, and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses equipment lifetime and a discount rate. Chapter 8 of the NOPR TSD 
provides detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.21 show the LCC and PBP results for the 
TSL efficiency levels considered for each compressor equipment class. 
In the first of each pair of tables, the simple payback is measured 
relative to the baseline equipment (EL 0). In the second table, the 
impacts are measured relative to the efficiency distribution in the no-
new-standards case in the compliance year (see section IV.F.8 of this 
document). Because some consumers purchase equipment with higher 
efficiency in the no-new-standards case, the average savings are less 
than the difference between the average LCC of EL 0 and the average LCC 
at each TSL. The savings refer only to consumers who are affected by a 
standard at a given TSL. Those who already purchase equipment with 
efficiency at or above a given TSL are not affected. Consumers for whom 
the LCC increases at a given TSL experience a net cost.

                 Table V.2--Average LCC and PBP Results by Efficiency Level for Rotary, Fixed-Speed, Lubricated, Air-Cooled Compressors
                                                                      [RP_FS_L_AC]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        Lifetime
                                                          Installed cost     operating       operating          LCC           (years)         (years)
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................         $14,808         $11,280         $88,269        $103,077  ..............            11.8
1.................................  1...................          15,022          11,115          87,028         102,050             1.3            11.8
2.................................  2...................          15,494          10,877          85,202         100,696             1.7            11.8
3.................................  3...................          16,379          10,547          82,673          99,052             2.1            11.8
4.................................  4...................          16,842          10,405          81,582          98,424             2.3            11.8
5.................................  5...................          17,725          10,165          79,732          97,457             2.6            11.8
6.................................  6...................          20,399           9,586          75,253          95,652             3.3            11.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


[[Page 31738]]


 Table V.3--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Fixed-Speed, Lubricated, Air-
                                               Cooled Compressors
                                                  [RP_FS_L_AC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                    consumers        Average
                                                                                       that          savings *
                                                                                    experience        (2015$)
                                                                                    (net cost)
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................               0          $9,056
2.............................................  2...............................               0           8,902
3.............................................  3...............................               1           9,443
4.............................................  4...............................               3           7,579
5.............................................  5...............................               5           7,748
6.............................................  6...............................              14           7,817
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                Table V.4--Average LCC and PBP Results by Efficiency Level for Rotary, Fixed-Speed, Lubricated, Water-Cooled Compressors
                                                                      [RP_FS_L_WC]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        Lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................         $37,958         $29,953        $248,854        $286,813  ..............            12.8
1.................................  1...................          38,504          29,685         246,653         285,157             2.0            12.8
2.................................  2...................          39,658          29,250         243,055         282,713             2.4            12.8
3.................................  3...................          41,699          28,622         237,909         279,608             2.8            12.8
4.................................  4...................          42,752          28,340         235,590         278,342             3.0            12.8
5.................................  5...................          44,716          27,856         231,614         276,330             3.2            12.8
6.................................  6...................          50,482          26,644         221,619         272,101             3.8            12.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


Table V.5--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Fixed-Speed, Lubricated, Water-
                                               Cooled Compressors
                                                  [RP_FS_L_WC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                 consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................               0         $14,396
2.............................................  2...............................               1          15,011
3.............................................  3...............................               3          16,538
4.............................................  4...............................               5          13,649
5.............................................  5...............................               7          14,397
6.............................................  6...............................              15          15,512
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


               Table V.6--Average LCC and PBP Results by Efficiency Level for Rotary, Fixed-Speed, Lubricant Free, Air-Cooled Compressors
                                                                      [RP_FS_LF_AC]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................         $88,182         $21,714        $177,081        $265,263            n.a.            12.5
1.................................  0...................          88,182          21,714         177,081         265,263            n.a.            12.5
2.................................  0...................          88,182          21,714         177,081         265,263            n.a.            12.5
3.................................  0...................          88,182          21,714         177,081         265,263            n.a.            12.5

[[Page 31739]]

 
4.................................  0...................          88,182          21,714         177,081         265,263            n.a.            12.5
5.................................  0...................          88,182          21,714         177,081         265,263            n.a.            12.5
6.................................  6...................          92,064          20,622         168,270         260,334             3.6            12.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.


  Table V.7--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Fixed-Speed, Lubricant Free,
                                             Air-cooled compressors
                                                  [RP_FS_LF_AC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                 consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  0...............................            n.a.            n.a.
2.............................................  0...............................            n.a.            n.a.
3.............................................  0...............................            n.a.            n.a.
4.............................................  0...............................            n.a.            n.a.
5.............................................  0...............................            n.a.            n.a.
6.............................................  6...............................               8          $5,182
----------------------------------------------------------------------------------------------------------------
Note: n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there
  are no LCC Savings or Simple Payback.
* The savings represent the average LCC for affected consumers.


              Table V.8--Average LCC and PBP Results by Efficiency Level for Rotary, Fixed-Speed, Lubricant Free, Water-Cooled Compressors
                                                                      [RP_FS_LF_WC]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................        $103,931         $29,608        $246,435        $350,366            n.a.            13.0
1.................................  0...................         103,931          29,608         246,435         350,366            n.a.            13.0
2.................................  0...................         103,931          29,608         246,435         350,366            n.a.            13.0
3.................................  0...................         103,931          29,608         246,435         350,366            n.a.            13.0
4.................................  0...................         103,931          29,608         246,435         350,366            n.a.            13.0
5.................................  0...................         103,931          29,608         246,435         350,366            n.a.            13.0
6.................................  6...................         109,110          28,324         235,882         344,992             4.0            13.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
``n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


  Table V.9--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Fixed-Speed, Lubricant Free,
                                            Water-Cooled Compressors
                                                  [RP_FS_LF_WC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                 consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  0...............................            n.a.            n.a.
2.............................................  0...............................            n.a.            n.a.

[[Page 31740]]

 
3.............................................  0...............................            n.a.            n.a.
4.............................................  0...............................            n.a.            n.a.
5.............................................  0...............................            n.a.            n.a.
6.............................................  6...............................              10          $5,686
----------------------------------------------------------------------------------------------------------------
Note: n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there
  are no LCC Savings or Simple Payback.
* The savings represent the average LCC for affected consumers.


               Table V.10--Average LCC and PBP Results by Efficiency Level for Rotary, Variable-Speed, Lubricated, Air-Cooled Compressors
                                                                      [RP_VS_L_AC]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2015$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................         $24,181         $12,574         $97,620        $121,801  ..............            11.8
1.................................  1...................          24,398          12,473          96,845         121,243             2.1            11.8
2.................................  2...................          24,981          12,258          95,215         120,196             2.5            11.8
3.................................  3...................          26,025          11,955          92,920         118,945             3.0            11.8
4.................................  4...................          26,843          11,757          91,415         118,258             3.3            11.8
5.................................  5...................          28,864          11,344          88,263         117,128             3.8            11.8
6.................................  6...................          34,034          10,559          82,265         116,299             4.9            11.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
``n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


  Table V.11--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Variable-Speed, Lubricated,
                                             Air-Cooled Compressors
                                                  [RP_VS_L_AC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of consumers
                      TSL                                      EL                      that           Average
                                                                                    experience       savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................               0          $5,073
2.............................................  2...............................               1           6,061
3.............................................  3...............................               4           6,746
4.............................................  4...............................               8           5,732
5.............................................  5...............................              13           6,408
6.............................................  6...............................              31           5,784
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                  Table V.12--Average LCC and PBP Results by Efficiency Level for Rotary, Variable-Speed, Lubricated, Water-Cooled Compressors
                                                                                          (RPp_VS_L_WC)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        Average costs 2015$
                                                                                                 ---------------------------------------------------------------- Simple payback      Average
                                TSL                                              EL                                First year's      Lifetime                         (years)        lifetime
                                                                                                  Installed cost  operating cost  operating cost        LCC                           (years)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               0         $61,242         $31,544        $259,506        $320,748  ..............            13.0

[[Page 31741]]

 
1.................................................................                             1          61,990          31,281         257,385         319,375             2.8            13.0
2.................................................................                             2          64,077          30,717         252,831         316,908             3.4            13.0
3.................................................................                             3          67,766          29,945         246,533         314,299             4.1            13.0
4.................................................................                             4          69,662          29,605         243,752         313,414             4.3            13.0
5.................................................................                             5          74,247          28,872         237,732         311,979             4.9            13.0
6.................................................................                             6          86,230          27,315         224,949         311,179             5.9            13.0
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the baseline (EL 0) equipment.


  Table V.13--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Variable-Speed, Lubricated,
                                            Water-Cooled Compressors
                                                  [RP_VS_L_WC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of consumers
                      TSL                                      EL                      that           Average
                                                                                    experience       savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  1...............................               1         $12,017
2.............................................  2...............................               3          13,865
3.............................................  3...............................               8          14,922
4.............................................  4...............................              14          11,996
5.............................................  5...............................              21          12,055
6.............................................  6...............................              40          10,082
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


             Table V.14--Average LCC and PBP Results by Efficiency Level for Rotary, Variable-Speed, Lubricant-Free, Air-Cooled Compressors
                                                                      [RP_VS_lf_ac]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................        $115,579         $29,125        $238,450        $354,029            n.a.            13.0
1.................................  0...................         115,579          29,125         238,450         354,029            n.a.            13.0
2.................................  0...................         115,579          29,125         238,450         354,029            n.a.            13.0
3.................................  0...................         115,579          29,125         238,450         354,029            n.a.            13.0
4.................................  0...................         115,579          29,125         238,450         354,029            n.a.            13.0
5.................................  0...................         115,579          29,125         238,450         354,029            n.a.            13.0
6.................................  6...................         121,730          27,060         221,747         343,478             3.0            13.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
`` n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


[[Page 31742]]


  Table V.15--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Variable-Speed, Lubricant-
                                          Free, Air-Cooled Compressors
                                                  [RP_VS_Lf_AC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                 consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  0...............................            n.a.            n.a.
2.............................................  0...............................            n.a.            n.a.
3.............................................  0...............................            n.a.            n.a.
4.............................................  0...............................            n.a.            n.a.
5.............................................  0...............................            n.a.            n.a.
6.............................................  6...............................               6         $11,104
----------------------------------------------------------------------------------------------------------------
Note: n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there
  are no LCC Savings or Simple Payback.
* The calculation excludes households with zero LCC savings (no impact).


            Table V.16--Average LCC and PBP Results by Efficiency Level for Rotary, Variable-Speed, Lubricant-Free, Water-Cooled Compressors
                                                                      [RP_VS_LF_WC]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                          EL                            First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................         $93,159         $19,555        $155,255        $248,414            n.a.            12.2
1.................................  0...................          93,159          19,555         155,255         248,414            n.a.            12.2
2.................................  0...................          93,159          19,555         155,255         248,414            n.a.            12.2
3.................................  0...................          93,159          19,555         155,255         248,414            n.a.            12.2
4.................................  0...................          93,159          19,555         155,255         248,414            n.a.            12.2
5.................................  0...................          93,159          19,555         155,255         248,414            n.a.            12.2
6.................................  6...................          97,524          17,922         142,583         240,107             2.7            12.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
``n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


  Table V.17--Average LCC Savings Relative to the No-New-Standards Case for Rotary, Variable-Speed, Lubricant-
                                         Free, Water-Cooled Compressors
                                                 [RP_VS_LFf_WC]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of consumers
                      TSL                                      EL                      that           Average
                                                                                    experience       savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  0...............................            n.a.            n.a.
2.............................................  0...............................            n.a.            n.a.
3.............................................  0...............................            n.a.            n.a.
4.............................................  0...............................            n.a.            n.a.
5.............................................  0...............................            n.a.            n.a.
6.............................................  6...............................               5          $8,748
----------------------------------------------------------------------------------------------------------------
Note: n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there
  are no LCC Savings or Simple Payback.
* The calculation excludes households with zero LCC savings (no impact).


[[Page 31743]]


            Table V.18--Average LCC and PBP Results by Efficiency Level for Reciprocating, Single-Phase, Fixed-Speed, Lubricated Compressors
                                                                      [R1_FS_L_XX]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $1,281            $240          $1,606          $2,888            n.a.             9.5
1.................................  0...................           1,281             240           1,606           2,888            n.a.             9.5
2.................................  0...................           1,281             240           1,606           2,888            n.a.             9.5
3.................................  0...................           1,281             240           1,606           2,888            n.a.             9.5
4.................................  0...................           1,281             240           1,606           2,888            n.a.             9.5
5.................................  0...................           1,281             240           1,606           2,888            n.a.             9.5
6.................................  6...................           2,209             139             946           3,155             9.2             9.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
``n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


  Table V.19--Average LCC Savings Relative to the No-New-Standards Case for Reciprocating, Single-Phase, Fixed-
                                          Speed, Lubricated Compressors
                                                  [R1_FS_L_XX]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                 consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  0...............................            n.a.            n.a.
2.............................................  0...............................            n.a.            n.a.
3.............................................  0...............................            n.a.            n.a.
4.............................................  0...............................            n.a.            n.a.
5.............................................  0...............................            n.a.            n.a.
6.............................................  6...............................              78           -$282
----------------------------------------------------------------------------------------------------------------
Note: n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there
  are no LCC Savings or Simple Payback.
* The calculation excludes households with zero LCC savings (no impact).


             Table V.20--Average LCC and PBP Results by Efficiency Level for Reciprocating, Three-Phase, Fixed-Speed, Lubricated Compressors
                                                                      [R3_FS_L_XX]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                          EL                            First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    0...................          $2,200            $406          $2,997          $5,197            n.a.             9.8
1.................................  0...................           2,200             406           2,997           5,197            n.a.             9.8
2.................................  0...................           2,200             406           2,997           5,197            n.a.             9.8
3.................................  0...................           2,200             406           2,997           5,197            n.a.             9.8
4.................................  0...................           2,200             406           2,997           5,197            n.a.             9.8
5.................................  0...................           2,200             406           2,997           5,197            n.a.             9.8
6.................................  6...................           3,802             274           2,055           5,857            12.1             9.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
``n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


[[Page 31744]]


  Table V.21--Average LCC Savings Relative to the No-New-Standards Case for Reciprocating, Three-Phase, Fixed-
                                          Speed, Lubricated Compressors
                                                  [RP_FS_L_XX]
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                       % of
                      TSL                                      EL                 consumers that      Average
                                                                                     experience      savings *
                                                                                    (net cost)        (2015$)
----------------------------------------------------------------------------------------------------------------
1.............................................  0...............................            n.a.            n.a.
2.............................................  0...............................            n.a.            n.a.
3.............................................  0...............................            n.a.            n.a.
4.............................................  0...............................            n.a.            n.a.
5.............................................  0...............................            n.a.            n.a.
6.............................................  6...............................              83           -$693
----------------------------------------------------------------------------------------------------------------
* The calculation excludes households with zero LCC savings (no impact).
* n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there are no
  LCC Savings or Simple Payback.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, described in section IV.I of 
this document, DOE estimated the impact of the considered TSLs on small 
businesses that purchase compressors. Table V.22 and Table V.23 
compares the average LCC savings and PBP at each efficiency level for 
the ``small business'' consumer subgroup, along with the average LCC 
savings for the entire sample. In most cases, the average LCC savings 
and PBP for the small business consumer subgroup at the considered 
efficiency levels are not substantially different from the average for 
all consumers. Chapter 11 of the NOPR TSD presents the complete LCC and 
PBP results for the subgroups.

                                 Table V.22--Comparison of LCC Savings for the Small Business Subgroup and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average life-cycle cost savings (2015$)
              Equipment class                           Scenario           -----------------------------------------------------------------------------
                                                                               TSL 1        TSL 2        TSL 3        TSL 4        TSL 5        TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC.................................  All Consumers................       $9,056       $8,902       $9,443       $7,579       $7,748       $7,817
                                             Small Businesses.............        7,837        7,577        7,939        6,341        6,421        6,309
RP_FS_L_WC.................................  All Consumers................       14,396       15,011       16,538       13,649       14,397       15,512
                                             Small Businesses.............       12,046       12,498       13,601       11,160       11,677       12,194
RP_FS_LF_AC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.        5,182
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.        4,098
RP_FS_LF_WC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.        5,686
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.        4,386
RP_VS_L_AC.................................  All Consumers................        5,073        6,061        6,746        5,732        6,408        5,784
                                             Small Businesses.............        4,438        5,141        5,591        4,703        5,108        4,181
RP_VS_L_WC.................................  All Consumers................       12,017       13,865       14,922       11,996       12,055       10,082
                                             Small Businesses.............        9,975       11,269       11,717        9,253        8,841        6,130
RP_VS_LF_AC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.       11,104
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.        9,185
RP_VS_LF_WC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.        8,748
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.        7,317
R1_FS_L_XX.................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.        (282)
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.        (332)
R3_FS_L_XX.................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.        (693)
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.        (790)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.


                            Table V.23--Comparison of Simple Payback Period for the Small Business Subgroup and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Average simple payback period  (years)
              Equipment class                           Scenario           -----------------------------------------------------------------------------
                                                                               TSL 1        TSL 2        TSL 3        TSL 4        TSL 5        TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC.................................  All Consumers................          1.3          1.7          2.1          2.3          2.6          3.3
                                             Small Businesses.............          1.3          1.7          2.2          2.4          2.7          3.3
RP_FS_L_WC.................................  All Consumers................          2.0          2.4          2.8          3.0          3.2          3.8
                                             Small Businesses.............          2.0          2.4          2.8          3.0          3.2          3.8
RP_FS_LF_AC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.          3.6
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.          3.6
RP_FS_LF_WC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.          4.0
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.          4.0
RP_VS_L_AC.................................  All Consumers................          2.1          2.5          3.0          3.3          3.8          4.9

[[Page 31745]]

 
                                             Small Businesses.............          2.1          2.5          3.0          3.3          3.8          4.9
RP_VS_L_WC.................................  All Consumers................          2.8          3.4          4.1          4.3          4.9          5.9
                                             Small Businesses.............          2.9          3.5          4.1          4.4          4.9          5.9
RP_VS_LF_AC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.          3.0
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.          3.0
RP_VS_LF_WC................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.          2.7
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.          2.7
R1_FS_L_XX.................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.          9.2
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.          9.2
R3_FS_L_XX.................................  All Consumers................         n.a.         n.a.         n.a.         n.a.         n.a.         12.1
                                             Small Businesses.............         n.a.         n.a.         n.a.         n.a.         n.a.         12.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline (EL 0) equipment.
* n.a. indicates that there is no increased in efficiency in the proposed standards case, therefore there are no LCC Savings or Simple Payback.

c. Rebuttable Presumption Payback
    As discussed in section III.G.2, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for equipment that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. In calculating a rebuttable 
presumption payback period for each of the considered TSLs, DOE used 
discrete values, and, as required by EPCA, based the energy use 
calculation on the DOE test procedure for compressors. In contrast, the 
PBPs presented in section V.B.1.a were calculated using distributions 
for input values, with energy use based on the methodology described in 
section IV.E.
    Notwithstanding this more limited analysis, DOE routinely conducts 
a full economic analysis that considers the full range of impacts to 
the consumer, manufacturer, Nation, and environment. See 42 U.S.C. 
6295(o)(2)(B)(i) and 6316(a). The results of that analysis serve as the 
basis for DOE to definitively evaluate the economic justification for a 
potential standard level, thereby supporting or rebutting the results 
of any preliminary determination of economic justification. Table V.24 
shows the rebuttable presumption PBPs for the considered TSLs for the 
considered compressors equipment classes.

                            Table V.24--Rebuttable Presumption Payback Periods by TSL
----------------------------------------------------------------------------------------------------------------
          Equipment class              TSL 1        TSL 2        TSL 3        TSL 4        TSL 5        TSL 6
----------------------------------------------------------------------------------------------------------------
RP_FS_L_AC........................          1.1          1.5          1.9          2.0          2.3          2.8
RP_FS_L_WC........................          1.7          2.0          2.4          2.5          2.7          3.2
RP_FS_LF_AC.......................         n.a.         n.a.         n.a.         n.a.         n.a.          3.0
RP_FS_LF_WC.......................         n.a.         n.a.         n.a.         n.a.         n.a.          3.4
RP_VS_L_AC........................          2.3          2.8          3.3          3.6          4.2          5.4
RP_VS_L_WC........................          3.2          3.8          4.5          4.8          5.4          6.5
RP_VS_LF_AC.......................         n.a.         n.a.         n.a.         n.a.         n.a.          3.3
RP_VS_LF_WC.......................         n.a.         n.a.         n.a.         n.a.         n.a.          3.0
R1_FS_L_XX........................         n.a.         n.a.         n.a.         n.a.         n.a.          7.2
R3_FS_L_XX........................         n.a.         n.a.         n.a.         n.a.         n.a.          9.4
----------------------------------------------------------------------------------------------------------------
Note: ``n.a.'' indicates that there is no increased in efficiency in the proposed standards case, therefore
  there are no LCC Savings or Simple Payback.

2. Economic Impacts on Manufacturers
    As noted previously, DOE performed an MIA to estimate the impact of 
energy conservation standards on manufacturers of compressors. The 
following section summarizes the expected impacts on manufacturers at 
each considered TSL. Chapter 12 of the NOPR TSD explains the analysis 
in further detail.
a. Industry Cash Flow Analysis Results
    Table V.25 depicts the estimated financial impacts (represented by 
changes in industry net present value, or INPV) of amended energy 
conservation standards on manufacturers of compressors, as well as the 
conversion costs that DOE expects manufacturers would incur for all 
equipment classes at each TSL. DOE notes that the GRIM and resulting 
industry cash flow analysis considered only rotary equipment classes, 
as DOE is proposing not to establish standards for reciprocating 
equipment. For further discussion on DOE's proposal for reciprocating 
compressors, see section V.C.
    As discussed in section IV.J.2, DOE modeled two different 
conversion cost scenarios to evaluate the range of cash flow impacts on 
the compressor industry: (1) A low conversion cost scenario; and (2) a 
high conversion cost scenario.
    The low conversion cost scenario assumes that manufacturers active 
in the EU market will not face additional product conversion costs to 
adapt to a U.S. standard that is at or below the draft EU level (EL 3 
and TSL 3). If the U.S. standard is above the draft EU level, these 
manufacturers would still incur full redesign costs. In the high 
conversion cost scenario, all manufacturers face full product

[[Page 31746]]

conversion costs, regardless of an EU regulation. DOE notes that these 
scenarios only impact lubricated rotary equipment, as lubricant-free 
rotary equipment is not proposed for coverage in the EU. Each of the 
conversion cost scenarios result in a unique set of cash flows and 
corresponding industry values at each TSL.
    In the following discussion, the INPV results refer to the 
difference in industry value between the base case ``business as 
usual'' and each standards case resulting from the sum of discounted 
cash flows from the base year (2015) through the end of the analysis 
period (2051). To provide perspective on the short-run cash flow 
impact, DOE includes in the discussion of results a comparison of free 
cash flow between the no-standards case and the standards case at each 
TSL in the year before amended standards would take effect. This figure 
provides an understanding of the magnitude of required conversion costs 
relative to cash flows generated by the industry in the base case.
    Table V.25 and Table V.26 present INPV results under the low and 
high conversion cost scenarios. The low conversion cost scenario 
represents the least severe set of impacts while the high conversion 
cost scenario represents the most severe sets of impacts. Markups do 
not vary with conversion cost scenario.

                             Table V.25--Manufacturer Impact Analysis Results for Compressors: Low Conversion Cost Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  No new                               Trial standard level *
                                                     Units       standard  -----------------------------------------------------------------------------
                                                                   case          1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................................       2014$M        497.1        480.4        451.9        385.7        301.8        256.0        105.3
Change in INPV..................................       2014$M                    (16.7)       (45.2)      (111.4)      (195.3)      (241.1)      (391.8)
                                                            %                     (3.4)        (9.1)       (22.4)       (39.3)       (48.5)       (78.8)
Product Conversion Costs........................       2014$M                      29.2         70.3        157.1        281.5        345.9        548.8
Capital Conversion Costs........................       2014$M                       7.6         28.7         72.9         92.4        112.7        181.3
Total Conversion Costs..........................       2014$M                      36.8         99.1        230.0        373.9        458.6        730.1
Free Cash Flow..................................       2014$M         33.0         19.9        (3.2)       (57.1)      (120.7)      (158.2)      (278.6)
                                                      %Change                    (39.7)      (109.7)      (273.1)      (465.9)      (579.7)      (944.5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                             Table V.26--Manufacturer Impact Analysis Results for Compressors: High Conversion Cost Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  No new                               Trial standard level *
                                                     Units       standard  -----------------------------------------------------------------------------
                                                                   case          1            2            3            4            5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................................       2014$M        497.1        476.8        439.3        345.8        301.8        256.0        105.3
Change in INPV..................................       2014$M  ...........       (20.3)       (57.8)      (151.3)      (195.3)      (241.1)      (391.8)
                                                            %  ...........        (4.1)       (11.6)       (30.4)       (39.3)       (48.5)       (78.8)
Product Conversion Costs........................       2014$M  ...........         36.6         96.4        222.7        281.5        345.9        548.8
Capital Conversion Costs........................       2014$M  ...........          7.6         28.7         72.9         92.4        112.7        181.3
Total Conversion Costs..........................       2014$M  ...........         44.3        125.2        295.6        373.9        458.6        730.1
Free Cash Flow..................................       2014$M         33.0         17.4       (11.8)       (86.0)      (120.7)      (158.2)      (278.6)
                                                      %Change  ...........       (47.1)      (135.9)      (360.7)      (465.9)      (579.7)      (944.5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    At TSL 1, DOE estimates the impacts on INPV to range from -$20.3 
million to -$16.7 million, or a change of -4.1 to -3.4 percent. 
Industry free cash flow is estimated to decrease by $13.1 to $15.5 
million, or a change of -47.1 to -39.7 percent compared to the base 
case value of $33.0 million in the year before the compliance date 
(2021).\116\ DOE estimates industry conversion costs of $36.8 to 44.3 
million at TSL 1.
---------------------------------------------------------------------------

    \116\ As noted previously, DOE estimates that a Final Rule will 
publish in late 2016, and compliance would be required starting in 
late 2021. As such, DOE's analysis begins in the first full year of 
compliance with new standards, 2022. So for the purposes of DOE's 
analysis, 2021 is considered the year before the compliance date.
---------------------------------------------------------------------------

    At TSL 2, DOE estimates impacts on INPV to range from -$57.8 
million to -$45.2 million, or a change in INPV of -11.6 percent to -9.1 
percent. At this level, industry free cash flow is estimated to 
decrease by $36.2 to 44.8 million, or a change of -135.9 to -109.7 
percent compared to the base case value of $33.0 million in the year 
before the compliance date (2021). DOE estimates industry conversion 
costs of $99.1 to 125.2 million at TSL 2.
    At TSL 3, DOE estimates impacts on INPV to range from -$151.3 to -
$111.4 million, or a change in INPV of -30.4 to -22.4 percent. At this 
level, industry free cash flow is estimated to decrease by $90.1 to 
119.0 million, or a change of -360.7 to -273.1 percent compared to the 
base case value of $33.0 million in the year before the compliance date 
(2021). DOE estimates industry conversion costs of $230.0 to 295.6 
million at TSL 3.
    At TSL 4, DOE estimates impacts on INPV of -$195.3 million, or a 
change in INPV of -39.3 percent. At this level, industry free cash flow 
is estimated to decrease by $153.7 million, or a change of 465.9 
percent compared to the base case value of $33.0 million in the year 
before the compliance date (2021). DOE estimates industry conversion 
costs of $373.9 million at TSL 4.
    At TSL 5, DOE estimates impacts on INPV of -$241.1 million, or a 
change in INPV of -48.5 percent. Industry free cash flow is estimated 
to decrease by $191.2 million, or a change of -579.7 percent compared 
to the base case value of $33.0 million in the year before the 
compliance date (2021). DOE estimates industry conversion costs of 
$458.6 million at TSL 5.
    At TSL 6, DOE estimates impacts on INPV of -$391.8 million, or a 
change in INPV of -78.8 percent. Industry free cash flow is estimated 
to decrease by $311.6 million, or a change of -944.5 percent compared 
to the base case value of $33.0 million in the year before the 
compliance date (2021). DOE estimates industry conversion costs of 
$730.1 million at TSL 6.

[[Page 31747]]

b. Impacts on Employment
    To quantitatively assess the potential impacts of energy 
conservation standards on direct employment, DOE used the GRIM to 
estimate the domestic labor expenditures and number of direct employees 
in the base case and at each TSL from 2015 through 2051. DOE used 
statistical data from the U.S. Census Bureau's 2013 Annual Survey of 
Manufacturers,\117\ the results of the engineering analysis, and 
interviews with manufacturers to determine the inputs necessary to 
calculate industry-wide labor expenditures and domestic direct 
employment levels. Labor expenditures related to producing the 
equipment are a function of the labor intensity of producing the 
equipment, 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. DOE 
estimates that 50 percent of rotary air compressors are produced 
domestically.
---------------------------------------------------------------------------

    \117\ Annual Survey of Manufacturers: General Statistics: 
Statistics for Industry Groups and Industries, U.S. Census Bureau, 
2011. Available at http://www.census.gov/manufacturing/asm/index.html.
---------------------------------------------------------------------------

    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours multiplied by the labor rate found in the U.S. Census 
Bureau's 2013 Annual Survey of Manufacturers). The production worker 
estimates in this section only cover workers up to the line-supervisor 
level who are directly involved in fabricating and assembling equipment 
within an OEM 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 
equipment covered by this rulemaking.
    To estimate an upper bound to employment change, DOE assumes all 
domestic manufacturers would choose to continue producing equipment in 
the U.S. and would not move production to foreign countries. To 
estimate a lower bound to employment, DOE considers the case where all 
manufacturers choose to relocate production of failing rotary 
compressors under 50-hp overseas rather than make the necessary 
conversions at domestic production facilities. A complete description 
of the assumptions used to generate these upper and lower bounds can be 
found in chapter 12 of the NOPR TSD.
    In the absence of energy conservation standards, DOE estimates that 
the rotary air compressors industry would employ 1,417 domestic 
production workers in 2022. Table V.27 shows the range of impacts of 
potential energy conservation standards on U.S. production workers of 
air compressors.

                          Table V.27--Potential Changes in the Total Number of Rotary Air Compressor Production Workers in 2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level *
                              --------------------------------------------------------------------------------------------------------------------------
                                        1                    2                    3                    4                   5                   6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Changes in Domestic  (113) to 14........  (179) to 45........  (265) to 95........  (288) to 121......  (345) to 169......  (477) to 293.
 Production Workers in 2022.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.
[dagger] No-new-standards case assumes 1,417 domestic production workers in the rotary air compressor industry in 2022.

    The upper end of the range estimates the maximum increase in the 
estimated number of domestic production workers in the compressor 
industry after implementation of amended energy conservation standards. 
It assumes manufacturers would continue to produce the same scope of 
covered equipment within the United States.
    The lower end of the range represents the maximum decrease in the 
total number of U.S. production workers that could result from an 
energy conservation standard. In interviews, manufacturers stated that 
the domestic compressor industry has seen limited migration to foreign 
production facilities. While many compressors are currently 
manufactured in foreign production facilities, this is more often the 
result of the global operations of many manufacturers, rather than off-
shoring of former U.S. production. However, manufacturers that 
currently produce in the U.S. have indicated they could potentially 
shift some production of some covered equipment to foreign facilities 
in order to take advantage of lower labor costs and/or global economies 
of scale, if standards erode the economic benefits of manufacturing 
domestically. Manufacturers also stated that smaller, lower horsepower 
compressors, rather than larger, higher horsepower compressors, are 
more likely to shift to foreign production. Given the uncertainty 
surrounding potential off-shoring decisions, manufacturers were unable 
to pinpoint a specific horsepower cutoff for ``lower horsepower 
compressors.'' However, based on qualitative discussions with 
manufacturers, DOE estimates that 50 horsepower is an appropriate 
cutoff to represent ``lower horsepower compressors.'' As a result, the 
lower bound of direct employment impacts assumes manufacturers choose 
to relocate production of failing rotary compressors under 50-hp 
overseas rather than make the necessary conversions at domestic 
production facilities.
    This conclusion is independent of any conclusions regarding 
indirect employment impacts in the broader U.S. economy, which are 
documented in chapter 15 of the TSD
    DOE requests comments on the total annual direct employment levels 
in the industry. This is identified as Issue 49 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
c. Impacts on Manufacturing Capacity
    In interviews, manufacturers of compressors did not indicate that 
new energy conservation standards would significantly constrain 
manufacturing production capacity. However, as discussed in section 
IV.J.3.b, manufacturers expressed concern that they may face a 
bottleneck in the redesign process. In other words, manufacturers felt 
that if they could complete their redesigns within the compliance 
period, then they would not have a problem obtaining sufficient floor 
space, equipment, and manufacturing labor to meet the shipment demands 
of the market, following an energy conservation standard.

[[Page 31748]]

    Manufacturers indicated that most experienced compressor design 
engineers are already employed within the industry, which limits their 
ability to rapidly expand their research and development teams if faced 
with a high volume of required compressor redesigns. Consequently, 
manufacturers typically commented that standard levels at or above the 
equivalent of TSL 3 could cause engineering constraints which might 
create time delays in complying with new standards. DOE notes that 
manufacturers typically discussed this constraint with respect to a 
three-year compliance period. In this NOPR, however, DOE is proposing a 
standard level at TSL 2, in conjunction with a five-year compliance 
period.
    DOE requests comment on potential bottlenecks in manufacturing 
capacity or constraints in engineering resources that could result from 
a new standard. This is identified as Issue 50 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
d. Impacts on Subgroups of Manufacturers
    As discussed previously, using average cost assumptions to develop 
an industry cash flow estimate is not adequate for assessing 
differential impacts among subgroups of manufacturers. Small 
manufacturers, niche players, or manufacturers exhibiting a cost 
structure that differs largely from the industry average could be 
affected differently. DOE used the results of the industry 
characterization to group manufacturers exhibiting similar 
characteristics. Specifically, DOE identified small business 
manufacturers as a subgroup for a separate impact analysis.
    For the small business subgroup analysis, DOE applied the small 
business size standards published by the Small Business Administration 
(SBA) to determine whether a company is considered a small business. 
(65 FR 30840, 30849 (May 15, 2000), as amended at 65 FR 53533, 53544 
(September 5, 2000), and codified at 13 CFR part 121.) To be 
categorized as a small business manufacturer of compressors under North 
American Industry Classification System (NAICS) code 333912, ``Air and 
Gas Compressor Manufacturing,'' a compressor manufacturer and its 
affiliates may employ a maximum of 500 employees. The 500-employee 
threshold includes all employees in a business's parent company and any 
other subsidiaries. Based on this classification, DOE identified three 
manufacturers of rotary air compressors and thirteen manufacturers of 
reciprocating equipment that qualify as small businesses. The small 
business subgroup analysis is discussed in section VII.B of this 
document and in chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of recent or impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. 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 equipment. 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 
equipment-specific Federal regulations that could affect compressor 
manufacturers and with which compliance is required approximately three 
years before or after the 2021 compliance date of the standard proposed 
in this document. The Department was not able to identify any 
additional regulatory burdens that meet these criteria.
    DOE requests comments on the cumulative regulatory burden facing 
compressor manufacturers. Specifically, DOE seeks input on any 
equipment-specific Federal regulations with which compliance is 
required within three years of the proposed compliance date for any 
final compressor standards, as well as on recommendations on how DOE 
may be able to align varying regulations to mitigate cumulative burden. 
This is identified as Issue 51 in section VIII.E, ``Issues on Which DOE 
Seeks Comment.''
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for compressors, DOE compared the energy consumption of those equipment 
under the no-new-standards case to their anticipated energy consumption 
under each TSL. The savings are measured over the entire lifetime of 
equipment purchased in the 30-year period that begins in the year of 
anticipated compliance with amended standards (2022-2051). Table V.28 
present DOE's projections of the national energy savings for each TSL 
considered for compressors. The savings were calculated using the 
approach described in section IV.H of this document.

               Table V.28--Cumulative National Energy Savings for Compressors Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                                Trial standard level
                                   -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
Primary energy (quads)............         0.04         0.17         0.47         0.67         1.06         4.37
FFC energy (quads)................         0.04         0.18         0.49         0.70         1.11         4.57
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \118\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using nine, rather than 30, years 
of 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.\119\ The review timeframe

[[Page 31749]]

established in EPCA is generally not synchronized with the equipment 
lifetime, equipment manufacturing cycles, or other factors specific to 
compressors. Thus, such results are presented for informational 
purposes only and are not indicative of any change in DOE's analytical 
methodology. The NES sensitivity analysis results based on a nine-year 
analytical period are presented in Table V.29. The impacts are counted 
over the lifetime of compressors purchased in 2022-2030.
---------------------------------------------------------------------------

    \118\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \119\ Section 325(m) of EPCA requires DOE to review its 
standards at least once every 6 years, and requires, for certain 
products, a 3-year period after any new standard is promulgated 
before compliance is required, except that in no case may any new 
standards be required within 6 years of the compliance date of the 
previous standards. While adding a 6-year review to the 3-year 
compliance period adds up to 9 years, DOE notes that it may 
undertake reviews at any time within the 6 year period and that the 
3-year compliance date may yield to the 6-year backstop. A 9-year 
analysis period may not be appropriate given the variability that 
occurs in the timing of standards reviews and the fact that for some 
consumer products, the compliance period is 5 years rather than 3 
years.

       Table V.29--Cumulative National Energy Savings for Compressors; Nine Years of Shipments (2022-2030)
----------------------------------------------------------------------------------------------------------------
                                                                Trial standard level
                                   -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
Primary energy (quads)............         0.01         0.04         0.12         0.17         0.27         1.15
FFC energy (quads)................         0.01         0.05         0.13         0.18         0.28         1.20
----------------------------------------------------------------------------------------------------------------

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 compressors. 
In accordance with OMB's guidelines on regulatory analysis,\120\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate.
---------------------------------------------------------------------------

    \120\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis,'' section E, (Sept. 17, 2003) (Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4/).
---------------------------------------------------------------------------

    Table V.30 shows the consumer NPV results for each TSL DOE 
considered for compressors. The impacts are counted over the lifetime 
of products purchased in 2022-2051.

       Table V.30--Cumulative Net Present Value of Consumer Benefits for Compressors Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                        Trial standard level (billion 2015$)
           Discount rate           -----------------------------------------------------------------------------
                                         1            2            3            4            1            6
----------------------------------------------------------------------------------------------------------------
3 percent.........................         0.14         0.63         1.62         2.21         3.28        -4.94
7 percent.........................         0.05         0.23         0.56         0.75         1.07        -4.71
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.31. The impacts are counted over the 
lifetime of equipment purchased in 2022-2030. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

  Table V.31--Cumulative Net Present Value of Consumer Benefits for Compressors; Nine Years of Shipments (2022-
                                                      2030)
----------------------------------------------------------------------------------------------------------------
                                                        Trial standard level (billion 2015$)
           Discount rate           -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
3 percent.........................         0.04         0.20         0.50         0.67         0.99        -2.19
7 percent.........................         0.02         0.09         0.23         0.31         0.44        -2.32
----------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a default trend to estimate 
the change in price for compressors over the analysis period (see 
section IV.F.1 of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with a lower rate of price 
decline than the reference case and one scenario with a higher rate of 
price decline than the reference case. The results of these alternative 
cases are presented in appendix 10B of the NOPR TSD. In the high-price-
decline case, the NPV of consumer benefits is higher than in the 
default case. In the low-price-decline case, the NPV of consumer 
benefits is lower than in the default case.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for compressors to reduce 
energy bills for consumers of those equipment, with the resulting net 
savings being redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. As described in section IV.N of this document, DOE 
used an input/output model of the U.S. economy to estimate indirect 
employment impacts of the TSLs that DOE considered in this rulemaking. 
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 timeframes 
(2022-2027), where these uncertainties are reduced.
    The results suggest that the proposed standards are likely to have 
a negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on

[[Page 31750]]

employment. Chapter 16 of the NOPR TSD presents detailed results 
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Equipment
    Based on testing conducted in support of this proposed rule, 
discussed in section IV.C.1.b of this document, DOE has tentatively 
concluded that the standards proposed in this NOPR would not reduce the 
utility or performance of the compressors under consideration in this 
rulemaking. This view is largely based on the fact that compressor 
manufacturers currently offer units that meet or exceed the proposed 
standards.
5. Impact of Any Lessening of Competition
    As discussed in section III.G.1.e, the Attorney General determines 
the impact, if any, of any lessening of competition likely to result 
from a proposed standard, and transmits such determination in writing 
to the Secretary, together with an analysis of the nature and extent of 
such impact. To assist the Attorney General in making such 
determination, DOE has provided DOJ with copies of this NOPR and the 
accompanying TSD for review. DOE will consider DOJ's comments on the 
proposed rule in determining whether to proceed to a final rule. DOE 
will publish and respond to DOJ's comments in that document. DOE 
invites comment from the public regarding the competitive impacts that 
are likely to result from this proposed rule. In addition, interested 
members of the public may also provide comments separately to DOJ 
regarding these potential impacts. See the ADDRESSES section for 
information on how to send comments to DOJ.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. As a measure of this reduced 
demand, chapter 15 in the NOPR TSD presents the estimated reduction in 
generating capacity, relative to the no-new-standards case, for the 
TSLs that DOE considered in this rulemaking.
    Energy conservation from potential standards for compressors are 
expected to yield environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases. Table V.32 provides 
DOE's estimate of cumulative emissions reductions expected to result 
from the TSLs considered in this rulemaking. The table includes both 
power sector emissions and upstream emissions. The emissions were 
calculated using the multipliers discussed in section IV.L. DOE reports 
annual emissions reductions for each TSL in chapter 13 of the NOPR TSD.

                 Table V.32--Cumulative Emissions Reduction for Compressors Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                                Trial standard level
                                   -----------------------------------------------------------------------------
                                         1            2            3            4            5            6
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).........          2.1         10.0         27.6         39.1         62.0        256.5
SO2 (thousand tons)...............          1.2          5.7         15.7         22.3         35.3        146.9
NOX (thousand tons)...............          2.3         11.2         30.8         43.7         69.4        286.5
Hg (tons).........................        0.004         0.02          0.1          0.1          0.1          0.5
CH4 (thousand tons)...............          0.2          0.8          2.3          3.2          5.1         21.2
N2O (thousand tons)...............          0.0          0.1          0.3          0.5          0.7          3.0
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).........          0.1          0.6          1.6          2.3          3.6         14.8
SO2 (thousand tons)...............          0.0          0.1          0.3          0.4          0.7          2.7
NOX (thousand tons)...............          1.7          8.3         22.9         32.5         51.6        211.9
Hg (tons).........................          0.0          0.0          0.0          0.0          0.0          0.0
CH4 (thousand tons)...............          9.6         45.9        126.7        179.5        285.0       1170.9
N2O (thousand tons)...............          0.0          0.0          0.0          0.0          0.0          0.1
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).........          2.2         10.6         29.2         41.3         65.6        271.3
SO2 (thousand tons)...............          1.2          5.8         16.0         22.7         36.0        149.6
NOX (thousand tons)...............          4.1         19.5         53.8         76.2        121.0        498.4
Hg (tons).........................        0.004         0.02          0.1          0.1          0.1          0.6
CH4 (thousand tons)...............          9.8         46.7        128.9        182.7        290.1       1192.1
CH4 (thousand tons CO2eq)*........        275.0       1308.7       3609.9       5116.0       8123.3      33378.7
N2O (thousand tons)...............          0.0          0.1          0.3          0.5          0.8          3.1
N2O (thousand tons CO2eq)*........          6.8         32.2         88.8        125.8        199.8        829.3
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

    As part of the analysis for this proposed rule, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
CO2 and NOX that DOE estimated for each of the 
considered TSLs for compressors. As discussed in section IV.L of this 
document, for CO2, DOE used the most recent values for the 
SCC developed by an interagency process. The four sets of SCC values 
for CO2 emissions reductions in 2015 resulting from that 
process (expressed in 2015$) 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

[[Page 31751]]

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. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values; these results are presented in chapter 
14 of the NOPR TSD.

   Table V.33--Estimates of Global Present Value of CO2 Emissions Reduction for Equipment Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                                    SCC case * (million 2015$)
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................            13.7            64.5           103.2           196.6
2...............................................            65.1           306.8           491.0           935.4
3...............................................           179.6           846.2          1354.1          2579.7
4...............................................           254.5          1199.1          1919.0          3655.7
5...............................................           404.1          1903.8          3046.7          5803.9
6...............................................          1738.1          8071.6         12866.2         24609.9
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             0.8             3.7             5.9            11.3
2...............................................             3.7            17.6            28.3            53.8
3...............................................            10.3            48.6            77.9           148.3
4...............................................            14.5            68.9           110.5           210.2
5...............................................            23.1           109.4           175.4           333.7
6...............................................            98.6           461.0           735.9          1406.3
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................            14.5            68.2           109.1           207.9
2...............................................            68.9           324.5           519.3           989.2
3...............................................           189.9           894.8          1432.1          2728.0
4...............................................           269.1          1268.1          2029.4          3865.9
5...............................................           427.2          2013.3          3222.1          6137.7
6...............................................          1836.7          8532.6         13602.1         26016.2
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $40.0, $62.3, and $117
  per metric ton (2015$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed on 
reduced CO2 emissions in this rulemaking is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this proposed rule the 
most recent values and analyses resulting from the interagency review 
process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for compressors. The 
dollar-per-ton values that DOE used are discussed in section IV.L of 
this document.
    Table V.34 presents the cumulative present values for 
NOX emissions for each TSL calculated using 7-percent and 3-
percent discount rates. This table presents values that use the low 
dollar-per-ton values, which reflect DOE's primary estimate. 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
                    Compressors Shipped in 2022-2051
------------------------------------------------------------------------
                                                     (Million 2015$)
                                               -------------------------
                      TSL                       3% discount  7% discount
                                                    rate         rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.............................................          4.1          1.5
2.............................................         19.3          7.2
3.............................................         53.1         19.8
4.............................................         75.3         28.0
5.............................................        119.5         44.5
6.............................................        515.8        200.4
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.............................................          3.0          1.1
2.............................................         14.1          5.1
3.............................................         38.9         14.2
4.............................................         55.2         20.1
5.............................................         87.6         31.9

[[Page 31752]]

 
6.............................................        376.0        143.0
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.............................................          7.0          2.6
2.............................................         33.4         12.3
3.............................................         92.1         34.0
4.............................................        130.5         48.1
5.............................................        207.2         76.4
6.............................................        891.8        343.4
------------------------------------------------------------------------

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 
6316(a)) No other factors were considered in this analysis.
8. Summary of National Economic Impacts
    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.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 7-percent and 3-percent discount rate. The 
CO2 values used in the columns of each table correspond to 
the four sets of SCC values discussed above.

Table V.35--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and
                                            NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                                 Consumer NPV at 3% discount rate added with:
                                                                                (billion 2015$)
                                                             ---------------------------------------------------
                                                                SCC Case     SCC Case     SCC Case     SCC Case
                             TSL                                 $12.2/       $12.2/       $12.2/       $12.2/
                                                               metric ton   metric ton   metric ton   metric ton
                                                               and 3% low   and 3% low   and 3% low   and 3% low
                                                               NOX values   NOX values   NOX values   NOX values
----------------------------------------------------------------------------------------------------------------
1...........................................................          0.2          0.2          0.3          0.4
2...........................................................          0.7          1.0          1.2          1.7
3...........................................................          1.9          2.6          3.1          4.4
4...........................................................          2.6          3.6          4.4          6.2
5...........................................................          3.9          5.5          6.7          9.6
6...........................................................         -2.2          4.5          9.6         22.0
1...........................................................          0.1          0.1          0.2          0.3
2...........................................................          0.3          0.6          0.8          1.2
3...........................................................          0.8          1.5          2.0          3.3
4...........................................................          1.1          2.1          2.8          4.7
5...........................................................          1.6          3.2          4.4          7.3
6...........................................................         -2.5          4.2          9.2         21.6
----------------------------------------------------------------------------------------------------------------
Note: The SCC case values represent the global SCC in 2015, in 2015$, for each case.

    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 
equipment shipped in 2022 to 2051. Because CO2 emissions 
have a very long residence time in the atmosphere,\121\ the SCC values 
in future years reflect future CO2-emissions impacts that 
continue beyond 2100.
---------------------------------------------------------------------------

    \121\ 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 new or amended energy conservation standards, the 
standards that DOE adopts for any type (or class) of covered product 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) In 
determining whether a standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens 
by, to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a).) 
The new or amended standard must also result in the significant 
conservation of energy. (42 U.S.C. 6295(o)(3)(B) and 6316(a).)
    For this NOPR, DOE considered the impacts of new standards for 
compressors at each TSL, beginning with the maximum technologically 
feasible level, to determine whether that level was economically 
justified. Where the max-tech level was not justified, DOE then 
considered the next most efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each TSL, tables in this section present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results presented in the tables, DOE also considers other 
burdens and benefits that affect economic justification. These include 
the impacts on identifiable subgroups of

[[Page 31753]]

consumers who may be disproportionately affected by a national standard 
and impacts on employment.
1. Benefits and Burdens of TSLs Considered for Compressor Standards
    Table V.36 and Table V.37 summarize the quantitative impacts 
estimated for each TSL for compressors. The national impacts are 
measured over the lifetime of compressors purchased in the 30-year 
period that begins in the anticipated first full year of compliance 
with amended standards (2022-2051). The energy savings, emissions 
reductions, and value of emissions reductions refer to full-fuel-cycle 
results. The efficiency levels contained in each TSL are described in 
section V.A of this document.

                                     Table V.36--Summary of Analytical Results for Compressor TSLs: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                   TSL 1                TSL 2                TSL 3                TSL 4               TSL 5               TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative FFC National Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                               0.04...............  0.18...............  0.49...............  0.70..............  1.11..............  4.57
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   NPV of Consumer Costs and Benefits (2015$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate.............  0.1................  0.6................  1.6................  2.2...............  3.3...............  (4.9)
7% discount rate.............  0.1................  0.2................  0.6................  0.7...............  1.1...............  (4.7)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Cumulative FFC Emissions Reduction (Total FFC Emission)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....  2.2................  10.6...............  29.2...............  41.3..............  65.6..............  271.3
SO2 (thousand tons)..........  1.2................  5.8................  16.0...............  22.7..............  36.0..............  149.6
NOX (thousand tons)..........  4.1................  19.5...............  53.8...............  76.2..............  121.0.............  498.4
Hg (tons)....................  0.0................  0.0................  0.1................  0.1...............  0.1...............  0.6
CH4 (thousand tons)..........  9.8................  46.7...............  128.9..............  182.7.............  290.1.............  1192.1
CH4 (thousand tons CO2eq) *..  275.0..............  1308.7.............  3609.9.............  5116.0............  8123.3............  33378.7
N2O (thousand tons)..........  0.0................  0.1................  0.3................  0.5...............  0.8...............  3.1
N2O (thousand tons CO2eq) *..  6.8................  32.2...............  88.8...............  125.8.............  199.8.............  829.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Value of Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2015$ million) **.......  0.01 to 0.21.......  0.07 to 0.99.......  0.19 to 2.73.......  0.27 to 3.87......  0.43 to 6.14......  1.84 to 26.02
NOX - 3% discount rate (2015$  7.0 to 16.0........  33.4 to 76.1.......  92.1 to 210.0......  130.5 to 297.5....  207.2 to 472.3....  891.8 to 2033.4
 million).
NOX - 7% discount rate (2015$  2.6 to 5.8.........  12.3 to 27.8.......  34.0 to 76.6.......  48.1 to 108.5.....  76.4 to 172.3.....  343.4 to 774.2
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


                          Table V. 37--Summary of Analytical Results for Compressors TSLs: Manufacturer and Consumer Impacts *
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                         TSL 1                     TSL 2                     TSL 3              TSL 4        TSL 5        TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2014$ million) (No-    476.8 to 480.4..........  439.3 to 451.9..........  345.8 to 385.7..........        301.8        256.0        105.3
 new-standards case INPV = 497.1).
Industry NPV (% change)............  (4.1) to (3.4)..........  (11.6) to (9.1).........  (30.4) to (22.4)........       (39.3)       (48.5)       (78.8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consumer Average LCC Savings (2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC.........................  $9,056..................  $8,902..................  $9,443..................       $7,579       $7,748       $7,817
RP_FS_L_WC.........................  $14,396.................  $15,011.................  $16,538.................      $13,649      $14,397      $15,512
RP_FS_LF_AC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.       $5,182
RP_FS_LF_WC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.       $5,686
RP_VS_L_AC.........................  $5,073..................  $6,061..................  $6,746..................       $5,732       $6,408       $5,784
RP_VS_L_WC.........................  $12,017.................  $13,865.................  $14,922.................      $11,996      $12,055      $10,082
RP_VS_LF_AC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.      $11,104
RP_VS_LF_WC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.       $8,748
R1_FS_L_XX.........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.       ($282)
R3_FS_L_XX.........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.       ($693)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC.........................  1.3.....................  1.7.....................  2.1.....................          2.3          2.6          3.3
RP_FS_L_WC.........................  2.0.....................  2.4.....................  2.8.....................          3.0          3.2          3.8

[[Page 31754]]

 
RP_FS_LF_AC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          3.6
RP_FS_LF_WC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          4.0
RP_VS_L_AC.........................  2.1.....................  2.5.....................  3.0.....................          3.3          3.8          4.9
RP_VS_L_WC.........................  2.8.....................  3.4.....................  4.1.....................          4.3          4.9          5.9
RP_VS_LF_AC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          3.0
RP_VS_LF_WC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          2.7
R1_FS_L_XX.........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          9.2
R3_FS_L_XX.........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.         12.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Percent of Consumers that Experience Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC.........................  0%......................  0%......................  1%......................           3%           5%          14%
RP_FS_L_WC.........................  0%......................  1%......................  3%......................           5%           7%          15%
RP_FS_LF_AC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.           8%
RP_FS_LF_WC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          10%
RP_VS_L_AC.........................  0%......................  1%......................  4%......................           8%          13%          31%
RP_VS_L_WC.........................  1%......................  3%......................  8%......................          14%          21%          40%
RP_VS_LF_AC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.           6%
RP_VS_LF_WC........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.           5%
R1_FS_L_XX.........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          78%
R3_FS_L_XX.........................  n.a.....................  n.a.....................  n.a.....................         n.a.         n.a.          83%
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values.
The entry ``n.a.'' means not applicable because no standards are being proposed for these equipment classes.

    DOE first considered TSL 6, which represents the max-tech 
efficiency level. TSL 6 would save 4.57 quads of energy, an amount DOE 
considers significant. Under TSL 6, the NPV of consumer benefit would 
be -$4.71 billion using a discount rate of 7 percent, and -$4.94 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 6 are 271.3 Mt of 
CO2,149.6 thousand tons of SO2, 498.4 thousand 
tons of NOX, 0.552 ton of Hg, 1192.1 thousand tons of 
CH4, and 3.13 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 6 
ranges from $1,837 million to $26,016 million.
    At TSL 6, the average LCC impacts are savings that range from 
$5,784 to $5,512 for rotary lubricated equipment classes, $5,182 to 
$11,104 for rotary lubricant-free equipment classes, and -$282 to -$693 
for reciprocating equipment classes. The simple payback periods range 
from 3.3 to 5.9 years for rotary lubricated equipment classes, 2.7 to 
4.0 years for rotary lubricant-free equipment classes, 9.2 to 12.1 
years for reciprocating equipment classes. The fraction of consumers 
experiencing a net LCC cost ranges from 14 to 40 percent for rotary 
lubricated equipment classes, 5 to 10 percent for rotary lubricant-free 
equipment classes, and 78- to 83-percent for reciprocating equipment 
classes.
    At TSL 6, DOE estimates a decrease in INPV of $391.8 million, which 
represents a loss of 78.8 percent in INPV for manufacturers.
    The Secretary tentatively concludes that at TSL 6 for compressors, 
the benefits of energy savings, emission reductions, and the estimated 
monetary value of the emissions reductions would be outweighed by the 
negative NPV of consumer benefits, the economic burden on some 
consumers, and the significant burden on the industry, including the 
conversion costs and profit margin impacts that could result in a large 
reduction in INPV. Consequently, the Secretary has tentatively 
concluded that TSL 6 is not economically justified.
    DOE then considered TSL 5, which would save 1.11 quads of energy, 
an amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be $1.07 billion using a discount rate of 7 percent, and 
$3.28 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 65.6 Mt of 
CO2,36.0 thousand tons of SO2, 121.0 thousand 
tons of NOX, 0.133 ton of Hg, 290.1 thousand tons of 
CH4, and 0.75 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 5 
ranges from $427 million to $6,138 million.
    At TSL 5 there is no projected increase in efficiency for rotary 
lubricant-free and reciprocating equipment classes. At TSL 5 for rotary 
lubricated equipment classes, the average LCC impact would result in 
savings that range from $6,408 for RP_VS_L_AC to $14,397 for 
RP_FS_L_WC. The simple payback period ranges from 2.6 years for 
RP_FS_L_AC to 4.9 years for RP_VS_L_WC. The fraction of consumers 
experiencing a net LCC cost ranges from 5-percent for RP_FS_L_AC to 21-
percent for RP_VS_L_WC.
    At TSL 5, DOE estimates a decrease in INPV of $241.1 million, which 
represents a loss of 48.5 percent in INPV for manufacturers.
    Based on this analysis, DOE tentatively concludes that at TSL 5, 
the benefits of energy savings, positive NPV of consumer benefits, 
emission reductions, and the estimated monetary value of the emissions 
reductions would be outweighed by the economic burden on some 
consumers, and significant burden on the industry, including the 
conversion costs and profit margin impacts that could result in a large 
reduction in INPV. Consequently, DOE has tentatively concluded that TSL 
5 is not economically justified.
    DOE then considered TSL 4, which would save 0.70 quads of energy, 
an amount DOE considers significant. Under TSL 4, the NPV of consumer 
benefit would be $0.75 billion using a discount rate of 7 percent, and 
$2.21 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 41.3 Mt of 
CO2, 22.7 thousand tons of SO2, 76.2 thousand 
tons of NOX, 0.084 ton of Hg, 182.7 thousand tons of 
CH4, and 0.47 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 4 
ranges from $269 million to $3,866 million.
    At TSL 4 there is no projected increase in efficiency for rotary

[[Page 31755]]

lubricant-free and reciprocating equipment classes. At TSL 4 for rotary 
lubricated equipment classes, the average LCC impact would result in 
savings that range from $5,732 for RP_VS_L_AC to $13,649 for 
RP_FS_L_WC. The simple payback period ranges from 2.3 years for 
RP_FS_L_AC to 4.3 years for RP_VS_L_WC. The fraction of consumers 
experiencing a net LCC cost ranges from 3 percent for RP_FS_L_AC to 14-
percent for RP_VS_L_WC.
    At TSL 4, DOE estimates a decrease in INPV of $195.3 million, which 
represents a loss of 39.3 percent in INPV for manufacturers.
    Based on this analysis, DOE tentatively concludes that at TSL 4 the 
benefits of energy savings, positive NPV of consumer benefits, emission 
reductions, and the estimated monetary value of the emissions 
reductions would be outweighed by the economic burden on some 
consumers, and significant burden on the industry, including the 
conversion costs and profit margin impacts that could result in a large 
reduction in INPV. Consequently, DOE has tentatively concluded that TSL 
4 is not economically justified.
    DOE then considered TSL 3, which would save 0.49 quads of energy, 
an amount DOE considers significant. Under TSL 3, the NPV of consumer 
benefit would be $0.56 billion using a discount rate of 7 percent, and 
$1.62 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 29.2 Mt of 
CO2, 16.0 thousand tons of SO2, 53.8 thousand 
tons of NOX, 0.059 ton of Hg, 128.9 thousand tons of 
CH4, and 0.34 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 3 
ranges from $190 million to $2,728 million.
    At TSL 3 there is no projected increase in efficiency for rotary 
lubricant-free and reciprocating equipment classes. At TSL 3 for rotary 
lubricated equipment classes the average LCC impact would result in 
savings that range from $6,746 for RP_VS_L_AC to $16,538 for 
RP_FS_L_WC. The simple payback period ranges from 2.1 years for 
RP_FS_L_AC to 4.1 years for RP_VS_L_WC. The fraction of consumers 
experiencing a net LCC cost ranges from 1 percent for RP_FS_L_AC to 8-
percent for RP_VS_L_WC.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$111.4 million to a decrease of $151.3 million, which represent 
decreases of 22.4 percent and 30.4 percent, respectively.
    Based on this analysis, DOE tentatively concludes that at TSL 3 for 
compressors, the benefits of energy savings, positive NPV of consumer 
benefits, emission reductions, and the estimated monetary value of the 
emissions reductions would be outweighed by the economic burden on some 
consumers, and significant burden on the industry, including the 
conversion costs and profit margin impacts that could result in a large 
reduction in INPV. Consequently, DOE has tentatively concluded that TSL 
3 is not economically justified.
    DOE then considered TSL 2, which would save 0.18 quads of energy, 
an amount DOE considers significant. Under TSL 2, the NPV of consumer 
benefit would be $0.23 billion using a discount rate of 7 percent, and 
$0.63 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 2 are 10.6 Mt of 
CO2, 5.8 thousand tons of SO2, 19.5 thousand tons 
of NOX, 0.021 ton of Hg, 46.7 thousand tons of 
CH4, and 0.12 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 2 
ranges from $69 million to $989 million.
    At TSL 2 there is no projected increase in efficiency for rotary 
lubricant-free and reciprocating equipment classes. At TSL 2 for rotary 
lubricated equipment classes, the average LCC impact would result in 
savings that range from $6,061 for RP_VS_L_AC to $15,011 for 
RP_FS_L_WC. The simple payback period ranges from 1.7 years for 
RP_FS_L_AC to 3.4 years for RP_VS_L_WC. The fraction of consumers 
experiencing a net LCC cost ranges from zero percent for RP_FS_L_AC to 
3-percent for RP_VS_L_WC.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$45.2 million to a decrease of $57.8 million, which represent decreases 
of 9.1 percent and 11.6 percent, respectively.
    After considering the analysis and weighing the benefits and 
burdens, and based upon DOE's understanding of currently available 
information, DOE has tentatively concluded that at TSL 2 for 
compressors the benefits of energy savings, positive NPV of consumer 
benefits, emission reductions, the estimated monetary value of the 
emissions reductions, and positive average LCC savings would outweigh 
the negative impacts on some consumers and the potential reduction in 
INPV for manufacturers. Accordingly, DOE has tentatively concluded that 
TSL 2 would offer the maximum improvement in efficiency that is 
technologically feasible and economically justified, and would result 
in the significant conservation of energy.
    Therefore, based on the above considerations, DOE proposes to adopt 
the energy conservation standards for compressors at TSL 2. The 
proposed standards, expressed in package isentropic efficiency are 
shown in Table V.38. Table V.39 through Table V.42 provide mathematical 
coefficients required to calculate package isentropic efficiency in 
Table V.38. For ``Fixed-speed compressor'' equipment classes, the 
relevant Package Isentropic Efficiency is Full-Load Package Isentropic 
Efficiency; for ``Variable-speed compressor'' equipment classes, the 
relevant Package Isentropic Efficiency is Part-Load Package Isentropic 
Efficiency. Both Full- and Part-Load Package Isentropic Efficiency are 
determined in accordance with the proposed DOE test procedure. These 
proposed standards, if adopted, would apply to all compressors listed 
in Table V.38 and manufactured in, or imported into, the United States 
starting on the proposed compliance date specified in this proposal.

                       Table V.38--Proposed Energy Conservation Standards for Compressors
----------------------------------------------------------------------------------------------------------------
                                                                         [eta]Regr  (package
           Equipment class             Minimum package isentropic       isentropic efficiency            d
                                               efficiency                 reference curve)
----------------------------------------------------------------------------------------------------------------
Rotary; Lubricated; Air-cooled;       [eta]Regr + (1- [eta]Regr) *  -0.00928 * ln(.472 * V1)\2\              -15
 Fixed-speed.                          (d/100).                      + 0.139 * ln(.472 * V1) +
                                                                     0.271.
Rotary; Lubricated; Air-cooled;       [eta]Regr + (1- [eta]Regr) *  -0.0155 * ln(.472 * V1)\2\ +             -10
 Variable-speed.                       (d/100).                      0.216 * ln(.472 * V1) +
                                                                     0.00905.
Rotary; Lubricated; Water-cooled;     .0235 + [eta]Regr + (1-       -0.00928 * ln(.472 * V1)\2\              -15
 Fixed-speed.                          [eta]Regr) * (d/100).         + 0.139 * ln(.472 * V1) +
                                                                     0.271.
Rotary; Lubricated; Water-cooled;     .0235 + [eta]Regr + (1-       -0.0155 * ln(.472 * V1)\2\ +             -15
 Variable-speed.                       [eta]Regr) * (d/100).         0.216 * ln(.472 * V1) +
                                                                     0.00905.

[[Page 31756]]

 
Rotary; Lubricant-free; Air-cooled;   [eta]Regr + (1- [eta]Regr) *  A1 * ln(.472 * V1)\2\ + B1 *             -11
 Fixed-speed.                          (d/100).                      ln(.472 * V1) + C1.
Rotary; Lubricant-free; Air-cooled;   [eta]Regr + (1- [eta]Regr) *  A2 * ln(.472 * V1)\2\ + B2 *             -13
 Variable-speed.                       (d/100).                      ln(.472 * V1) + C2.
Rotary; Lubricant-free; Water-        A3 * ln(.472 * V1)\2\ + B3 *  A1 * ln(.472 * V1)\2\ + B1 *             -11
 cooled; Fixed-speed.                  ln(.472 * V1) + C3 +          ln(.472 * V1) + C1.
                                       [eta]Regr + (1- [eta]Regr)
                                       * (d/100).
Rotary; Lubricant-free; Water-        A4 * ln(.472 * V1)\2\ + B4 *  A2 * ln(.472 * V1)\2\ + B2 *             -13
 cooled; Variable-speed.               ln(.472 * V1) + C4 +          ln(.472 * V1) + C2.
                                       [eta]Regr + (1- [eta]Regr)
                                       * (d/100).
----------------------------------------------------------------------------------------------------------------


 Table V.39--Coefficients for Proposed Energy Conservation Standards for Rotary, Lubricant-Free, Air and Water-
                                       Cooled, Fixed-Speed Air Compressors
----------------------------------------------------------------------------------------------------------------
         Full-load actual volume flow rate range (acfm)                 A1              B1              C1
----------------------------------------------------------------------------------------------------------------
0<=V1[gteqt]161.................................................        -0.00928           0.139           0.191
1612 and 
NOX emission reductions.\122\
---------------------------------------------------------------------------

    \122\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2016, 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 2016. 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.
---------------------------------------------------------------------------

    Table V.43 shows the annualized values for compressors under TSL 2,

[[Page 31757]]

expressed in 2015$. The results under the primary estimate are as 
follows.
    Using a 7-percent discount rate for benefits and costs other than 
CO2 reduction (for which DOE used a 3-percent discount rate 
along with the average SCC series that has a value of $40.0/t in 2015), 
the estimated cost of the standards proposed in this rule is 10.4 
million per year in increased equipment costs, while the estimated 
annual benefits are $36.0 million in reduced equipment operating costs, 
$19.2 million in CO2 reductions, and $1.4 million in reduced 
NOX emissions. In this case, the net benefit amounts to $46 
million per year.
    Using a 3-percent discount rate for all benefits and costs and the 
average SCC series that has a value of $40.0/t in 2015, the estimated 
cost of the proposed standards is $10.9 million per year in increased 
equipment costs, while the estimated annual benefits are $48.4 million 
in reduced operating costs, $19.2 million in CO2 reductions, 
and $2.0 million in reduced NOX emissions. In this case, the 
net benefit amounts to $59 million per year.

                        Table V.43--Annualized Benefits and Costs of Proposed Standards (TSL 2) for Compressors Sold in 2022-2051
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Discount rate               Primary estimate *       Low net benefits estimate  High net benefits estimate
                                                                                                               *                           *
                                                                     -----------------------------------------------------------------------------------
                                                                                                      million 2015$/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  36.0......................  29.3......................  43.7.
                                    3%..............................  48.4......................  38.9......................  60.4.
CO2 Reduction (using mean SCC at    5%..............................  5.7.......................  4.8.......................  6.9.
 5% discount rate)\**\.
CO2 Reduction (using mean SCC at    3%..............................  19.2......................  16.0......................  23.2.
 3% discount rate)\**\.
CO2 Reduction (using mean SCC at    2.5%............................  28.1......................  23.3......................  33.9.
 2.5% discount rate)\**\.
CO2 Reduction (using 95th           3%..............................  58.5......................  48.6......................  70.6.
 percentile SCC at 3% discount
 rate )\**\.
NOX Reduction[dagger].............  7%..............................  1.4.......................  1.2.......................  3.7.
                                    3%..............................  2.0.......................  1.6.......................  5.4.
Total Benefits[dagger][dagger]....  7% plus CO2 range...............  43 to 96..................  35 to 79..................  54 to 118.
                                    7%..............................  57........................  46........................  71.
                                    3% plus CO2 range...............  56 to 109.................  45 to 89..................  73 to 136.
                                    3%..............................  70........................  57........................  89.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Installed      7%..............................  10.4......................  8.9.......................  11.8.
 Equipment Costs.
                                    3%..............................  10.9......................  9.2.......................  12.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total[dagger][dagger].............  7% plus CO2 range...............  33 to 85..................  26 to 70..................  42 to 106.
                                    7%..............................  46........................  38........................  59.
                                    3% plus CO2 range...............  45 to 98..................  36 to 80..................  60 to 124.
                                    3%..............................  59........................  47........................  77.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with compressors shipped in 2022-2051. These results include benefits to consumers
  which accrue after 2051 from the equipment purchased in 2022-2051. The Primary, Low Benefits, and High Benefits Estimates utilize projections of
  energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental
  product costs reflect a constant trend in the Primary Estimate, an increasing trend in the Low Benefits Estimate, and a decreasing trend in the High
  Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.1. Note that the Benefits and Costs may not sum to
  the Net Benefits due to rounding.
** The CO2 reduction benefits are calculated using 4 different sets of SCC values. The first three use the average SCC calculated using 5%, 3%, and 2.5%
  discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC values
  are emission year specific. See section IV.L.1 for more details.
[dagger] DOE estimated the monetized value of NOX emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Clean
  Power Plan Final Rule, published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For DOE's Primary Estimate and Low
  Net Benefits Estimate, the agency is using a national benefit-per-ton estimate for NOX 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.
[dagger][dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with a 3-percent discount
  rate ($40.0/t case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the
  labeled discount rate, and those values are added to the full range of CO2 values.

VI. Certification Requirements

    DOE proposes to adopt the reporting requirements in a new section 
429.61(b) within subpart B of 10 CFR part 429. This section would also 
include sampling requirements, which are discussed in the test 
procedure NOPR. Consistent with other types of covered products and 
equipment, the proposed section (10 CFR 429.61(b)) would specify that 
the general certification report requirements contained in 10 CFR 
429.12 apply to compressors. The additional requirements proposed in 10 
CFR 429.61 would require manufacturers to supply certain additional 
information to DOE in certification reports for compressors to 
demonstrate compliance with any energy conservation standards 
established as a result of this rulemaking.
    Specifically, DOE proposes that the following data be included in 
the

[[Page 31758]]

certification reports and be made public on DOE's Web site:
     Full-load package isentropic efficiency or part-load 
package isentropic efficiency, as applicable (dimensionless);
     Full-load actual volume flow rate (in actual cubic feet 
per minute);
     Compressor motor nominal horsepower (in horsepower);
     Full-load operating pressure (in pounds per square inch, 
gauge);
     Maximum full-flow operating pressure (in pounds per square 
inch, gauge); and
     Pressure ratio (dimensionless).
    10 CFR 429.12(b) already requires reporting of manufacturer name, 
model number(s), and equipment class for all covered products and 
equipment.
    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 compressor, but also 
any motor and controls with which the compressor is being rated.

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 proposed standards set forth in this NOPR are 
intended to address are as follows:
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads some consumers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases, the benefits of more-efficient equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of appliances and equipment that are not captured by the 
users of such 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 quantify some of the 
external benefits through use of social cost of carbon values.
    In addition, DOE has determined that this regulatory action is not 
a ``significant regulatory action'' under section 3(f) of Executive 
Order 12866. Section 6(a)(3)(A) of the Executive Order states that 
absent a material change in the development of the planned regulatory 
action, regulatory action not designated as significant will not be 
subject to review under the aforementioned section unless, within 10 
working days of receipt of DOE's list of planned regulatory actions, 
the Administrator of OIRA notifies the agency that OIRA has determined 
that a planned regulation is a significant regulatory action within the 
meaning of the Executive order.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (January 21, 2011). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 to: (1) Propose or adopt 
a regulation only upon a reasoned determination that its benefits 
justify its costs (recognizing that some benefits and costs are 
difficult to quantify); (2) tailor regulations to impose the least 
burden on society, consistent with obtaining regulatory objectives, 
taking into account, among other things, and to the extent practicable, 
the costs of cumulative regulations; (3) select, in choosing among 
alternative regulatory approaches, those approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety, and other advantages; distributive impacts; and equity); 
(4) to the extent feasible, specify performance objectives, rather than 
specifying the behavior or manner of compliance that regulated entities 
must adopt; and (5) identify and assess available alternatives to 
direct regulation, including providing economic incentives to encourage 
the desired behavior, such as user fees or marketable permits, or 
providing information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, OIRA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that this NOPR is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (IRFA) 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 IRFA for the equipment that are the subject 
of this rulemaking.
    For manufacturers of compressors, 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

[[Page 31759]]

subject to the requirements of the rule. (65 FR 30840, 30849 (May 15, 
2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000), and codified 
at 13 CFR part 121.) The size standards are listed by North American 
Industry Classification System (NAICS) code and industry description 
and are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Manufacturing of compressors is classified 
under NAICS 333912, ``Air and Gas Compressor Manufacturing.'' The SBA 
sets a threshold of 500 employees or fewer for an entity to be 
considered as a small business for this category.
1. Description on Estimated Number of Small Entities Regulated
a. Methodology for Estimating the Number of Small Entities
    To estimate the number of small business manufacturers of equipment 
within the scope of this rulemaking, DOE conducted a market survey 
using available public information. DOE's research involved industry 
trade association membership directories (including CAGI), individual 
company and online retailer Web sites, and market research tools (e.g., 
Hoovers reports) to create a list of companies that manufacture 
equipment 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. DOE screened out companies that do not offer equipment 
within the scope of this rulemaking, do not meet the definition of a 
``small business,'' or are foreign-owned and operated.
b. Compressor Industry Structure and Nature of Competition
    DOE identified a total of 37 manufacturers of compressor equipment 
sold in the United States and within the scope of this rulemaking. 
Seventeen of these manufacturers met the 500-employee threshold defined 
by the SBA to qualify as a small business, but only 13 were domestic 
companies. All 13 domestic small businesses manufacture reciprocating 
air compressors, while only five of the 13 manufacture rotary air 
compressors.
    Within the compressor industry, manufacturers can be classified 
into two categories; original equipment manufacturers (OEMs) and 
compressor packagers. OEMs manufacture their own air-ends and assemble 
them with other components to create complete package compressors. 
Packagers assemble motors and other accessories with air-ends purchased 
from other companies, resulting in a complete compressor.
    Within the rotary air compressor industry, DOE identified 20 
manufacturers; 15 are OEMs and five are packagers of compressors. Of 
the 20 total manufacturers, seven large OEMs supply approximately 80-
percent of shipments and revenues. Of the five domestic small rotary 
air compressor businesses identified, DOE's research indicates that two 
are OEMs and three are packagers.
    The reciprocating air compressor market has a significantly 
different structure than the rotary market. The reciprocating market is 
highly fragmented, consisting of approximately 16 large and 17 small 
OEMs and packagers. Five of the 16 large businesses are members of 
CAGI. Eight of the 16 large manufacturers are believed to be packagers. 
Of the 18 identified small businesses, 13 are domestic. DOE notes that 
some interviewed manufacturers stated that there are potentially a 
large number of domestic small reciprocating air compressor 
manufacturers who assemble compressor packages from nearly complete 
components. These unidentified small manufacturers are not members of 
CAGI and typically have a limited marketing presence. DOE was not able 
to identify these small businesses. Based on this information, it is 
possible that DOE's list of 13 small domestic players may not include 
all small U.S. manufacturers in the industry. Of the 13 identified 
domestic reciprocating air compressor manufacturers, three are believed 
to be OEMs and 10 are believed to be packagers.
    Table VII.1 presents both the total number of domestic small 
businesses offering equipment in each equipment class grouping as well 
as the breakdown between domestic small business OEMs and domestic 
small business packagers.

     Table VII.1--Number of Domestic Small Businesses Manufacturing Compressors by Equipment Class Grouping
----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                                                                  domestic small     Number of     Total number
                    Equipment class grouping                         original     domestic small    of domestic
                                                                     equipment       packagers         small
                                                                   manufacturers                    businesses
----------------------------------------------------------------------------------------------------------------
Rotary Air Compressors..........................................               2               3               5
Reciprocating Air Compressors...................................               3              10              13
Total...........................................................               3              10              13
----------------------------------------------------------------------------------------------------------------

    DOE requests comment on the number and names of domestic small 
manufacturers producing covered equipment. This is identified as Issue 
53 in section VIII.E, ``Issues on Which DOE Seeks Comment.''
c. Manufacturer Participation
    DOE reached out to all 13 identified domestic small businesses to 
invite them to take part in manufacturer impact analysis interviews. As 
mentioned previously, all thirteen domestic small businesses 
manufacturer reciprocating air compressors, while only five of the 
thirteen manufacturer rotary air compressors.
    As a part of the domestic small business outreach process, DOE 
attempted to obtain the best contact information possible for each 
domestic small business. To do so, DOE directly solicited domestic 
small business contact information from known industry participants. In 
addition, DOE also researched domestic small business contact 
information using publically available information. When these methods 
were successful, DOE initiated contact with domestic small businesses 
by emailing recommended, specific individuals within an organization. 
When specific email addresses were not available, DOE contacted 
manufacturers using general contact information provided on 
manufacturer Web pages; this includes contact web forms, as well as 
general sales, support, and information email addresses.

[[Page 31760]]

    Of the five domestic small manufacturers of rotary compressors, two 
responded to DOE's contact attempt and were willing to discuss 
potential standards with DOE. These two manufacturers are the only 
known domestic small OEMs of rotary compressor. The three that did not 
respond are believed to be packagers.
    Of the thirteen domestic small manufacturers of reciprocating 
compressors, four responded to DOE's contact attempt and ultimately, 
three were willing to discuss potential standards with DOE. DOE notes 
that one of the three is a reciprocating compressor packager, while the 
other two are OEMs of both reciprocating and rotary compressors. The 
latter are the same manufacturers discussed in the previous paragraph. 
DOE notes that no new standards for reciprocating compressors are 
proposed in this document.
    Finally, DOE also discussed information about small businesses and 
potential impacts on small businesses while interviewing large 
manufacturers.
2. Description and Estimate of Compliance Requirements
    Because DOE proposes to establish standards for only rotary 
equipment, this section will only focus on the estimated impacts to the 
five domestic small manufacturers of rotary compressors.
    Of the five domestic small rotary compressor manufacturers 
identified, DOE's research indicates that two are OEMs and three are 
packagers. Whereas OEMs would be expected to incur significant redesign 
and capital conversion costs in order to comply with amended standards, 
packagers would not. Unlike OEMs, packagers would not face significant 
capital conversion costs, as the processes they use to assemble 
completed packages from purchased air-ends and components is not 
expected to change. Packagers are also not expected to face significant 
product redesign costs, as the burden of engineering and redesigning 
the air-end and other key components would reside with OEMs. However, 
as manufacturers OEMs and packagers are both expected to incur new 
compliance and testing costs, as any new energy conservation standard 
would require their equipment to be tested and certified to the 
standard, using a DOE test procedure.
    As a result of these efforts, the following discussion of domestic 
small business impacts considers capital, redesign, and compliance cost 
impacts facing rotary OEMs, while only considering compliance cost 
impacts for rotary packagers.
    DOE estimates that domestic small rotary compressor OEMs account 
for approximately 9 percent of models available in the market. As such, 
DOE estimates that 9 percent of the total industry product and capital 
conversion costs (excluding compliance costs) are attributed to 
domestic small rotary compressor OEMs. At TSL 2, the level proposed in 
this document, 9-percent of total conversion costs (excluding 
compliance costs) equates to $7.9 to $10.3 million; the remaining $78.3 
to $102.0 million is attributed to large OEMs. DOE's conversion cost 
estimates were derived from total industry conversion costs discussed 
previously in section IV.J.2.b.i. DOE notes that the ranges shown here 
relate to the two conversion cost scenarios investigated in section 
IV.J.2.b.i.
    DOE also estimates that, combined, domestic small rotary compressor 
OEMs and packagers account for approximately 15-percent of models 
available in the market. As such, DOE estimates that 15-percent of the 
total industry testing and compliance costs are attributed to domestic 
small rotary compressor OEMs and packagers. At TSL 2, this equates to 
$1.9 million for domestic small manufacturers and $10.9 million for 
large OEMs. DOE notes that these costs represent those involved in 
testing and ensuring compliance of both lubricated and non-lubricated 
equipment with the proposed standards. DOE's testing and compliance 
cost estimates were derived from total industry conversion costs 
discussed previously in section IV.J.2.b.i.
    Finally, DOE estimated revenues for the five domestic small rotary 
manufacturers. To do so, DOE researched publicly available revenue 
estimates from Hoovers \123\ and scaled those revenues to reflect only 
the portion of a company's revenues attributable to rotary compressor 
sales. DOE estimates the aggregate 2014 rotary compressor revenues for 
the five domestic small manufacturers to be approximately $41.6 
million. DOE's GRIM results estimate total industry 2014 revenues 
(including small businesses) to be $583.8 million. Accordingly, 
revenues from large rotary manufacturers are estimated to be $542.2 
million. As such DOE estimates domestic small rotary manufacturers 
account for approximately 7.1-percent of industry revenues and large 
manufacturers account for 92.9-percent. Comparing costs to revenues for 
each group, DOE estimates total conversion costs, including testing and 
compliance, at TSL 2 are approximately 23.8-to 29.5-percent of revenues 
for domestic small manufacturers and 16.4 to 20.8 percent of revenues 
for large manufacturers. Table VII.2 summarizes domestic small and 
large business conversion and compliance costs and shows the relative 
impacts of conversion costs on domestic small manufacturers relative to 
large manufacturers.
---------------------------------------------------------------------------

    \123\ Hoovers Inc., Company Profiles, Various Companies 
(Available at: www.hoovers.com/).

 Table VII.2--Aggregated Impacts of Conversion Costs on a Domestic Small Manufacturers at the Proposed Standard,
                                                      TSL 2
----------------------------------------------------------------------------------------------------------------
                                         Aggregate impact to domestic small   Aggregate impact to large, rotary
                                                rotary manufacturers                    manufacturers
----------------------------------------------------------------------------------------------------------------
Total Product and Capital Conversion    $7.9 to $10.3......................  $78.3 to $102.0.
 Costs, Excluding Compliance and
 Testing Costs (Millions).
Total Testing and Compliance Costs      $1.9...............................  $10.9.
 (Millions).
Total Conversion, Testing, and          $9.9 to $12.3......................  $89.2 to $112.9.
 Compliance Costs (Millions).
2014 Revenues (Millions)..............  $41.6..............................  $542.2.
Total Conversion, Testing, and          23.8% to 29.5%.....................  16.4% to 20.8%.
 Compliance Cost, as a Percentage of
 Annual Revenue.
----------------------------------------------------------------------------------------------------------------


[[Page 31761]]

    However, as noted in section V.B.2.a, the GRIM free cash flow 
results in 2021 indicated that some manufacturers may need to access 
the capital markets in order to fund conversion costs directly related 
to the proposed standard. Given that small manufacturers may have 
greater difficulty securing outside capital \124\ and that the 
necessary conversion costs are not insignificant to the size of a small 
business, it is possible the domestic small OEMs may 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.
---------------------------------------------------------------------------

    \124\ 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.
---------------------------------------------------------------------------

    DOE notes that this conversion cost analysis assumes that 
compressors sold by domestic small manufacturers are of the same 
efficiency distribution as those sold by large manufacturers. DOE 
requests comment and data on the relative efficiency of equipment sold 
by domestic small manufacturers, as compared to equipment sold by large 
manufacturers. This is identified as Issue 54 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
    DOE requests comment and data on the impact of the proposed 
standard on domestic small business manufacturers. Specifically, DOE 
requests comment on the magnitude of conversion costs for a domestic 
small manufacturers and the number or percent of models produced by 
domestic small manufacturers. DOE also requests data on the cost of 
capital for domestic small manufacturers to better quantify how 
domestic small manufacturers might be disadvantaged relative to large 
competitors. This is identified as Issue 55 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the rule being considered today.
4. Significant Alternatives to the Rule
    The discussion above analyzes impacts on small businesses that 
would result from DOE's proposed rule. In addition to the other TSLs 
being considered, the NOPR TSD includes an analysis of the following 
policy alternatives: (1) No change in standards; (2) consumer rebates; 
(3) consumer tax credits; (4) manufacturer tax credits; and (5) 
voluntary energy efficiency targets. While these alternatives may 
mitigate to some varying extent the economic impacts on small entities 
compared to the proposed standards, DOE does not intend to consider 
these alternatives further because in several cases, they would not be 
feasible to implement without authority and funding from Congress, and 
in all cases, DOE has determined that the energy savings of these 
alternatives are significantly smaller than those that would be 
expected to result from adoption of the proposed standard levels 
(ranging from approximately 11-percent to 66-percent of the energy 
savings from the proposed standards). Accordingly, DOE is declining to 
adopt any of these alternatives and is proposing the standards set 
forth in this rulemaking. (See chapter 17 of the NOPR TSD for further 
detail on the policy alternatives DOE considered.)
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure. Further, EPCA provides that a 
manufacturer whose annual gross revenue from all of its operations does 
not exceed $8,000,000 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.
    DOE continues to seek input from businesses that would be affected 
by this rulemaking and will consider comments received in the 
development of any final rule.

C. Review Under the Paperwork Reduction Act

    Manufacturers of compressors must certify to DOE that their 
equipment complies with any applicable energy conservation standards. 
In certifying compliance, manufacturers must test their equipment 
according to the DOE test procedures for compressors, including any 
amendments adopted for those test procedures. DOE has established 
regulations for the certification and recordkeeping requirements for 
covered consumer products and commercial equipment. See generally 10 
CFR part 429. The collection-of-information requirement for the 
certification and recordkeeping is subject to review and approval by 
OMB under the Paperwork Reduction Act (PRA). This requirement has been 
approved by OMB under OMB control number 1910-1400. Public reporting 
burden for the certification is estimated to average 30 hours per 
response, including the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that the proposed rule fits within the category of 
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets 
the requirements for application of a CX. See 10 CFR part 1021, App. B, 
B5.1(b); 1021.410(b) and App. B, B(1)-(5). The proposed 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 proposed rule. 
DOE's CX determination for this proposed 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 (August 10, 
1999), imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the

[[Page 31762]]

necessity for such actions. The Executive Order also requires agencies 
to have an accountable process to ensure meaningful and timely input by 
State and local officials in the development of regulatory policies 
that have Federalism implications. On March 14, 2000, DOE published a 
statement of policy describing the intergovernmental consultation 
process it will follow in the development of such regulations. 65 FR 
13735. DOE has examined this proposed rule and has tentatively 
determined that it would not have a substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. EPCA governs and prescribes Federal 
preemption of State regulations as to energy conservation for the 
products that are the subject of this proposed rule. States can 
petition DOE for exemption from such preemption to the extent, and 
based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no 
further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the 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 (February 7, 1996). Regarding the review required by section 
3(a), section 3(b) of Executive Order 12988 specifically requires that 
Executive agencies make every reasonable effort to ensure that the 
regulation: (1) Clearly specifies the preemptive effect, if any; (2) 
clearly specifies any effect on existing Federal law or regulation; (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction; (4) specifies the retroactive 
effect, if any; (5) adequately defines key terms; and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this proposed rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE has concluded that this proposed rule is not expected to 
require expenditures of $100 million or more on the private sector. As 
a result, the analytical requirements of UMRA described above are not 
applicable.

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 proposed rule would not have any impact on the autonomy or 
integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (March 15, 1988), DOE has determined that this proposed rule would 
not result in any takings that might require compensation under the 
Fifth Amendment to the U.S. Constitution.

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

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

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
proposes new energy conservation standards for compressors, is not a 
significant energy action because the proposed standards are not likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy, nor has it been designated as such by the Administrator 
at OIRA. Accordingly, DOE has not prepared a Statement of Energy 
Effects on this proposed rule.

[[Page 31763]]

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 (January 
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: http://energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report.

VIII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this document. If 
you plan to attend the public meeting, please notify Ms. Brenda Edwards 
at (202) 586-2945 or [email protected].
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures which require advance 
notice prior to attendance at the public meeting. If a foreign national 
wishes to participate in the public meeting, please inform DOE of this 
fact as soon as possible by contacting Ms. Regina Washington at (202) 
586-1214 or by email ([email protected]) so that the 
necessary procedures can be completed.
    DOE requires visitors to have laptops and other devices, such as 
tablets, checked upon entry into the Forrestal Building. Any person 
wishing to bring these devices into the building will be required to 
obtain a property pass. Visitors should avoid bringing these devices, 
or allow an extra 45 minutes to check in. Please report to the 
visitor's desk to have devices checked before proceeding through 
security.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding identification 
(ID) requirements for individuals wishing to enter Federal buildings 
from specific States and U.S. territories. As a result, driver's 
licenses from several States or territory will not be accepted for 
building entry, and instead, one of the alternate forms of ID listed 
below will be required. DHS has determined that regular driver's 
licenses (and ID cards) from the following jurisdictions are not 
acceptable for entry into DOE facilities: Alaska, American Samoa, 
Arizona, Louisiana, Maine, Massachusetts, Minnesota, New York, 
Oklahoma, and Washington. Acceptable alternate forms of Photo-ID 
include: U.S. Passport or Passport Card; an Enhanced Driver's License 
or Enhanced ID-Card issued by the States of Minnesota, New York, or 
Washington (Enhanced licenses issued by these States are clearly marked 
Enhanced or Enhanced Driver's License); a military ID or other Federal 
government-issued Photo-ID card.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's Web site at https://www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/87 Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

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

C. Conduct of the Public Meeting

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

[[Page 31764]]

needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this document and will be accessible on the DOE Web site. In 
addition, any person may buy a copy of the transcript from the 
transcribing reporter.

D. Submission of Comments

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

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE invites comments on whether DOE should adopt standards for 
compressors at TSL 3 instead of at TSL 2.
    2. DOE seeks comment on its proposal to limit the scope of energy 
conservation standard proposed in this document to only equipment that 
is made up of a compression element (bare compressor), driver(s), 
mechanical equipment to drive the compressor element, and any ancillary 
equipment (i.e., a ``packaged compressor''), through the use of the 
defined term, ``air compressors.''
    3. DOE seeks comment on its proposal to limit the scope of energy 
conservation standard proposed in this document to only compressors 
that are designed to compress air and that have inlets open to the 
atmosphere or other source of air, through the use of the defined term, 
``air compressors.''
    4. DOE requests comment on its proposal to consider standards for 
both single- and three-phase compressor equipment. DOE also requests 
comment on any market trends that may affect the efficiency of such 
equipment in the future. DOE requests data that may aid in 
characterizing the relative cost and performance of equipment of 
different

[[Page 31765]]

motor phase counts, so that DOE can better evaluate whether a 
substitution incentive is likely to be created.
    5. DOE requests comment on the proposal to include only compressors 
with a compressor motor nominal horsepower of greater than or equal to 
1 and less than or equal to 500 within the scope of this energy 
conservation standard.
    6. DOE requests comment on its proposal to establish separate 
equipment classes for rotary and reciprocating equipment, and on 
whether and why utility or performance differences exist between the 
two types of equipment. DOE requests comment on its proposal to 
establish separate equipment classes for rotary and reciprocating 
equipment, and on whether and why utility or performance differences 
exist between the two types of equipment.
    7. DOE requests comment on separating equipment classes by 
lubricant presence, and specifically on whether ISO 8573-1:2010 is 
suitable for characterizing compressors on that basis. DOE also 
requests comments on the proposed definitions for lubricated 
compressor, lubricant-free compressors, and auxiliary substance.
    8. DOE requests comment on its proposal to establish separate 
equipment classes for air- and water-cooled equipment. DOE also 
requests comments on the proposed definitions for air- and water-cooled 
compressor.
    9. DOE requests comment on the establishment of separate equipment 
classes, by motor phase count, for reciprocating equipment.
    10. DOE also requests comment on the proposal to combine single- 
and three-phase rotary equipment in each rotary equipment class.
    11. DOE also requests comment specifically on IE4 or ``super 
premium'' electric motors, their suitability for compressors, and on 
any efforts to incorporate them into newly developed equipment.
    12. DOE seeks comment on whether sufficient resources would be 
available such that criterion 2 of the screening analysis is satisfied.
    13. DOE requests comment on the use of 125 and 175 psig as 
representative pressures to establish absolute MSPs for rotary and 
reciprocating equipment classes, respectively.
    14. DOE requests comment on DOE's proposal to establish efficiency 
levels that are independent of pressure.
    15. DOE also requests comment on DOE's proposal to establish 
incremental MSPs that are independent of pressure.
    16. DOE requests additional data which can be used to refine its 
current baseline, max-tech, and efficiency level assumptions.
    17. DOE requests comment on the use of the EU Lot 31 regression 
curve for piston standard air compressors to define the regression 
curve of the R3_FS_L_XX equipment class.
    18. DOE requests comment and supporting data on the efficiency 
levels established for the RP_FS_L_AC, RP_VS_L_AC, and R3_FS_L_XX 
equipment classes.
    19. DOE requests comment on the proposed efficiency levels selected 
for the RP_VS_LF_AC equipment class regarding their representation of 
the market, and any data that could improve the analysis.
    20. DOE requests comment on the proposed efficiency levels selected 
for the RP_VS_LF_WC equipment class regarding their representation of 
the market, and any data that could improve the analysis.
    21. DOE requests comment and supporting data on the proposed 
efficiency levels established for the R1_FS_L_XX equipment class.
    22. DOE requests comment on the use of Lot 31 MSP-Flow-Efficiency 
Relationships to develop MSP-flow-efficiency relationships for the 
proposed RP_FS_L_AC and RP_VS_L_AC equipment classes.
    23. DOE requests comment on the methods used to develop RP_FS_LF_AC 
(lubricant-free) incremental MSP. Specifically, DOE requests comment on 
the use of RP_FS_L_AC (lubricated) incremental MSP relationship to 
develop a lubricant-free incremental MSP relationship.
    24. DOE requests comment and supporting data on the MSPs 
established for the RP_FS_LF_AC equipment class.
    25. DOE requests comment on the methods used to develop RP_VS_LF_AC 
(lubricant-free) incremental MSP. Specifically, DOE requests comment on 
the use of RP_VS_L_AC (lubricated) incremental MSP relationship to 
develop a lubricant-free incremental MSP relationship.
    26. DOE requests comment and supporting data on the MSPs 
established for the RP_VS_LF_AC equipment class.
    27. DOE requests comment on the use of incremental MSP for air-
cooled equipment classes to represent incremental MSP for water-cooled 
equipment classes.
    28. DOE requests comment and supporting data on the MSPs 
established for the R3_FS_L_XX equipment class.
    29. DOE requests comment on the use of incremental MSP for the 
R3_FS_L_XX equipment classes to represent incremental MSP for the 
R1_FS_L_XX equipment classes.
    30. DOE requests comment on its estimates for manufacturer markups, 
as well as material, labor, depreciation, and overhead breakdowns.
    31. DOE seeks input on its analysis of market channels listed above 
in Table IV.28, particularly related to whether the channels include 
all necessary intermediate steps, and the estimated market share of 
each channel.
    32. Table IV.29 shows the distribution of air compressor 
application for both rotary and reciprocating air compressors. DOE 
seeks comment on its distribution of air compressors application.
    33. DOE requests comment and information on average annual 
operating hours for the compressor types and applications in the scope 
of this rulemaking.
    34. DOE requests comment and information on typical load profiles 
for the air compressor types and applications in the scope of this 
rulemaking.
    35. DOE seeks data on the degree that compressors are over- or 
under-sized for an intended application. Specifically, DOE requests 
data on the degree that air compressors are operated at duty points 
other than their intended design point.
    36. DOE requests information and data on the degree that a 
compressor's pressure can be set above or below its design point. 
Additionally, DOE requests information and data on air compressor 
efficiency when it is operated above the design point pressure.
    37. DOE requests comments on the most appropriate trend to use for 
real (inflation-adjusted) compressor prices.
    38. DOE requests comment on whether any of the efficiency levels 
considered in this NOPR might lead to an increase in installation costs 
and, if so, data regarding the magnitude of the increased cost for each 
relevant efficiency level.
    39. DOE seeks comment on these minimum, average, and maximum 
equipment lifetimes, and whether or not they are appropriate for all 
equipment classes.
    40. DOE seeks comment on the total 2013 shipments by equipment 
class.
    41. DOE seeks comment on its assumption that air compressors with a 
capacity of no more than 50 ACFM are used in commercial applications, 
and air compressors greater than 50 ACFM are used in industrial 
applications.
    42. DOE seeks comment on the share of shipments by equipment class, 
and how these shares may change over time.

[[Page 31766]]

    43. DOE seeks comment on whether the assumed price elasticities are 
reasonable for air compressors.
    44. DOE seeks comment on its assumption of no change over time in 
the market share of more efficient equipment in the no-new-standards 
case.
    45. DOE seeks information on any projected change in equipment 
efficiencies over time, specifically whether or not the market shares 
of air compressors by efficiency would change after the publication of 
a new standard.
    46. DOE requests comment on its estimates of average industry 
financial parameters.
    47. DOE requests comment on the use of failure rates for rotary 
compressor equipment as a proxy for reciprocating equipment failure 
rates.
    48. DOE requests feedback on its conversion cost methodology, 
including quantitative estimates and qualitative descriptions of the 
capital and product conversion costs manufacturers would incur in order 
to comply with amended energy conservation standards.
    49. DOE requests comments on the total annual direct employment 
levels in the industry.
    50. DOE requests comment on potential bottlenecks in manufacturing 
capacity or constraints in engineering resources that could result from 
a new standard.
    51. DOE requests comments on the cumulative regulatory burden 
facing compressor manufacturers. Specifically, DOE seeks input on any 
equipment-specific Federal regulations with which compliance is 
required within three years of the proposed compliance date for any 
final compressor standards, as well as on recommendations on how DOE 
may be able to align varying regulations to mitigate cumulative burden.
    DOE requests comments and data that will aid in the refinement of 
its analysis of the calculated reduction to the industry's net present 
value at the TSL 3 level (see section V.B.2.a). These impacts are 
captured in the Manufacturing Impact Analysis, and in particular within 
the DOE's Government Regulatory Impact Model (see section V.B.2). 
Comments are also requested on DOE's inputs to the product and capital 
conversion costs, including the lack of available skilled design 
engineers (see section V.B.2.c) and product production costs (see 
section V.B.2.a), as well as DOE's assumptions regarding mark-up 
scenarios, specifically the assumption regarding the percentage of 
costs that will be passed on to consumers (see section IV.C.7).
    52. DOE requests comment on the number and names of domestic small 
manufacturers producing covered equipment.
    53. DOE notes that this conversion cost analysis assumes that 
compressors sold by domestic small manufacturers are of the same 
efficiency distribution as those sold by large manufacturers. DOE 
requests comment and data on the relative efficiency of equipment sold 
by domestic small manufacturers, as compared to equipment sold by large 
manufacturers.
    54. DOE requests comment and data on the impact of the proposed 
standard on domestic small business manufacturers. Specifically, DOE 
requests comment on the magnitude of conversion costs for a domestic 
small manufacturers and the number or percent of models produced by 
domestic small manufacturers. DOE also requests data on the cost of 
capital for domestic small manufacturers to better quantify how 
domestic small manufacturers might be disadvantaged relative to large 
competitors.

IX. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 429

    Confidential business information, Energy conservation, Household 
appliances, Imports, Reporting and recordkeeping requirements.

10 CFR Part 430

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

    Issued in Washington, DC, on April 29, 2016.
David Friedman,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable 
Energy.

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

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

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

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

0
2. Section 429.12 is amended by revising paragraph (b)(13) 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 429.61 of this chapter.
* * * * *
0
3. Section 429.61 [proposed at 81 FR 27219, (May 5, 2016)] is amended 
by adding paragraph (b) to read as follows:


Sec.  429.61  Compressors.

* * * * *
    (b) Certification reports. (1) The requirements of Sec.  429.12 are 
applicable to compressors; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report will 
include the following public product-specific information:
    (i) Full- or part-load package isentropic efficiency, as applicable 
(dimensionless);
    (ii) Full-load actual volume flow rate (in actual cubic feet per 
minute);
    (iii) Compressor motor nominal horsepower (in horsepower);
    (iv) Full-load operating pressure (in pounds per square inch, 
gauge);
    (v) Maximum full-flow operating pressure (in pounds per square 
inch, gauge); and
    (vi) Pressure ratio (dimensionless).

PART 431--ENERGY CONSERVATION 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 431.342 [proposed at 81 FR 27219 (May 5, 2016)] is amended 
by adding, in alphabetical order, definitions for the terms ``Air-
cooled compressor,'' ``Auxiliary substance,'' ``Lubricant-free 
compressor,'' ``Lubricated compressor,'' and ``Water-cooled 
compressor.''
    The additions read as follows:


Sec.  431.342  Definitions concerning compressors.

* * * * *
    Air-cooled compressor means a compressor that utilizes air to cool 
both the compressed air and, if present, any auxiliary substances used 
to facilitate compression.
* * * * *
    Auxiliary substance means any substance deliberately introduced 
into a

[[Page 31767]]

compression process to aid in compression of a gas by any of the 
following: lubricating, sealing mechanical clearances, or absorbing 
heat.
* * * * *
    Lubricant-free compressor means a compressor that does not 
introduce any auxiliary substance into the compression chamber at any 
time during operation.
    Lubricated compressor means a compressor that introduces an 
auxiliary substance into the compression chamber during compression.
* * * * *
    Water-cooled compressor means a compressor that utilizes chilled 
water provided by an external system to cool both the compressed air 
and, if present, any auxiliary substance used to facilitate 
compression.
0
6. Section 431.345 is added to read as follows:


Sec.  431.345  Energy conservation standards and effective dates.

    (a) Each compressor that is manufactured starting on [date five 
years after date of publication in the Federal Register] and that:
    (1) Is an air compressor;
    (2) Is a rotary compressor;
    (3) Is driven by a brushless electric motor;
    (4) Is distributed in commerce with a compressor motor nominal 
horsepower greater than or equal to 1 and less than or equal to 500 
horsepower (hp);
    (5) Has a full-load operating pressure greater than or equal to 31 
pounds per square inch gauge (psig) and less than or equal to 225 psig;
    (6) Is manufactured alone or as a component of another piece of 
equipment; and
    (7) Is in one of the equipment classes listed in the Table 1, must 
have a full-load package isentropic efficiency or part-load package 
isentropic efficiency that is not less than the appropriate ``Minimum 
Package Isentropic Efficiency'' value listed in Table 1.

                         Table 1--Energy Conservation Standards for Certain Compressors
----------------------------------------------------------------------------------------------------------------
                                                                         [eta]Regr  (package      d  (percentage
           Equipment class             Minimum package isentropic       isentropic efficiency          loss
                                               efficiency                 reference curve)          reduction)
----------------------------------------------------------------------------------------------------------------
Rotary; Lubricated; Air-cooled;       [eta]Regr + (1- [eta]Regr) *  -0.00928 * ln(.472 * V1)\2\              -15
 Fixed-speed Compressor.               (d/100).                      + 0.139 * ln(.472 * V1) +
                                                                     0.271.
Rotary; Lubricated; Air-cooled;       [eta]Regr + (1- [eta]Regr) *  -0.0155 * ln(.472 * V1)\2\ +             -10
 Variable-speed Compressor.            (d/100).                      0.216 * ln(.472 * V1) +
                                                                     0.00905.
Rotary; Lubricated; Water-cooled;     .0235 + [eta]Regr + (1-       -0.00928 * ln(.472 * V1)\2\              -15
 Fixed-speed Compressor.               [eta]Regr) * (d/100).         + 0.139 * ln(.472 * V1) +
                                                                     0.271.
Rotary; Lubricated; Watercooled;      .0235 + [eta]Regr + (1-       -0.0155 * ln(.472 * V1)\2\ +             -15
 Variable-speed Compressor.            [eta]Regr) * (d/100).         0.216 * ln(.472 * V1) +
                                                                     0.00905.
Rotary; Lubricant-free; Air-cooled;   [eta]Regr + (1- [eta]Regr) *  A1 * ln(.472 * V1)\2\ + B1 *             -11
 Fixed-speed Compressor.               (d/100).                      ln(.472 * V1) + C1.
Rotary; Lubricant-free; Air-cooled;   [eta]Regr + (1- [eta]Regr) *  A2 * ln(.472 * V1)\2\ + B2 *             -13
 Variable-speed.                       (d/100).                      ln(.472 * V1) + C2.
Rotary; Lubricant-free; Water-        A3 * ln(.472 * V1)\2\ + B3 *  A1 * ln(.472 * V1)\2\ + B1 *             -11
 cooled; Fixed-speed Compressor.       ln(.472 * V1) + C3 +          ln(.472 * V1) + C1.
                                       [eta]Regr + (1- [eta]Regr)
                                       * (d/100).
Rotary; Lubricant-free; Water-        A4 * ln(.472 * V1)\2\ + B4 *  A2 * ln(.472 * V1)\2\ + B2 *             -13
 cooled; Variable-speed Compressor.    ln(.472 * V1) + C4 +          ln(.472 * V1) + C2.
                                       [eta]Regr + (1- [eta]Regr)
                                       * (d/100).
----------------------------------------------------------------------------------------------------------------

    Instructions for the use of Table 1:
    (1) To determine the standard level a compressor must meet, the 
correct equipment class must be identified. The descriptions are in the 
first column (``Equipment Class''); definitions for these descriptions 
are found in Sec.  431.342.
    (2) The second column (``Minimum Package Isentropic Efficiency'') 
contains the applicable energy conservation standard level, provided in 
terms of package isentropic efficiency.
    (3) For ``Fixed-speed compressor'' equipment classes, the relevant 
Package Isentropic Efficiency is Full-Load Package Isentropic 
Efficiency. For ``Variable-speed compressor'' equipment classes, the 
relevant Package Isentropic Efficiency is Part-Load Package Isentropic 
Efficiency. Both Full- and Part-Load Package Isentropic Efficiency are 
determined in accordance with the test procedure in Sec.  431.344.
    (4) The second column (``Minimum Package Isentropic Efficiency'') 
references the third column (``[eta]Regr''), also a function 
of full-load actual volume flow rate, and the fourth column (``d''). 
The equations are provided separately to maintain consistency with the 
language of the preamble and analysis.
    (5) The second and third columns contain the term V1, 
which denotes compressor full-load actual volume flow rate, given in 
terms of actual cubic feet per minute (``acfm'') in inlet air 
conditions and determined in accordance with the test procedure in 
Sec.  431.344.
    (6) The second and third columns contain the mathematical 
coefficients A1, A2, A3, 
A4, B1, B2, B3, 
B4, C1, C2, C3, and 
C4. Refer to Tables 1A, 1B, 1C, and 1D for the values of 
these coefficients.

                                         Table 1A--Certain Coefficients
----------------------------------------------------------------------------------------------------------------
         Full-load actual volume flow rate range  (acfm)                A1              B1              C1
----------------------------------------------------------------------------------------------------------------
0 < V1 <= 161...................................................        -0.00928           0.139           0.191
161 < V1 <= 2125................................................         0.00281          0.0344           0.417
2125 < V1.......................................................        -0.00928           0.139           0.271
----------------------------------------------------------------------------------------------------------------


[[Page 31768]]


                                         Table 1B--Certain Coefficients
----------------------------------------------------------------------------------------------------------------
         Full-load actual volume flow rate range  (acfm)                A2              B2              C2
----------------------------------------------------------------------------------------------------------------
0 < V1 <= 102...................................................         -0.0155           0.216         -0.0984
102 < V1 <= 1426................................................           0.000          0.0958           0.134
1426 < V1.......................................................         -0.0155           0.216         0.00905
----------------------------------------------------------------------------------------------------------------


                                         Table 1C--Certain Coefficients
----------------------------------------------------------------------------------------------------------------
         Full-load actual volume flow rate range  (acfm)                A3              B3              C3
----------------------------------------------------------------------------------------------------------------
0 < V1 < 102....................................................               0               0               0
102 <= V1.......................................................        -0.00924           0.117          -0.315
----------------------------------------------------------------------------------------------------------------


                                         Table 1D--Certain Coefficients
----------------------------------------------------------------------------------------------------------------
         Full-load actual volume flow rate range  (acfm)                A4              B4              C4
----------------------------------------------------------------------------------------------------------------
0 < V1 < 74.....................................................               0               0               0
74 <= V1........................................................        0.000173         0.00783         -0.0300
----------------------------------------------------------------------------------------------------------------

    (b) [Reserved]

[FR Doc. 2016-11337 Filed 5-18-16; 8:45 am]
 BILLING CODE 6450-01-P