[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Rules and Regulations]
[Pages 6826-6887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-00474]



[[Page 6825]]

Vol. 82

Thursday,

No. 12

January 19, 2017

Part III





Department of Energy





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10 CFR Part 430





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

  Federal Register / Vol. 82 , No. 12 / Thursday, January 19, 2017 / 
Rules and Regulations  

[[Page 6826]]


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DEPARTMENT OF ENERGY

10 CFR Part 430

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


Energy Conservation Program: Energy Conservation Standards for 
Ceiling Fans

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

ACTION: Final rule.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
ceiling fans. EPCA also requires the U.S. Department of Energy (DOE) to 
periodically determine whether more-stringent standards would be 
technologically feasible and economically justified, and would save a 
significant amount of energy. In this final rule, DOE amends the energy 
conservation standards for ceiling fans. It has determined that the 
amended energy conservation standards for these products would result 
in significant conservation of energy, and are technologically feasible 
and economically justified.

DATES: The effective date of this rule is March 20, 2017. Compliance 
with the amended standards established for ceiling fans in this final 
rule is required on and after January 21, 2020.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    A link to the docket web page can be found at https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=5. The docket web page contains instructions 
on how to access all documents, including public comments, in the 
docket.
    For further information on how to review the docket, contact Ms. 
Lucy deButts at: (202) 287-1604 or by e-mail: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Lucy deButts, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, 
DC 20585-0121. Telephone: (202) 287-1604. E-mail: 
[email protected].
    Elizabeth Kohl, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-7796. E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Synopsis of the Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Ceiling Fans
III. General Discussion
    A. Product Classes and Scope of Coverage
    1. Scope of Coverage
    2. Product Classes
    B. Test Procedure
    C. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Product Classes
    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Standard and Hugger Ceiling Fans
    2. VSD and HSSD Ceiling Fans
    3. Large-Diameter Ceiling Fans
    4. Reducing Fan Speed to Improve Efficiency
    5. Standard Level Equations
    D. Markups Analysis
    E. Energy Use Analysis
    1. Inputs for Standard, Hugger, and VSD Ceiling Fans
    a. Sample of Purchasers
    b. Operating Hours
    c. Power Consumption at Each Speed and Standby
    2. Inputs for Large-Diameter and High-Speed Small-Diameter 
Ceiling Fans
    a. Sample of Purchasers
    b. Operating Hours
    c. Power Consumption at Each Speed and Standby
    3. Impact on Air Conditioning or Heating Equipment Use
    F. Life-Cycle Cost and Payback Period Analysis
    1. Purchase Price
    2. Electricity Prices
    3. Electricity Price Trends
    4. Repair Costs
    5. Product Lifetime
    6. Discount Rates
    7. Efficiency and Blade Span Distribution in the No-New-
Standards Case
    8. Payback Period Analysis
    G. Shipments Analysis
    1. Shipments Demand Model
    2. Stock-Accounting Model
    3. Market-Share Projections
    4. Price Trend
    5. Impact of a Standard on Shipments
    H. National Impact Analysis
    1. National Energy Savings
    2. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis and Key Inputs
    a. Capital and Product Conversion Costs
    b. Manufacturer Production Costs
    c. Shipment Scenarios
    d. Markup Scenarios
    3. Discussion of Comments
    4. Manufacturer Interviews
    a. Shift to Air Conditioning
    b. Testing Burden
    c. Utility of Brushless DC Motors for Residential Consumers
    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

[[Page 6827]]

    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    7. Other Factors
    8. Summary of National Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Ceiling Fan 
Standards
    2. Summary of Annualized Benefits and Costs of the Adopted 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Need for, and Objectives of, the Rule
    2. Significant Comments in Response to the IRFA
    3. Comments Filed by the Chief Counsel for Advocacy
    4. Description and Estimate of the Number of Small Entities 
Affected
    5. Description of Compliance Requirements
    6. Significant Alternatives Considered and Steps Taken to 
Minimize Significant Economic Impacts on Small Entities
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309), 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles.\2\ These products include ceiling fans, which are the 
subject of this rulemaking.
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    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (April 30, 2015).
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new 
or amended standard must result in significant conservation of energy. 
(42 U.S.C. 6295(o)(3)(B))
    In accordance with these and other statutory provisions discussed 
in this document, DOE is adopting amended energy conservation standards 
for ceiling fans. The amended standards, which are expressed for each 
product class as the minimum allowable efficiency in terms of cubic 
feet per minute per watt (CFM/W), as a function of ceiling fan diameter 
in inches, are shown in Table I.1. These standards would apply to all 
ceiling fans listed in Table I.1 and manufactured in, or imported into, 
the United States on and after January 21, 2020.

        Table I.1--Energy Conservation Standards for Ceiling Fans
                 [Compliance starting January 21, 2020]
------------------------------------------------------------------------
                                             Minimum efficiency equation
               Product class                           CFM/W *
------------------------------------------------------------------------
Very Small-Diameter (VSD).................  D <= 12 in.: 21
                                            D > 12 in.: 3.16 D-17.04
Standard..................................  0.65 D + 38.03
Hugger....................................  0.29 D + 34.46
High-Speed Small-Diameter (HSSD)..........  4.16 D + 0.02
Large Diameter............................  0.91 D -30.00
------------------------------------------------------------------------
* D is the ceiling fan's blade span, in inches, as determined in
  Appendix U.

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
adopted standards on consumers of ceiling fans, as measured by the 
average life-cycle cost (LCC) savings and the simple payback period 
(PBP).\3\ The average LCC savings are positive for all product classes, 
and the PBP is less than the average lifetime of ceiling fans, which is 
estimated to be 13.8 years for all product classes (see section 
IV.F.5).
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    \3\ The average LCC savings are measured relative to the 
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.7). The simple PBP, which is designed to compare 
specific ceiling fan efficiency levels, is measured relative to the 
baseline product (see section IV.C), which corresponds to the least 
efficient model available to purchase.

Table I.2--Impacts of Amended Energy Conservation Standards on Consumers
                             of Ceiling Fans
------------------------------------------------------------------------
                                       Average LCC       Simple payback
           Product class            savings * (2015$)    period (years)
------------------------------------------------------------------------
Standard..........................              25.78                1.7
Hugger............................              21.50                1.8
Very Small-Diameter...............               4.29                9.3
High-Speed Small-Diameter.........              19.80                6.9
Large-Diameter....................             128.90                4.1
------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).

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

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the reference year through the terminal 
year of the analysis period (2016-2049). Using a real discount rate of 
7.4 percent, DOE estimates that the INPV for manufacturers of ceiling 
fans in the case without amended standards is $1,211.6 million in 
2015$. Under the adopted standards, DOE expects that manufacturers may 
lose up to 9.9 percent of this INPV, which is approximately $119.4 
million.
    DOE's analysis of the impacts of the adopted standards on 
manufacturers is described in section IV.J of this document.

C. National Benefits and Costs 4
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    \4\ All monetary values in this document are expressed in 2015 
dollars and, where appropriate, are discounted to 2016 unless 
explicitly stated otherwise.
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    DOE's analyses indicate that the adopted energy conservation 
standards for ceiling fans would save a significant amount of energy. 
Relative to the case without amended standards (referred to as the 
``no-new-standards case''), the lifetime energy savings for ceiling 
fans

[[Page 6828]]

purchased in the 30-year period that begins in the anticipated first 
full year of compliance with the amended standards (2020-2049), amount 
to 2.008 quadrillion British thermal units (Btu), or quads.\5\ This 
represents a total energy savings of 26 percent across all product 
classes relative to the energy use of these products in the no-new-
standards case.
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    \5\ The quantity refers to full-fuel-cycle (FFC) energy savings. 
FFC energy savings includes the energy consumed in extracting, 
processing, and transporting primary fuels (i.e., coal, natural gas, 
petroleum fuels), and, thus, presents a more complete picture of the 
impacts of energy efficiency standards. For more information on the 
FFC metric, see section IV.H.1.
---------------------------------------------------------------------------

    The cumulative net present value (NPV) of total consumer costs and 
savings of the standards for ceiling fans ranges from $4.488 billion 
(at a 7-percent discount rate) to $12.123 billion (at a 3-percent 
discount rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased product costs for 
ceiling fans purchased in 2020-2049.
    In addition, the standards for ceiling fans are projected to yield 
significant environmental benefits. DOE estimates that the standards 
would result in cumulative greenhouse gas emission reductions (over the 
same period as for energy savings) of 120.2 million metric tons (Mt) 
\6\ of carbon dioxide (CO2), 64.0 thousand tons of sulfur 
dioxide (SO2), 222.6 thousand tons of nitrogen oxides 
(NOX), 530.1 thousand tons of methane (CH4), 1.3 
thousand tons of nitrous oxide (N2O), and 0.2 tons of 
mercury (Hg).\7\ The cumulative reduction in CO2 emissions 
through 2030 amounts to 18.2 Mt, which is equivalent to the emissions 
resulting from the annual electricity use of more than 1.9 million 
homes.
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    \6\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \7\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy 
Outlook 2015 (AEO 2015).
---------------------------------------------------------------------------

    The value of the CO2 reductions is calculated using a 
range of values per metric ton (t) of CO2 (otherwise known 
as the ``Social Cost of Carbon'', or SCC) developed by a Federal 
interagency working group.\8\ The derivation of the SCC values is 
discussed in section IV.L. Using discount rates appropriate for each 
set of SCC values, DOE estimates that the net present monetary value of 
the CO2 emissions reduction (not including CO2 
equivalent emissions of other gases with global warming potential) is 
between $0.8 billion and $11.7 billion, with a value of $3.8 billion 
using the SCC central value case represented by $40.6/metric ton (t) in 
2015. DOE also estimates that the present monetary value of the 
NOX emissions reduction to be $0.2 billion at a 7-percent 
discount rate, and $0.4 billion at a 3-percent discount rate.\9\ DOE is 
investigating appropriate valuation of the reduction in other 
emissions, and did not include any values for other emissions in this 
rulemaking.
---------------------------------------------------------------------------

    \8\ 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. Available at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
    \9\ 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 
www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See section IV.L.2 for further discussion. On 
February 9, 2016, the U.S. Supreme Court stayed the rule 
implementing the Clean Power Plan pending disposition of the 
applicants' petitions for review in the United States Court of 
Appeals for the District of Columbia Circuit and disposition of the 
applicants' petition for a writ of certiorari, if such writ is 
sought. Chamber of Commerce, et al. v. EPA, et al., Order in Pending 
Case, available at http://www.chamberlitigation.com/sites/default/
files/scotus/files/2016/
SCOTUS%20Order%20Granting%20U.S.%20Chamber%2C%20et%20al.%20Stay%20App
lication%20_
%20States%20of%20West%20Virginia%2C%20Texas%2C%20et%20al.%20v.%20EPA%
20%28ESPS%29.pdf (last visited June 22, 2016). Pending the outcome 
of that litigation, DOE continues to use the benefit-per-ton 
estimates established in the Regulatory Impact Analysis for the 
Clean Power Plan. To be conservative, 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.
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    Table I.3 summarizes the economic benefits and costs expected to 
result from the adopted standards for ceiling fans.

Table I.3--Selected Categories of Economic Benefits and Costs of Amended
            Energy Conservation Standards for Ceiling Fans *
------------------------------------------------------------------------
                                      Present value
             Category                (billion 2015$)   Discount rate (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings...                7.0                  7
                                                 16.5                  3
CO2 Reduction (using mean SCC at                  0.8                  5
 5% discount rate) **.............
CO2 Reduction (using mean SCC at                  3.8                  3
 3% discount rate) **.............
CO2 Reduction (using mean SCC at                  6.1                2.5
 2.5% discount rate) **...........
CO2 Reduction (using 95th                        11.7                  3
 percentile SCC at 3% discount
 rate) **.........................
NOX Reduction [dagger]............                0.2                  7
                                                  0.4                  3
Total Benefits [Dagger]...........               11.0                  7
                                                 20.7                  3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed                    2.5                  7
 Costs............................                4.4                  3
------------------------------------------------------------------------

[[Page 6829]]

 
                           Total Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                   8.5                  7
 Monetized Value [Dagger].........               16.3                  3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with ceiling
  fans shipped in 2020-2049. These results include benefits to consumers
  which accrue after 2049 from the products purchased in 2020-2049. The
  incremental installed costs include incremental equipment cost as well
  as installation costs. The CO2 reduction benefits are global benefits
  due to actions that occur nationally.
** 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 percent,
  3 percent, and 2.5 percent. 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-percent
  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
  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 www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for
  further discussion. To be conservative, 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-percent and 7-percent cases are
  presented using only the average SCC with 3-percent discount rate.

    The benefits and costs of the adopted standards, for ceiling fans 
sold in 2020-2049, can also be expressed in terms of annualized values. 
The monetary values for the total annualized net benefits are the sum 
of (1) the national economic value of the benefits in reduced consumer 
operating costs, minus (2) the increases in product purchase prices and 
installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\10\
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    \10\ 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 cost savings are domestic private 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 ceiling fans shipped in 2020-2049. 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.
    Estimates of annualized benefits and costs of the adopted standards 
are shown in Table I.4. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reduction, (for which DOE used a 3-percent discount 
rate along with the SCC series that has a value of $40.6/t in 
2015),\11\ the estimated annualized cost of the standards in this rule 
is $245.1 million per year in increased equipment costs, while the 
estimated annualized benefits are $688.1 million in reduced equipment 
operating costs, $214.1 million in CO2 reductions, and $15.1 
million in reduced NOX emissions. In this case, the 
annualized net benefit amounts to $672.2 million per year. Using a 3-
percent discount rate for all benefits and costs and the SCC series has 
a value of $40.6/t in 2015, the estimated cost of the standards is 
$243.2 million per year in increased equipment costs, while the 
estimated annualized benefits are $919.0 million in reduced operating 
costs, $214.1 million in CO2 reductions, and $21.5 million 
in reduced NOX emissions. In this case, the annualized net 
benefit amounts to $911.4 million per year.
---------------------------------------------------------------------------

    \11\ DOE used a 3-percent discount rate because the SCC values 
for the series used in the calculation were derived using a 3-
percent discount rate (see section IV.L).

                         Table I.4--Selected Categories of Annualized Benefits and Costs of Amended Standards for Ceiling Fans *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Discount rate                Primary estimate        Low-net-benefits estimate  High-net-benefits estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      (million 2015$/year)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  688.1.....................  579.7.....................  793.5
                                    3%..............................  919.0.....................  764.2.....................  1081.9
CO2 Reduction (using mean SCC at    5%..............................  62.8......................  53.7......................  71.0
 5% discount rate) **.
CO2 Reduction (using mean SCC at    3%..............................  214.1.....................  182.2.....................  242.6
 3% discount rate) **.
CO2 Reduction (using mean SCC at    2.5%............................  314.2.....................  267.2.....................  356.3
 2.5% discount rate) **.
CO2 Reduction (using 95th           3%..............................  652.7.....................  555.4.....................  739.8
 percentile SCC at 3% discount
 rate) **.
NOX Reduction [dagger]............  7%..............................  15.1......................  13.1......................  38.1
                                    3%..............................  21.5......................  18.4......................  55.3
Total Benefits [Dagger]...........  7% plus CO2 range...............  766 to 1,356..............  647 to 1,148..............  903 to 1,571

[[Page 6830]]

 
                                    7%..............................  917.3.....................  775.0.....................  1,074.2
                                    3% plus CO2 range...............  1,003 to 1,593............  836 to 1,338..............  1,208 to 1,877
                                    3%..............................  1,154.6...................  964.8.....................  1,379.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Costs ***
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  245.1.....................  288.1.....................  272.8
                                    3%..............................  243.2.....................  298.7.....................  273.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [Dagger]....................  7% plus CO2 range...............  521 to 1,111..............  358 to 860................  630 to 1,299
                                    7%..............................  672.2.....................  487.0.....................  801.4
                                    3% plus CO2 range...............  760 to 1,350..............  538 to 1,039..............  935 to 1,603
                                    3%..............................  911.4.....................  666.1.....................  1,106.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with ceiling fans shipped in 2020-2049. These results include benefits to consumers
  which accrue after 2049 from the ceiling fans purchased from 2020-2049. The incremental installed costs include incremental equipment cost as well as
  installation costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. The Primary Estimate assumes the Reference
  case electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the
  electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend
  for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the
  same product price decrease for ceiling fans with DC motors as in the Primary Estimate. The methods used to derive projected price trends are
  explained in section IV.G.4. 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-percent, 3-
  percent, and 2.5-percent discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3-percent
  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 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 www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For the
  Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates 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 the High Net Benefits Estimate, the benefit-per-ton
  estimates were based on the Six Cities study (Lepuele et al. 2011); these are nearly two-and-a-half times larger than those from the ACS study.
[Dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with 3-percent discount rate. In the rows
  labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those
  values are added to the full range of CO2 values.
*** For certain assumed design options (e.g., fan optimization) that are included at the selected standard level, DOE estimated no incremental costs to
  consumers, but did estimate a one-time industry conversion cost to manufacturers to make their products compliant with the selected standards that are
  not reflected in the Consumer Incremental Product Costs. The one-time industry conversion cost to manufacturers of these design options contribute to
  a loss in industry net present value of $4.8 million, which is equivalent to an annualized cost of $0.4 million/year at a 7.4-percent discount rate
  over the analysis period.

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

D. Conclusion

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

II. Introduction

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

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291, et seq.) 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles, a program covering most major household appliances 
(collectively referred to as ``covered products''), which includes the 
ceiling fans that are the subject of this rulemaking. (42 U.S.C. 
6295(ff)) EPCA, as amended, prescribes energy conservation standards 
for these products and authorizes DOE to consider energy efficiency or 
energy use standards for the electricity used by ceiling fans to 
circulate air in a room. Id.
    Under 42 U.S.C. 6295(m), DOE must periodically review its already 
established energy conservation standards for a covered product. Under 
this requirement, the next review that DOE would need to conduct must 
occur no later than 6 years from the issuance of any final rule 
establishing or amending a standard for a covered product. EPCA also 
provides that not later than 6 years after issuance of any final rule 
establishing or amending a standard, DOE must publish either a notice 
of determination that standards for the product do not need to be 
amended, or a notice of proposed rulemaking including new proposed 
energy conservation standards. (42 U.S.C. 6295(m))

[[Page 6831]]

    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing, (2) labeling, 
(3) the establishment of Federal energy conservation standards, and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(FTC) is primarily responsible for labeling, and DOE implements the 
remainder of the program. Subject to certain criteria and conditions, 
DOE is required to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of 
covered products must use the prescribed DOE test procedure as the 
basis for certifying to DOE that their products comply with the 
applicable energy conservation standards adopted under EPCA and when 
making representations to the public regarding the energy use or 
efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) 
Similarly, DOE must use these test procedures to determine whether the 
products comply with standards adopted pursuant to EPCA. (42 U.S.C. 
6295(s)) The DOE test procedures for ceiling fans appear at title 10 of 
the Code of Federal Regulations (CFR) part 430, subpart B, appendix U, 
10 CFR 430.23(w) and 10 CFR 429.32.
    DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered products, including ceiling fans. Any new 
or amended standard for a covered product must be designed to achieve 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 
(3)(B)) Furthermore, DOE may not adopt any standard that would not 
result in the significant conservation of energy. (42 U.S.C. 
6295(o)(3)) Moreover, DOE may not prescribe a standard (1) for certain 
products, including ceiling fans, if no test procedure has been 
established for the product, or (2) if DOE determines by rule that the 
standard is not technologically feasible or economically justified. (42 
U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is 
economically justified, DOE must determine whether the benefits of the 
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make 
this determination after receiving comments on the proposed standard, 
and by considering, to the greatest extent practicable, the following 
seven statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy (Secretary) considers 
relevant.


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

    Further, EPCA, 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))
    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)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4))
    Additionally, EPCA 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 products that has the same function or intended use if DOE 
determines that products within such group (A) consume a different kind 
of energy from that consumed by other covered products within such type 
(or class); or (B) have a capacity or other performance-related feature 
which other products within such type (or class) do not have and such 
feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In 
determining whether a performance-related feature justifies a different 
standard for a group of products, DOE must consider such factors as the 
utility to the consumer of such a feature and other factors DOE deems 
appropriate. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 42 
U.S.C. 6297(d)).
    EPCA also requires that for any final rule for new or amended 
energy conservation standards promulgated after July 1, 2010, DOE must 
address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) 
Specifically, when DOE adopts a standard for a covered product after 
that date, it must, if justified by the criteria for adoption of 
standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and 
off mode energy use into a single standard, or, if that is not 
feasible, adopt a separate standard for such energy use for that 
product. (42 U.S.C. 6295(gg)(3)(A)-(B)) The amended standards DOE is 
adopting in this final rule incorporate standby mode and off mode 
energy use into a single standard.

B. Background

1. Current Standards
    The Energy Policy and Conservation Act of 1975 (EPCA) defined and 
established design standards for ceiling fans. EPCA defined a ``ceiling 
fan'' as ``a nonportable device that is suspended from a ceiling for 
circulating air via the rotation of fan blades.'' (42 U.S.C. 6291(49)) 
In a final rule technical amendment published in the on October 18, 
2005, DOE codified the statutorily-prescribed design standards for 
ceiling fans. 70 FR 60407, 60413. These standards are set forth in 
DOE's regulations at 10 CFR 430.32(s), and require all ceiling fans 
manufactured on or after January 1, 2007, to have the following 
features:

[[Page 6832]]

    1. Fan speed controls separate from any lighting controls;
    2. adjustable speed controls (either more than one speed or 
variable speed); and
    3. the capability for reverse action (other than fans sold for 
industrial or outdoor application or where safety would be an issue)).

(42 U.S.C. 6295(ff)(1)(A) and (6))
2. History of Standards Rulemaking for Ceiling Fans
    EPCA established energy conservation standards for ceiling fans as 
described in Section II.B.1 and authorized DOE to consider, if the 
requirements of 42 U.S.C. 6295(o) and (p) are met, establishing energy 
efficiency or energy use standards for the electricity used by ceiling 
fans to circulate air in a room. (42 U.S.C. 6295(ff))
    As noted in section II.B.1, DOE codified the statutorily-prescribed 
design standards for ceiling fans in the CFR at 10 CFR 430.32(s). 70 FR 
60407, 60413 (Oct. 18, 2005). DOE also adopted test procedures for 
ceiling fans at 10 CFR part 430, subpart B, appendix U and 10 CFR 
430.23(w). 71 FR 71340, 71366-67 (Dec. 8, 2006). Sampling and 
certification requirements for ceiling fans are set forth at 10 CFR 
429.32.
    On March 15, 2013, DOE published a notice announcing the 
availability of the framework document, ``Energy Conservation Standards 
Rulemaking Framework Document for Ceiling Fans and Ceiling Fan Light 
Kits,'' \12\ and a public meeting to discuss the proposed analytical 
framework for the energy conservation standards rulemaking. 78 FR 
16643. DOE held the public meeting for the framework document on March 
22, 2013,\13\ to present the framework document, describe the analyses 
DOE planned to conduct during the rulemaking, seek comments from 
interested parties on these subjects, and inform them about and 
facilitate their involvement in the rulemaking.
---------------------------------------------------------------------------

    \12\ The energy conservation standards final rule for ceiling 
fan light kits was published on January 6, 2016. 81 FR 580.
    \13\ The framework document is available at regulations.gov 
under docket number EERE-2012-BT-STD-0045-0001.
---------------------------------------------------------------------------

    On September 29, 2014, DOE published the preliminary analysis for 
the ceiling fan energy conservation standards rulemaking. 79 FR 58290. 
DOE posted the preliminary analysis, as well as the complete 
preliminary technical support document (TSD), on its website.\14\ DOE 
held a public meeting on November 19, 2014, to present the preliminary 
analysis, which included presenting preliminary results for the 
engineering and downstream economic analyses, seek comments from 
interested parties on these subjects, and facilitate interested 
parties' involvement in the rulemaking.
---------------------------------------------------------------------------

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

    On January 13, 2016, DOE published a notice of proposed rulemaking 
(NOPR) for the ceiling fans energy conservation standards rulemaking 
(ceiling fans NOPR). 81 FR 1688. DOE posted the ceiling fans NOPR 
analysis, as well as the complete NOPR TSD on its Web site.\15\ DOE 
held a public meeting on February 3, 2016 to present the ceiling fans 
NOPR, which included the engineering analysis, downstream economic 
analyses, manufacturer impact analysis, and proposed standards. In the 
public meeting, DOE also sought comments from interested parties on 
these subjects, and facilitated interested parties' involvement in the 
rulemaking. At the public meeting, and during the comment period, DOE 
received comments that helped DOE identify issues and refine the 
analyses presented in the ceiling fans NOPR for this final rule. The 
key changes since the ceiling fans NOPR were the following: (1) The 
engineering analysis was updated based on additional test data, and (2) 
the efficiency distribution in the no-new-standards case for the 
standard and hugger product classes was updated with significantly more 
market share at the lower efficiency levels based on comments from 
manufacturers.
---------------------------------------------------------------------------

    \15\ The NOPR analysis, NOPR TSD and NOPR public meeting 
information are available at regulations.gov under docket number 
EERE-2012-BT-STD-0045-0130.
---------------------------------------------------------------------------

    This final rule responds to issues raised by commenters in response 
to the framework document, preliminary analysis, and NOPR.

III. General Discussion

    DOE developed this proposal after considering comments, data, and 
information from interested parties that represent a variety of 
interests. The following section provides general discussion of the 
final standards rule; section IV addresses the issues raised by these 
commenters.

A. Product Classes and Scope of Coverage

1. Scope of Coverage
    EPCA defines a ``ceiling fan'' as ``a nonportable device that is 
suspended from a ceiling for circulating air via the rotation of fan 
blades.'' (42 U.S.C. 6291(49))
    DOE previously interpreted the definition of a ceiling fan such 
that it excluded certain types of ceiling fans commonly referred to as 
hugger fans. 71 FR 71343 (Dec. 8, 2006). Hugger ceiling fans are 
typically understood to be set flush to the ceiling (e.g., mounted 
without a downrod). The previous interpretation exempted hugger fans 
from standards on the basis that they are set flush to the ceiling. 
However, in the test procedure final rule for ceiling fan light kits, 
DOE reinterpreted the definition of a ceiling fan to include hugger 
fans, and clarified that the definition also included ceiling fans 
capable of producing large volumes of airflow. 80 FR 80209 (Dec. 24, 
2015).
    The changes in interpretation of the ceiling fan definition 
discussed above resulted in the applicability of the design standards 
set forth in EPCA at 42 U.S.C. 6295(ff)(1) to these fan types as of 
January 25, 2016. DOE research indicates that all ceiling fans 
currently on the market, including hugger ceiling fans and ceiling fans 
that produce a large volume of airflow, appear to meet the EPCA design 
standards. Compliance with requirements related to the ceiling fan 
reinterpretation was discussed in the Ceiling Fan Light Kit test 
procedure final rule. 80 FR 80209 (Dec. 24, 2015) Specifically, DOE 
will not assert civil penalty authority for violations of the 
applicable standards arising as a result of the reinterpretation of the 
ceiling fan definition before June 26, 2017.
    DOE is also establishing efficiency standards for these fan types, 
which include hugger ceiling fans and ceiling fans that produce a large 
volume of airflow, in this ceiling fans final rule. Compliance with 
those standards, as discussed in the DATES section, is January 21, 
2020.
    Additionally, in the ceiling fan test procedure final rule, DOE 
provided clarification on those ceiling fans that are not subject to 
the test procedure. 81 FR 48620 (July 25, 2016). The test procedures do 
not apply to belt-driven ceiling fans, centrifugal ceiling fans, 
oscillating ceiling fans, or ceiling fans whose blades' plane of 
rotation cannot be within 45 degrees of horizontal. American Lighting 
Association (ALA) requested that DOE clarify that if the plane of 
rotation is not within 45 degrees of horizontal, the ceiling fan is not 
subject to DOE's proposed efficiency standards, certification 
requirements or labeling requirements. (ALA, No. 137 at p. 4) DOE 
confirms that it is not establishing performance standards for ceiling 
fans whose blades' plane of rotation cannot be within 45 degrees of 
horizontal in this final rule. The design standards set forth in EPCA 
at 42 U.S.C.

[[Page 6833]]

6295(ff) remain applicable to these fans and manufacturers must certify 
compliance with those design standards to DOE.
    In summary, this DOE final rule is not establishing performance 
standards for belt-driven ceiling fans, centrifugal ceiling fans, 
oscillating ceiling fans, or ceiling fans whose blades' plane of 
rotation cannot be within 45 degrees of horizontal. DOE is also not 
establishing performance standards for highly decorative fans. 
Manufacturers must continue to submit certification reports to DOE for 
such fans with respect to the statutory design standards. Both DOE and 
manufacturers would determine whether a fan met the definition of a 
highly decorative fan using the final test procedure, though 
manufacturers would not be required to submit the supporting 
information, including any test data that supports their highly 
decorative classification as part of their certification submission to 
DOE. In addition, manufacturers would be required to test highly-
decorative fans according to the test procedure established in the test 
procedure final rule to make representations of the energy efficiency 
of such fans (e.g., for the EnergyGuide label)).
2. Product Classes
    When establishing energy conservation standards, DOE divides 
covered products into product classes by the type of energy used or by 
capacity or other performance-related features that justify differing 
standards. In making a determination whether a performance-related 
feature justifies a different standard, DOE must consider such factors 
as the utility of the feature to the consumer and other factors DOE 
determines are appropriate. (42 U.S.C. 6295(q))
    Currently there are no product classes for ceiling fans, because 
the previous final rule for ceiling fans published on October 18, 2005 
set design standards, but did not establish product classes. 70 FR 
60407. In the ceiling fans NOPR, DOE proposed seven product classes and 
their associated definitions, which included highly-decorative, belt-
driven, very small-diameter, hugger, standard, high-speed small-
diameter and large-diameter fans. 81 FR 1688 (January 13, 2016). 
Chapter 3 of the TSD provides additional discussion on the 
establishment of these product classes pursuant to 42 U.S.C. 6295(q). 
In the ceiling fans test procedure final rule, DOE finalized the 
definitions for these types of ceiling fans. 81 FR 48620 (July 25, 
2016). In this final rule, DOE is finalizing all seven product classes 
proposed in the ceiling fans NOPR. For further details on product 
classes, see section IV.A.1 of this rulemaking.

B. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) 
Manufacturers of covered products must use these test procedures to 
certify to DOE that their product complies with energy conservation 
standards and to quantify the efficiency of their product. (42 U.S.C. 
6293, 6295(s)) Similarly, DOE must use these test procedures to 
determine compliance with its energy conservation standards. (42 U.S.C. 
6295(s)) As noted, the test procedures for ceiling fans are provided in 
10 CFR 430.23(w) and appendix U to subpart B of 10 CFR part 430. DOE 
published a NOPR to amend the ceiling fan test procedures on October 
17, 2014, 79 FR 62521, and published a supplemental NOPR (SNOPR) on 
June 3, 2015. 80 FR 31487. DOE finalized the test procedure on July 25, 
2016. 81 FR 48620.
    With respect to the process of establishing test procedures and 
standards for a given product, DOE notes that, while not legally 
obligated to do so, it generally follows the approach laid out in 
guidance found in 10 CFR part 430, subpart C, Appendix A (Procedures, 
Interpretations and Policies for Consideration of New or Revised Energy 
Conservation Standards for Consumer Products). That guidance provides, 
among other things, that DOE issues final, modified test procedures for 
a given product prior to publication of the NOPR proposing energy 
conservation standards for that product. While DOE strives to follow 
the procedural steps outlined in its guidance, there may be 
circumstances in which it may be necessary or appropriate to deviate 
from it. In such instances, the guidance indicates that DOE will 
provide notice and an explanation for the deviation. Accordingly, DOE 
has provided notices while it continued to develop the final test 
procedure for ceiling fans. DOE received comments regarding test 
methods for ceiling fans for which the plane of rotation of the ceiling 
fan's blades cannot be within 45 degrees of horizontal, high-volume 
small-diameter ceiling fans and ceiling fans with blade spans greater 
than seven feet leading to modification to test methods proposed in the 
NOPR. (79 FR 62521 (October 17, 2014)). DOE also received comments 
regarding the variability of results from the test procedures proposed 
in the SNOPR (80 FR 31487 (June 3, 2015)), based on testing conducted 
by manufacturers. Lastly, DOE conducted a thorough review of all 
available test data, including additional test data supplied by 
manufacturers, to identify opportunities to decrease testing variation.
    DOE attempted to issue the final test procedure prior to the NOPR 
proposing energy conservation standards. However, additional time to 
address comments received on the NOPR and SNOPR lead to modification of 
the test procedure, which caused deviations from the guidance provided 
in 10 CFR part 430, subpart C, Appendix A.
    Currently no energy efficiency performance standards exist for 
ceiling fans, just design standards for certain ceiling fans. In this 
final rule, DOE is setting energy efficiency performance standards in 
terms of a minimum efficiency equation established in the test 
procedure final rule. 81 FR 48620 (July 25, 2016). The test procedure 
final rule established test procedures for an integrated efficiency 
metric measured in cubic feet per minute per watt (CFM/W) that is 
applicable to all ceiling fans for which DOE establishes energy 
conservation standards in this final rule.
    In the July 2016 test procedure final rule, DOE: (1) Specified new 
test procedures for large-diameter ceiling fans, multi-mount ceiling 
fans, ceiling fans with multiple fan heads, and ceiling fans where the 
airflow is not directed vertically, and (2) adopted the following 
changes to the current test procedure: (a) Low-speed small-diameter 
ceiling fans must be tested at high and low speeds; (b) high-speed 
small-diameter ceiling fans must be tested at high speed only; (c) 
large-diameter ceiling fans must be tested at up to five speeds; (d) a 
test cylinder is not to be used during testing; (e) fans that can be 
mounted at more than one height are to be mounted in the configuration 
that minimizes the distance between the fan blades and the ceiling; (f) 
any heater installed with a ceiling fan is to be switched off during 
testing; (g) small-diameter ceiling fans must be mounted directly to 
the real ceiling; (h) the allowable measurement tolerance for air 
velocity sensors is  5%; (i) the allowable mounting 
distance tolerance for air velocity sensors is  1/16''; (j) 
the air delivery room must be at 70 F  5 F during testing; 
(k) air delivery room doors and air conditioning vents must be closed 
and forced-air conditioning equipment turned off during testing; (l) 
low speed small diameter and HSSD fans capable of operating with 
single- and multi-phase power be tested with single-phase power, and 
large diameter fans capable of operating with single- and multi-phase 
power be tested with multi-phase

[[Page 6834]]

power; (m) the supply voltage must be 120 V if the ceiling fan's 
minimum rated voltage is 120 V or the lowest rated voltage range 
contains 120 V; 240 V if the ceiling fan's minimum rated voltage is 240 
V or the lowest rated voltage range contains 240 V; the ceiling fan's 
minimum rated voltage (if a voltage range is not given) or the mean of 
the lowest rated voltage range, in all other cases; (n) measurement 
axes shall be perpendicular to test room walls; and (o) measurement 
stabilization requirements shall be met for a valid test (i.e., average 
air velocity readings in each axis for each sensor are within 5% and 
average electrical power measurement in each axis for each sensor are 
within 1%). DOE also determined that belt-driven ceiling fans, 
centrifugal ceiling fans, oscillating ceiling fans, and ceiling fans 
for which the plane of rotation of the fan blades cannot be within 45 
degrees of horizontal are not subject to the ceiling fan test 
procedure. Manufacturers of highly decorative ceiling fans must use the 
test procedure as described in section III.A.1.

C. Technological Feasibility

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

D. Energy Savings

1. Determination of Savings
    For each trial standard level (TSL), DOE projected energy savings 
from application of the TSL to ceiling fans purchased in the 30-year 
period that begins in the first full year of compliance with any 
amended standards (2020-2049).\16\ The savings are measured over the 
entire lifetime of products purchased in the 30-year analysis period. 
DOE quantified the energy savings attributable to each TSL as the 
difference in energy consumption between each standards case and the 
no-new-standards case. The no-new-standards case represents a 
projection of energy consumption that reflects how the market for a 
product would likely evolve in the absence of amended energy 
conservation standards.
---------------------------------------------------------------------------

    \16\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet models to 
estimate national energy savings (NES) from potential amended standards 
for ceiling fans. The NIA spreadsheet model (described in section IV.H 
of this rulemaking) 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.\17\ 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 rulemaking.
---------------------------------------------------------------------------

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

2. Significance of Savings
    To adopt standards for a covered product, DOE must determine that 
such action would result in significant energy savings. (42 U.S.C. 
6295(o)(3)(B)) Although the term ``significant'' is not defined in the 
Act, the U.S. Court of Appeals, for the District of Columbia Circuit in 
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), indicated that Congress intended ``significant'' 
energy savings in the context of EPCA to be savings that are not 
``genuinely trivial.'' The energy savings for all the TSLs considered 
in this rulemaking, which range from 0.807 quads to 3.738 quads, are 
nontrivial, and, therefore, DOE considers them ``significant'' within 
the meaning of section 325 of EPCA.

E. Economic Justification

1. Specific Criteria
    As noted above, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)) The 
following sections discuss how DOE has addressed each of those seven 
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 
discussed in section IV.J. DOE first uses an annual cash-flow approach 
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the

[[Page 6835]]

regulation--and a long-term assessment over a 30-year period. The 
industry-wide impacts analyzed include (1) INPV, which values the 
industry on the basis of expected future cash flows; (2) cash flows by 
year; (3) changes in revenue and income; and (4) other measures of 
impact, as appropriate. Second, DOE analyzes and reports the impacts on 
different types of manufacturers, including impacts on small 
manufacturers. Third, DOE considers the impact of standards on domestic 
manufacturer employment and manufacturing capacity, as well as the 
potential for standards to result in plant closures and loss of capital 
investment. Finally, DOE takes into account cumulative impacts of 
various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and payback period (PBP) associated with new or amended 
standards. These measures are discussed further in the following 
section. For consumers in the aggregate, DOE also calculates the 
national net present value of the economic impacts applicable to a 
particular rulemaking. DOE also evaluates the LCC impacts of potential 
standards on identifiable subgroups of consumers that may be affected 
disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product in the 
type (or class) compared to any increase in the price of, or in the 
initial charges for, or maintenance expenses of, the covered product 
that are likely to result from a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating cost (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC analysis requires a variety of inputs, such as 
product prices, product energy consumption, energy prices, maintenance 
and repair costs, product lifetime, and discount rates appropriate for 
consumers. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of 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 full 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 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As 
discussed in section IV.H, DOE uses the NIA spreadsheet models to 
project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes, and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards adopted in this final rule would not 
reduce the utility or performance of the products under consideration 
in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It 
also directs the Attorney General to determine the impact, if any, of 
any lessening of competition likely to result from a 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)) To assist the 
Department of Justice (DOJ) in making such a determination, DOE 
transmitted copies of its proposed rule and the NOPR TSD to the 
Attorney General for review, with a request that the DOJ provide its 
determination on this issue. In its assessment letter responding to 
DOE, DOJ concluded that the proposed energy conservation standards for 
ceiling fans are unlikely to have a significant adverse impact on 
competition. DOE is publishing the Attorney General's assessment at the 
end of this final rule.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the 
adopted standards may provide improvements to the security and 
reliability of the nation's energy system. Reductions in the demand for 
electricity also may result in reduced costs for maintaining the 
reliability of the Nation's electricity system. DOE conducts a utility 
impact analysis to estimate how standards may affect the nation's 
needed power generation capacity, as discussed in section IV.M.
    The adopted standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases (GHGs) 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.B.6 of this rulemaking. DOE also 
estimates the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L. To date, this accounting 
for environmental benefits has not had a decisive impact on the outcome 
of any standards rulemaking, which is also the case for today's final 
rule.
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)) To 
the extent interested parties submit any relevant information regarding 
economic justification that does not fit into the other categories 
described above, DOE could consider such information under ``other 
factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the

[[Page 6836]]

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 effect 
potential amended energy conservation standards would have on the 
payback period for consumers. These analyses include, but are not 
limited to, the 3-year payback period contemplated under the 
rebuttable-presumption test. In addition, DOE routinely conducts an 
economic analysis that considers the full range of impacts to 
consumers, manufacturers, the Nation, and the environment, as required 
under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as 
the basis for DOE's evaluation of the economic justification for a 
potential standard level (thereby supporting or rebutting the results 
of any preliminary determination of economic justification). The 
rebuttable presumption payback calculation is discussed in section 
IV.F.8 of this final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regard to ceiling fans. Separate subsections address 
each component of DOE's analyses. DOE also responds to comments 
received on its analyses in this section.
    DOE used several analytical tools to estimate the impact of the 
standards considered in this document. The first tool is a spreadsheet 
that calculates the LCC savings and PBP of amended energy conservation 
standards (the Life-Cycle Cost Analysis spreadsheet). The national 
impacts analysis uses a second spreadsheet set that provides shipments 
forecasts and calculates national energy savings and net present value 
of total consumer costs and savings expected to result from potential 
energy conservation standards (the National Impact Analysis 
spreadsheet). DOE uses the third spreadsheet tool, the Government 
Regulatory Impact Model (GRIM), to assess manufacturer impacts of 
potential standards. These three spreadsheet tools are available on the 
DOE website for this rulemaking: https://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0045. 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 products 
concerned, including the purpose of the products, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the products. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly-available 
information. The subjects addressed in the market and technology 
assessment for this rulemaking include (1) the scope of the rulemaking 
and product 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 ceiling fans. See chapter 3 of the 
final rule TSD for further discussion of the market and technology 
assessment.
    DOE received several comments regarding product classes, and the 
technology options DOE identified that can improve the efficiency of 
ceiling fans. The comments are discussed in the following sections.
1. Product Classes
    DOE divides covered products into classes by: (a) The type of 
energy used by the product; (b) the capacity of the product; or (c) 
other performance-related features that justify different standard 
levels, considering the consumer utility of the feature and other 
relevant factors. (42 U.S.C. 6295(q))
    In the ceiling fans NOPR, DOE proposed seven product classes based 
on the capacity of the product and other performance-related features 
that justify a different standard, considering the utility to the 
consumer. 81 FR 1688. The product classes include: Highly-decorative, 
belt-driven, very-small-diameter, hugger, standard, high-speed small-
diameter and large-diameter ceiling fans. DOE also proposed definitions 
for these product classes in the ceiling fan energy conservation 
standard proposed rule. In the ceiling fan test procedure final rule, 
DOE finalized the definitions for the following types of ceiling fans: 
highly-decorative, belt-driven, very-small-diameter, hugger, standard, 
high speed small-diameter and large-diameter ceiling fans. DOE 
responded to any comments received in response to the ceiling fans NOPR 
regarding the definitions for these type of ceiling fans in the test 
procedure final rule. 81 FR 48620 (July 25, 2016).
    In this final rule, DOE finalizes the product classes proposed in 
the ceiling fans NOPR for the energy conservation standards. DOE 
received several comments to the ceiling fans NOPR regarding the 
product classes that were proposed. Westinghouse stated that they agree 
and appreciate the minor changes made to the product class structure, 
and that the changes make a big difference, particularly regarding 
safety. (Westinghouse, Public Meeting Transcript, No. 133 at p. 21) ALA 
commented that they agreed in general with the product class structure 
proposed in the NOPR. (ALA, No. 137 at p. 4) BAS stated that they are 
generally supportive of the product class structure. (BAS, No. 138 at 
p. 2) However, BAS expressed concern that the product classes may be 
too complex, in particular, comparing the standard fans to HSSD fans. 
The two different methods of tests may provide some confusion to end 
users. Specifically, BAS was concerned that HSSD ceiling fans will be 
tested at one speed, while standard ceiling fans will be tested at two 
speeds (BAS, Public Meeting Transcript, No. 133 at p. 22) (BAS, No. 138 
at p. 2)
    DOE finds that HSSD ceiling fans provide different utility to the 
consumer than standard ceiling fans. HSSD ceiling fans generally 
operate at much higher speeds (in terms of RPM) than standard ceiling 
fans, and are installed in commercial applications. HSSD ceiling fans 
are available in a blade span range similar to standard ceiling fans, 
but an HSSD fan typically provides more airflow at a given blade span 
because it runs at much higher RPMs. Additionally, DOE observed that 
HSSD ceiling fans are generally used in commercial buildings whereas 
standard fans are installed in residential buildings. Therefore, HSSD 
and standard ceiling fans provide distinct utility to different end-
users and are not market substitutes. As a result, establishing 
separate product classes and differing test methods should not provide 
confusion to end-users.
    Also, in general, the product class structure was developed to 
follow the Underwriters Laboratory (UL) ceiling fan existing safety 
standards (UL Standard 507-1999, ``UL Standard for Safety for Electric 
Fans'' (UL 507)).\18\ The UL 507 standard uses both blade thickness and 
maximum tip speed to differentiate fans, such that ceiling fans are 
safe for use in applications where

[[Page 6837]]

the distance between the fans blades and the floor is 10 feet or less. 
While standard ceiling fans are used in locations where blades are 
typically within 10 feet of the floor, HSSD ceiling fans are not and do 
not have to comply with the UL 507 standard. A product class structure 
that is consistent with UL 507 provides a method to differentiate 
standard and HSSD ceiling fans, while still ensuring that the safety 
standards are in place. Simplifying the product class structure without 
using the UL507 standard could result in safety issues.
---------------------------------------------------------------------------

    \18\ Underwriters Laboratories Inc. UL Standard for Safety for 
Electric Fans, UL 507. 1999. Northbrook, IL. http://www.comm-2000.com/ProductDetail.aspx?UniqueKey=8782.
---------------------------------------------------------------------------

    In summary, HSSD ceiling fans provide a different utility to 
consumers compared to standard fans, and that warrants a separate 
product class for these ceiling fans. Therefore, in this final rule, 
DOE continues to define separate product classes for HSSD and standard 
ceiling fans.
    For the reasons discussed above, DOE finalizes the seven product 
classes proposed in the ceiling fans NOPR in this final rule. The 
product classes finalized in this final rule are: Highly-decorative, 
belt-driven, very-small-diameter, hugger, standard, high-speed small-
diameter and large-diameter ceiling fans.
    In the ceiling fans NOPR, DOE did not propose standards for ceiling 
fans in the highly-decorative fan and belt-driven ceiling fan product 
classes. EPCA requires DOE to consider exempting, or setting different 
standards for, certain product classes for which the ``primary 
standards'' are not technically feasible or economically justified. 
EPCA also requires DOE to consider establishing separate exempted 
product classes for highly-decorative fans for which air movement 
performance is a secondary design feature. (42 U.S.C.6295(ff)(6)(B)(i)-
(ii)) DOE did not have data to determine whether standards for belt-
driven ceiling fans were technically feasible and economically 
justified due to the limited number of basic models for belt-driven 
ceiling fans. DOE did not receive any comments regarding these product 
classes and has not received any additional data to analyze potential 
standards for belt-driven ceiling fans. As a result, in this final 
rule, DOE does not set any standards for highly-decorative and belt-
driven ceiling fans.
    DOE is also not establishing performance standards for centrifugal 
ceiling fans, oscillating ceiling fans, or ceiling fans whose blades' 
plane of rotation cannot be within 45 degrees of horizontal fans. In 
the ceiling fan test procedure final rule, DOE stated that those 
ceiling fans are also not subject to the test procedure. 81 FR 48620 
(July 25, 2016).
2. Technology Options
    In the NOPR market and technology assessment, DOE identified 
technology options that would improve the efficiency of ceiling fans, 
as measured by the DOE test procedure. These technology options fall 
into four main categories: (1) More efficient motors, which include 
larger direct-drive single phase induction motors, three-phase 
induction motors, geared brushless DC motors, gearless brushless DC 
motors, and brushless DC motors, and; (2) more efficient blades, which 
include curved blades, airfoil blades, twisted blades, beveled blades, 
blade attachments, alternative blade materials; (3) ceiling fan 
controls, which include occupancy sensors; and (4) fan optimization.
    DOE received no comments in opposition to the technology options 
proposed in the ceiling fans NOPR. However, DOE did receive comments 
regarding including an additional technology option specific to large-
diameter ceiling fans. BAS requested that an additional efficiency 
level be added to represent a large diameter fan using a premium AC 
motor instead of a three-phased geared brushless DC motor. BAS stated 
that premium AC motors are almost as efficient as permanent magnet 
motors. (BAS, Public Meeting Transcript, No. 133 at pp. 35-36)
    In response to BAS's comment, and for the reasons discussed in 
section IV.C.3, DOE added premium AC motor as an additional technology 
option in this final rule to account for the costs and benefits of 
premium AC motors used in ceiling fans in DOE's analysis. Further 
discussion regarding how DOE implemented this technology option in the 
analysis is provided in chapter 5 of the TSD.
    In the absence of adverse comments, DOE analyzed the same 
technology options from the ceiling fans NOPR, as well as the premium 
AC motor technology option specific to large-diameter ceiling fans, in 
this final rule. Table IV.1 provides the list of technology options 
considered in the analysis and their descriptions. The screening 
analysis, which is discussed in the next section, provides further 
discussion on which of these technology options DOE retained as design 
options for the engineering analysis.

             Table IV.1--Technology Options and Descriptions
------------------------------------------------------------------------
      Technology option                       Description
------------------------------------------------------------------------
Fan optimization.............  This represents increasing the efficiency
                                of a fan by adjusting existing fan
                                design features. These adjustments could
                                include changing blade pitch, fine-
                                tuning motor RPM, and/or changing
                                internal motor characteristics.
                               The material, mass, and design/assembly
                                of the motor lamination stack will have
                                an impact on efficiency (via reducing
                                eddy current losses, for example).
                                Similarly, the material, diameter,
                                length, configuration, etc. of the wire
                                in the motor will influence electrical
                                resistance losses inside motor as well
                                as the overall efficiency of the motor.
More efficient motors:
    Larger direct drive        This represents increasing the mass and/
     single-phase induction     or choosing steel with better energy
     motors.                    efficiency characteristics for the
                                stator and rotor stack, improving the
                                lamination design, increasing the cross
                                section and/or length of the copper
                                wiring inside the motor.
    Three-phase induction      Three-phase induction motors have lower
     motors.                    thermal energy losses than the single-
                                phase motors typically found in
                                residential line-power applications.
                                They also have a more even torque on the
                                rotor resulting in a more efficient
                                rotation and less motor ``hum.''
                               However, three-phase power is extremely
                                uncommon in residential applications.
                                For most residences, these types of
                                motors require electronic drive systems
                                that convert single-phase power into a
                                three-phase power supply.
    Brushless DC motor.......  In residential applications, brushless DC
                                motors typically consist of a permanent
                                magnet synchronous AC motor that is
                                driven by a multi-pole electronic drive
                                system. Similar to DC motors, brushless
                                DC motors typically achieve better
                                efficiency than standard AC motors
                                because they too have no rotor energy
                                losses.

[[Page 6838]]

 
    Geared Brushless DC motor  Brushless DC motor fans with geared
                                motors have fan blades attached to the
                                motor via a geared mechanism, which
                                allows the fan blades to rotate at a
                                different speed from the motor.
    Premium AC motor.........  Premium AC motors are NEMA Premium[reg]
                                motors that are highly energy efficient
                                electric motors. A motor can be marketed
                                as a NEMA Premium motor if it meets or
                                exceeds a set of minimum full-load
                                efficiency levels.\19\ Such NEMA motors
                                are available in integral horsepower
                                capacities (i.e., 1 hp+).
    Gearless Brushless DC      Fans with a brushless DC motor that drive
     motor.                     the fan blades directly without the use
                                of a geared mechanism.
More efficient blades:
    Curved blades............  Curved blades are blades for which the
                                centerline of the blade cross section is
                                cambered. Curved blades generally have
                                uniform thickness and no significant
                                internal volume.
    Airfoil blades...........  Airfoil blades use curved surfaces to
                                improve aerodynamics, but the thickness
                                is not uniform and the top and bottom
                                surfaces do not follow the same path
                                from leading edge to trailing edge.
                               Airfoil blades typically do not operate
                                as efficiently in reverse, potentially
                                impacting consumer utility on models
                                where reverse flow was an option.
    Twisted blades...........  Twisted blades reduce aerodynamic drag
                                and improve efficiency by decreasing the
                                blade pitch or twist from where the
                                blade attaches to the motor casing to
                                the blade tip.
    Blade attachments........  Blade attachments refer to upswept blade
                                tips or other components that can be
                                fastened to a fan blade to potentially
                                increase airflow or reduce drag.
    Beveled blades...........  Beveled blades are typically beveled at
                                the blade edges from the motor casing to
                                the blade tip. Beveled fan blades are
                                more aerodynamic than traditional fan
                                blades.
    Alternative blade          Use of alternative materials could enable
     materials.                 more complex and efficient blade shapes
                                (plywood vs. MDF vs. injection-molded
                                resin, for example).
Ceiling fan controls:
    Occupancy sensors........  Occupancy sensors use technologies that
                                detect the presence of people through
                                movement, body heat, or other means.
                                Ceiling fans used with an occupancy
                                sensor could power down if they sense
                                that a room is unoccupied.
    Wind and Temperature       Wind and temperature sensors detect
     Sensors.                   temperature changes in the surrounding
                                space, or potential wind speed
                                reductions below certain thresholds.
                                Ceiling fans could potentially adjust
                                fan speed based on the wind and
                                temperature in the space the ceiling fan
                                is located when coupled with these
                                sensors.
------------------------------------------------------------------------

B. Screening Analysis
---------------------------------------------------------------------------

    \19\ NEMA Premium Motors Information Page: https://www.nema.org/Policy/Energy/Efficiency/Pages/NEMA-Premium-Motors.aspx.
---------------------------------------------------------------------------

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

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

    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, DOE 
will exclude it from further consideration in the engineering analysis. 
The reasons for eliminating any technology are discussed below. The 
subsequent sections include comments from interested parties pertinent 
to the screening criteria, DOE's evaluation of each technology option 
against the screening analysis criteria, and whether DOE determined 
that a technology option should be excluded (``screened out'') based on 
the screening criteria.
    Westinghouse agreed in general with the screened in and screened 
out technologies, and said they appreciated that DOE considered a 
significant amount of stakeholder feedback. (Westinghouse, Public 
Meeting Transcript, No. 133 at p. 46) With the exception of brushless 
DC motors, ALA agreed with DOE's screening analysis for hugger and 
standard ceiling fans. (ALA, No. 137 at p. 6) The discussion regarding 
retaining brushless DC motors as a technology option is provided in 
section IV.B.2.
1. Screened-Out Technologies
    In the ceiling fans NOPR, DOE screened out the following 
technologies: (1) For standard, hugger and VSD ceiling fans: Three-
phase induction motors, occupancy sensors, and blade design elements 
including airfoil blades, beveled blades, twisted blades, blade 
attachments, and alternative blade materials; (2) For HSSD ceiling 
fans: Larger direct-drive single-phase induction motors, three-phase 
induction motors, twisted blades, blade attachments, alternative blade 
materials, and occupancy sensors; (3) For large-diameter ceiling fans: 
Larger direct-drive single-phase induction motors, beveled blades, 
twisted blades, blade attachments, alternative blade materials, and 
occupancy sensors. 81 FR 1688, (January 13, 2016).
    DOE received several comments regarding the screened-out 
technologies, specifically occupancy sensors, and wind and temperature 
sensors. ALA supported screening out occupancy sensors from DOE's 
analysis. According to ALA, while this technology has the potential to 
reduce consumer ceiling fan usage, occupancy sensors would be

[[Page 6839]]

problematic for ceiling fans in bedrooms. (ALA, No. 137 at p. 7) BAS 
stated that in the Lawrence Berkeley National Laboratory (LBNL) study 
cited by DOE in the TSD, more than 50 percent of surveyed people 
indicated there is a ceiling fan operating in an empty room at least 
half of the time. BAS believes that adding occupancy sensors to those 
ceiling fans would dramatically reduce the annual energy use of the 
fan. (BAS, No. 138 at p. 6)
    DOE acknowledges that occupancy sensors have the potential to save 
energy by reducing the number of ceiling fan operating hours. However, 
available data was insufficient for DOE to evaluate any potential 
tradeoff between consumer utility and the energy savings of reduced 
operating hours. DOE also researched the option of introducing 
occupancy sensors in ceiling fans. DOE did not find data to show that 
occupancy sensor can be installed reliably market-wide. Therefore, in 
this final rule, DOE continues to screen out occupancy sensors because 
DOE cannot satisfactorily evaluate the energy savings potential, 
technological feasibility and impact on consumer utility of 
implementing sensors or schedule controls.
    In terms of wind and temperature sensors, Center for the Built 
Environment (CBE) commented that additional research is needed to 
demonstrate to what degree integrated temperature and wind sensors in a 
ceiling fan may save energy with current commercial building controls, 
or standard thermostats found in most homes. (CBE, No. 143 at p. 1) ALA 
agreed with DOE's decision to not include wind or temperature sensors 
as technology options. ALA stated they are not aware of any ceiling 
fans or working prototypes that include integrated wind or temperature 
sensors, or any data that would indicate that these products could lead 
to energy savings in real world applications. (ALA, No. 137 at p. 6) 
BAS stated that many large diameter fan manufacturers offer some sort 
of speed control based on space temperature (Big Ass Fans' SmartSense). 
(BAS, No. 138 at pp. 4-5)
    Similar to occupancy sensors, DOE acknowledges that wind and 
temperature sensors have the potential to save energy by reducing the 
number of ceiling fan operating hours. As BAS stated, there are large-
diameter manufacturers that offer some sort of speed control based on 
space temperature. However, available data is insufficient for DOE to 
evaluate any potential tradeoff between consumer utility and the energy 
savings of reduced operating hours based on implementing controls. DOE 
also did not find data to show that wind and temperature sensors can be 
installed reliably market-wide. Therefore, for this final rule, DOE 
continues to screen out wind and temperature sensors for all ceiling 
fans because DOE cannot satisfactorily evaluate the energy savings 
potential, technological feasibility and impact on consumer utility of 
implementing wind and temperature sensors.
    In the absence of any adverse comments regarding the technology 
options that were screened out in the NOPR, DOE continues to screen-out 
the same technology options from the NOPR in this final rule. 
Specifically, DOE screened out the following technologies in this final 
rule--(1) For standard, hugger and VSD ceiling fans: Three-phase 
induction motors, and blade design elements including airfoil blades, 
beveled blades, twisted blades, blade attachments, and alternative 
blade materials, and occupancy, wind and temperature sensors; (2) For 
HSSD ceiling fans: More efficient direct-drive single-phase induction 
motors, three-phase induction motors, twisted blades, blade 
attachments, alternative blade materials, and occupancy, wind and 
temperature sensors; (3) For large-diameter ceiling fans: More 
efficient direct-drive single-phase induction motors, beveled blades, 
twisted blades, blade attachments, alternative blade materials, and 
occupancy, wind and temperature sensors.
2. Remaining Technologies
    In the ceiling fans NOPR, DOE retained the following technology 
options--(1) For standard, hugger and VSD ceiling fans: Fan 
optimization, larger direct-drive single-phase induction motor and 
brushless DC motors; (2) For HSSD ceiling fans: fan optimization, 
curved blades, airfoil blades and brushless DC motors; (3) For large-
diameter ceiling fans: Fan optimization, airfoil blades, geared 
brushless DC motors and gearless brushless DC motors. 81 FR 1688 
(January 13, 2016).
    DOE received several comments regarding the retained technology 
options. For fan optimization, Westinghouse commented that there are 
always a few changes that can be made to fans to optimize fans, but not 
all of the options can be made or it will result in a completely 
different product. (Westinghouse, Public Meeting Transcript, No. 133 at 
p. 48) DOE recognizes Westinghouse's concern that making changes to a 
ceiling fan to improve performance may result in what the industry or 
consumer would consider a different fan model. DOE defined ``fan 
optimization'' for its analysis as adjusting existing design features. 
These adjustments include adjusting blade pitch, fine-tuning motor rpm, 
and changing internal motor characteristics. DOE does not expect any of 
these adjustments to require significant changes to the appearance, 
materials, or outputs of the fan. Consequently, the optimized fan 
should look and feel almost identical to the non-optimized version of 
the same fan, only consume less energy.
    Regal requested that DC motors be referred to as ``brushless DC 
motors'' instead of just ``DC motors'' in the standard. (Regal, Public 
Meeting Transcript, No. 133 at p. 52) DOE agrees with Regal and 
recognizes that ``brushless DC motors'' is a more accurate technical 
descriptor for these motors. As such, DOE refers to these motors as 
``brushless DC motors'' throughout this final rule notice and 
accompanying TSD.
    For brushless DC motors in standard and hugger ceiling fans, ALA 
commented that they are concerned about the technological feasibility 
of DC motors due to concerns about their reliability and their 
incompatibility with existing wall-mounted controls. (ALA, No. 137 at 
p. 6) Appliance Standards Awareness Project (ASAP), Alliance to Save 
Energy (ASE), American Council for an Energy-Efficient Economy (ACEEE), 
Natural Resources Defense Council (NRDC), and Northwest Energy 
Efficiency Alliance (herein knows as ``Advocates'') claimed they were 
unaware of any data indicating any reliability issues associated with 
DC motors for ceiling fans. (Advocates, No. 142 at p. 4)
    DOE has observed that several ceiling fan manufacturers offer 
small-diameter ceiling fans that use brushless DC motors, and that 
these fans are some of the most efficient small-diameter ceiling fans 
on the market. DOE does acknowledge, however, that brushless DC motors 
are a relatively new technology. Consequently, most small diameter 
ceiling fans that use brushless DC motors that are currently installed 
in the field are early in their expected lifespan and, in turn, any 
reliability issues may become apparent as these fans age. Nevertheless, 
their availability in the market indicates to DOE that brushless DC 
motors meet the screening criteria of technological feasibility, 
practicability to manufacture, install, and service, and no significant 
impacts on utility (including reliability and product availability). 
Consequently, DOE screened in brushless DC motors

[[Page 6840]]

for this final rule for standard and hugger fans. DOE accounted for 
differences in reliability between brushless DC and AC motors in the 
life cycle cost analyses. In addition, the energy conservation standard 
efficiency level adopted in this final rule (see section V.C.1 for 
discussion on TSLs) is consistent with performance achieved by standard 
and hugger ceiling fans that use larger direct-drive single-phase 
induction motors. As a result, any issues, if they exist, with the use 
of brushless DC motors in standard and hugger ceiling fans, should not 
be influenced by this rule.
    For brushless DC motors in VSD ceiling fans, ALA objected to 
screening in this technology option. ALA stated they are not aware of 
any brushless DC motor VSD fans on the market, or currently in 
development, that would provide an acceptable substitute for the 
functionality of AC motors in VSD fans. (ALA, No. 137 at p. 6) Pacific 
Gas and Electric Company (PG&E), Southern California Gas Company 
(SCGC), San Diego Gas and Electric (SDG&E), Southern California Edison 
(SCE), and Arizona Public Service (APS) (herein known as California 
Investor Owned Utilities, or CA IOUs), on the other hand, commented 
that they continue to support the inclusion of brushless DC motor 
technology for all product classes, including VSD ceiling fans. CA IOUs 
also identified several VSD models that use brushless DC motors, 
including Vaxcel F1008, Fanimation MAD3255, and Sunpentown SF-1691C. In 
addition, CA IOUs stated that several pedestal and desk fans that are 
similar in technology, utility, and physical dimensions to VSD ceiling 
fans use brushless DC motors. (CA IOUs, No. 144 at p. 2)
    DOE's understanding from manufacturer interviews is that brushless 
DC motors in VSD ceiling fans could be technologically feasible, as 
brushless DC motors are used in traditional standard and hugger ceiling 
fans. DOE reviewed the list provided by CA IOUs regarding VSD ceiling 
fans with brushless DC motors that are available in the market. The 
Fanimation MAD 3255 ceiling fan model specifications on the Fanimation 
website states that the smallest diameter for the model is 44-inches; 
\20\ therefore, this fan is not a VSD ceiling fan. The Vaxcel F0018 and 
the Sunpentown SF-1619C, however, are VSD ceiling fans that have a 
brushless DC motor. Therefore, DOE confirms that there are VSD ceiling 
fan in the market with brushless DC motors. DOE also did some online 
research regarding pedestal and desk fans that use brushless DC motors, 
and observed that there are several models available in the market at 
blade spans 18 inches or less. Desk fans and pedestal fans are similar 
in utility compared to VSD ceiling fans because they generally provide 
consumers with targeted airflow, and can be used to provide air to 
smaller spaces. However, more importantly, these fans have similar 
physical characteristics to VSD ceiling fans in terms of fan design; 
the fans typically have similar blade spans, similar airflows, and 
similar design (e.g., axial blades and a single motor). Additionally, 
desk fans and VSD fans have similar size constraints for the motor 
housing. Because DOE has observed that brushless DC motors are 
commercially available in VSD ceiling fans, and in desk and pedestal 
fans, DOE concludes that brushless DC motor is practicable to 
manufacture, install, and service that does not have significant 
adverse impacts on utility (including reliability and product 
availability). Therefore, in this final rule, DOE continues to retain 
brushless DC motors as a technology option for VSD ceiling fans. In 
addition, the energy conservation standard efficiency level adopted in 
this final rule (see section V.C.1 for discussion on TSLs) is 
consistent with performance achieved by VSD ceiling fans that use 
larger direct-drive single-phase induction motors. As a result, any 
issues, if they exist, with the use of brushless DC motors in VSD 
ceiling fans, should not be influenced by this rule.
---------------------------------------------------------------------------

    \20\ http://www.fanimation.com/products/index.php/louvre.html.
---------------------------------------------------------------------------

    For the large-diameter product class, BAS requested that an 
additional efficiency level be added with a premium AC motor instead of 
the three-phased geared brushless DC motor. (BAS, Public Meeting 
Transcript, No. 133 at p. 35) DOE acknowledges that for large-diameter 
ceiling fans, premium AC motors and three-phase geared motors are 
readily available in the market. Therefore, DOE retained both 
technology options in the screening analysis because they meet the four 
screening criteria for this final rule.
    Through a review of each technology, DOE concludes that all of the 
other identified technologies listed in this section meet all four 
screening criteria to be examined further as design options in DOE's 
final rule analysis. In summary, DOE retained the following technology 
options: (1) For standard, hugger and VSD ceiling fans: Fan 
optimization, larger direct-drive single-phase induction motors and 
brushless DC motors; (2) For HSSD ceiling fans: Fan optimization, 
curved blades, airfoil blades and brushless DC motors; (3) For large-
diameter ceiling fans: Fan optimization, airfoil blades, premium AC 
motors, geared brushless DC motors and gearless brushless DC motors.
    DOE determined that these technology options are technologically 
feasible because they are being used in commercially-available products 
or working prototypes. DOE also finds that all of the remaining 
technology options meet the other screening criteria (i.e., practicable 
to manufacture, install, and service and do not result in adverse 
impacts on consumer utility, product availability, health, or safety). 
For additional details, see chapter 4 of the final rule TSD.

C. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (MPC) and improved ceiling fan 
efficiency. This relationship serves as the basis for cost-benefit 
calculations for individual consumers, manufacturers, and the Nation.
    In this final rule, for small-diameter ceiling fans (VSD, Standard, 
Hugger and HSSD ceiling fans), DOE performed its analysis in terms of 
incremental increases in efficiency due to the implementation of 
selected design options. DOE selected representative sizes, and for 
each size, DOE identified a baseline efficiency as a reference point 
from which to measure changes resulting from each design option. For 
large-diameter ceiling fans, DOE performed its analysis based on a 
representative data set of ceiling fan performance data. DOE determined 
efficiency as observed in the representative dataset by best-fitting 
lines to the data for fans that incorporate each design option 
analyzed. Efficiency for all ceiling fans is represented in terms of 
the metric finalized in the test procedure. 81 FR 48620 (July 25, 
2016).
    For both small and large-diameter ceiling fans, MPCs for each 
successive design option are based on reverse-engineering, which 
includes product teardowns and a bottom[dash]up manufacturing cost 
assessment. The estimated MPCs also include the costs of controls. DOE 
then developed the relationship between MPC and ceiling fan efficiency; 
this relationship is referred to as a cost-efficiency curve. The 
efficiency ranges from that of the least-efficient ceiling fan sold 
today (i.e., the baseline) to the maximum-technologically feasible 
(max-tech) efficiency level.
    The following is a summary of the method DOE used to determine the

[[Page 6841]]

cost[dash]efficiency relationship for ceiling fans:
     Perform airflow and power consumption tests on a 
representative sample of ceiling fans in each product class.
     Develop a detailed BOM for the tested ceiling fans through 
product teardowns, and construct a ceiling fan cost model.
    DOE used a combination of test data, data from spec sheets, the 
cost model, and feedback from manufacturers to calculate the 
incremental increase in efficiency and cost increase from baseline to 
max-tech. Further details can be found in chapter 5 of the TSD.
1. Standard and Hugger Ceiling Fans
    In the ceiling fans NOPR, DOE combined the cost-efficiency curves 
of flat-blade fans and unconventional-blade fans in the standard and 
hugger product classes to create an aggregate curve for all standard 
ceiling fans and all hugger ceiling fans. DOE used the following design 
options to create the curves: Fan optimization, larger direct drive 
motors, and brushless DC motors. DOE used the maximum efficiency of the 
unconventional-blade fans as the max-tech for the aggregate curve to 
ensure that all types of ceiling fans, including designs with 
unconventional-blades, can achieve the max-tech level of efficiency. 
DOE received several comments on the engineering analysis specific to 
the standard and hugger product classes.
    Advocates commented that the energy savings associated with EL 4 
for standard and hugger fans are likely to be significantly greater 
than shown in the analysis. They stated that it looks like the analysis 
is assuming that the power consumption of a flat-blade fan 
incorporating a DC motor would be equivalent to that of an 
unconventional-blade fan with a DC motor. In practice, it seems very 
unlikely that flat-blade fans with DC motors would not significantly 
exceed the efficiency levels given that DOE's analysis shows that a 
flat-blade fan with a DC motor is 30% more efficient than an 
unconventional-blade fan with a DC motor. (Advocates, No. 142 at p. 4)
    For the NOPR, because DOE set the max-tech efficiency for standard 
and hugger ceiling fan product classes as the max-tech efficiency for 
unconventional-blade fans, DOE also set the power consumption at max-
tech as the max-tech power consumption for unconventional-blade fans to 
match the max-tech efficiency. DOE acknowledges that to comply with the 
EL 4 efficiency for both flat blade fans and unconventional-blade fans, 
manufacturers are likely to employ brushless DC motors. Therefore, at 
the max-tech efficiency, there is potential for energy savings for the 
flat-blade fans. For this final rule, DOE adjusted the power 
consumption at max-tech to include the potential energy savings from 
the flat-blade fans. DOE used the same weighting between flat and 
unconventional blade fans at max tech (i.e., unconventional blade fans 
make up about 2 percent of the market, while flat blade fans are about 
98 percent of the market) as at all the other efficiency levels.
    In the engineering analysis for standard and hugger ceiling fans, 
DOE used an aggregate cost-efficiency curve for flat and unconventional 
blade fans, as opposed to defining two separate product classes, 
because fans with flat blades and fans with unconventional blades are 
functionally indistinguishable. Both fan types move air via the 
rotation of fan blades, improve comfort by this air movement, and can 
be used in similar spaces (unlike the distinction between standard and 
hugger fans, where the former cannot be used in rooms with low 
ceilings). Further, because flat blade and unconventional blade fans on 
the market appear to operate within the same CFM range, they have the 
same product capacity. Therefore, when setting the max-tech for the 
standard and hugger ceiling fan product classes, DOE set it at the max-
tech efficiency for unconventional-blade fans, because this ensures 
that even at max-tech, all types of ceiling fans, including designs 
with unconventional blades, can achieve this level of efficiency.
    Advocates also stated that the costs associated with EL4 for 
standard and hugger fans are likely to be lower than shown in the 
analysis, but did not provide supporting data for this statement. 
(Advocates, No. 142 at p. 4) As described in section IV.C, DOE reverse 
engineered several ceiling fans at EL4 (with brushless DC motors) to 
determine the MPC for that EL. To investigate the Advocates' claims, 
DOE reverse engineered several more brushless DC motor fans, and 
revisited the cost model to review the costs used in the NOPR. Based on 
the review, DOE corroborated the costs presented in the NOPR, rather 
than lower costs. Absent any additional cost data, DOE continues to use 
the MPC results from the NOPR for EL4 for standard and hugger fans in 
this final rule.
    In summary, in this final rule, DOE continues to use the combined 
cost-efficiency curves of flat-blade fans and unconventional-blade fans 
in the standard and hugger product classes to create an aggregate curve 
for all standard ceiling fans and all hugger ceiling fans.
    Since the NOPR, DOE received additional test data for hugger and 
standard fans from manufacturers, which was used in the analysis for 
the final rule. The additional test data was used to update some of the 
efficiency deltas (i.e., the difference in efficiency for a particular 
design option) in the analysis. Additionally, the test data informed 
the conversion factors used to convert efficiencies from ENERGY STAR 
test method, to efficiencies based on testing small-diameter ceiling 
fans using the test method in the July 2016 test procedure final rule 
(i.e., mounting fans directly to the real ceiling). Based on the new 
test data, DOE increased the conversion factors since the NOPR. DOE 
then used these conversion factors to determine the efficiency results 
for the engineering analysis. Further details on the updates to the 
conversion factor is provided in Chapter 5 of the TSD.
2. VSD and HSSD Ceiling Fans
    For the NOPR analysis, DOE was not aware of unconventional blade 
and flat blade fan variations for VSD and HSSD fans, so DOE did not use 
an aggregate curve approach for these ceiling fans. DOE used the same 
design option approach as standard and hugger ceiling fans to determine 
cost-efficiency relationships for all representative sizes in both VSD 
and HSSD product classes. DOE used the following design options for VSD 
ceiling fans to create the curves: Fan optimization, larger direct 
drive single-phase induction motors, and brushless DC motors. DOE used 
the following design options for HSSD ceiling fans to create the 
curves: Fan optimization, curved blades, airfoil blades and brushless 
DC motors.
    DOE did not receive any specific comments on the engineering 
approach used for the VSD product class. However, DOE received several 
comments specific to the HSSD engineering analysis. Westinghouse 
commented that they were concerned with the additive approach used in 
calculating cost differences for the HSSD efficiency levels. They 
stated that the approach may not be fully calculating or capturing what 
the true cost increase will be. (Westinghouse, Public Meeting 
Transcript, No. 133 at p. 92)
    DOE interprets Westinghouse's comment to mean that the full cost 
for the ELs with multiple design options is not being captured in the 
engineering analysis. As described in section IV.C, DOE developed the 
manufacturer production costs based on actual

[[Page 6842]]

product teardowns. When actual torn down models were not available for 
certain design options, DOE estimated costs based on materials and 
manufacturing processes necessary for each design option, and by using 
input from manufacturers. DOE performed this analysis through a catalog 
teardown, which uses published manufacturer product literature and 
supplementary component data to estimate the costs of major physical 
differences between the catalog teardown unit and a similar physical 
teardown unit. Some efficiency levels are consistent with performance 
of ceiling fans that use multiple design options, such as fan 
optimization and larger direct-drive single-phase induction motors. 
When determining the MPCs for efficiency levels that incorporate 
several design options, DOE's engineering analysis incorporates the 
costs of all design options included in that efficiency level (i.e., 
the additive approach) added to the baseline MPC. The result, 
therefore, includes all of the production costs associated with 
manufacturing a baseline fan and all the incremental costs of adding or 
substituting technology options to improve efficiency. Westinghouse did 
not identify specific costs not captured by DOE's analysis, or provide 
information to support a contention that the additive approach does not 
fully calculate or capture the actual cost increase. Absent additional 
information, DOE concludes that its MPC estimates capture all 
manufacturing costs applicable to the efficiency levels analyzed. See 
chapter 5 of the final rule TSD for further discussion on the HSSD 
ceiling fan engineering analysis, which includes details about the 
costs included in DOE's MPC estimates. DOE did increase the conversion 
costs for all ceiling fans as part of the MIA. See section IV.J.2.a for 
further discussion on manufacturer conversion costs.
    Westinghouse also asked if DOE had considered reordering the HSSD 
efficiency levels to have EL3 with DC motor and with flat metal blade 
followed by EL4 with DC motor and airfoil blades instead of adding the 
airfoil blades in EL3 and DC motor in EL4. Westinghouse commented that 
this is different from hugger and standard fans, where the motor 
options are what drive the cost. They stated that the airfoil blade is 
a high cost adder with not the same payback as a motor upgrade would 
be. (Westinghouse, Public Meeting Transcript, No. 133 at p. 113) 
Fanimation agreed with Westinghouse's comments. (Fanimation, Public 
Meeting Transcript, No. 133 at pp. 113-114) ALA commented that they are 
skeptical of DOE's estimate of the net benefits that DC motor-based fan 
provide to consumers, and generally believe that DC motor-based ceiling 
fan efficiency standards, like DOE's proposed TSL 4-based standard for 
HSSD fans, are not technologically feasible. Additionally, ALA stated 
that DOE's proposed max-tech standard is not economically justified 
because it relies upon the airfoil blade design option, which is not 
economically justified. ALA stated that if DOE declines to adopt a 
standard at EL 3 or below for HSSD fans, DOE should consider adopting a 
standard for HSSD fans based on an efficiency level that corresponds to 
the fan optimization and DC motor design options, without the use of 
curved blades or airfoil blades. (ALA, No. 137, pp. 2-3)
    Pursuant to EPCA, DOE must adopt standards that achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) To do this, DOE first 
establishes TSLs by combining specific efficiency levels for each of 
the product classes analyzed. Higher TSLs generally consist of a 
combination of higher efficiency levels for each product class, and the 
highest TSL generally represents the max-tech efficiency level for all 
product classes. Therefore, higher TSLs typically represent higher 
potential energy savings. (See section V.A for more details on TSLs 
chosen for this rulemaking). DOE then considers the impacts of amended 
standards for ceiling fans at each TSL beginning with the maximum 
technologically feasible level, to determine whether that level is 
economically justified. Where the max-tech level is not justified, DOE 
then ``walks down'' to the next most efficient level and conducts 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.
    For this final rule, TSLs 4 and 5 correspond to the max-tech 
efficiency level for HSSD ceiling fans.\21\ Therefore, when DOE 
performed a walk-down from TSL 5 and determined that TSL 4 would result 
in the maximum improvement in energy efficiency that was 
technologically feasible and economically justified (see section 
V.C.1), the efficiency level for HSSD ceiling fans still corresponded 
to the max-tech EL for HSSD ceiling fans. Because TSL 4 is justified, 
EPCA prohibits DOE from considering TSL 3, which included a lower 
efficiency level for HSSD ceiling fans (EL 3, which included only 
airfoil blades and fan optimization as design options on a baseline 
fan). Thus, the change to the order of the efficiency levels for HSSD 
ceiling fans suggested by Westinghouse would not change the results of 
DOE's walkdown analysis. Therefore, DOE has not analyzed an alternate 
EL3 with a brushless DC motor and with flat metal blades in this final 
rule.
---------------------------------------------------------------------------

    \21\ For HSSD ceiling fans, the max-tech efficiency level 
analyzed included fan optimization, airfoil blades and a brushless 
DC motor as design options on a baseline fan.
---------------------------------------------------------------------------

    Since the NOPR, DOE received additional test data for hugger and 
standard fans from manufacturers that was used in the analysis for the 
final rule. The additional test data was used to update some of the 
efficiency deltas in the analysis. Because some of the VSD and HSSD 
efficiency deltas are dependent on the standard and hugger analysis, 
the engineering results for VSD and HSSD analyses were updated 
accordingly. Further details on the engineering analysis is provided in 
Chapter 5 of the TSD.
3. Large-Diameter Ceiling Fans
    In the NOPR, DOE used a combination of the reverse[dash]engineering 
and design option approach for the large-diameter ceiling fan 
engineering analysis. DOE relied on test data and feedback from 
manufacturers to determine energy ELs to analyze. DOE estimated 
baseline ceiling fan efficiencies based on test data for large-diameter 
ceiling fans at intermediate ELs adjusted by efficiency deltas. After 
establishing the baseline efficiency for large-diameter ceiling fans, 
DOE applied efficiency deltas associated with each design option to the 
baseline to calculate the efficiency consistent with performance of 
large-diameter ceiling fans that use each design option from baseline 
to max-tech. In DOE's analysis, efficiency deltas are estimated 
differences in ceiling fan efficiency based on comparing performance of 
ceiling fans that use different technology options, but are otherwise 
identical. This analysis resulted in an efficiency curve, as a function 
of ceiling fan diameter, for each efficiency level.
    During the NOPR public meeting, BAS requested that an additional 
efficiency level be added to represent large-diameter ceiling fans that 
use a premium AC motor instead of a three-phased geared brushless DC 
motor, and stated that the premium AC motors are almost as efficient as 
permanent magnet motors. (BAS, Public Meeting Transcript, No. 133 at 
pp. 35-36)
    DOE received test data from BAS that included ceiling fans using 
premium AC

[[Page 6843]]

motors. After evaluating the data, DOE confirmed BAS's assertions that 
large-diameter ceiling fans that use premium AC motors have comparable 
efficiencies to those that use geared brushless DC motors. In addition, 
DOE conducted a teardown analysis, which estimated that ceiling fans 
with a premium AC motor have lower MPC than ceiling fans with a geared 
brushless DC motor. Therefore, DOE expects that manufacturers would use 
the lower-cost premium AC motors instead of geared brushless DC motors 
to meet a standard that is consistent with the performance of ceiling 
fans that use either of these technologies. Consequently, DOE replaced 
the geared brushless DC motor design option with premium AC motors for 
EL 3 in this analysis to reflect this expectation.
    In addition to the test data for fans with premium AC motors, DOE 
also received additional test data from BAS for the other efficiency 
levels analyzed in the analysis. With this data, DOE's database of 
large-diameter fan performance includes 87 ceiling fans at EL 2, EL 3 
and EL 4, comprising of ceiling fans from six different manufacturers, 
and with blade spans of 8, 10, 12, 14, 16, 18, 20 and 24 feet. Due to 
the large number of ceiling fans, the range of efficiency levels, and 
the variety of manufacturers, DOE determined that this dataset is 
representative of the EL 2, EL 3 and EL 4 large-diameter ceiling fans 
in the market.
    A representative dataset allowed DOE to shift from the design 
option approach used in the NOPR (i.e., evaluating technology pairs to 
determine efficiency deltas associated with each design option) to an 
efficiency-level approach (i.e., representing efficiency as observed in 
the representative dataset by using best-fit lines for each technology 
option analyzed). In its dataset, DOE observed a broad range of 
efficiencies in ceiling fans with a gearless brushless DC motor and 
airfoil blades (i.e., max-tech), and a narrow range of efficiencies in 
ceiling fans either with airfoil blades (i.e., EL 2) or with a premium 
AC motor and airfoil blades (i.e., EL3). This change in methodology 
also updated the engineering results for the large-diameter analysis. 
Further discussion regarding the efficiency-level approach and the 
engineering results for large-diameter ceiling fans is provided in 
chapter 5 of the TSD.
    During the NOPR public meeting, BAS recommended that efficiencies 
be gauged using a CFM/W curve as a function of airflow for each 
diameter. This would essentially require a CFM per watt standard 
equation as a function of airflow at every diameter available. (BAS, 
Public Meeting Transcript, No. 133 at p. 39) In written comments, BAS 
stated that the fundamental assumption that all ceiling fans of the 
same diameter move the same amount of air is untrue, allows inefficient 
low airflow products to remain on the market, and creates an upper 
limit to ceiling fan performance at each diameter. (BAS, No. 138 at p. 
12) BAS further urged DOE to consider a metric that will not eliminate 
high efficiency, high utility ceiling fans from the market. BAS 
recommended that an efficiency metric based on ceiling fan diameter and 
maximum airflow be used to provide energy savings across all airflows 
and diameters, while still allowing the continued development of high 
utility products. (BAS, No. 138 at p. 15) In this discussion, DOE 
understood BAS' use of the phrase ``high utility ceiling fans'' to mean 
ceiling fans with high maximum airflows. The Advocates also encouraged 
DOE to consider standards for large-diameter ceiling fans that take 
both diameter and airflow into account. According to the Advocates, by 
taking only diameter into account in establishing ELs for large-
diameter ceiling fans, the standards may have little impact on ceiling 
fans that deliver relatively low airflow rates, while simultaneously 
prohibiting ceiling fans of the same diameter that deliver higher 
airflow rates than those assumed in the analysis. (Advocates, No. 142 
at pp. 1-2)
    DOE's understanding of both BAS and Advocates concern is that an 
efficiency standard only based on diameter only could disproportionally 
impact ceiling fans that deliver higher airflows, compared to those 
that deliver lower airflows. To investigate this further, DOE analyzed 
the test data provided by BAS, in addition to DOE's own test data of 
large-diameter ceiling fans.
    DOE began its analysis by confirming that the relationship between 
diameter and ceiling fan efficiency is an appropriate basis for an 
energy efficiency standard. DOE plotted a best fit line between 
diameter and efficiency of all the ceiling fans at max-tech and 
observed a R\2\ correlation of 0.51 between diameter and efficiency. 
DOE conducted a similar exercise for ceiling fans at EL 2 and EL 3. At 
these ELs, however, DOE observed a narrower range of efficiencies at 
each diameter, which resulted in better R\2\ correlations of 0.87 and 
0.97 for EL 2 and EL 3, respectively, compared to max-tech. Therefore, 
the greater variation in max-tech test data suggests that the variation 
in efficiency with airflow is much greater for ceiling fans with 
gearless brushless DC motors than those with AC motors. DOE realizes 
that the data for EL 4 ceiling fans is more scattered meaning that not 
all ceiling fans produce the same amount of airflow and that airflow 
has a direct effect on the efficiency of ceiling fans. However, for EL 
2 and EL 3, the tight range of efficiency and airflow data at EL 2 and 
EL 3 suggests that the slope from the best fit line is a good 
representation of the relationship between efficiency and diameter.
    For this final rule, the energy conservation standard efficiency 
level adopted is consistent with performance achieved by large-diameter 
ceiling fans with EL 3 characteristics. See section V.C.1 for 
discussion on TSLs. Therefore, DOE believes that the relationship 
between diameter and efficiency is an appropriate basis for an energy 
efficiency standard. However, based on the data, DOE did observe that 
there were some high airflow ceiling fans that might be 
disproportionally disadvantaged based on a standard using the best fit 
line. Therefore, to preserve consumer utility that require ceiling fans 
with high airflow, DOE decreased the y-intercept of the best fit 
equations, while maintaining the slopes. DOE aimed to preserve consumer 
utility by maintaining the maximum airflow produced at each diameter, 
or identify a close alternative, by shifting the equation downwards.
    For each of the eight diameters analyzed (ranging from 8-24 feet), 
DOE identified the ceiling fan with the maximum tested airflow from all 
efficiency levels. At two of the eight diameters, a ceiling fan at EL 2 
produces the largest airflow, and at the other six diameters, a ceiling 
fan at EL 3 produces the maximum airflow. At three of the eight 
diameters, the fan with the highest airflow achieves the efficiency 
level established in this final rule.
    For the other five diameters, where the highest airflow ceiling fan 
does not meet the established standard level, DOE identified the 
ceiling fan with the highest airflow that achieves the standard level 
and compared it to the ceiling fan with the maximum airflow at that 
diameter. DOE calculated the percentage of maximum airflow for these 
ceiling fans to determine whether the EL 3 standard is still achievable 
with an EL 3 ceiling fan, without eliminating ceiling fans with high 
maximum airflows. DOE further investigated any diameter where the 
maximum airflow ceiling fan did not achieve the standard level, in 
order to see if the maximum airflow or a close alternative could be 
achieved. At two of the remaining five diameters, the ceiling fan with 
the highest airflow that achieved the standard level produced 99

[[Page 6844]]

percent of the airflow recorded for the ceiling fan with the maximum 
airflow. At two other diameters, the ceiling fans that meet the 
standard produced 90 percent of airflow of the highest airflow ceiling 
fan. For the last diameter, the highest airflow of a ceiling fan 
achieving the standard was 85 percent of the ceiling fan with the 
maximum airflow. The lower percentages at the three diameters may be a 
representation of smaller sample size, and not an outcome of the 
stringency of the standard.
    For the reasons mentioned, DOE believes that the high efficiency, 
high airflow ceiling fans will not be eliminated from the market when 
using the shifted best fit equation. Therefore, DOE continued with the 
methodology outlined in the NOPR by adopting a standard equation that 
is only a function of diameter, and not airflow.
    BAS commented that the repair costs should be separated for the 
geared and gearless versions for DC motors used in the large-diameter 
analysis. BAS stated that the gearless DC motor will take more hours to 
service than the geared motor because the entire fan assembly has to be 
removed to repair the gearless motor. (BAS, Public Meeting Transcript, 
No. 133 at p. 99) BAS also stated that efficiency losses resulting from 
gearboxes are generally less than 5 percent, not 20 percent. (BAS, 
Public Meeting Transcript, No. 133 at p. 31)
    In the final rule, DOE replaced the geared brushless DC motor with 
the premium AC motor for efficiency level 3. Therefore, these comments 
do not affect the large-diameter analysis in the final rule.
4. Reducing Fan Speed To Improve Efficiency
    In the NOPR analysis, DOE had requested comments on what an 
acceptable reduction of fan speed may be to improve ceiling fan 
efficiency such that it does not affect consumer utility for each of 
the proposed product classes. DOE received several comments regarding 
this topic.
    CBE stated that, based on CBE laboratory tests, at least one 
ceiling fan tested is more efficient at lower speed. However, limiting 
the maximum air speed would not satisfy human comfort at higher 
temperatures. CBE suggested that one way to avoid this may be setting a 
limit for the maximum air speed for a ceiling fan, while requiring that 
the energy efficiency standard be met as well. (CBE, No. 143 at p. 1) 
BAS commented that a decrease of 50% in airflow nets an approximate 
gain of 220% on efficiency, but would result in a dramatic reduction in 
cooling effect and consumer utility. BAS stated that the impact of the 
reduced performance will likely not be known to the consumer because 
there are no guidelines, equations or standards that allow consumers to 
translate CFM into cooling effect. BAS felt this would be especially 
true if the labeling requirements do not prominently display the 
maximum CFM of the fan. (BAS, No. 138 at p. 7) ALA stated they do not 
believe that reducing fan speeds available to a consumer is a viable 
way to improve efficiency because reducing fan speed directly impairs 
consumer utility. ALA therefore agreed with DOE's statement in the 
NOPR, that ``manufacturers will not reduce airflow to levels that are 
unacceptable when other cost-justified pathways to compliance are 
available.'' (ALA, No. 137 at p. 7) CA IOUs asked whether companies may 
simply reduce their fans' RPMs in order to meet the efficiency 
standard, and ASAP suggested that in such a case, consumers may run 
their fans at higher speeds, thereby reducing the energy savings from 
the standard. (CA IOUs, Public Meeting Transcript, No. 133 at p. 159; 
ASAP, Public Meeting Transcript, No. 133 at pp. 154-155) Westinghouse 
responded by suggesting that manufacturers that try to meet the 
standard by reducing the utility (i.e., airflow) of their fans would 
lose business. (Westinghouse, Public Meeting Transcript, No. 133 at pp. 
155-156) In addition, Westinghouse noted that if a manufacturer tried 
to make an obsolete product simply to meet the standard, demand for the 
product would wane over time and competition would publicize how that 
manufacturer's products are lacking in performance. (Westinghouse, 
Public Meeting Transcript, No. 133 at pp. 158-159)
    DOE understands that slowing down a fan can significantly reduce 
energy consumption. However, DOE also recognizes that airflow, which 
diminishes at lower fan speeds, factors heavily into consumer utility. 
DOE observes that the airflow produced by commercially available fans 
of the same diameter varies. While DOE interprets this to mean that 
some variation in airflow at a given diameter is acceptable to the 
market and does not represent a reduction in utility, DOE did not 
include slowing down the fan as a design option to avoid setting 
standards that may result in reduced utility. Leaving out reducing fan 
speed as a design option ensures that manufacturers can meet the level 
adopted by this final rule in a cost-justified manner without reducing 
fan speed. While manufacturers may opt to do so, it is unlikely that 
many will due to the market pressures identified by Westinghouse. In 
addition, the FTC is primarily responsible for labeling, and issued 
amendments to the ceiling fan label for all ceiling fans except large-
diameter and HSSD ceiling fans on September 15, 2016. 81 FR 63634. The 
ceiling fan label includes a prominent display of the CFM based on 
typical use of a ceiling fan. The FTC is planning to seek comments on 
the need for, and content of, fan labels for large-diameter and HSSD 
ceiling fans in a separate notice. 81 FR 63634, 63637.
5. Standard Level Equations
    In the ceiling fans NOPR, DOE proposed best-fit linear standard 
level equations in terms of ceiling fan diameter, based on the 
efficiency results for the representative sizes analyzed for each 
product classes. The linear standard level equations were established 
so that the proposed minimum efficiencies could be calculated for all 
ceiling fan diameters within a product class. DOE received a comment 
regarding the standard level equations proposed.
    In general, ALA commented that DOE should, in adopting final 
efficiency standards for ceiling fans, clarify that the efficiency 
equation found in the table in proposed 10 CFR Sec.  430.32(s)(2) 
represents minimum ceiling fan efficiency. (ALA, No. 137 at p. 3) DOE 
appreciates the comment from ALA, and has updated references to the 
standard level equations in this final rule to clarify that it 
represents minimum ceiling fan efficiency.
    In this final rule, DOE continues to develop standard level 
equations based on diameter for all product classes. As discussed in 
the ceiling fans NOPR, DOE believes that blade diameter is a better 
proxy for utility than airflow. The size of a fan determines the 
cooling area, impacts room aesthetics, and determines if a fan 
physically fits into a room. Literature published by manufacturers 
clearly indicates that blade span is an important criterion for 
consumer fan selection. Manufacturers include sizing guides in 
published product literature to instruct consumers on how to properly 
size a fan for a given room size. These fan sizing guides specify the 
affected square footage of a room based on fan blade diameter. DOE did 
not find such guides for other ceiling fan characteristics such as 
airflow.
    Therefore, based on the updates to the engineering analyses 
described in sections IV.C.1 through IV.C.3 for all product classes, 
DOE also updated the best-fit linear standard level equations.

[[Page 6845]]

    DOE is not aware of commercially available VSD fan models below 12 
inches in diameter. However, extending a best-fit linear equation below 
12 inches for VSD would result in minimum ceiling fan efficiency 
standards below 0 CFM/Watt at near 0 inch diameters. In this final 
rule, DOE is continuing to use a best-fit linear equation for VSD fans 
12 inches in diameter and above (the range in which all known 
commercially-available VSD models currently exist). However, DOE is 
extending the minimum ceiling fan efficiency required at 12 inches to 
all VSD fans below 12 inches in diameter to avoid standards 0 CFM/Watt 
and below for any VSD models that may exist in this range.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., 
manufacturer markups, retailer markups, distributor markups, contractor 
markups) in the distribution chain and sales taxes to convert the MPC 
estimates derived in the engineering analysis to consumer prices, which 
are then used in the LCC and PBP analysis and in the manufacturer 
impact analysis. At each step in the distribution channel, the markups 
are multipliers that are applied to the purchase cost to cover business 
costs and profit margin.
    DOE characterized four distribution channels to describe how 
standard, hugger and VSD ceiling fans pass from manufacturers to 
consumers. These four distribution channels can be characterized as 
follows:

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

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

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

    The second distribution channel for large-diameter and HSSD ceiling 
fans is a direct sale channel where the manufacturer sells the product 
directly to a customer through its in-house dealer. DOE assumed the 
markup for in-house dealers is the same as the conventional dealer 
markup; therefore, the overall markup for these two distribution 
channels is the same.
    To account for manufacturers' non-production costs and profit 
margin, DOE applied the manufacturer markup to the full MPC derived in 
the engineering analysis. The resulting manufacturing selling price 
(MSP) is the price at which the manufacturer can recover all production 
and non-production costs and earn a profit. To meet new or amended 
energy conservation standards, manufacturers typically introduce design 
changes to their product lines, which increase manufacturer production 
costs. As production costs increase, manufacturers typically incur 
additional overhead.
    To calculate the manufacturer markups, DOE reviewed 10-K reports 
\22\ submitted to the U.S. Securities and Exchange Commission (SEC) by 
publicly-owned ceiling fan companies. The financial figures necessary 
for calculating the manufacturer markup are net sales, costs of sales, 
and gross profit. Few ceiling fan manufacturing companies are publicly 
owned, and most of the publicly-owned ceiling fan manufacturing 
companies are subsidiaries of more diversified parent companies, so the 
financial information summarized may not be exclusively for the ceiling 
fan portion of their business and can also include financial 
information from other product sectors. DOE discussed the manufacturer 
markup with manufacturers during interviews, and used product specific 
feedback on market share, markups and cost structure from manufacturers 
to adjust the manufacturer markup calculated through review of SEC 10-K 
reports.
---------------------------------------------------------------------------

    \22\ U.S. Securities and Exchange Commission, Annual 10-K 
Reports (various years between 2007 and 2013), available at http://sec.gov.
---------------------------------------------------------------------------

    To develop markups for the market participants involved in the 
distribution of ceiling fans, DOE utilized several sources, including: 
(1) The SEC 10-K reports and U.S. Census Bureau's annual retail trade 
survey for building material and supplier dealer industry \23\ (to 
develop home improvement center markups); (2) the U.S. Census Bureau's 
annual wholesale trade report for electrical and electronic appliance, 
television, and radio set merchant wholesaler industry \24\ (to develop 
wholesaler markups); (3) 2014 RSMeans Electrical Cost Data \25\ (to 
develop contractor markups); and (4) the SEC 10-K reports (to develop 
dealer markups).
---------------------------------------------------------------------------

    \23\ U.S. Census Bureau. 2012 Annual Retail Trade Survey. 
Building Material and Supplier Dealer. 2012 (Last Accessed April 22, 
2015) http://www.census.gov/retail/arts/historic_releases.html.
    \24\ U.S. Bureau of the Census. 2012 Annual Wholesale Trade 
Report, NAICS 423620: Electrical and Electronic Appliance, 
Television and Radio Set Merchant Wholesaler. 2012. Washington, DC. 
(Last Accessed April 22, 2015) http://www.census.gov/wholesale/index.html.
    \25\ RS Means Company Inc. Electrical Cost Data: 36th Annual 
Edition. 2014. Kingston, MA.
---------------------------------------------------------------------------

    To develop the markups when home centers serve as both brand 
manufacturer and retailer, DOE relied upon input from an industry 
expert.\26\
---------------------------------------------------------------------------

    \26\ Mehta, V. Independent ceiling fan industry consultant. 
Personal communication. E-mail to Colleen Kantner, LBNL. November 
24, 2013.
---------------------------------------------------------------------------

    For each of the market participants, DOE developed baseline and 
incremental markups based on the product markups at each step in the 
distribution chain. The baseline markup relates the change in the MSP 
of baseline models to the change in the consumer purchase price. The 
incremental markup relates the change in the MSP of higher-efficiency 
models (the incremental cost increase) to the change in the consumer 
purchase price.
    In addition to the markups, DOE derived state and local taxes from 
data provided by the Sales Tax Clearinghouse.\27\ 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.
---------------------------------------------------------------------------

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

    Chapter 6 of the final rule TSD provides details on DOE's 
development of markups for ceiling fans.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of ceiling fans at different efficiency levels in

[[Page 6846]]

representative U.S. homes and commercial buildings, and to assess the 
energy savings potential of increased ceiling fan efficiency. To 
develop annual energy use estimates, DOE multiplied ceiling fan input 
power by the number of hours of use (HOU) per year. The energy use 
analysis estimates the range of operating hours of ceiling fans in the 
field (i.e., as they are actually used by consumers). The energy use 
analysis provides the basis for other analyses that DOE performed, 
particularly assessments of the energy savings and the savings in 
consumer operating costs that could result from adoption of amended 
standards.
1. Inputs for Standard, Hugger, and VSD Ceiling Fans
a. Sample of Purchasers
    As in the NOPR analysis, DOE has included only residential 
applications in the energy use analysis of standard, hugger, and VSD 
ceiling fans. DOE used the Energy Information Administration (EIA) 2009 
Residential Energy Consumption Survey (RECS) \28\ to choose a random 
sample of households in which new ceiling fans could be installed. RECS 
is a national sample survey of housing units that collects statistical 
information on the consumption of, and expenditures for, energy in 
housing units, along with data on energy-related characteristics of the 
housing units and occupants. RECS collected data on 12,083 housing 
units, and was constructed by EIA to be a national representation of 
the household population in the United States.
---------------------------------------------------------------------------

    \28\ U.S. Department of Energy-Energy Information 
Administration. 2009 RECS Survey Data. (Last accessed May 3, 2016.) 
http://www.eia.gov/consumption/residential/data/2009/.
---------------------------------------------------------------------------

    In creating the sample of RECS households, DOE used the subset of 
RECS records that met the criterion that the household had at least one 
ceiling fan. DOE chose a sample of 10,000 households from RECS to 
estimate annual energy use for standard, hugger, and VSD ceiling fans. 
Because RECS provides no means of determining the type of ceiling fan 
in a given household, DOE used the same sample for the standard, 
hugger, and VSD product classes.
b. Operating Hours
    As in the NOPR analysis, DOE used data from an LBNL study \29\ that 
surveyed ceiling fan owners to estimate the total daily operating hours 
for each sampled RECS household. In that study, the authors asked a 
nationally representative sample of more than 2,500 ceiling fan users 
to report their ceiling fan operating hours for high, medium, and low 
speeds. The LBNL study reported a distribution of operating hours, with 
an average of 6.45 hours of operation per day. The operating hours for 
each sample household were drawn from the distribution of operating 
hours reported in the LBNL study, and further apportioned into 
operating hours at different fan speeds.
---------------------------------------------------------------------------

    \29\ Kantner, C. L. S., S. J. Young, S. M. Donovan, and K. 
Garbesi. Ceiling Fan and Ceiling Fan Light Kit Use in the U.S.--
Results of a Survey on Amazon Mechanical Turk. 2013. Lawrence 
Berkeley National Laboratory: Berkeley, CA. Report No. LBNL-6332E. 
http://www.escholarship.org/uc/item/3r67c1f9.
---------------------------------------------------------------------------

    As in the NOPR analyses, DOE estimated that the average fraction of 
time that standard, hugger, and VSD ceiling fans were operated at each 
speed was equal to the simple average of the fractions reported by the 
LBNL survey and an AcuPOLL \30\ survey submitted by ALA in response to 
the ceiling fan test procedure NOPR. This average yields an estimate of 
33 percent of time spent in active mode on high speed, 38 percent on 
medium speed, and 29 percent on low speed. In written comments received 
in response to the NOPR, Westinghouse and ALA indicated agreement with 
these estimated average hours of use for standard, hugger, and VSD 
ceiling fans. (Westinghouse, Public Meeting Transcript, No. 133 at p. 
79; ALA, No. 137 at p. 8)
---------------------------------------------------------------------------

    \30\ AcuPOLL[supreg] Precision Research, Inc. Survey of Consumer 
Ceiling Fan Usage and Operations. 2014.
---------------------------------------------------------------------------

    For the final rule, DOE refined the NOPR approach by accounting for 
a distribution in operating hours spent at each speed.\31\ 
Specifically, for each sampled household, the fraction of time that the 
fan spends at each of low and medium speed was drawn from a uniform 
distribution over the interval between zero and twice the average 
fraction of time for that speed. Since the sum of fractions of time 
spent at each speed must equal one, the fraction of time spent at high 
speed is simply given by the remaining fraction. DOE then used these 
fractions to apportion the total hours of use into hours of use at 
high, medium and low speeds.
---------------------------------------------------------------------------

    \31\ For the final rule, DOE used a distribution of operating 
hours at each speed, rather than an average, to better represent the 
distribution of impacts on a sample of 10,000 households. The 
average time at each speed from the distribution is unchanged from 
average value used in the NOPR analysis.
---------------------------------------------------------------------------

c. Power Consumption at Each Speed and Standby
    DOE determined the power consumption at high, medium, and low speed 
for each representative fan size in the engineering analysis. These 
values are shown in chapter 5 of the final rule TSD. DOE estimated that 
all ceiling fans with brushless DC motors expend standby power, and 
that 7 percent of standard, hugger, and VSD ceiling fans with AC motors 
come with a remote, and therefore consume power while in standby mode. 
DOE further estimated 0.7 watts as the power consumption value for 
standby for all representative fans belonging to the standard, hugger, 
and VSD product classes, based on testing conducted in association with 
developing the engineering analysis.
    BAS commented that the percentage energy savings for ceiling fans 
with occupancy sensors will be similar to that of lighting systems with 
occupancy sensors and that this similarity could be used to estimate 
savings from ceiling fans with occupancy sensors. (BAS, No. 138 at p. 
5) DOE acknowledges that occupancy sensors have the potential to have 
an impact on the energy consumption of ceiling fans. However, available 
data is insufficient for DOE to determine what impact occupancy sensors 
may have on energy use in practice. In the absence of supporting data 
or evidence to substantiate energy savings, DOE does not believe it is 
appropriate to assume ceiling fans and lighting systems to have similar 
percentage energy savings. Furthermore, occupancy sensors have been 
screened out of the final rule analysis (see section IV.B.1), and it is 
unclear if fans with occupancy sensors will make up a non-negligible 
portion of the market in the future, especially in the residential 
sector.
    The CA IOUs indicated that many hugger, standard, and VSD ceiling 
fans with brushless DC motors have six speeds, not three speeds. 
Therefore, the CA IOUs recommended that DOE consider incorporating the 
advantages of six-speed ceiling fans by averaging the performance 
characteristics at the lowest two speeds, the middle two speeds, and 
the highest two speeds as proxies for the currently-proposed low-speed 
setting, middle-speed setting, and high-speed setting, respectively. 
(CA IOUs, No. 144 at p. 3) As previously mentioned, in the energy use 
analysis, DOE used the power consumption estimates developed for each 
representative fan in the engineering analysis. In the engineering 
analysis, power consumption estimates at high, medium, and low speed 
were developed based on the test method set forth in the test procedure 
final rule (CITE). Consistent with the test procedure final rule, 
testing was conducted at the lowest and highest speed for fans for with 
brushless DC motors. Testing was not conducted at the other four fan

[[Page 6847]]

speeds. Power consumption at medium speed for such fans was estimated 
based on scaling the power consumption at the middle speed setting from 
representative fans with three speeds. The specific distribution of 
time between the six fan speeds commonly had by DC-motor fans is 
unknown, but DOE concludes that the current approach should be a 
representative estimate of overall energy use for DC-motor ceiling 
fans.
2. Inputs for Large-Diameter and High-Speed Small-Diameter Ceiling Fans
a. Sample of Purchasers
    As in the NOPR analysis, DOE has included only commercial and 
industrial applications in the energy use analysis of large-diameter 
and HSSD ceiling fans. Although some large-diameter and HSSD fans are 
used in residential applications, they represent a very small portion 
of the total market for large-diameter and HSSD ceiling fans. Similar 
to standard, hugger, and VSD ceiling fans, DOE developed a sample of 
10,000 fans to represent the range of large-diameter and HSSD ceiling 
fan energy use. The sample captured variations in operating hours.
b. Operating Hours
    In the NOPR analysis, DOE used feedback from manufacturers to 
estimate total hours of operation for HSSD ceiling fans. Manufacturers 
suggested a range of possible hours of operation, depending on industry 
and application, with 12 hours per day as a representative value. To 
represent a range of possible operating hours around this 
representative value, DOE drew 10,000 samples from a uniform 
distribution between 6 hours per day and 18 hours per day when 
calculating the energy use of HSSD fans. DOE also used manufacturer 
feedback to determine the proportion of operating time spent at each 
speed, estimating that, on average, HSSD fans spend approximately 10 
percent of the time at high or low speed, and the rest of their time 
(approximately 80 percent) at a medium speed.
    Westinghouse and ALA agreed with the average hours of use estimate 
for HSSD fans in the NOPR analysis, and no stakeholders expressed 
disagreement. (Westinghouse, Public Meeting Transcript, No. 133 at p. 
79; ALA, No. 137 at p. 8) Accordingly, DOE assumed for this final rule 
that HSSD fans operate for 12 hours a day on average when conducting 
analysis for the final rule, and has maintained its assumptions 
regarding the operating hours distribution.
    In the energy conservation standards NOPR analysis, DOE's estimate 
of the daily total hours of operation for large-diameter fans was 
consistent with total hours of operation estimate from the test 
procedure SNOPR. (80 FR 31487 (Jun. 3, 2015)) In the test procedure 
SNOPR, to weight the performance results of the ceiling fans at each of 
the five speeds, DOE took a simple average of the total daily hours-of-
use estimate of 18 hours per day provided by MacroAir and an example of 
the fraction of time spent at each speed from BAS that DOE assumed 
implicitly agreed with the 12 hours per day estimate from the October 
2014 test procedure NOPR, which yielded an average value of 15 hours 
per day. Id. BAS took issue with DOE's assumption and, therefore, 
disagreed with DOE's estimate of 15 hours of use per day (BAS, No. 138 
at p. 6)
    To estimate the energy consumption of large-diameter ceiling fans, 
DOE must make an estimate of average operating hours for such fans. 
Based on the available data on daily operating hours, for the final 
rule DOE estimated 12 hours of use per day in active mode for large-
diameter ceiling fans, consistent with the hours of use estimate for 
HSSD fans, which are also used in commercial and industrial 
applications, and also consistent with estimate from the test procedure 
final rule (CITE).
    In the NOPR analysis, DOE also modeled the fraction of time spent 
at each of five speeds by large-diameter ceiling fans in an approach 
aligned with the ceiling fans test procedure SNOPR, which proposed to 
test all large-diameter ceiling fans at maximum speed, 80% speed, 60% 
speed, 40% speed, and 20% speed. 80 FR 31487 (June 3, 2015). Taking the 
average of manufacturer inputs yielded the following hours of use 
distribution for the NOPR analysis: 1.8 hours at maximum speed, 3.5 
hours at 80% speed, 3.6 hours at 60% speed, 2 hours at 40% speed, and 
4.1 hours at 20% speed. BAS clarified that the input on distribution of 
time at different speeds was intended as an example and not as an 
estimate to be used in calculations. (BAS, No. 138 at p. 8) BAS further 
commented that there is insufficient data to assign operating hours or 
estimate percentages of operation. (BAS, Public Meeting Transcript, No. 
133 at pp. 83-84) BAS recommended against the use of an average of two 
sets of operating hours in deriving operating hours for large-diameter 
ceiling fans and recommended measuring at high speed only or using a 
metric that includes equal weighting at the five proposed operating 
speeds. (BAS, No. 138 at p. 6)
    For the final rule, based on lack of available data to suggest 
otherwise, DOE gave equal weighting to each of the five speeds from the 
test procedure, consistent with BAS's suggestion and consistent with 
the approach in the test procedure final rule. (CITE)
c. Power Consumption at Each Speed and Standby
    For the large-diameter ceiling fan product class, the power 
consumption for a given representative fan was determined by the 
weighted average of power consumption at the five speeds discussed 
previously, where each speed was weighted by an equal fraction of time 
spent at that speed, as detailed in chapter 5 of the final rule TSD.
    For the HSSD ceiling fan product class, as in the NOPR analysis, 
DOE determined power consumption at high speed for each representative 
fan in the engineering analysis. To estimate the power consumption at 
medium speed, DOE multiplied the high-speed power by the average ratio 
between high-speed power and medium-speed power in the standard, 
hugger, and VSD fans engineering analysis. DOE used the same approach 
for low-speed power, using the average ratio between high-speed power 
and low-speed power from the standard, hugger, and VSD fans engineering 
analysis.
    As in the NOPR analysis, in this final rule DOE considered all HSSD 
fans at the efficiency levels with a brushless DC motor to have standby 
power, assuming a remote control was included for all such fans. DOE 
estimated 0.7 watts as the standby power value for all representative 
fans in the HSSD product class. Because these fans also have standby 
power as a result of a remote control receiver, this is the same value 
used for standard, hugger and VSD fans, as discussed in section 
IV.E.1.c.
    DOE also considered large-diameter fans to have standby power, 
because available information indicated that the majority of large-
diameter ceiling fans in the market use a variable-frequency drive and/
or are operated by remote control, which consumes standby power. The 
standby power for large-diameter ceiling fans was estimated to be 7 
watts in the engineering analysis (see chapter 5 of the final rule 
TSD).
    For HSSD and large-diameter ceiling fans with standby power 
consumption, DOE assumed that all hours not spent in active mode were 
in standby mode.
3. Impact on Air Conditioning or Heating Equipment Use
    DOE did not account for any interaction between ceiling fans and 
air conditioning or heating equipment in

[[Page 6848]]

the NOPR analyses. In DOE's estimation it appeared unlikely that 
consumers would substantially increase air conditioning use, or forego 
purchasing a ceiling fan in lieu of an air conditioning unit, due to a 
modest increase in the initial cost of a ceiling fan due to an amended 
energy conservation standard. Therefore the interaction between ceiling 
fan use and air conditioning use would be unlikely to be different in 
the case of amended standards than it would be in the no-new-standards 
case.
    ASAP, et al. and the CA IOUs agree that the interaction between 
ceiling fan and air conditioning use would be negligible on a national 
level. (ASAP, et al., No. 142 at p. 5) The CA IOUs also agreed with 
DOE's decision not to include the air conditioning interaction in its 
analyses for this rule, based on the lack of available data. (CA IOUs, 
No. 144 at p. 2) ALA suggested that DOE's proposed ceiling fan 
efficiency standards could result in increased air conditioning use, 
because many ceiling fan consumers already have air conditioning 
units--which provide substitutionary cooling at no additional cost--and 
will therefore be more price sensitive to the price of ceiling fans. 
(ALA, No. 137 at p. 8) BAS pointed out that shipments projections do 
not directly reflect the possibility of consumers increasing their air 
conditioning set point and using the ceiling fan at high speeds. (BAS, 
Public Meeting Transcript, No. 133 at pp. 77-78)
    As noted in the NOPR, DOE agrees that ceiling fans have the 
theoretical potential to be an inexpensive and effective replacement 
for air conditioning use; however, the interaction between ceiling fan 
use and air conditioning use is unlikely to be different in the case of 
amended standards than it would be in the no-new-standards case. The 
shipments analysis projects a modest change of shipments for standard, 
hugger, and VSD fans of less than 1% under the adopted standard level, 
and it is unclear what would motivate consumers to change their air 
conditioner's set point or otherwise change their air-conditioning 
behavior if they own a ceiling fan regardless of whether there is a new 
or amended standard. DOE did not account for such interaction in the 
final rule analyses.
    The Center for the Built Environment at the University of 
California, Berkeley (CBE) agreed with DOE that a modest increase in 
ceiling fan price is unlikely to increase air conditioning use, but 
suggested that DOE conduct analyses on the building level rather than 
only considering ceiling fan cost savings. (CBE, No. 143 at p. 2) BAS 
cited three projects using building automation systems to vary ceiling 
fan speed that resulted in a reduction or elimination of air 
conditioning use. (BAS, No. 138 at p. 10) It was reported in one of the 
projects cited by BAS that the use of ceiling fans in a school can 
provide up to 4 [deg]F of ``additional effective'' or ``perceived'' 
cooling. In the other two projects, the use of ceiling fans resulted in 
expanded temperature ranges in buildings, such as from a 72 [deg]F to 
75 [deg]F range to a 68 [deg]F to 82 [deg]F range.
    While DOE appreciates the provision of quantifiable outcomes, it is 
not clear if and how such cooling translates to applications beyond the 
specific cases cited, which may not be representative of ceiling fan 
usage in general. Moreover, as discussed previously, the interaction 
between ceiling fan use and air conditioning use is unlikely to be 
significantly different in the case of amended standards than it would 
be in the no-new-standards case. Customers who would purchase ceiling 
fans as a cost-effective substitute are for air-conditioning or heating 
equipment are free to do so regardless of whether there is any amended 
standard.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducts LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards. The 
effect of new or amended energy conservation standards on individual 
consumers usually involves a reduction in operating cost and an 
increase in purchase cost. DOE uses the following two metrics to 
measure consumer impacts:
     The LCC (life-cycle cost) is the total consumer expense of 
an appliance or product over the life of that product, consisting of 
total installed cost (manufacturer selling price, distribution chain 
markups, sales tax, and installation costs) plus operating costs 
(expenses for energy use, maintenance, and repair). To compute the 
operating costs, DOE discounts future operating costs to the time of 
purchase and sums them over the lifetime of the product.
     The PBP (payback period) is the estimated amount of time 
(in years) it takes consumers to recover the increased purchase cost 
(including installation) of a more-efficient product through lower 
operating costs. DOE calculates the PBP by dividing the change in 
purchase cost at higher efficiency levels by the change in annual 
operating cost for the year that amended or new standards are assumed 
to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-new-standards case, which reflects the 
estimated efficiency distribution of ceiling fans in the absence of new 
or amended energy conservation standards. In contrast, the PBP for a 
given efficiency level is measured relative to the baseline product.
    DOE calculated the LCC and PBP for each considered efficiency level 
for a nationally representative consumer sample for each of the product 
classes. DOE developed consumer samples that account for variation in 
factors such as geographic location. Two types of consumer samples were 
created: one for the standard, hugger and VSD group of fans and another 
for the HSSD and large-diameter group. This was done to capture the 
variability in energy consumption, discount rates and energy prices 
associated with the different groups of ceiling fans.
    For VSD, hugger, and standard ceiling fans, DOE created a sample in 
a manner similar to that outlined in section IV.E.1. Due to a lack of 
data on the location of HSSD and large- diameter fans, DOE assumed that 
the geographic distribution of HSSD and large- diameter fan purchasers 
is similar to that of standard, hugger, and VSD ceiling fan purchasers. 
Therefore, DOE chose the location of HSSD and large-diameter fan 
purchasers according to the geographic distribution of households in 
RECS. For each consumer in the sample used for HSSD and large-diameter 
fans, DOE determined the energy consumption of ceiling fans and the 
appropriate electricity price for the location and sector.
    The calculation of the total installed cost includes MPCs, 
manufacturer markups, retailer and distributor markups, and sales 
taxes. Installation costs were assumed not to vary by efficiency level, 
and therefore were not considered in the analysis.
    Inputs to the calculation of operating expenses include annual 
energy consumption, energy prices and price projections, repair and 
maintenance costs, product lifetimes, and discount rates.
    DOE created distributions of values for product lifetime, discount 
rates, and sales taxes, with probabilities attached to each value, to 
account for their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations randomly sample input 
values from the probability distributions and ceiling fan

[[Page 6849]]

user samples. The model calculated the LCC and PBP for products at each 
efficiency level for a sample of 10,000 consumers per simulation run.
    DOE calculated the LCC and PBP for all consumers as if each were to 
purchase a new product in the expected first full year of compliance 
with amended standards. The final rule is expected to publish in late 
2016, with a compliance date in late 2019. For this final rule, DOE 
analyzes LCC results for 2020, the first full year of compliance with 
final rule.
    Table IV.2 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
and its appendices of the final rule TSD.

Table IV.2--Summary of Inputs and Methods for the LCC and PBP Analyses *
------------------------------------------------------------------------
            Inputs                           Source/method
------------------------------------------------------------------------
Purchase Price...............  DOE estimated the purchase price of
                                ceiling fans (CF) by combining the
                                different cost components along the
                                production, import, distribution and
                                retail chain.
                               DOE further used a price trend to project
                                prices of CF with brushless DC motors to
                                the compliance year.
Sales Tax....................  Derived 2020 population-weighted-average
                                tax values for each reportable domain
                                based on Census population projections
                                and sales tax data from Sales Tax
                                Clearinghouse.
Energy Use...................  Derived in the energy use analysis, and
                                takes into account variations in factors
                                such as operating hours. Variation in
                                geographic location is taken into
                                account for certain product classes.
Energy Prices................  Electricity: Based on 2014 marginal
                                electricity price data from the Edison
                                Electric Institute.
                               Variability: Electricity prices vary by
                                season, U.S. region, and baseline
                                electricity consumption level.
Energy Price Trends..........  Based on AEO 2015 price forecasts.
Product Lifetime.............  Derived a mean ceiling fan life time of
                                13.8 years from a best-fit model based
                                on the Weibull distribution.
Discount Rates...............  Approach involves identifying all
                                possible debt or asset classes that
                                might be used to purchase the considered
                                appliances, or might be affected
                                indirectly. Primary data source was the
                                Federal Reserve Board's Survey of
                                Consumer Finances.
Efficiency Distribution......  Current efficiency distribution for
                                standard and hugger ceiling fans is
                                based on feedback from manufacturers.
                                Current efficiency distribution for VSD,
                                HSSD and large-diameter ceiling fans is
                                based on online model counts. Efficiency
                                distribution for the compliance year is
                                estimated by the market-share module of
                                shipments model. See chapter 9 of the
                                final rule TSD for details.
Assumed Compliance Date......  2019.**
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table and in chapter 8 of the final rule
  TSD.
** The compliance date was assumed to be in late 2019, so the LCC
  analysis was conducted for 2020, the first full year of compliance.

1. Purchase Price

    DOE estimates the purchase price by combining manufacturing and 
production cost, manufacturer markups, tariffs, import costs, retail 
markups, and sales tax. Section IV.D provides the details of the 
markups analysis.
    DOE used a price trend to account for changes in the incremental 
brushless DC motor price that are expected to occur between the time 
for which DOE has data for brushless DC motor prices (2014) and the 
first full year after the assumed compliance date of the rulemaking 
(2020). DOE estimated a 6 percent price decline rate associated with 
the electronics used to control brushless DC motor fans based on an 
analysis of the Producer Price Index (PPI) of semiconductor 
components.\32\ This rate is applied only to the incremental cost 
between a brushless DC motor and an AC motor and not to the price of 
the entire ceiling fan. For details on the price trend analysis, see 
section IV.G.
---------------------------------------------------------------------------

    \32\ PCU334413334413.
---------------------------------------------------------------------------

    DOE applied sales tax, which varies by geographic location, to the 
total product cost. DOE collected sales tax data from the Sales Tax 
Clearinghouse \33\ and used population projections from the Census 
bureau \34\ to develop population-weighted-average sales tax values for 
each state in 2020.
---------------------------------------------------------------------------

    \33\ https://thestc.com/STRates.stm. Last accessed May 7th 2015.
    \34\ U.S. Census Bureau, Population Division, Interim State 
Population Projections, 2005. Table A1: Interim Projections of the 
Total Population for the United States and States: April 1, 2000 to 
July 1, 2030.
---------------------------------------------------------------------------

    In the final rule analyses, as in the NOPR analysis, DOE assumed 
that installation costs are the same regardless of efficiency level and 
do not affect the LCC or PBP. Westinghouse, ALA, and BAS agreed that 
installation costs are not based on efficiency level of fan technology. 
(Westinghouse, Public Meeting Transcript, No. 133 at p. 96; ALA, No. 
137 at p. 8; BAS, No. 138 at p. 10)
    Lutron estimated that, conservatively, there are approximately 20 
million ceiling fan speed controls installed in the U.S. that generally 
work well with AC-motor ceiling fans. Because controls for DC-motor 
ceiling fans are more complicated, requiring brushless DC motors for 
standard, hugger, and VSD ceiling fans would unintentionally force 
consumers with high-cost, integrated control systems (i.e., control 
systems intended to control ceiling fan operation in addition to other 
appliances) to replace those controls systems, which is expensive and 
would remove energy savings potential. (Lutron, No. 141 at p. 2)
    Regarding the estimate of 20 million installed speed controls for 
ceiling fans with AC motors, DOE notes that brushless DC-motor ceiling 
fans are assumed to be sold with a remote control and that the cost of 
the associated control is included in DOE's analyses. Therefore, 
consumer ability to control fan speed is preserved for ceiling fans 
with brushless DC motors. Regarding high-cost integrated control 
systems, DOE acknowledges that there may be a higher installation cost 
for consumers who purchase a DC-motor ceiling fan and need to upgrade 
from an existing integrated control system that only works with AC-
motor ceiling fans to an integrated control system that works with DC-
motor ceiling fans; however it is unclear what fraction of AC-motor 
standard, hugger, and VSD ceiling fans are currently operated by high-
cost integrated control systems. DOE's best estimate is that this 
fraction

[[Page 6850]]

is negligibly small.\35\ Furthermore, DOE notes that the standard 
adopted for standard, hugger, and VSD ceiling fans by this final rule 
does not require the usage of DC-motor ceiling fans.
---------------------------------------------------------------------------

    \35\ In the aforementioned LBNL study, only 1 percent of ceiling 
fan owners indicated that their ceiling fans were operated via means 
other than pull chain/chord, wall switch (on-off only), wall control 
(on-off and variable speed control, and remote control (battery 
operated). Integrated controls such as the ones mentioned here are 
assumed to fall into the ``other'' category.
---------------------------------------------------------------------------

    The CA IOUs suggested that DOE remove the remote control cost from 
the installed cost, as the remote control is not an essential component 
for a ceiling fan. Alternatively, if DOE decides to include the cost of 
remote controls, the CA IOUs encourage DOE to consider adding the cost 
for wall mount controls for AC ceiling fans. (CA IOUs, No. 144 at p. 4)
    DOE clarifies that in the final rule analysis, the cost of the 
basic means of control has been accounted for in the engineering 
analysis at all efficiency levels for all product classes (see section 
IV.C). For standard, hugger and VSD fans with an AC motor, the means of 
control are assumed to be electromechanical, e.g., a pull chain or 
wall-mounted controls, as the vast majority of AC-motor ceiling fans 
are operated with these types of controls. For fans with a brushless DC 
motor, the means of control is assumed to be a remote control, as the 
vast majority of ceiling fans with a brushless DC motor are operated by 
remote control. Chapter 5 of the final TSD provides more detail on the 
assumptions and costs regarding the means of control. In the case of 
standard, hugger and VSD fans, DOE will continue to estimate, as in the 
NOPR analysis, that 7 percent of fans with AC motors are operated with 
a remote control, which is accounted for separately when calculating 
the purchase price.
2. Electricity Prices
    In the final rule analysis, as in the NOPR analysis, DOE used 
average electricity prices to characterize energy costs associated with 
the baseline efficiency level and marginal electricity prices to 
characterize incremental energy costs associated with the other 
efficiency levels considered. Marginal electricity prices are used to 
characterize incremental energy costs because they capture more 
accurately the small, incremental cost or savings associated with a 
change in energy use relative to the consumer's bill in the reference 
case, and may provide a better representation of consumer costs than 
average electricity prices. In the LCC analysis, the marginal 
electricity prices vary by season, region, and baseline household 
electricity consumption level. DOE estimated these prices using data 
published with the Edison Electric Institute (EEI) Typical Bills and 
Average Rates reports for summer and winter 2014.\36\ DOE assigned 
seasonal marginal prices to each LCC sample based on the location and 
the baseline monthly electricity consumption for an average summer or 
winter month associated with that sample. DOE approximated the 
electricity prices for the industrial sector using the commercial 
sector prices. This approximation was made as the type of industrial 
facility that uses ceiling fans typically occupies a regular building, 
rather than a heavy industrial complex. For a detailed discussion of 
the development of electricity prices, see appendix 8B of the final 
rule TSD.
---------------------------------------------------------------------------

    \36\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014. See http://www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------

3. Electricity Price Trends
    To arrive at average and marginal electricity prices in future 
years, DOE multiplied the average and marginal electricity prices in 
the reference year (2014) by the forecast of annual residential or 
commercial electricity price changes for each Census division from 
EIA's AEO 2015, which has an end year of 2040.\37\ To estimate the 
trends after 2040, DOE used the average rate of change during 2025-
2040.
---------------------------------------------------------------------------

    \37\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2015 with Projections to 2040 
(Available at: <http://www.eia.gov/forecasts/aeo/>).
---------------------------------------------------------------------------

    For each fan purchase sampled, DOE applied the projection for the 
Census division in which the purchase was located. The AEO electricity 
price trends do not distinguish between marginal and average prices, so 
DOE used the AEO 2015 trends for the marginal prices. DOE reviewed the 
EEI data for the years 2007 to 2014 and determined that there is no 
systematic difference in the trends for marginal vs. average 
electricity prices in the data.
    DOE used the electricity price trends associated with the AEO 
Reference case scenarios for the nine Census divisions. The Reference 
case is a business-as-usual estimate, given expected market, 
demographic, and technological trends. DOE also included prices from 
AEO high-growth and AEO low-growth scenarios in the analysis. The high- 
and low-growth cases show the projected effects of alternative economic 
growth assumptions on energy markets.
4. Repair Costs
    In the NOPR analysis, DOE used information on repairs and 
installation from manufacturer interviews to estimate the cost to 
consumers of repairing a ceiling fan. DOE also assumed that 2.5 percent 
and 9 percent of AC-motor and DC-motor ceiling fans incurred repair 
costs, respectively. DOE based these assumptions on repair rate 
estimates provided by a ceiling fan technical expert.\38\
---------------------------------------------------------------------------

    \38\ Mehta, V. Personal communication. E-mail to Mohan 
Ganeshalingam, LBNL. January 14, 2014.
---------------------------------------------------------------------------

    CA IOUs and ASAP commented that the repair rate for brushless DC 
motors in ceiling fans may actually be lower than the repair rate for 
AC motors. (CA IOUs, Public Meeting Transcript, No. 133 at p. 98; ASAP, 
Public Meeting Transcript, No. 133 at p. 98) The CA IOUs and ASAP 
disagreed with the repair cost increase for brushless DC motor ceiling 
fans due to a lack of supporting data, and ASAP further noted that this 
may have caused the economic results presented in the NOPR to be 
underestimated. (CA IOUs, No. 144 at p. 5; ASAP, Public Meeting 
Transcript, No. 133 at pp. 12-13; ASAP, No. 142 at p. 4)
    DOE reexamined this issue and found no suitable data with which to 
update its assumption that the excess rate of failure for brushless DC 
motors, above the repair rate for AC motors, is 6.5 percent of 
purchases. Because brushless DC motors incorporate electronics that AC 
motors do not have, the reliability of AC motors is likely to exceed 
brushless DC motors. Hence, DOE has continued to use the same 
assumptions in the final rule analyses.
5. Product Lifetime
    DOE estimated ceiling fan lifetimes by fitting a survival 
probability function to data of historical shipments and the 2012 age 
distributions of installed stock. Data on the age distribution for the 
installed standard, hugger, and VSD ceiling fan stock in 2012 was 
available from the LBNL study.\39\ By combining data from the LBNL 
study with historic data on standard, hugger, and VSD ceiling fan 
shipments from NPD, ENERGY STAR and Appliance Magazine (see chapter 3 
for more information on historical shipments), DOE estimated the 
percentage of appliances of a given age that are still in operation. 
This survival function, which DOE assumed has the form of a cumulative 
Weibull distribution,\40\ provides a mean of 13.8 years and a

[[Page 6851]]

median of 13.0 years for ceiling fan lifetime and is the same 
distribution employed in the preliminary and NOPR analyses. Shipment 
data were available only for standard, hugger, and VSD ceiling fans, so 
DOE assumed the survival probability function of large-diameter and 
HSSD ceiling fans is the same as that for standard, hugger, and VSD 
ceiling fans.
---------------------------------------------------------------------------

    \39\ Kantner, et al. (2013), op. cit.
    \40\ Weibull distributions are commonly used to model appliance 
lifetimes.
---------------------------------------------------------------------------

    Westinghouse and ALA agreed with the ceiling fan survival function 
used by DOE in the NOPR analysis, but Westinghouse commented that 
commercial building ``turning'' (i.e., where a building is repurposed 
for a new business) can shorten the service life of commercial fans. 
(Westinghouse, Public Meeting Transcript, No. 133 at p. 101; ALA, No. 
137 at p. 8) CA IOUs added that there is qualitative online information 
suggesting that ceiling fans with brushless DC motors last longer than 
ceiling fans with AC motors. (CA IOUs, Public Meeting Transcript, No. 
133 at p. 102) The CA IOUs also indicated that DC-motor ceiling fans 
may last longer than AC-motor ceiling fans, and that consumers are less 
likely to discard DC-motor ceiling fans prior to the end of their 
useful life when compared to AC-motor ceiling fans. (CA IOUs, No. 144 
at p. 3) BAS added that the average lifetime for large-diameter fans is 
on the order of 15-20 years, with a large spread in the distribution of 
expected lifetimes. (BAS, No. 138 at p. 11) Finally, HKC commented that 
the service life of ceiling fans can be shortened by changing design 
trends. (HKC, Public Meeting Transcript, No. 133 at pp. 103-104)
    DOE acknowledges that ceiling fans that use different technologies 
and belong to product classes may have different technical lifetimes. 
However, in its analyses, DOE considers the service lifetime of ceiling 
fans, including the types of effects mentioned by HKC and Westinghouse. 
The survival function used in the NOPR and final rule analyses 
inherently incorporates factors other than product failure, such as 
home renovation rates or design trend changes, by virtue of its 
derivation from the actual age distribution of installed ceiling fans 
in the stock. Therefore, the technical possibility of ceiling fans with 
brushless DC motors lasting longer than ceiling fans with AC motors 
should not significantly alter the survival function.
    With respect to large-diameter ceiling fans, given that the general 
survival function DOE used results in and a median lifetime of 13 years 
and an average lifetime of 13.8 years--which does not drastically 
differ from the average lifetime suggested by BAS--and that DOE is 
unaware of any data to support an increase in average lifetime for 
large-diameter ceiling fans, in this final rule DOE used the same 
survival function proposed in the NOPR for all product classes.
6. Discount Rates
    In calculating the LCC, DOE applies discount rates appropriate to 
consumers to estimate the present value of future operating costs. To 
identify appropriate discount rates for purchasers, DOE estimated the 
percentage of HSSD and large-diameter fan purchasers in the commercial 
and industrial sectors. For HSSD fans, DOE estimated the ratio in floor 
space between likely building types where a fan would be installed in 
commercial settings to that in industrial settings. Manufacturer 
interviews informed DOE of the likely locations of CF installations. 
Floor space estimates by building type were taken from the 2010 U.S. 
Lighting Market Characterization,\41\ which extrapolates estimates for 
commercial floor space from the 2003 Commercial Buildings Energy 
Consumption Survey (CBECS) and industrial floor space from the 2006 
Manufacturing Energy Consumption Survey (MECS) to 2010 values using 
measured growth trends. The ratio suggests that 80 percent of HSSD 
installations are in the commercial sector and 20 percent are in the 
industrial sector. For large-diameter fans, DOE used manufacturer 
feedback about common applications for these fans. DOE estimated that 
20 percent of large-diameter ceiling fan installations are in the 
commercial sector and 80 percent are in the industrial sector.
---------------------------------------------------------------------------

    \41\ Navigant Consulting, Inc. Final Report: 2010 U.S. Lighting 
Market Characterization. January 2012. (Last Accessed May 7, 2016.) 
http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2010-lmc-final-jan-2012.pdf.
---------------------------------------------------------------------------

    For residential consumers, DOE estimated a distribution of discount 
rates for ceiling fans based on consumer financing costs and 
opportunity cost of funds related to appliance energy cost savings and 
maintenance costs. First, DOE identified all relevant household debt or 
asset classes to approximate a consumer's opportunity cost of funds 
related to appliance energy cost savings. It estimated the average 
percentage shares of the various types of debt and equity by household 
income group using data from the Federal Reserve Board's Survey of 
Consumer Finances \42\ (SCF) for 1995, 1998, 2001, 2004, 2007, 2010 and 
2013. Using the SCF and other sources, DOE developed a distribution of 
rates for each type of debt and asset by income group to represent the 
rates that may apply in the year in which amended standards would take 
effect. DOE assigned each sample household, based on its income group, 
a specific discount rate drawn from one of the distributions. The 
average rate across all types of household debt and equity and income 
groups, weighted by the shares of each type, is 4.4 percent. See 
chapter 8 of the final rule TSD for further details on the development 
of residential discount rates.
---------------------------------------------------------------------------

    \42\ Board of Governors of the Federal Reserve System. Survey of 
Consumer Finances. 1995, 1998, 2001, 2004, 2007, 2010 and 2013. 
(Last accessed May 7, 2016.) http://www.federalreserve.gov/econresdata/scf/scfindex.htm.
---------------------------------------------------------------------------

    To establish discount rates for commercial and industrial users, 
DOE estimated the cost of capital for companies that purchase ceiling 
fans. The weighted average cost of capital is commonly used to estimate 
the present value of cash flows to be derived from a typical company 
project or investment. Most companies use both debt and equity capital 
to fund investments, so their cost of capital is the weighted average 
of the cost to the firm of equity and debt financing, as estimated from 
financial data for publicly traded firms in the sectors that purchase 
ceiling fans. For this analysis, DOE used Damodaran online \43\ as the 
source of information about company debt and equity financing. The 
average rate across all types of companies, weighted by the shares of 
each type, is 5.0 percent. See chapter 8 of the final rule TSD for 
further details on the development of commercial and industrial sector 
discount rates.
---------------------------------------------------------------------------

    \43\ Damodaran, A. Cost of Capital by Sector. January 2014. 
(Last accessed May 7, 2016.) http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/wacc.htm.
---------------------------------------------------------------------------

7. Efficiency and Blade Span Distribution in the No-New-Standards Case
    To estimate the share of consumers that would be affected by a 
potential energy conservation standard at a particular efficiency 
level, DOE's LCC analysis considered the projected distribution (market 
shares) of product efficiencies in the no-new-standards case (i.e., the 
case without new efficiency performance standards).
    Shipments data for ceiling fans disaggregated by efficiency level 
are not available, so it is not possible to derive the current 
shipments-weighted efficiency distribution. Instead, for the NOPR 
analysis, DOE developed the current efficiency market share 
distributions for the standard, hugger, and VSD product classes using 
online data from a ceiling fan retailer \44\ and data obtained from in-
store visits of major retailers. Ceiling fan models were

[[Page 6852]]

binned according to their efficiency to arrive at the current 
distributions. To estimate the efficiency distributions in 2019, DOE 
applied a consumer-choice model sensitive only to the first cost of 
options representative of each efficiency level given by the 
engineering analysis.
---------------------------------------------------------------------------

    \44\ http://www.hansenwholesale.com/.
---------------------------------------------------------------------------

    Westinghouse commented at the NOPR public meeting that the fraction 
of hugger fans currently estimated to meet EL 3 appeared to be too 
high. Westinghouse and ALA also commented that model counts of ceiling 
fans are not representative of market share. (Westinghouse, Public 
Meeting Transcript, No. 133 at p. 107-110; ALA, No. 139 at pp. 2-3) ALA 
estimated that approximately 70 percent of standard and hugger ceiling 
fan models do not meet the standard level proposed in the NOPR based on 
test results of sample products, and added that higher sales-volume 
ceiling fan models are less likely to meet that standard than lower 
sales-volume models. For certain manufacturers, ALA estimated that over 
90 percent of shipments would not comply with the proposed standards 
(ALA, No. 139 at pp. 2-3)
    DOE understands that model counts are not necessarily 
representative of market share. With respect to the estimate that 90 
percent of shipments would not comply with the proposed standards for 
certain manufacturers, DOE notes that any given manufacturer's 
efficiency distribution may differ from the efficiency distribution of 
the entire market. For the 70 percent of standard and hugger sample 
products that did not meet the proposed standard level based on recent 
testing results, it is unclear how representative these sample products 
are of the entire ceiling fan market without corresponding shipments 
data. However, in the absence of a shipments-weighted efficiency 
distribution, for this final rule DOE has adopted an updated 2015 
efficiency distribution with 70 percent of shipments of standard and 
hugger ceiling fans below the proposed standard level in the NOPR. 
Because no market share distribution was suggested by ALA amongst the 
three efficiency levels below the proposed standard level, market 
shares were assumed to be split evenly between EL0, EL1, and EL2. The 
efficiency distribution for 2020 was then projected using the consumer-
choice model described in section IV.G.3.
    No comments were received regarding the efficiency distribution for 
VSD ceiling fans, so DOE has maintained its approach from the NOPR 
analysis for the VSD product class.
    For HSSD and large-diameter ceiling fans, DOE developed the current 
efficiency distributions using model counts available on HSSD and 
large-diameter fan manufacturer websites. DOE assumed the current 
distribution observed in 2015 would also be representative of the 
efficiency distribution in 2020.
    The estimated market shares for the no-new-standards case for all 
ceiling fans are shown in Table IV.3. See chapter 8 of the final rule 
TSD for further information on the derivation of the efficiency 
distributions.

                                    Table IV.3.--Market Efficiency Distribution for the No-New-Standards Case in 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Product class                          EL 0 (%)        EL 1 (%)        EL 2 (%)        EL 3 (%)        EL 4 (%)       Total * (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard................................................            22.7            22.7            22.7            28.9             3.1             100
Hugger..................................................            22.6            22.6            22.6            28.8             3.4             100
VSD.....................................................             4.1             0.0            96.0             0.0  ..............             100
HSSD....................................................            44.7            44.7             0.0             2.7             8.0             100
Large-Diameter..........................................             5.1             5.1            58.3            14.1            17.3             100
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Rows may not sum to 100% due to rounding.

    DOE also developed size distributions within each product class to 
determine the likelihood that a given purchaser would select each of 
the representative fan sizes from the engineering analysis. For the 
NOPR, DOE estimated the distribution of diameters for standard, hugger, 
HSSD and large-diameter ceiling fans using the distribution of models 
currently seen on the market. In particular, DOE estimated that the 
current market share for 36-inch and 56-inch HSSD ceiling fans are 7 
percent and 93 percent, respectively. A limited pool of available VSD 
fan models indicated a rough split of market share between the two 
representative blade spans, so DOE assumed that the VSD market was 
evenly split between the two blade spans.
    Westinghouse agreed with the proposed market shares for 36'' and 
56'' high-speed small-diameter ceiling fans in the NOPR, as well as the 
market shares by diameter for hugger, standard, and very-small diameter 
low-volume ceiling fans. (Westinghouse, Public Meeting Transcript, No. 
133 at p. 91, 117) In the absence of additional data or comments to 
support an alternative approach, DOE retained the same methodology for 
the final rule analysis to estimate the blade span distribution for all 
the product classes. DOE estimated the blade span distribution by using 
the distribution of models currently seen on the market for the final 
rule. Table IV.4 presents the blade span distribution of each of the 
product classes. (For the NIA, DOE assumed that blade size distribution 
remains constant over the years considered in the analysis.)

                                      Table IV.4.--Blade Span Distribution
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
        Product class               Standard
                                 Hugger
                                   VSD
                                  HSSD
                                 Large-Diameter
----------------------------------------------------------------------------------------------------------------
Blade Span (inches).........     44     52     60     44     52     13     16     36     56     96    144    240
Market Share (%)............   21.1   72.5    6.5   46.2   53.8   50.0   50.0    7.0   93.0   22.0   27.0   51.0
----------------------------------------------------------------------------------------------------------------

8. Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased

[[Page 6853]]

total installed cost is not recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    EPCA, as amended, establishes a rebuttable presumption that a 
standard is economically justified if the Secretary finds that the 
additional cost to the consumer of purchasing a product complying with 
an energy conservation standard level will be less than three times the 
value of the first year's energy savings resulting from the standard, 
as calculated under the applicable test procedure. (42 U.S.C. 
6295(o)(2)(B)(iii)) For each considered efficiency level, DOE 
determined the value of the first year's energy savings by calculating 
the energy savings in accordance with the applicable DOE test 
procedure, and multiplying those savings by the average energy price 
forecast for the year in which compliance with the amended standards 
would be required.

G. Shipments Analysis

    DOE uses projections of product shipments to calculate the national 
impacts of potential amended energy conservation standards on energy 
use, NPV, and future manufacturer cash flows. Historical shipments data 
are used to build up an equipment stock, and to calibrate the shipments 
model to project shipments over the course of the analysis period based 
on the estimated future demand for ceiling fans. Details of the 
shipments analysis are described in chapter 9 of the final rule TSD.
    The shipments model projects total shipments and market-share 
efficiency distributions in each year of the 30-year analysis period 
for the no-new-standards case and each of the standards cases, 
calibrated using historical shipments. This final rule is expected to 
publish in late 2016 with a compliance date in late 2019. DOE begins 
its shipments analysis for the final rule in 2020, the first full year 
of compliance, and extends over 30 years until 2049. The shipments 
model consists of three main components: (1) A shipments demand model 
that determines the total demand for new ceiling fans in each year of 
the analysis period, (2) a stock model that tracks the age distribution 
of the stock over the analysis period, and (3) a model that determines 
the market shares of purchased ceiling fans across efficiency levels. 
For standard, hugger, and VSD ceiling fans, DOE used a consumer-choice 
model sensitive to ceiling fan first cost to estimate market shares 
across efficiency level. For HSSD and large-diameter ceiling fans, DOE 
used a roll-up approach to estimate the efficiency distribution in each 
standards case.
1. Shipments Demand Model
    DOE used historical shipment data of hugger, standard, and VSD fans 
from Appliance Magazine's Statistical Review from 1991 to 2006,\45\ 
data from ENERGY STAR annual reports from 2003 to 2013,\46\ and data 
purchased from NPD Research group from 2007-2011.\47\ Figure 9.3.1 in 
Chapter 9 of this final rule TSD displays the historical time series 
used for DOE's shipments analysis.
---------------------------------------------------------------------------

    \45\ Appliance[supreg] Statistical Review, Annual Report, 
Appliance Magazine (1991-2006).
    \46\ United States Environmental Protection Agency, ENERGY 
STAR[supreg] and Other Climate Protection Partnerships: Annual 
Report (2003-2013).
    \47\ NPD Group, 2007-2011.
---------------------------------------------------------------------------

    As the data were not disaggregated by product class, DOE estimated 
the relative split between standard, hugger, and VSD product classes. 
In the NOPR analysis, DOE used online and in-store ceiling fan data and 
applied a price-weighting approach based on market share data as a 
function of retail price for ceiling fans collected by the NPD Group 
from 2007 to 2011. These data inform the price-weighting scheme, which 
apportions more market share to ceiling fans with lower first costs. 
DOE calculated 48.7 percent and 51.3 percent current market shares for 
hugger and standard ceiling fans, respectively. DOE's calculation 
assumed that multi-mount ceiling fan installations are split 27 
percent/73 percent as hugger and standard ceiling fans, respectively.
    Westinghouse agreed with DOE's estimates for the market split 
between standard, hugger, and VSD ceiling fans in the NOPR analyses. 
(Westinghouse, Public Meeting Transcript, No. 133 at p. 91, 117) DOE 
retains this methodology for estimating market share by product class 
for the final rule.
    DOE's estimate for HSSD historical shipments is based on scaling 
historical shipments of standard, hugger, and VSD ceiling fans using a 
scaling factor estimated from feedback from manufacturer interviews. 
DOE's estimate for large-diameter fans is based on matching a linear 
shipments trend to an estimate of 2013 installed stock assuming large-
diameter fans were introduced to the market in 2000.
    Shipments for standard, hugger, and VSD ceiling fans are calculated 
for the residential sector. Shipments for HSSD and large-diameter fans 
are calculated for the commercial and industrial sectors. As all of the 
inputs used in the downstream analyses are the same for both sectors, 
DOE does not distinguish between shipments to the commercial or 
industrial sector.
    The ceiling fan shipments demand model considers four market 
segments that affect the net demand for total shipments: replacements 
for retired stock, additions due to new building construction, 
additions due to expanding demand in existing buildings, and reductions 
due to building demolitions, which erodes demand from replacements and 
existing buildings.
2. Stock-Accounting Model
    The stock accounting model tracks the age (vintage) distribution of 
the installed ceiling fan stock. The age distribution of the stock 
impacts both the national energy savings (NES) and NPV calculations, 
because the operating costs for any year depend on the age distribution 
of the stock. Older, less efficient units may have higher operating 
costs, while newer, more efficient units have lower operating costs. 
The stock accounting model is initialized using historical shipments 
data and accounts for additions to the stock (i.e., shipments) and 
retirements. The age distribution of the stock in 2012 is estimated 
using results from a recent survey of ceiling fan owners.\48\ The stock 
age distribution is updated for subsequent years using projected 
shipments and retirements determined by the stock age distribution and 
a product retirement function.
---------------------------------------------------------------------------

    \48\ Kantner, et al. (2013), op. cit.
---------------------------------------------------------------------------

3. Market-Share Projections
    The consumer-choice model used for standard, hugger, and VSD 
ceiling fans estimates the market shares of purchases in each year in 
the analysis period for each efficiency level presented in the 
engineering analysis. DOE assumed that each of these product classes 
provides a specific utility and consumers do not choose between options 
in different product classes. The consumer-choice module selects which 
ceiling fans are purchased within a product class in any given year 
based on consumer sensitivity to first cost, as well as on the ceiling 
fan options available, which were determined in the engineering 
analysis. Deviations from purely cost-driven behavior are accounted for 
using factors found by calibrating the model to observed historical 
data.
    Westinghouse agreed with DOE's NOPR assumption that consumers of 
standard, hugger, and VSD ceiling fans

[[Page 6854]]

are most sensitive to first cost. (Westinghouse, Public Meeting 
Transcript, No. 133 at p. 123) DOE maintains this assumption for the 
consumer-choice model in the final rule.
    In the NOPR analysis, DOE assumed the no-new-standards case 
efficiency distribution for HSSD and large-diameter ceiling fans 
remained fixed at the estimated 2015 efficiency distribution over the 
shipments analysis period. In the standards cases, market shares for 
those levels that do not meet the standard roll up to the standard 
level, and shares above the standard level are unchanged. In the NOPR 
analysis, DOE assumed no product class switching between the HSSD and 
large-diameter product classes.
    Westinghouse and BAS agreed with the roll-up approach DOE used in 
its NOPR analysis, but BAS added that large-diameter ceiling fan 
manufacturers are likely to meet the minimum efficiency by reducing the 
utility of their fans (i.e., by reducing the maximum airflow). 
(Westinghouse, Public Meeting Transcript, No. 133 at pp. 123-124; BAS, 
Public Meeting Transcript, No. 133 at p. 126)
    For this final rule, DOE continues to use the roll-up approach for 
HSSD and large-diameter ceiling fans. As discussed in section IV.C.3, 
DOE adjusted the efficiency equation associated with the considered 
standard levels to ensure that high airflow ceiling fans would be 
preserved under the standard level in this final rule.
4. Price Trend
    The consumer-choice model uses ceiling fan prices, which change 
over time in some cases. There is considerable evidence of learning-by-
doing lowering the cost of new technologies along with increases in 
production of the new technology. The concept behind this empirical 
phenomenon is that as the new technology is produced in greater 
numbers, employees and firms will find ways to lower costs. Brushless 
DC motors are a relatively new technology for use in ceiling fans, and 
thus DOE expects price declines. Given the absence of data on 
cumulative shipments of brushless DC motors, DOE models learning 
lowering costs, and thus prices, with time. In the NOPR analysis, DOE 
adopted a price decline rate of 6 percent applied to the incremental 
(not total) cost associated with a brushless DC motor, based on 
information from a technical expert for standard, hugger, and VSD 
ceiling fans.\49\ ASAP agreed with DOE's approach to apply price 
learning only to the electronic component of brushless DC motors, as 
opposed to applying price learning to the entire product. (ASAP, Public 
Meeting Transcript, No. 133 at p. 122) DOE continues to use this 
methodology for applying price trends to brushless DC motors in this 
final rule.
---------------------------------------------------------------------------

    \49\ Mehta, V. Personal communication. E-mail to Mohan 
Ganeshalingam, LBNL. January 14, 2014.
---------------------------------------------------------------------------

5. Impact of a Standard on Shipments
    DOE assumes that any increase in the average price of a ceiling fan 
due to a standard would result in a decrease in shipments. For this 
final rule analysis, DOE uses a relative price elasticity of demand of 
-0.34, which is the value DOE has typically used for residential 
appliances.
    DOE notes that an increase in the price of ceiling fan light kits 
due to the adopted ceiling fan light kit standard will also impact the 
shipments of ceiling fans sold with ceiling fan light kits. The ceiling 
fan final rule analysis included the impact on ceiling fan shipments 
from the estimated ceiling fan light kit price change due to the 
adopted ceiling fan light kit standard. (81 FR 580 (Jan. 6, 2016)) The 
impact from a ceiling fan light kit standard to ceiling fan shipments 
is applied to both the no ceiling fan standards case and the ceiling 
fan standards case shipments.

H. National Impact Analysis

    The NIA assesses the national energy savings (NES) and the net 
present value (NPV) from a national perspective of total consumer costs 
and savings that would be expected to result from new or amended 
standards at specific efficiency levels. (``Consumer'' in this context 
refers to consumers of the product being regulated.) DOE calculates the 
NES and NPV based on projections of annual product shipments, along 
with the annual energy consumption, total installed cost, and repair 
costs. For the final rule analysis, DOE projected the energy savings, 
operating cost savings, product costs, and NPV of consumer benefits 
over the lifetime of ceiling fans shipped from 2020 through 2049, 
beginning with the first full year of compliance with a potential 
standard.
    DOE evaluates the impacts of new and amended standards by comparing 
a case without such standards with standards-case projections. The no-
new-standards case projection characterizes energy use and consumer 
costs for each product class in the absence of new or amended energy 
conservation standards. For this projection, DOE considers historical 
trends in efficiency and various forces that are likely to affect the 
mix of efficiencies over time. DOE compares the no-new-standards case 
with projections characterizing the market for each product class if 
DOE adopted new or amended standards at specific energy efficiency 
levels (i.e., the TSLs or standards cases) for that class. For the 
standards cases, DOE considers how a given standard would likely affect 
the market shares of products with efficiencies greater than the 
standard when ceiling fans that do not meet the TSL being analyzed are 
excluded as options available to the consumer.
    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.5 summarizes the inputs and methods DOE used for the NIA 
analysis for the final rule. Discussion of these inputs and methods 
follows the table. See chapter 10 of the final rule TSD for further 
details.

    Table IV.5--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                 Inputs                               Method
------------------------------------------------------------------------
Shipments..............................  Annual shipments from shipments
                                          model.
Assumed Compliance Date of Standard....  2019.*
No Standard-Case Forecasted Efficacies.  Estimated by market-share
                                          module of shipments model.
Standards-Case Forecasted Efficacies...  Estimated by market-share
                                          module of shipments model.

[[Page 6855]]

 
Annual Energy Consumption per Unit.....  Annual weighted-average values
                                          are a function of energy use
                                          at each EL.
Total Installed Cost per Unit..........  Annual weighted-average values
                                          are a function of cost at each
                                          EL.
                                         Incorporates projection of
                                          future product 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...  DC motor fans have a 6.5%
                                          higher failure rate compared
                                          to AC motor fans.
Energy Prices..........................  AEO 2015 forecasts (to 2040)
                                          and extrapolation thereafter.
Energy Site-to-Primary and FFC           A time-series conversion factor
 Conversion.                              based on AEO 2015.
Discount Rate..........................  Three and seven percent.
Present Year...........................  2016.
------------------------------------------------------------------------
* The compliance date was assumed to be in late 2019, so the shipments
  analysis was conducted for products shipped from 2020-2049, beginning
  with the first full year of compliance.

1. National Energy Savings

    The national energy savings analysis involves a comparison of 
national energy consumption of the considered products between each 
potential standards case and the case with no new or amended energy 
conservation standards. DOE calculated the national energy consumption 
by multiplying the number of units (stock) of each product (by vintage 
or age) by the unit energy consumption (also by vintage). DOE 
calculated annual NES based on the difference in national energy 
consumption for the no-new-standards case and for the case where a 
standard is set at each TSL. 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 (Aug. 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 (Aug. 17, 2012). NEMS is a public 
domain, multi-sector, partial equilibrium model of the U.S. energy 
sector \50\ 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 10B of the final rule TSD.
---------------------------------------------------------------------------

    \50\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009. 
Available at http://www.eia.gov/forecasts/aeo/index.cfm.
---------------------------------------------------------------------------

    The rebound effect accounts for increased usage of an appliance by 
consumers after the implementation of a standard, reducing the energy 
savings attributed to a standard. DOE generally accounts for the direct 
rebound effect in its estimates of the national energy savings when 
available data suggest consumers may increase product usage in the 
event of a standard which acts to decrease the average power associated 
with the product. In the case of ceiling fans, DOE found no data 
pertaining to a rebound effect associated with more efficient products 
and also received comments in response to the Framework document from 
ALA indicating that they did not believe a rebound effect due to a 
ceiling fan standard was likely. (ALA, No 39, at pg. 39) In this final 
rule, DOE assumes no rebound effect in its reference scenario. 
Nevertheless, DOE performed a sensitivity scenario assuming a rebound 
of 3-percent to examine the implications of rebound. The rebound 
sensitivity reduces national energy savings at each TSL by 3 percent 
without impacting NPV results. The full results of this sensitivity 
analysis can be found in appendix 10C of this final rule TSD. The 
rebound effect explored in this sensitivity analysis can reduce 
expected savings in energy costs to consumers in the standards case.
2. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are (1) total annual installed cost, (2) total 
annual operating costs savings, 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.
    The operating cost savings are primarily energy cost savings, which 
are calculated using the estimated energy savings in each year and the 
projected price of electricity. To estimate electricity prices in 
future years, DOE multiplied the average regional 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 through 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. NIA results based on these cases 
are presented in appendix 10C of the final rule TSD.
    DOE estimated the range of potential impacts of amended standards 
by considering four sensitivity scenarios: a high-benefit scenario, a 
low-benefit scenario, and a scenario that includes a 3-percent rebound 
effect. In the high benefits scenario, DOE used the AEO 2015 high 
economic growth case estimates for new housing starts and electricity 
prices along with its reference price trend for DC motor fans. As 
discussed in section IV.G.4, price

[[Page 6856]]

trend is only applied to the price premium between a DC motor and a 
direct drive AC motor. In the low benefits scenario, DOE used the low 
economic growth AEO 2015 estimates for housing starts and electricity 
prices, along with no price trend. In the 3-percent rebound scenario, 
DOE assumed that there would be increased ceiling fan usage due to the 
decreased operating cost savings associated with a standard. As noted 
previously, DOE assumes any operating cost incurred by increased usage 
due to the rebound effect is offset by the economic value associated 
with that increased usage. The NIA results based on these alternative 
scenarios are presented in appendix 10C of the final rule TSD.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
final rule, DOE estimated the NPV of consumer benefits using both a 3-
percent and a 7-percent real discount rate. DOE uses these discount 
rates in accordance with guidance provided by the Office of Management 
and Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\51\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. The 7-percent real value 
is an estimate of the average before-tax rate of return to private 
capital in the U.S. economy. The 3-percent real value represents the 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \51\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 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 final rule, DOE 
analyzed the impacts of the considered standard levels on low-income 
households and small businesses that purchase ceiling fans. DOE used 
the LCC and PBP spreadsheet model to estimate the impacts of the 
considered efficiency levels on these subgroups.
    DOE calculated the LCC and PBP results for standard, hugger, and 
VSD fans based on a sample of low-income households or consumers who 
were identified in the RECS 2009 survey as being at or below the 
``poverty line.'' The poverty line varies with household size, head of 
household age, and family income.
    In the case of the HSSD and large-diameter fans, DOE conducted a 
subgroup analysis based on small businesses that purchase ceiling fans 
by applying the small company discount rate distributions for each 
sector in the LCC and PBP calculation, instead of the discount rate 
associated with the entire industry.
    Chapter 11 in the final rule TSD describes the consumer subgroup 
analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE conducted an MIA for ceiling fans to estimate the financial 
impact of amended standards on manufacturers of ceiling fans. The MIA 
has both quantitative and qualitative aspects. The quantitative part of 
the MIA relies on the GRIM, an industry cash-flow model customized for 
the ceiling fans covered in this rulemaking. The key GRIM inputs are 
data on the industry cost structure, MPCs, shipments, and assumptions 
about manufacturer markups, and conversion costs. The key MIA output is 
INPV. DOE used the GRIM to calculate cash flows using standard 
accounting principles and to compare changes in INPV between the no-
new-standards case and various TSLs (the standards cases). The 
difference in INPV between the no-new-standards case and the standards 
cases represents the financial impact of amended energy conservation 
standards on ceiling fan manufacturers. Different sets of assumptions 
(scenarios) produce different INPV results. The qualitative part of the 
MIA addresses factors such as manufacturing capacity; characteristics 
of, and impacts on, any particular subgroup of manufacturers, including 
small manufacturers; and impacts on competition.
    DOE conducted the MIA for this rulemaking in three phases. In the 
first phase, DOE prepared an industry characterization based on the 
market and technology assessment, preliminary manufacturer interviews, 
and publicly available information. In the second phase, DOE estimated 
industry cash flows in the GRIM using industry financial parameters 
derived in the first phase and the shipments derived in the shipment 
analysis. In the third phase, DOE conducted interviews with a variety 
of ceiling fan manufacturers that account for more than 30 percent of 
domestic ceiling fan sales covered by this rulemaking. During these 
interviews, DOE discussed engineering, manufacturing, procurement, and 
financial topics specific to each company, and obtained each 
manufacturer's view of the ceiling fan industry as a whole. The 
interviews provided information that DOE used to evaluate the impacts 
of amended standards on manufacturers' cash flows, manufacturing 
capacities, and direct domestic manufacturing employment levels. See 
section V.B.2.b of this final rule for the discussion on the estimated 
changes in the number of domestic employees involved in manufacturing 
ceiling fans covered by standards.
    During the third phase, DOE used the results of the industry 
characterization analysis in the first phase and feedback from 
manufacturer interviews to group manufacturers that exhibit similar 
production and cost structure characteristics. DOE identified one 
manufacturer subgroup for a separate impact analysis; small businesses. 
DOE determined that ceiling fan manufacturing falls under the North 
American Industry Classification System (NAICS) code 335210, small 
electrical appliance manufacturing. The U.S. Small Business 
Administration (SBA) defines a small business as having less than 1,500 
total employees for manufacturing operating under this NAICS code. This 
threshold includes all employees in a business' parent company and any 
other subsidiaries. Based on this classification, DOE identified six 
domestic ceiling fan businesses that manufacturer ceiling fans in the 
United States and qualify as small businesses per the SBA threshold. 
DOE analyzed the impact on the small business subgroup in the complete 
MIA, which is presented in chapter 12 of the final rule TSD, and in the 
Regulatory Flexibility analysis required by the Regulatory Flexibility 
Act, 5 U.S.C. 601, et. seq., presented in section VI.B of this final 
rule.
2. GRIM Analysis and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flows over time 
due to amended energy conservation standards. These changes in cash 
flows result in either a higher or lower INPV for the standards case 
compared to the no-new-standards case. The GRIM uses standard annual 
cash-flow analysis that incorporates MPCs, manufacturer

[[Page 6857]]

markups, shipments, and industry financial information as inputs. It 
then models changes in MPCs, investments, and manufacturer margins that 
may result from analyzed amended energy conservation standards. The 
GRIM uses these inputs to calculate a series of annual cash flows 
beginning with the reference year of the analysis, 2016, and continuing 
to the terminal year of the analysis, 2049. DOE computes INPV by 
summing the stream of annual discounted cash flows during the analysis 
period. DOE used a real discount rate of 7.4 percent for ceiling fan 
manufacturers. This is the same discount rate used in the NOPR 
analysis. Many of the GRIM inputs come from the engineering analysis, 
the shipment analysis, manufacturer interviews, and other research 
conducted during the MIA. The major GRIM inputs are described in detail 
in the following sections.
a. Capital and Product Conversion Costs
    DOE expects amended ceiling fan energy conservation standards to 
cause manufacturers to incur conversion costs by bringing their tooling 
and product designs into compliance with amended standards. For the 
MIA, DOE classified these conversion costs into two major groups: (1) 
Capital conversion costs and (2) product conversion costs. Capital 
conversion costs are investments in property, plant, and equipment 
necessary to adapt or change existing tooling equipment so new product 
designs can be fabricated and assembled. Product conversion costs are 
investments in research, development, testing, marketing, 
certification, and other non-capitalized costs necessary to make 
product designs comply with amended standards.
    ALA commented that DOE underestimated conversion costs due to an 
understated percentage of shipments that will meet the standard in the 
compliance year (ALA, No. 139, p. 2-4). ALA maintains that conversion 
costs would be doubled had DOE used the efficiency distribution 
estimated by ALA.
    For the final rule, DOE revised the shipment efficiency 
distribution in the shipment analysis for standard and hugger ceiling 
fans based on feedback from ALA. The MIA used the shipment efficiency 
distribution when calculating the industry conversion costs. Conversion 
costs significantly increased from the NOPR to the final rule due to 
these changes in the efficiency distribution.
    ALA went on to comment that conversion costs are further 
understated due to their exclusion of additional financing costs that 
could be incurred by some manufacturers to purchase manufacturing 
equipment needed to produce ceiling fans that comply with the standard 
(ALA, No. 139, p. 4). Also, Westinghouse commented that they were 
concerned DOE's analysis may not be fully calculating or capturing what 
the true cost increase for manufacturers will be. (Westinghouse, Public 
Meeting Transcript, No. 133 at p. 92)
    DOE increased the per model capital and product conversion costs 
associated with converting a failing ceiling fan model into a compliant 
model, based on ALA and Westinghouse's comments. This per model 
conversion cost increase resulted in higher overall conversion costs 
from the NOPR to the final rule. This increase in per model conversion 
costs was in addition to the increase in the number of models needed to 
be converted due to the changes in the efficiency distribution 
previously described.
b. Manufacturer Production Costs
    Manufacturing a more efficient product is typically more expensive 
than manufacturing a lower efficient product due to the use of more 
complex components, which are typically more costly than less efficient 
components. The increases in the MPCs of the analyzed products can 
affect the revenues, gross margins, and cash flow of the industry, 
making these product costs key inputs for the GRIM and the MIA.
    In the MIA, DOE used the MPCs calculated in the engineering 
analysis, as described in section IV.C and further detailed in chapter 
5 of the final rule TSD. To calculate MPCs for ceiling fans. DOE 
updated the MPCs used in the NOPR analysis based on manufacturer 
feedback for the final rule analysis. The MIA used these updated MPCs 
for the final rule analysis.
c. Shipment Scenarios
    INPV, which is the key GRIM output, depends on industry revenue, 
which depends on the quantity and prices of ceiling fans shipped in 
each year of the analysis period. Industry revenue calculations require 
forecasts of: (1) Total annual shipment volume of ceiling fans; (2) the 
distribution of shipments across the product class (because prices vary 
by product class); and, (3) the distribution of shipments across ELs 
(because prices vary with ceiling fan efficiency).
    DOE modeled the no-new-standards case ceiling fan shipments and the 
growth of ceiling fan shipments using replacement shipments of failed 
ceiling fan units, new construction starts as projected by AEO 2015, 
and the number of additions to existing buildings due to expanding 
demand throughout the analysis period taking into account demolitions 
in the housing stock.
    DOE updated the initial 2015 efficiency distribution for the final 
rule analysis for standard and hugger fans based on feedback from 
manufacturers. To estimate the distribution of shipments across ELs 
over the analysis period for standard, hugger, and VSD ceiling fans, a 
consumer-choice model was used to project consumer purchases based on 
consumer sensitivity to first cost. For HSSD and large-diameter ceiling 
fans, a roll-up approach was used, in which consumers who would have 
purchased ceiling fans that fail to meet the new standards in the no-
new-standards case purchase the least efficient, compliant ceiling fans 
in the standards cases. Consumers that would have purchased compliant 
ceiling fans in the no-new-standards case continue to purchase the 
exact same ceiling fans in the standards cases.
    For all ceiling fans, DOE also included price elasticity in the 
shipments analysis for all standards cases. When price elasticity is 
included in the shipment analysis, the total number of ceiling fans 
declines as the average price of a ceiling fan increases due to 
standards. For a complete description of the shipments, see the 
shipments analysis discussion in section IV.G of this final rule.
d. Markup Scenarios
    As discussed in section IV.J.2.b, the MPCs for ceiling fans are the 
manufacturers' costs for those units. These costs include materials, 
labor, depreciation, and overhead, which are collectively referred to 
as the cost of goods sold (COGS). The MSP is the price received by 
ceiling fan manufacturers from the first sale, typically to a 
distributor, regardless of the downstream distribution channel through 
which the ceiling fans are ultimately sold. The MSP is not the cost the 
end-user pays for ceiling fans, because there are typically multiple 
sales along the distribution chain and various markups applied to each 
sale. The MSP equals the MPC multiplied by the manufacturer markup. The 
manufacturer markup covers all the ceiling fan manufacturer's non-
production costs (i.e., selling, general, and administrative expenses 
[SG&A]; research and development [R&D]; interest) as well as profit. 
Total industry revenue for ceiling fan manufacturers equals the MSPs at 
each efficiency level multiplied by the number of shipments at that 
efficiency level.

[[Page 6858]]

    Modifying these manufacturer markups in the standards cases yields 
a different set of impacts on ceiling fan manufacturers than in the no-
new-standards case. For the MIA, DOE modeled three standards case 
markup scenarios for ceiling fans to represent the uncertainty 
regarding the potential impacts on prices and profitability for ceiling 
fan manufacturers following the implementation of amended standards. 
The three scenarios are: (1) A preservation of gross margin markup 
scenario; (2) a preservation of operating profit markup scenario; and 
(3) a two-tiered markup scenario. Each scenario leads to different 
manufacturer markup values, which, when applied to the inputted MPCs, 
result in varying revenue and cash-flow impacts on ceiling fan 
manufacturers.
    The manufacturer markups for the preservation of operating profit 
and two-tiered markup scenarios depend on the efficiency distribution 
of shipments calculated in the shipment analysis. Therefore, the 
manufacturer markups for the preservation of operating profit and two-
tiered markup scenarios are slightly different in the final rule that 
those in the NOPR analysis.
3. Discussion of Comments
    Only ALA and Westinghouse commented on the assumptions and results 
of the NOPR MIA. These comments addressed the capital and product 
conversion costs and are addressed in section IV.J.2.a. No further 
comments on the NOPR were submitted regarding the MIA.
4. Manufacturer Interviews
    DOE conducted additional interviews with manufacturers following 
the preliminary analysis as part of the NOPR analysis. DOE outlined the 
key issues for ceiling fan manufacturers in the NOPR. 81 FR 1689 
(January 13, 2016). DOE considered the information received during 
these interviews in the development of the NOPR and this final rule. 
DOE did not receive any comments regarding the key issues described in 
the NOPR analysis.
a. Shift to Air Conditioning
    Several manufacturers stated that ceiling fan energy conservation 
standards could cause residential consumers to forgo the purchase of a 
ceiling fan in lieu of an air conditioner due to the price increase, or 
could cause residential ceiling fan owners to run their air 
conditioners more frequently instead of using their ceiling fan. 
Manufacturers assert that if residential consumers instead use their 
air conditioner to cool their homes, this could result in more energy 
use, as ceiling fans tend to be more efficient at cooling rooms than 
air conditioners.
    Manufacturers also stated that overly stringent ceiling fan 
standards could force manufacturers to reduce the aesthetic quality of 
some ceiling fans to comply with energy conservation standards. This 
could cause some residential consumers to forgo the purchase of these 
ceiling fans because the aesthetic appearance of ceiling fans is an 
important factor when residential consumers purchase ceiling fans. 
Manufacturers claim this reduction in aesthetic quality could again 
result in more energy use, because residential consumers who do not 
purchase ceiling fans would need to use air conditioners to cool their 
homes. DOE addresses this issue in section IV.E.3 of this final rule.
b. Testing Burden
    Manufacturers are concerned about the additional testing burden 
associated with complying with amended energy conservation standards. 
Most manufacturers use third-party testing facilities for testing and 
reporting purposes, which can be expensive. Manufacturers stated that 
ceiling fan standards would significantly increase the amount that they 
already invest in testing each year. DOE includes the additional 
testing and certification costs that manufacturers must make due to 
standards as part of the MIA. DOE calculates the total industry 
conversion costs for manufacturers, which includes the additional 
testing and certification costs of complying with amended standards. 
These conversion costs impact the INPV at each TSL. Industry cash flow 
analysis results are discussed in detail in section V.B.2.a.
c. Utility of Brushless and Gearless DC Motors for Residential 
Consumers
    Manufacturers stated that amended energy conservation standards 
that required the use of brushless DC motors in residential ceiling 
fans would limit the overall utility of the fan and increase 
maintenance costs. Manufacturers claim that brushless DC motors require 
significantly more maintenance and have a higher warranty factor 
compared to ceiling fans with AC motors. Additionally, ceiling fans 
with brushless DC motors require the use of a handheld remote, which 
manufacturers claim is not preferred by many residential consumers. 
Therefore, manufacturers stated any ceiling fan standard that required 
the use of a brushless DC motor would significantly reduce the overall 
utility of ceiling fans to residential consumers.
    For the HSSD and large-diameter product classes, which are expected 
to represent less than three percent of all covered ceiling fan 
shipments in 2020, manufacturers stated that the use of brushless DC 
motors in HSSD ceiling fans and gearless DC motors in large-diameter 
ceiling fans will not significantly impact consumer utility. HSSD and 
large-diameter ceiling fans are typically used in commercial and 
industrial applications as opposed to in residential applications. Most 
manufacturers indicated that commercial and industrial consumers do not 
dislike using a handheld remote that is required when operating a 
ceiling fan with a brushless or gearless DC motor, and in some 
applications it is preferable. Also, these commercial and industrial 
consumers tend to be better equipped to respond to the increased 
maintenance costs associated with owning and operating ceiling fans 
with brushless or gearless DC motors because these consumers are more 
likely to repair their own products and equipment than residential 
consumers are.
    DOE conducted a screening analysis as part of this final rule 
analysis and concluded that brushless or gearless DC motors should be 
considered as a viable technology for all respective product classes of 
covered ceiling fans for the engineering analysis. See section IV.B of 
this final rule for a detailed discussion of the screening analysis. 
Additionally, DOE did include the additional repair costs of ceiling 
fans using brushless or gearless DC motors as part of the LCC analysis. 
See section IV.F.4 for a complete description of the repair cost 
assumptions of brushless and gearless DC motors.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities consist of 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.

[[Page 6859]]

Details of the methodology are described in the appendices to chapters 
13 and 15 of the final rule TSD.
    Combustion emissions of CH4 and N2O are 
estimated using emissions intensity factors published by the EPA-GHG 
Emissions Factors Hub.\52\ The FFC upstream emissions are estimated 
based on the methodology described in chapter 15 of the final rule TSD. 
The upstream emissions include both emissions from fuel combustion 
during extraction, processing, and transportation of fuel, and 
``fugitive'' emissions (direct leakage to the atmosphere) of 
CH4 and CO2.
---------------------------------------------------------------------------

    \52\ Available at www2.epa.gov/climateleadership/center-corporate-climate-leadership-ghg-emission-factors-hub.
---------------------------------------------------------------------------

    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. Total emissions 
reductions are estimated using the energy savings calculated in the 
national impact analysis.
    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying each ton of gas by the gas' global warming potential 
(GWP) over a 100-year time horizon. Based on the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change,\53\ DOE used 
GWP values of 28 for CH4 and 265 for N2O.
---------------------------------------------------------------------------

    \53\ Intergovernmental Panel on Climate Change. Anthropogenic 
and Natural Radiative Forcing. In Climate Change 2013: The Physical 
Science Basis. Contribution of Working Group I to the Fifth 
Assessment Report of the Intergovernmental Panel on Climate Change. 
Chapter 8. 2013. Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, 
S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex, and P.M. 
Midgley, Editors. Cambridge University Press: Cambridge, United 
Kingdom and New York, NY, USA.
---------------------------------------------------------------------------

    The AEO incorporates the projected impacts of existing air quality 
regulations on emissions. AEO 2015 generally represents current 
legislation and environmental regulations, including recent government 
actions, for which implementing regulations were available as of 
[October 31, 2014]. DOE's estimation of impacts accounts for the 
presence of the emissions control programs discussed in the following 
paragraphs.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous States and the 
District of Columbia (D.C.). (42 U.S.C. 7651 et seq.) SO2 
emissions from 28 eastern States and D.C. 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.\54\ In 2011, EPA issued a replacement for CAIR, the Cross-State 
Air Pollution Rule (CSAPR). 76 FR 48208 (Aug. 8, 2011). On August 21, 
2012, the D.C. Circuit issued a decision to vacate CSAPR,\55\ and the 
court ordered EPA to continue administering CAIR. On April 29, 2014, 
the U.S. Supreme Court reversed the judgment of the D.C. Circuit and 
remanded the case for further proceedings consistent with the Supreme 
Court's opinion.\56\ On October 23, 2014, the D.C. Circuit lifted the 
stay of CSAPR.\57\ Pursuant to this action, CSAPR went into effect (and 
CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \54\ 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).
    \55\ 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).
    \56\ See EPA v. EME Homer City Generation, 134 S. Ct. 1584, 1610 
(U.S. 2014). The Supreme Court held in part that EPA's methodology 
for quantifying emissions that must be eliminated in certain States 
due to their impacts in other downwind States was based on a 
permissible, workable, and equitable interpretation of the Clean Air 
Act provision that provides statutory authority for CSAPR.
    \57\ 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.\58\ Therefore, DOE believes that energy conservation standards 
will generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \58\ DOE notes that the Supreme Court 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.\59\ 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

[[Page 6860]]

considered in this final rule for these States.
---------------------------------------------------------------------------

    \59\ 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 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 rule, DOE considered the 
estimated monetary benefits from the reduced emissions of 
CO2 and NOX expected to result from each of the 
TSLs considered. To make this calculation analogous to the calculation 
of the NPV of consumer benefit, DOE considered the reduced emissions 
expected to result over the lifetime of products shipped in the 
forecast period for each TSL. This section summarizes the basis for the 
monetary values used for of CO2 and NOX emissions 
and presents the values considered in this final rule.
    For this final rule, DOE relied on a set of values for the social 
cost of carbon (SCC) that was developed by a Federal interagency 
process. The basis for these values is summarized in the next section, 
and a more detailed description of the methodologies used is provided 
as an appendix to chapter 14 of the final rule TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) 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 \60\ 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.
---------------------------------------------------------------------------

    \60\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. 2009. National Academies 
Press: Washington, DC.
---------------------------------------------------------------------------

    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 group 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

[[Page 6861]]

taken by the key modelers in the field. An extensive review of the 
literature was conducted to select three sets of input parameters for 
these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    In 2010, the interagency group selected four sets of SCC values for 
use in regulatory analyses. Three sets of values are based on the 
average SCC from the three integrated assessment models, at discount 
rates of 2.5, 3, and 5 percent. The fourth set, which represents the 
95th percentile SCC estimate across all three models at a 3-percent 
discount rate, was included to represent higher-than-expected impacts 
from climate change further out in the tails of the SCC distribution. 
The values grow in real terms over time. Additionally, the interagency 
group determined that a range of values from 7 percent to 23 percent 
should be used to adjust the global SCC to calculate domestic 
effects,\61\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions. Table IV.6 
presents the values in the 2010 interagency group report,\62\ which is 
reproduced in appendix 14A of the final rule TSD.
---------------------------------------------------------------------------

    \61\ 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.
    \62\ United States Government-Interagency Working Group on 
Social Cost of Carbon. Social Cost of Carbon for Regulatory Impact 
Analysis Under Executive Order 12866. February 2010. https://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

                      Table IV.6--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).\63\ 
Table IV.7 shows the updated sets of SCC estimates from the latest 
interagency update in 5-year increments from 2010 through 2050. The 
full set of annual SCC estimates from 2010 through 2050 is reported in 
appendix 14B of the final rule TSD. The central value that emerges is 
the average SCC across models at the 3-percent discount rate. However, 
for purposes of capturing the uncertainties involved in regulatory 
impact analysis, the interagency group emphasizes the importance of 
including all four sets of SCC values.
---------------------------------------------------------------------------

    \63\ 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.

            Table IV.7--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
----------------------------------------------------------------------------------------------------------------


[[Page 6862]]

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned previously points out that there is tension 
between the goal of producing quantified estimates of the economic 
damages from an incremental ton of carbon and the limits of existing 
efforts to model these effects. There are a number of analytical 
challenges that are being addressed by the research community, 
including research programs housed in many of the Federal agencies 
participating in the interagency process to estimate the SCC. The 
interagency group intends to periodically review and reconsider those 
estimates to reflect increasing knowledge of the science and economics 
of climate impacts, as well as improvements in modeling.\64\
---------------------------------------------------------------------------

    \64\ 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: This is available at 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 $12.4, $40.6, $63.2, 
and $118 per metric ton avoided (values expressed in 2015$). 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 reduce site NOX emissions 
nationwide and decrease power sector NOX emissions in those 
22 States not affected by the CAIR.
    DOE estimated the monetized value of NOX emissions 
reductions from electricity generation 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.\65\ The report includes high and low values for 
NOX (as PM2.5) for 2020, 2025, and 2030 using 
discount rates of 3 percent and 7 percent; these values are presented 
in appendix 14C of the final rule TSD. DOE primarily relied on the low 
estimates to be conservative.\66\ 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 ceiling fans using a method 
described in appendix 14C of the final rule TSD.
---------------------------------------------------------------------------

    \65\ Available at www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See Tables 4A-3, 4A-4, and 
4A-5 in the report. 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, 577 U.S. __ (2016). 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.
    \66\ 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. [Include this explanation the first time/
previous times where these two cites are referenced.] If the 
benefit-per-ton estimates were based on the Six Cities study 
(Lepuele et al. 2012), the values would be nearly two-and-a-half 
times larger. (See chapter 14 of the final rule TSD for citations 
for the studies mentioned above.)
---------------------------------------------------------------------------

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

N. Employment Impact Analysis

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

[[Page 6863]]

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.\67\ There are many 
reasons for these differences, including wage differences and the fact 
that the utility sector is more capital-intensive and less labor-
intensive than other sectors. Energy conservation standards have the 
effect of reducing consumer utility bills. Because reduced consumer 
expenditures for energy likely lead to increased expenditures in other 
sectors of the economy, the general effect of efficiency standards is 
to shift economic activity from a less labor-intensive sector (i.e., 
the utility sector) to more labor-intensive sectors (e.g., the retail 
and service sectors). Thus, the BLS data suggest that net national 
employment may increase due to shifts in economic activity resulting 
from energy conservation standards.
---------------------------------------------------------------------------

    \67\ See U.S. Department of Commerce--Bureau of Economic 
Analysis. Regional Multipliers: A User Handbook for the Regional 
Input-Output Modeling System (RIMS II). 1997. U.S. Government 
Printing Office: Washington, DC. Available at http://www.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf.
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this final rule using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 3.1.1 
(ImSET).\68\ 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.
---------------------------------------------------------------------------

    \68\ J.M. Roop, M.J. Scott, and R.W. Schultz. ImSET 3.1: Impact 
of Sector Energy Technologies. 2009. Pacific Northwest National 
Laboratory: Richland, WA. PNNL-18412. 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 (2020 and 2025), where these 
uncertainties are reduced. For more details on the employment impact 
analysis, see chapter 16 of the final rule TSD.

V. Analytical Results and Conclusions

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

A. Trial Standard Levels

    In the NOPR analysis, DOE had six TSLs with TSL 6 corresponding to 
maximum technologically feasible (max tech) efficiency level, TSL 5 
corresponding to maximum NPV (at a 7 percent discount rate), and TSL 4 
corresponding to maximum NPV (at a 7 percent discount rate) with 
positive LCC savings. For the final rule, DOE now has five TSLs with 
TSL 5 corresponding to both max tech and maximum NPV, and TSL 4 
corresponding to maximum NPV with an AC motor for all product classes 
other than HSSD fans, and maximum NPV for HSSD fans. The criteria for 
TSLs 1-3 remains unchanged.
    The TSLs for the final rule were developed by combining specific 
efficiency levels for each of the product classes analyzed by DOE. DOE 
presents the results for the TSLs in this document, while the results 
for all efficiency levels that DOE analyzed are in the final rule TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
for ceiling fans. TSL 5 represents the max-tech energy efficiency for 
all product classes.
    TSL 4 corresponds to maximum NPV with an AC motor for all product 
classes other than HSSD fans, and maximum NPV for HSSD fans. In 
addition, at this TSL, less than 50 percent of consumers experience a 
net cost, and large-diameter ceiling fans that provide high levels of 
airflow are not disproportionally impacted. Specifically, for large-
diameter ceiling fans, while max-tech provides LCC savings and NPV that 
are both positive, max-tech has potential unintended consequence of 
disproportionately impacting large diameter fans that provide high 
levels of airflow. DOE does not have enough data to be certain that 
large-diameter ceiling fans at the current max CFM levels offered on 
the market at all diameters can meet the max-tech level, even when 
using brushless DC motors. Therefore, if large-diameter ceiling fans 
that provide the highest levels of airflow in today's market cannot 
meet the max tech level even when using brushless DC motors, these fans 
could be unintentionally eliminated from the market, diminishing 
product availability and utility.
    TSL 3 corresponds to the highest efficiency level that can be met 
with a standard (AC) motor for all product classes. TSL 2 corresponds 
to the fan-optimization design-option efficiency level. TSL 1 
corresponds to the first non-baseline efficiency level (i.e., EL 1).

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


[[Page 6864]]

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on ceiling fans consumers by 
looking at the effects potential amended standards at each TSL would 
have on the LCC and PBP. DOE also examined the impacts of potential 
standards on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency products affect consumers in two 
ways: (1) Purchase price increases and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses product lifetime and a discount rate. Chapter 8 of the final rule 
TSD provides detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.11 show the LCC and PBP results for the 
TSL efficiency levels considered for each product class. In the first 
of each pair of tables, the simple payback is measured relative to the 
baseline product. In the second table, the impacts are measured 
relative to the efficiency distribution in the in the no-new-standards 
case in the compliance year (see section IV.F.7 of this notice). 
Because some consumers purchase products 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 a product 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 Standard Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                           EL                                              First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          113.49           16.99          190.29          303.79  ..............            13.8
1.......................................................          113.49           12.75          144.06          257.55             0.0            13.8
2.......................................................          113.49           11.48          130.20          243.70             0.0            13.8
3.......................................................          124.95           10.33          117.58          242.53             1.7            13.8
4.......................................................          158.01            5.86           75.92          233.93             4.0            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


  Table V.3--Average LCC Savings Relative to the No-New-Standards Case
                Efficiency Distribution for Standard Fans
------------------------------------------------------------------------
                                           Life-cycle cost savings
                                   -------------------------------------
                                        Percent of
                EL                    consumers that      Average LCC
                                      experience net   savings * (2015$)
                                           cost
------------------------------------------------------------------------
                                    .................  .................
1.................................                0.0              46.61
2.................................                0.0              37.20
3.................................               27.5              25.78
4.................................               50.4              26.80
------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                       Table V.4--Average LCC and PBP Results by Efficiency Level for Hugger Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                           EL                                              First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          100.39           15.05          168.74          269.13  ..............            13.8
1.......................................................          100.39           11.30          127.78          228.17             0.0            13.8
2.......................................................          100.39           10.17          115.51          215.90             0.0            13.8
3.......................................................          110.63            9.24          105.27          215.90             1.8            13.8
4.......................................................          139.90            5.52           71.83          211.73             4.1            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


[[Page 6865]]


  Table V.5--Average LCC Savings Relative to the No-New-Standards Case
                 Efficiency Distribution for Hugger Fans
------------------------------------------------------------------------
                                           Life-cycle cost savings
                                   -------------------------------------
                                        Percent of
                EL                    consumers that      Average LCC
                                      experience net   savings * (2015$)
                                           cost
------------------------------------------------------------------------
                                    .................  .................
1.................................                0.0              39.02
2.................................                0.0              31.75
3.................................               27.8              21.50
4.................................               51.4              19.20
------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                         Table V.6--Average LCC and PBP Results by Efficiency Level for VSD Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                           EL                                              First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          268.25           14.12          158.25          426.50  ..............            13.8
1.......................................................          268.25           12.72          142.90          411.15             0.0            13.8
2.......................................................          289.30           11.87          133.65          422.95             9.3            13.8
3.......................................................          352.51            7.82           96.53          449.04            13.4            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


  Table V.7--Average LCC Savings Relative to the No-New-Standards Case
                  Efficiency Distribution for VSD Fans
------------------------------------------------------------------------
                                           Life-cycle cost savings
                                   -------------------------------------
                                        Percent of
                EL                    consumers that      Average LCC
                                      experience net   savings * (2015$)
                                           cost
------------------------------------------------------------------------
                                    .................  .................
1.................................                0.0              16.10
2.................................                2.1               4.29
3.................................               75.8             -25.94
------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                        Table V.8--Average LCC and PBP Results by Efficiency Level for HSSD Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                           EL                                              First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................          145.28           20.27          204.44          349.72  ..............            13.8
1.......................................................          145.28           18.24          184.24          329.52             0.0            13.8
2.......................................................          169.20           17.05          172.35          341.55             7.4            13.8
3.......................................................          177.92           16.92          177.65          355.56             9.8            13.8
4.......................................................          227.81            8.38           92.49          320.30             6.9            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


[[Page 6866]]


  Table V.9--Average LCC Savings Relative to the No-New-Standards Case
                  Efficiency Distribution for HSSD Fans
------------------------------------------------------------------------
                                           Life-cycle cost savings
                                   -------------------------------------
                                        Percent of
                EL                    consumers that      Average LCC
                                      experience net   savings * (2015$)
                                           cost
------------------------------------------------------------------------
                                    .................  .................
1.................................                0.0              20.17
2.................................               58.8              -1.90
3.................................               70.0             -15.81
4.................................               38.7              19.80
------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


                                  Table V.10.--Average LCC and PBP Results by Efficiency Level for Large-Diameter Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                           EL                                              First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
0.......................................................         4119.72          292.21         2921.38         7041.10  ..............            13.8
1.......................................................         4119.72          262.99         2632.90         6752.62             0.0            13.8
2.......................................................         4261.44          239.08         2396.87         6658.31             2.7            13.8
3.......................................................         4458.32          210.14         2110.93         6569.25             4.1            13.8
4.......................................................         4706.71          156.42         1624.11         6330.82             4.3            13.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each EL represent the average result if all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


  Table V.11--Average LCC Savings Relative to the No-New-Standards Case
             Efficiency Distribution for Large-Diameter Fans
------------------------------------------------------------------------
                                           Life-cycle cost savings
                                   -------------------------------------
                                        Percent of
                EL                    consumers that      Average LCC
                                      experience net   savings * (2015$)
                                           cost
------------------------------------------------------------------------
                                    .................  .................
1.................................                0.0             291.52
2.................................                1.0             247.21
3.................................               23.3             128.90
4.................................               16.2             347.93
------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).

    DOE conducted a sensitivity analysis to determine the potential 
impacts to consumers for a scenario in which manufacturers increase 
their manufacturer selling price in order to pass through to consumers 
their conversion costs at TSL 1 and TSL 2. At TSL 1 and TSL 2, DOE 
estimates no incremental installed costs to consumers because the 
assumed design options (e.g., fan optimization) implemented at those 
levels would not result in incremental MPC or differences in 
installation costs based on manufacturer interviews. However, DOE 
estimates that manufacturers will incur conversion costs at TSL 1 and 
TSL 2 to make their products compliant. To provide a high estimate of 
the potential cost impacts on consumers, DOE passed through these 
product conversion costs at TSL 1 and TSL 2 to the higher TSL levels 
and presents the results in appendix 8.E of the TSD. For this 
sensitivity, the LCC savings are positive and the PBPs are less than 
the lifetime of the products for each product class at the chosen TSL 
level.
b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on low-income households and small businesses. Table 
V.12 through
    Table V.16 compare the average LCC savings and PBP at each 
efficiency level for the two consumer subgroups, along with the average 
LCC savings for the entire sample for all the product classes. For 
standard, hugger, and VSD ceiling fans, the average LCC savings and PBP 
for low-income households at the considered efficiency levels are not 
substantially different from the averages for all households. For HSSD 
and large-diameter ceiling fans, the average savings and PBP for small 
businesses at the considered efficiency levels show moderate 
differences from the averages for all businesses, but the differences 
are not significant enough to recommend a different standard level be 
adopted. Chapter 11 of the final rule TSD presents the complete LCC and 
PBP results for the subgroups.

[[Page 6867]]



  Table V.12--Comparison of LCC Savings and PBP for Low-Income Households and All Households for Standard Fans
----------------------------------------------------------------------------------------------------------------
                                          Average LCC savings * (2015$)         Simple payback period (years)
                 EL                  ---------------------------------------------------------------------------
                                             All             Low-income            All             Low-income
----------------------------------------------------------------------------------------------------------------
                                      .................  .................  .................  .................
1...................................              46.61              42.26                0.0                0.0
2...................................              37.20              34.65                0.0                0.0
3...................................              25.78              23.73                1.7                1.7
4...................................              26.80              24.99                4.0                4.0
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


   Table V.13--Comparison of LCC Savings and PBP for Low-Income Households and All Households for Hugger Fans
----------------------------------------------------------------------------------------------------------------
                                          Average LCC savings * (2015$)         Simple payback period (years)
                 EL                  ---------------------------------------------------------------------------
                                             All             Low-income            All             Low-income
----------------------------------------------------------------------------------------------------------------
                                      .................  .................  .................  .................
1...................................              39.02              40.04                0.0                0.0
2...................................              31.75              33.22                0.0                0.0
3...................................              21.50              22.49                1.8                1.8
4...................................              19.20              19.56                4.1                4.2
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


     Table V.14--Comparison of LCC Savings and PBP for Low-Income Households and All Households for VSD Fans
----------------------------------------------------------------------------------------------------------------
                                          Average LCC savings * (2015$)         Simple payback period (years)
                 EL                  ---------------------------------------------------------------------------
                                             All             Low-income            All             Low-income
----------------------------------------------------------------------------------------------------------------
                                      .................  .................  .................  .................
1...................................              16.10              16.90                0.0                0.0
2...................................               4.29               5.99                9.3                9.5
3...................................             -25.94             -27.10               13.4               13.6
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


       Table V.15--Comparison of LCC Savings and PBP for Small Businesses and All Buildings for HSSD Fans
----------------------------------------------------------------------------------------------------------------
                                          Average LCC savings * (2015$)         Simple payback period (years)
                 EL                  ---------------------------------------------------------------------------
                                             All          Small businesses         All          Small businesses
----------------------------------------------------------------------------------------------------------------
                                      .................  .................  .................  .................
1...................................              20.17              17.49                0.0                0.0
2...................................              -1.90              -4.96                7.4                7.4
3...................................             -15.81             -18.39                9.8                9.7
4...................................              19.80               6.08                6.9                6.9
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


  Table V.16--Comparison of LCC Savings and PBP for Small Businesses and All Buildings for Large-Diameter Fans
----------------------------------------------------------------------------------------------------------------
                                          Average LCC savings * (2015$)         Simple payback period (years)
                 EL                  ---------------------------------------------------------------------------
                                             All          Small businesses         All          Small businesses
----------------------------------------------------------------------------------------------------------------
                                      .................  .................  .................  .................
1...................................             291.52             250.66                0.0                0.0
2...................................             247.21             191.28                2.7                2.6
3...................................             128.90              80.70                4.1                4.1
4...................................             347.93             254.52                4.3                4.3
----------------------------------------------------------------------------------------------------------------
* The calculation excludes consumers with zero LCC savings (no impact).


[[Page 6868]]

c. Rebuttable Presumption Payback
    As discussed in section IV.F.8, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for a product that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. 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 procedures for ceiling fans. In contrast, 
the PBPs presented in section V.B.1.a were calculated using 
distributions that reflect the range of energy use in the field.
    Table V.17 presents the rebuttable-presumption payback periods for 
the considered TSLs for ceiling fans. While DOE examined the 
rebuttable-presumption criterion, it considered whether the standard 
levels considered for this rule are economically justified through a 
more detailed analysis of the economic impacts of those levels, 
pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range 
of impacts to the consumer, manufacturer, Nation, and environment. The 
results of that analysis serve as the basis for DOE to evaluate the 
economic justification for a potential standard level, thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification.

                            Table V.17--Rebuttable Presumption Payback Period Results
----------------------------------------------------------------------------------------------------------------
                                                                                                      Large-
               EL                    Standard         Hugger            VSD            HSSD          diameter
----------------------------------------------------------------------------------------------------------------
                                  ..............  ..............  ..............  ..............  ..............
1...............................             0.0             0.0             0.0             0.0             0.0
2...............................             0.0             0.0             9.4             3.5             2.9
3...............................             1.5             1.5            12.6             4.2             4.5
4...............................             3.2             3.3  ..............             3.2             4.7
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of ceiling fans. This section 
describes the expected impacts on manufacturers at each TSL. Chapter 12 
of the final rule TSD explains the analysis in further detail.
a. Industry Cash Flow Analysis Results
    Table V.18 through Table V.20 present the financial impacts, 
represented by changes in INPV, of amended standards on ceiling fan 
manufacturers as well as the conversion costs that DOE estimates 
ceiling fan manufacturers would incur at each TSL. To evaluate the 
range of cash-flow impacts on the ceiling fan industry, DOE modeled 
three manufacturer markup scenarios that correspond to the range of 
anticipated market responses to amended standards. Each scenario 
results in a unique set of cash flows and corresponding industry values 
at each TSL.
    In the following discussion, the INPV results refer to the 
difference in industry value between the no-new-standards case and each 
TSL in the standards cases. INPV is calculated by summing the 
discounted cash flows from the reference year (2016) through the end of 
the analysis period (2049). INPV values vary by the manufacturer markup 
scenario modeled to produce them. DOE believes that these manufacturer 
markup scenarios are most likely to capture the range of impacts on 
ceiling fan manufacturers as a result of the amended energy 
conservation standards. The results also discuss the difference in cash 
flows between the no-new-standards case and the standards cases in the 
year before the compliance date of amended standards. This difference 
in cash flow represents the size of the required conversion costs at 
each TSL relative to the cash flow generated by the ceiling fan 
industry in the absence of amended energy conservation standards.
    To assess the upper (less severe) bound on the range of potential 
impacts on ceiling fan manufacturers, DOE modeled a preservation of 
gross margin, or flat, markup scenario. This scenario assumes that in 
the standards cases, manufacturers would be able to pass along the 
higher production costs required for more efficient products to their 
consumers. Specifically, the industry would be able to maintain its 
average no-new-standards case gross margin (as a percentage of revenue) 
despite the higher product costs in the standards cases. In general, 
the larger the product price increases, the less likely manufacturers 
are to achieve the cash flow from operations calculated in this 
manufacturer markup scenario because it is less likely that 
manufacturers would be able to fully mark up these larger cost 
increases.
    To assess the lower (more severe) bound on the range of potential 
impacts on ceiling fan manufacturers, DOE modeled two additional 
manufacturer markup scenarios; a preservation of operating profit 
markup scenario and a two-tiered markup scenario. In the preservation 
of operating profit markup scenario manufacturers are not able to yield 
additional operating profit from higher production costs and the 
investments that are required to comply with amended ceiling fan energy 
conservation standards, but instead are only able to maintain the same 
operating profit in the standards cases that was earned in the no-new-
standards case. This scenario represents a potential lower bound on the 
range of impacts on manufacturers because manufacturers are only able 
to maintain the operating profit that they would have earned in the no-
new-standards case despite higher production costs and investments. 
Manufacturers must therefore, reduce margins as a result of this 
manufacturer markup scenario, which reduces profitability.
    DOE also modeled a two-tiered markup scenario as a potential lower 
(more severe) bound on the range of potential impacts on ceiling fan 
manufacturers. In this manufacturer markup scenario, manufacturers have 
two tiers of markups that are differentiated, in part, by efficiency 
level. The higher efficiency tiers typically earn premiums (for the 
manufacturer) over the baseline efficiency tier. Several manufacturers 
suggested that amended standards would lead to a reduction in premium 
markups and reduce the profitability of higher efficiency products. 
During the MIA interviews, manufacturers provided information on the 
range of typical efficiency levels in those tiers and the change in 
profitability at each level. DOE used this information to estimate 
markups for ceiling fans under a two-tiered pricing strategy in the no-
new-standards case. In the standards cases, DOE modeled the situation 
in which standards result in less product

[[Page 6869]]

differentiation, compression of the markup tiers, and an overall 
reduction in profitability.

     Table V.18--Manufacturer Impact Analysis for Ceiling Fans--Preservation of Gross Margin Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                   Trial standard levels
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2015$ millions.    1,211.6    1,214.6    1,227.2    1,213.2    1,206.8    1,265.3
Change in INPV...............  2015$ millions.  .........        3.0       15.6        1.6      (4.8)       53.8
                               %..............  .........        0.2        1.3        0.1      (0.4)        4.4
Product Conversion Costs.....  2015$ millions.  .........        5.1        9.4       31.7       33.2       46.5
Capital Conversion Costs.....  2015$ millions.  .........        7.1       13.1       63.0       66.7      109.5
Total Conversion Costs.......  2015$ millions.  .........       12.3       22.5       94.7       99.9      155.9
----------------------------------------------------------------------------------------------------------------


   Table V.19--Manufacturer Impact Analysis for Ceiling Fans--Preservation of Operating Profit Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                   Trial standard levels
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2015$ millions.    1,211.6    1,200.8    1,188.6    1,107.9    1,092.1      926.7
Change in INPV...............  2015$ millions.  .........     (10.7)     (23.0)    (103.7)    (119.4)    (284.8)
                               %..............  .........      (0.9)      (1.9)      (8.6)      (9.9)     (23.5)
Product Conversion Costs.....  2015$ millions.  .........        5.1        9.4       31.7       33.2       46.5
Capital Conversion Costs.....  2015$ millions.  .........        7.1       13.1       63.0       66.7      109.5
Total Conversion Costs.......  2015$ millions.  .........       12.3       22.5       94.7       99.9      155.9
----------------------------------------------------------------------------------------------------------------


              Table V.20--Manufacturer Impact Analysis for Ceiling Fans--Two-Tiered Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                   Trial standard levels
                                    Units       standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
INPV.........................  2015$ millions.    1,211.6    1,232.8    1,275.8    1,123.8    1,116.6    1,164.2
Change in INPV...............  2015$ millions.  .........       21.2       64.3     (87.7)     (95.0)     (47.3)
                               %..............  .........        1.8        5.3      (7.2)      (7.8)      (3.9)
Product Conversion Costs.....  2015$ millions.  .........        5.1        9.4       31.7       33.2       46.5
Capital Conversion Costs.....  2015$ millions.  .........        7.1       13.1       63.0       66.7      109.5
Total Conversion Costs.......  2015$ millions.  .........       12.3       22.5       94.7       99.9      155.9
----------------------------------------------------------------------------------------------------------------

    TSL 1 sets the efficiency level at EL 1 for all ceiling fans. At 
TSL 1, DOE estimates that impacts on INPV range from -$10.7 million to 
$21.2 million, or changes in INPV of -0.9 percent to 1.8 percent. At 
TSL 1, industry free cash flow (operating cash flow minus capital 
expenditures) is expected to decrease by approximately 6.3 percent to 
$69.9 million, compared to the no-new-standards case value of $74.6 
million in 2019, the year leading up to the standards.
    Percentage impacts on INPV are slightly negative to slightly 
positive at TSL 1. DOE estimates that 77 percent of standard and hugger 
ceiling fan shipments, 96 percent of VSD ceiling fan shipments, 55 
percent of HSSD ceiling fan shipments, and 95 percent of large-diameter 
ceiling fan shipments would meet or exceed the efficiency levels 
required at TSL 1.
    DOE expects conversion costs to be small at TSL 1 because most of 
the ceiling fan shipments, on a total volume basis, already meet or 
exceed the efficiency levels required at TSL 1. DOE estimates that 
ceiling fan manufacturers will incur a total of $12.3 million in 
conversion costs at TSL 1 based on estimates for product conversion 
costs and capital conversion costs. DOE estimates that ceiling fan 
manufacturers will incur $5.1 million in product conversion costs as 
they must develop and redesign any ceiling fan models that do not meet 
the efficiency levels required at TSL 1. DOE estimates that 
manufacturers will incur $7.1 million in capital conversion costs at 
TSL 1, as ceiling fan manufacturers most likely will need to purchase 
new tooling for any redesigned models.
    At TSL 1, the shipment-weighted average MPC for all ceiling fans 
increases by approximately 1.5 percent relative to the no-new-standards 
case shipment-weighted average MPC for all ceiling fans in 2020, the 
year of compliance for amended ceiling fan energy conservation 
standards. In the preservation of gross margin markup scenario, 
manufacturers are able to fully pass on this slight cost increase to 
consumers. The slight increase in the shipment-weighted average MPC for 
all ceiling fans outweighs the $12.3 million in conversion costs, 
causing a slightly positive change in INPV at TSL 1 under the 
preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, 
manufacturers earn the same operating profit as would be earned in the 
no-new-standards case, but manufacturers do not earn additional profit 
from their investments. The average manufacturer markup for both the 
preservation of operating profit and two-tiered markup scenarios is 
calculated by averaging the ceiling fan industry manufacturer markup, 
for all ceiling fan product classes in aggregate, from the year of 
compliance (2020) until

[[Page 6870]]

the terminal year (2049). In this scenario, the 1.5 percent increase in 
the shipment-weighted average MPC for all ceiling fans results in a 
slight reduction in average manufacturer markup, from 1.370 in the no-
new-standards case to 1.368 at TSL1. The slight reduction in average 
manufacturer markup and $12.3 million in conversion costs causes a 
slightly negative change in INPV at TSL 1 under the preservation of 
operating profit markup scenario.
    Under the two-tiered markup scenario, where manufacturers earn 
different markups for more efficient products, the average manufacturer 
markup increases from 1.370 in the no-new-standards case to 1.373 at 
TSL 1 as more shipments are purchased at the higher markup efficiency 
tiers. The increase in the average manufacturer markup and the increase 
in the shipment-weighted average MPC for all ceiling fans outweigh the 
$12.3 million in conversion costs, causing a slightly positive change 
in INPV at TSL 1 under the two-tiered markup scenario.
    TSL 2 sets the efficiency level at EL 1 for VSD, HSSD, and large-
diameter ceiling fans and EL 2 for standard and hugger ceiling fans. At 
TSL 2, DOE estimates that impacts on INPV range from -$23.0 million to 
$64.3 million, or changes in INPV of -1.9 percent to 5.3 percent. At 
this TSL, industry free cash flow is estimated to decrease by 
approximately 11.5 percent to $66.0 million, compared to the no-new-
standards case value of $74.6 million in 2019.
    Percentage impacts on INPV range from slightly negative to slightly 
positive at TSL 2. DOE projects that in 2020, 55 percent of standard 
and hugger ceiling fan shipments, 96 percent of VSD ceiling fan 
shipments, 55 percent of HSSD ceiling fan shipments, and 95 percent of 
large-diameter ceiling fan shipments would meet or exceed the 
efficiency levels required at TSL 2.
    DOE expects conversion costs to be moderate at TSL 2 because most 
of the ceiling fan shipments, on a total volume basis, currently meet 
or exceed the efficiency levels analyzed at TSL 2. DOE estimates that 
manufacturers will incur a total of $22.5 million in conversion costs 
at TSL 2. DOE estimates that manufacturers will incur $9.4 million in 
product conversion costs at TSL 2 as manufacturers must develop and 
redesign any ceiling fan models that do not meet the efficiency levels 
required at TSL 2. Capital conversion costs are estimated to be $13.1 
million at TSL 2. Capital conversion costs at TSL 2 are driven by 
investments in tooling needed to further optimize standard and hugger 
ceiling fans to meet the efficiency levels required at TSL 2.
    At TSL 2, the shipment-weighted average MPC for all ceiling fans 
increases by approximately 4.2 percent relative to the no-new-standards 
case shipment-weighted average MPC for all ceiling fans in 2020. In the 
preservation of gross margin markup scenario, manufacturers are able to 
recover their $22.5 million in conversion costs over the course of the 
analysis period through the increase in the shipment-weighted MPC for 
all ceiling fans, causing a slightly positive change in INPV at TSL 2 
under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, the 4.2 
percent increase in the shipment-weighted average MPC for all ceiling 
fans results in a slight reduction in the average manufacturer markup, 
from 1.370 in the no-new-standards case to 1.365 at TSL 2. The slight 
reduction in the average manufacturer markup and $22.5 million in 
conversion costs cause a slightly negative change in INPV at TSL 2 
under the preservation of operating profit scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup increases from 1.370 in the no-new-standards case to 1.377 at 
TSL 2 as more shipments are purchased at the higher markup efficiency 
tiers. The increase in the average manufacturer markup and the increase 
in the shipment-weighted average MPC for all ceiling fans outweigh the 
$22.5 million in conversion costs, causing a slightly positive change 
in INPV at TSL 2 under the two-tiered markup scenario.
    TSL 3 sets the efficiency level at EL 2 for VSD ceiling fans and EL 
3 for standard, hugger, HSSD, and large-diameter ceiling fans. At TSL 
3, DOE estimates that impacts on INPV range from -$103.7 million to 
$1.6 million, or changes in INPV of -8.6 percent to 0.1 percent. At 
this level, industry free cash flow is estimated to decrease by 
approximately 50.1 percent to $37.2 million, compared to the no-new-
standards case value of $74.6 million in 2019.
    Percentage impacts on INPV range from moderately negative to 
slightly positive at TSL 3. DOE projects that in 2020, 32 percent of 
standard and hugger ceiling fan shipments, 96 percent of VSD ceiling 
fan shipments, 11 percent of HSSD ceiling fan shipments, and 31 percent 
of large-diameter ceiling fan shipments would meet or exceed the 
efficiency levels analyzed at TSL 3.
    DOE expects higher conversion costs at TSL 3 than at lower TSLs 
because manufacturers will be required to redesign and retest a 
significant portion of their ceiling fan models that do not meet the 
efficiency levels required at this TSL. DOE estimates that 
manufacturers will incur $31.7 million in product conversion costs at 
TSL 3 as manufacturers must research, develop, and redesign numerous 
ceiling fan models to meet the efficiency levels required at TSL 3. 
Capital conversion costs are estimated to be $63.0 million at TSL 3. 
Capital conversion costs at TSL 3 are driven by retooling costs 
associated with producing redesigned standard, hugger, and VSD ceiling 
fans with larger direct drive motors; HSSD ceiling fans with air foil 
blades; and large-diameter ceiling fans with premium AC motors and 
airfoil blades.
    At TSL 3, the shipment-weighted average MPC increases by 
approximately 11.5 percent for all ceiling fans relative to the no-new-
standards case MPC in 2020. In the preservation of gross margin markup 
scenario, manufacturers are able to recover their $94.7 million in 
conversion costs through the moderate increase in MPC over the course 
of the analysis period causing a slightly positive change in INPV at 
TSL 3 under the preservation of gross margin markup scenario.
    Under the preservation of operating profit markup, the 11.5 percent 
MPC increase for all ceiling fans results in a reduction in 
manufacturer markup after the compliance year, from 1.370 in the no-
new-standards case to 1.356 at TSL 3. This reduction in manufacturer 
markup and $94.7 million in conversion costs incurred by manufacturers 
cause a moderately negative change in INPV at TSL 3 under the 
preservation of operating profit scenario.
    Under the two-tiered markup scenario, the average manufacturer 
markup decreases from 1.370 in the no-new-standards case to 1.359 at 
TSL 3. At TSL 3 under the two-tiered markup scenario, manufacturers 
reduce their markups on their more efficient shipments, as these 
premium products are no longer able to earn higher markups as they 
become the baseline due to standards. The decrease in the average 
manufacturer markup and the $94.7 million in conversion costs incurred 
by manufacturers outweighs the moderate increase in the shipment-
weighted average MPC for all ceiling fans, causing a moderately 
negative change in INPV at TSL 3 under the two-tiered markup scenario.
    TSL 4 sets the efficiency level at EL 2 for VSD ceiling fans; EL 3 
for standard, hugger, and large-diameter ceiling fans; and EL 4 for 
HSSD ceiling fans. At TSL 4, DOE estimates impacts

[[Page 6871]]

on INPV range from -$119.4 million to -$4.8 million, or decreases in 
INPV of -9.9 percent to -0.4 percent. At this level, industry free cash 
flow is estimated to decrease by approximately 52.9 percent to $35.1 
million, compared to the no-new-standards case value of $74.6 million 
in 2019.
    Percentage impacts on INPV range from moderately negative to 
slightly negative at TSL 4. DOE projects that in 2020, 32 percent of 
standard and hugger ceiling fan shipments, 96 percent of VSD ceiling 
fan shipments, 8 percent of HSSD ceiling fan shipments, and 31 percent 
of large-diameter ceiling fan shipments would meet or exceed efficiency 
levels analyzed at TSL 4.
    For TSL 4, DOE concluded that manufacturers would likely use DC 
motors in the HSSD ceiling fan product class. DOE estimates that 
manufacturers will incur a total of $99.9 million in conversion costs 
at TSL 4. DOE estimates that manufacturers will incur $33.2 million in 
product conversion costs at TSL 4 as manufacturers must research, 
develop, and redesign numerous ceiling fan models to meet the 
efficiency levels required at TSL 4. Capital conversion costs are 
estimated to be $66.7 million at TSL 4. Capital conversion costs at TSL 
4 are driven by retooling costs associated with producing redesigned 
standard, hugger, and VSD ceiling fans with larger direct drive motors; 
HSSD ceiling fans with DC motors and airfoil blades; and large-diameter 
ceiling fans with premium AC motors and airfoil blades.
    At TSL 4, the shipment-weighted average MPC for all ceiling fans 
increases by approximately 12.8 percent relative to the no-new-
standards case shipment-weighted average MPC for all ceiling fans in 
2020. In the preservation of gross margin markup scenario, 
manufacturers are not able to recover their $99.9 million in conversion 
costs over the course of the analysis period through the moderate 
increase in the shipment-weighted average MPC for all ceiling fans, 
causing a slightly negative change in INPV at TSL 4 under the 
preservation of gross margin markup scenario.
    Under the preservation of operating profit markup scenario, the 
12.8 percent increase in the shipment-weighted average MPC for all 
ceiling fans results in a reduction of the average manufacturer markup, 
from 1.370 in the no-new-standards case to 1.355 at TSL 4. The 
reduction of the average manufacturer markup and $99.9 million in 
conversion costs cause a moderately negative change in INPV at TSL 4 
under the preservation of operating profit scenario.
    Under the two-tiered markup scenario, the increase in the shipment-
weighted average MPC for all ceiling fans results in a reduction of the 
average manufacturer markup, from 1.370 in the no-new-standards case to 
1.359 at TSL 4. At TSL 4 under the two-tiered markup scenario, 
manufacturers reduce their markups on their more efficient shipments, 
as these premium products are no longer able to earn higher markups as 
they become the baseline due to standards. The decrease in the average 
manufacturer markup and the $99.9 million in conversion costs outweigh 
the increase in the shipment-weighted average MPC for all ceiling fans, 
causing a moderately negative change in INPV at TSL 4 under the two-
tiered markup scenario.
    TSL 5 represents max-tech for all ceiling fan product classes. This 
TSL sets the efficiency level at EL 3 for VSD ceiling fans and EL 4 for 
standard, hugger, HSSD, and large-diameter ceiling fans. At TSL 5, DOE 
estimates that impacts on INPV range from -$284.8 million to $53.8 
million, or changes in INPV of -23.5 percent to 4.4 percent. At this 
level, industry free cash flow is estimated to decrease by 
approximately 83.4 percent to $12.4 million, compared to the no-new-
standards case value of $74.6 million in 2019.
    Percentage impacts on INPV range from significantly negative to 
slightly positive at TSL 5. DOE projects that in 2020, 3 percent of 
standard ceiling fan shipments, 4 percent of hugger ceiling fan 
shipments, no VSD ceiling fan shipments, 8 percent of HSSD ceiling fan 
shipments, and 17 percent of large-diameter ceiling fan shipments would 
meet the efficiency levels analyzed at TSL 5.
    DOE estimates that manufacturers will incur a total of $155.9 
million in conversion costs at TSL 5. DOE estimates that manufacturer 
will incur $46.5 million in product conversion costs at TSL 5 as 
manufacturers must research, develop, and redesign the vast majority of 
their ceiling fan models to meet the efficiency levels required at TSL 
5. Capital conversion costs are estimated to be $109.5 million at TSL 
5, driven by retooling costs associated with producing redesigned, max-
tech standard, hugger, and VSD ceiling fans with DC motors; and HSSD 
and large-diameter ceiling fans with DC motors and airfoil blades.
    At TSL 5, the shipment-weighted average MPC for all ceiling fans 
significantly increases by approximately 45.1 percent relative to the 
no-new-standards case shipment-weighted average MPC for all ceiling 
fans in 2020. In the preservation of gross margin markup scenario, 
manufacturers are able to recover their $155.9 million in conversion 
costs over the course of the analysis period through the significant 
increase in the shipment-weighted average MPC for all ceiling fans, 
causing a positive change in INPV at TSL 5 under the preservation of 
gross margin markup scenario.
    Under the preservation of operating profit markup scenario, the 
45.1 percent increase in the shipment-weighted MPC for all ceiling fans 
results in a reduction of the average manufacturer markup, from 1.370 
in the no-new-standards case to 1.332 at TSL 5. The reduction of the 
average manufacturer markup and $155.9 million in conversion costs 
cause a significantly negative change in INPV at TSL 5 under the 
preservation of operating profit markup scenario.
    Under the two-tiered markup scenario, the 45.1 percent increase in 
the shipment-weighted average MPC for all ceiling fans results in a 
reduction of the average manufacturer markup, from 1.370 in the no-new-
standards case to 1.359 at TSL 5. At TSL 5 under the two-tiered markup 
scenario, manufacturers reduce their markups on their more efficient 
shipments, as these premium products are no longer able to earn higher 
markups as they become the baseline due to standards. The decrease in 
the average manufacturer markup and $155.9 million in conversion costs 
outweigh the increase in the shipment-weighted average MPC for all 
ceiling fans, causing a slightly negative change in INPV at TSL 5 under 
the two-tiered markup scenario.
b. Impacts on Employment
    DOE quantitatively assessed the impacts of amended energy 
conservation standards on direct employment in the ceiling fan 
industry. DOE used the GRIM to estimate the domestic labor expenditures 
and number of domestic production workers in the no-new-standards case 
and at each TSL from 2016 to 2049. DOE used statistical data from the 
U.S. Census Bureau's 2014 Annual Survey of Manufacturers, the results 
of the engineering analysis, and interviews with manufacturers to 
determine the inputs necessary to calculate industry-wide labor 
expenditures and domestic employment levels. Labor expenditures 
involved with the manufacturing of the product are a function of the 
labor intensity of the product, the sales volume, and an assumption 
that wages remain fixed in real terms over time.
    In the GRIM, DOE used the labor content of ceiling fans and the 
MPCs to estimate the annual labor expenditures

[[Page 6872]]

in the industry. DOE used Census data and interviews with manufacturers 
to estimate the portion of the total labor expenditures that is 
attributable to domestic labor.
    The production worker estimates in this section only cover workers 
up to the line-supervisor level directly involved in fabricating and 
assembling a product within a manufacturing facility. Workers 
performing services that are closely associated with production 
operations, such as material handing with a forklift, are also included 
as production labor. DOE's estimates account for production workers who 
manufacture only the specific products covered by this rulemaking.
    Table V.21 represents the potential impacts the amended standards 
could have on domestic production employment. The upper bound of the 
results estimates the maximum change in the number of production 
workers that could occur after compliance with amended energy 
conservation standards when assuming that manufacturers continue to 
produce the same scope of covered products in the same production 
facilities. It also assumes that domestic production does not shift to 
lower labor-cost countries. Because there is a real risk of 
manufacturers evaluating sourcing and production facility location 
decisions in response to amended energy conservation standards, the 
lower bound of the employment results estimate the maximum decrease in 
domestic production workers in the industry if some or all existing 
production was moved outside of the United States. While the results 
present a range of estimates, the following sections also include 
qualitative discussions of the employment impacts at the various TSLs. 
Finally, the domestic production employment impacts shown are 
independent of the employment impacts from the broader U.S. economy, 
documented in chapter 17 of the final rule TSD.
    DOE estimates that in the absence of amended energy conservation 
standards, there would be approximately 33 domestic production workers 
involved in manufacturing ceiling fans in 2020. Table V.21 presents the 
range of potential impacts of amended energy conservation standards on 
U.S. production workers in the ceiling fan industry.

      Table V.21--Potential Changes in the Total Number of Domestic Ceiling Fan Production Workers in 2020
----------------------------------------------------------------------------------------------------------------
                                                 No-new-                    Trial standard level
                                                standards ------------------------------------------------------
                                                   case        1          2          3          4          5
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in         33         33         33         32         32         28
 2020 (without changes in production
 locations)...................................
Potential Changes in Domestic Production        .........     0-(33)     0-(33)   (1)-(33)   (1)-(33)   (5)-(33)
 Workers in 2020 *............................
----------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

    At the upper end of the employment impact range, DOE expects there 
to be slight or no negative impacts on domestic production employment 
at each of the TSLs. Slight negative impacts on domestic production 
employment at higher TSLs are driven by the reduction in total ceiling 
fan shipments. DOE included price elasticity as part of the shipments 
analysis, so as the average price of ceiling fans increases due to 
amended standards, fewer ceiling fans would be sold. Therefore, the 
amount of labor associated with these fewer shipments also decreases. 
It is important to note that while the average total MPC increases for 
more efficient ceiling fans, the increase in MPC is almost entirely 
attributed to the increase in the material costs used to produce more 
efficient fans. The amount of labor associated with producing more 
efficient ceiling fans remains virtually the same even as the total MPC 
of a ceiling fan increases at higher efficiency levels.
    At the lower end of the range, DOE models a situation where all 
domestic employment associated with ceiling fan production moves abroad 
as a result of energy conservation standards. The majority of 
manufacturers that have domestic production produce large-diameter 
ceiling fans. Moving production of large-diameter fans abroad would 
result in significantly high shipping costs. Based on the prohibitive 
shipping costs and manufacturer feedback, DOE does not expect the 
impacts on domestic production employment to approach the lower bound 
at any TSL.
    At TSL 4, the TSL adopted in today's final rule, DOE concludes 
that, based on the shipment analysis, manufacturer interviews, and the 
results of the direct domestic employment analysis, manufacturers could 
face a slight negative impact on domestic production employment due to 
a slight reduction in overall ceiling fan shipments in 2020.
c. Impacts on Manufacturing Capacity
    Ceiling fan manufacturers stated that they anticipate manufacturing 
capacity constraints if all ceiling fans are required to use DC motors 
to comply with the amended energy conservation standards. DOE learned 
during interviews that manufacturers primarily source motors for 
ceiling fans from either ceiling fan original equipment manufacturers 
or directly from motor manufacturers and then insert them into their 
ceiling fan models. During interviews, manufacturers stated that demand 
for DC motors may outpace supply if DC motors are required for all 
ceiling fans to comply with amended standards. Manufacturers expressed 
concern during interviews that currently only a few ceiling fan 
shipments incorporate DC motors, and there would be major sourcing 
concerns if all ceiling fan were required to use DC motors.
    Manufacturers would most likely meet the standard required at TSL 4 
for the HSSD ceiling fans by using DC motors, HSSD ceiling fans only 
account for less than 3 percent of all ceiling fan shipments. 
Therefore, DOE does not anticipate a manufacturer capacity constraint 
on the supply of DC motors for this small portion of the overall 
ceiling fan market. DOE expects that the motor manufacturers that 
supply ceiling fan manufacturers with DC motors would be able to 
increase production of DC motors in the 3 years from the publication of 
the final rule to the compliance date of the final rule to meet demand 
for ceiling fans that require DC motors due to amended standards. DOE 
does not anticipate any significant impact on the manufacturing 
capacity as a result of the adopted amended energy conservation 
standards in this final rule. See section V.C.1 for more details on the 
standard adopted in this rulemaking.
d. Impacts on Subgroups of Manufacturers
    Using average cost assumptions to develop an industry cash-flow 
estimate may not be adequate for assessing

[[Page 6873]]

differential impacts among manufacturer subgroups. Small manufacturers, 
niche product manufacturers, and manufacturers exhibiting cost 
structures substantially different from the industry average could be 
affected disproportionately. DOE identified only one manufacturer 
subgroup that required a separate analysis in the MIA; small 
businesses. DOE analyzes the impacts on small businesses in a separate 
analysis in section VI.B. DOE did not identify any other adversely 
impacted manufacturer subgroups for ceiling fans for this rulemaking 
based on the results of the industry characterization.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of recent or impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. Multiple 
regulations affecting the same manufacturer can strain profits and lead 
companies to abandon product lines or markets with lower expected 
future returns than competing products. For these reasons, DOE conducts 
a cumulative regulatory burden analysis as part of its rulemaking for 
ceiling fans.
    DOE identified a number of requirements, in addition to amended 
energy conservation standards for ceiling fans, that ceiling fan 
manufacturers will face for products they manufacture approximately 
three years leading up to and three years following the compliance date 
of these amended standards. The following section addresses key related 
concerns that manufacturers raised during interviews regarding 
cumulative regulatory burden.
    Manufacturers raised concerns about existing regulations and 
certifications separate from DOE's energy conservation standards that 
ceiling fan manufacturers must meet. These include California Title 20, 
which has the same energy conservation standards to DOE's existing 
ceiling fan standards, but requires an additional certification, and 
California Air Resources Board Standards limiting the amount of 
formaldehyde in composite wood used to make fan blades, among others.
    DOE discusses these and other requirements in chapter 12 of the 
final rule TSD, which lists the estimated compliance costs of those 
requirements when available. In considering the cumulative regulatory 
burden, DOE evaluates the timing of regulations that affect the same 
product, because the coincident requirements could strain financial 
resources in the same profit center and consequently affect capacity. 
DOE also identified the ceiling fan light kit standards rulemaking as a 
source of additional cumulative regulatory burden on ceiling fan 
manufacturers.
    DOE has published a final rule pertaining to energy conservation 
standards for ceiling fan light kits. 81 FR 581 The ceiling fan light 
kit standard affects the majority of ceiling fan manufacturers and will 
require manufacturers impacted by both standards to make investments to 
bring both ceiling fan light kits and ceiling fans into compliance 
during the same time period. Additionally, redesigned ceiling fan light 
kits could potentially require adjustments to ceiling fan redesigns 
that are separate from those potentially required by the amended 
ceiling fan rule.
    In addition to the amended energy conservation standards on ceiling 
fans, several other existing and pending Federal regulations may apply 
to other products produced by ceiling fan manufacturers. DOE 
acknowledges that each regulation can affect a manufacturer's financial 
operations. Multiple regulations affecting the same manufacturer can 
strain manufacturers' profit and possibly cause them to exit particular 
markets. Table V.22 presents other DOE energy conservation standards 
that could also affect ceiling fan manufacturers in the three years 
leading up to and after the compliance date of amended energy 
conservation standards for these products.

                                    Table V.22--Other DOE Regulations Potentially Affecting Ceiling Fan Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Number of
                                    Number of    Approximate                                                                               manufacturers
           Regulation             manufacturers   compliance   Estimated industry total conversion          Annual industry revenue         from today's
                                        *            date                    expenses                                                      rule affected
                                                                                                                                                 **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Electric Motors, 79 FR 30933                 7          2016  $84.6 million (2013$)................  $3,880 million (2013$)..............             1
 (May 29, 2014).
General Service Fluorescent                 47          2018  $26.6 million (2013$)................  $2,820 million (2013$)..............             1
 Lamps, 80 FR 4042 (January 26,
 2015).
Ceiling Fan Light Kits, 81 FR               67          2019  $18.9 million (2014$)................  $310 million (2014$)................            53
 580 (January 6, 2016).
Commercial Industrial Fans and    [dagger] 242      [dagger]  TBD [dagger].........................  TBD [dagger]........................    [dagger] 8
 Blowers [dagger].                                      2019
General Service Lamps, 81 FR      [dagger] 142      [dagger]  $509.0 million (2014$) [dagger]......  1,903 million (2014$) [dagger]......    [dagger] 1
 14528 (NOPR) March 17, 2016                            2020
 [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The number of manufacturers listed in the final rule for the energy conservation standard that is contributing to cumulative regulatory burden
** The number of manufacturers producing ceiling fans that are affected by the listed energy conservation standards
[dagger] The final rule for this energy conservation standard has not been published.

    DOE did not receive any data on other regulatory costs that affect 
the industry modeled in the cash-flow analysis.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for ceiling fans, DOE compared their energy consumption under the no-
new-standards case to their anticipated energy consumption under each 
TSL. The savings are measured over the entire lifetime of products 
purchased in the 30-year period that begins in the first full year of 
anticipated compliance with amended standards (2020-2049). Table V.23 
presents DOE's projections of the national energy savings for each TSL 
considered for ceiling fans. The savings were calculated using the 
approach described in section IV.H.1 of this notice.

[[Page 6874]]



             Table V.23--Cumulative National Energy Savings for Ceiling Fans; 30 Years of Shipments
                                                   [2020-2049]
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                                                       Quads
                                 -------------------------------------------------------------------------------
Primary energy..................           0.772           1.205           1.760           1.921           3.577
FFC energy......................           0.807           1.260           1.839           2.008           3.738
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \69\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using nine, rather than 30, years 
of product shipments. The choice of a 9-year period is a proxy for the 
timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\70\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to ceiling fans. Thus, such results 
are presented for informational purposes only and are not indicative of 
any change in DOE's analytical methodology. The NES sensitivity 
analysis results based on a 9-year analytical period are presented in 
Table V.24. The impacts are counted over the lifetime of ceiling fans 
purchased in 2020-2028.
---------------------------------------------------------------------------

    \69\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. www.whitehouse.gov/omb/circulars_a004_a-4/.
    \70\ 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 products, the 
compliance period is 5 years rather than 3 years.

              Table V.24--Cumulative National Energy Savings for Ceiling Fans; 9 Years of Shipments
                                                   [2020-2028]
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                                                       quads
                                 -------------------------------------------------------------------------------
Primary energy..................           0.221           0.332           0.465           0.510           1.068
FFC energy......................           0.231           0.347           0.486           0.533           1.116
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for ceiling fans. 
In accordance with OMB's guidelines on regulatory analysis,\71\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V.25 shows the consumer NPV results with impacts counted 
over the lifetime of products purchased in 2020-2049.
---------------------------------------------------------------------------

    \71\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. www.whitehouse.gov/omb/circulars_a004_a-4/.

      Table V.25--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans; 30 Years of Shipments
                                                   [2020-2049]
----------------------------------------------------------------------------------------------------------------
                                                       Trial standard level (billion 2015$)
          Discount rate          -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
3 percent.......................           6.464           9.286          11.389          12.123          21.006
7 percent.......................           2.700           3.744           4.228           4.488           7.454
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.26. The impacts are counted over the 
lifetime of products purchased in 2020-2028. 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.

[[Page 6875]]



      Table V.26--Cumulative Net Present Value of Consumer Benefits for Ceiling Fans; 9 Years of Shipments
                                                   [2020-2028]
----------------------------------------------------------------------------------------------------------------
                                                       Trial standard level (billion 2015$)
          Discount rate          -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
3 percent.......................           2.302           3.165           3.556           3.752           6.298
7 percent.......................           1.312           1.753           1.814           1.904           2.895
----------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a default trend to estimate 
the change in price for ceiling fans over the analysis period (see 
section IV.G of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with no price decline. The 
results of these alternative cases are presented in appendix 10C of the 
NOPR TSD.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for ceiling fans to 
reduce energy bills for consumers of those products, with the resulting 
net savings being redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. As described in section IV.N of this document, DOE 
used an input/output model of the U.S. economy to estimate indirect 
employment impacts of the TSLs that DOE considered in this rulemaking. 
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 
(2020-2025), where these uncertainties are reduced.
    The results suggest that the adopted standards are likely to have a 
negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 16 of the final rule TSD presents detailed results 
regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    Based on testing and teardowns conducted in support of this rule as 
discussed in section IV.C of this notice, DOE has concluded that the 
standards adopted in this final rule would not reduce the utility or 
performance of the ceiling fans under consideration in this rulemaking. 
Manufacturers of these products currently offer units that meet or 
exceed the adopted standards.
5. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that would be likely to 
result from new or amended standards. As discussed in section 
III.E.1.e, the Attorney General of the United States (Attorney General) 
to determine the impact, if any, of any lessening of competition likely 
to result from a proposed standard and to transmit such determination 
in writing to the Secretary within 60 days of the publication of a 
proposed rule, together with an analysis of the nature and extent of 
the impact. To assist the Attorney General in making this 
determination, DOE provided the Department of Justice (DOJ) with copies 
of the NOPR and the TSD for review. In its assessment letter responding 
to DOE, DOJ concluded that the proposed energy conservation standards 
for ceiling fans are unlikely to have a significant adverse impact on 
competition. DOE is publishing the Attorney General's assessment at the 
end of this final rule.
6. Need of the Nation To Conserve Energy
    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 final rule 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 resulting from amended standards for ceiling 
fans is expected to yield environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases. Table V.27 provides 
DOE's estimate of cumulative emissions reductions expected to result 
from the TSLs considered in this rulemaking. The table includes both 
power sector emissions and upstream emissions. The emissions were 
calculated using the multipliers discussed in section IV.K. DOE reports 
annual emissions reductions for each TSL in chapter 13 of the final 
rule TSD.

                Table V.27--Cumulative Emissions Reduction for Ceiling Fans Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                               Trial standard level
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......           45.79           71.38          104.07          113.66          212.43
SO2 (thousand tons).............           25.38           39.50           57.48           62.75          117.87
NOX (thousand tons).............           51.65           80.54          117.49          128.34          239.51
Hg (tons).......................            0.09            0.15            0.21            0.23            0.44
CH4 (thousand tons).............            3.67            5.71            8.31            9.08           17.03
N2O (thousand tons).............            0.52            0.81            1.17            1.28            2.40
----------------------------------------------------------------------------------------------------------------

[[Page 6876]]

 
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            2.64            4.12            6.02            6.58           12.23
SO2 (thousand tons).............            0.49            0.76            1.11            1.22            2.26
NOX (thousand tons).............           37.87           59.12           86.36           94.31          175.36
Hg (tons).......................            0.00            0.00            0.00            0.00            0.00
CH4 (thousand tons).............          209.18          326.60          477.10          521.03          968.66
N2O (thousand tons).............            0.02            0.04            0.06            0.06            0.11
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......           48.43           75.50          110.09          120.24          224.66
SO2 (thousand tons).............           25.87           40.26           58.59           63.97          120.13
NOX (thousand tons).............           89.51          139.66          203.85          222.65          414.87
Hg (tons).......................            0.10            0.15            0.22            0.24            0.44
CH4 (thousand tons).............          212.85          332.31          485.41          530.11          985.69
CH4 (thousand tons COeq) *......         5959.68         9304.79        13591.50        14843.04        27599.41
N2O (thousand tons).............            0.54            0.84            1.23            1.34            2.51
N2O (thousand tons COeq) *......          143.43          223.33          325.12          354.94          665.94
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).
Negative values refer to an increase in emissions.

    As part of the analysis for this rule, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX that DOE estimated for each of the considered TSLs 
for ceiling fans. As discussed in section IV.L of this 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 $12.4/t (the average value from 
a distribution that uses a 5-percent discount rate), $40.6/t (the 
average value from a distribution that uses a 3-percent discount rate), 
$63.2/t (the average value from a distribution that uses a 2.5-percent 
discount rate), and $118/t (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.28 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values; these results are presented in chapter 
14 of the final rule TSD.

   Table V.28--Estimates of Global Present Value of CO2 Emissions Reduction for Products Shipped in 2020-2049
----------------------------------------------------------------------------------------------------------------
                                                                      SCC case *
                                     ---------------------------------------------------------------------------
                 TSL                  5% discount rate,  3% discount rate,    2.5% discount    3% discount rate,
                                           average            average         rate, average     95th percentile
----------------------------------------------------------------------------------------------------------------
                                                                     Million 2015$
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...................................              321.5             1472.2             2338.6             4486.8
2...................................              498.5             2287.8             3635.9             6973.5
3...................................              722.5             3324.3             5286.2            10134.5
4...................................              789.6             3632.1             5775.3            11072.8
5...................................             1500.9             6854.9            10882.2            20887.5
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...................................               18.2               84.1              133.9              256.6
2...................................               28.3              131.0              208.5              399.5
3...................................               41.2              190.7              303.7              581.7
4...................................               45.0              208.3              331.8              635.5
5...................................               85.0              391.1              621.8             1192.4
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...................................              339.8             1556.4             2472.5             4743.4
2...................................              526.8             2418.8             3844.4             7373.0
3...................................              763.6             3515.0             5589.9            10716.3

[[Page 6877]]

 
4...................................              834.6             3840.4             6107.1            11708.4
5...................................             1585.9             7246.0            11503.9            22079.9
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.4, $40.6, $63.2, and $118
  per metric ton (2015$). 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 rule the most 
recent values and analyses resulting from the interagency review 
process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from the considered TSLs for ceiling fans. The 
dollar-per-ton values that DOE used are discussed in section IV.L of 
this document. Table V.29 presents the cumulative present 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.31.

  Table V.29--Estimates of Present Value of NOX Emissions Reduction for
                   Ceiling Fans Shipped in 2020-2049 *
------------------------------------------------------------------------
 
------------------------------------------------------------------------
TSL                               3% discount rate      7% discount rate
                             -------------------------------------------
                                             Million 2015$
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1...........................                  86.2                  35.2
2...........................                 133.4                  54.0
3...........................                 193.7                  77.6
4...........................                 213.4                  85.6
5...........................                 404.6                 166.6
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1...........................                  69.9                  27.9
2...........................                 108.5                  43.0
3...........................                 157.5                  61.7
4...........................                 172.1                  67.5
5...........................                 326.3                 131.4
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1...........................                 156.1                  63.1
2...........................                 241.9                  96.9
3...........................                 351.2                 139.4
4...........................                 385.5                 153.1
5...........................                 730.9                 297.9
------------------------------------------------------------------------
* Results are based on the low benefit-per-ton values.

7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No 
other factors were considered in this analysis.
8. Summary of National Economic Impacts
    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.30 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced CO2 
and

[[Page 6878]]

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 2015 values in the four sets of SCC values discussed above.

        Table V.30--Net Present Value of Consumer Savings Combined With Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Consumer NPV at 3% discount rate added with:
                                                                 ---------------------------------------------------------------------------------------
                               TSL                                SCC case $12.4/t and  SCC case $40.6/t and  SCC case $63.2/t and   SCC case $118/t and
                                                                    3% low NOX values     3% low NOX values     3% low NOX values     3% low NOX values
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Billion 2015$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................                 6.960                 8.177                 9.093                11.364
2...............................................................                10.055                11.947                13.372                16.901
3...............................................................                12.502                15.254                17.329                22.455
4...............................................................                13.343                16.349                18.615                24.217
5...............................................................                23.323                28.983                33.241                43.817
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                                                       Consumer NPV at 7% discount rate added with:
                                                                 ---------------------------------------------------------------------------------------
                               TSL                                SCC case $12.4/t and  SCC case $40.6/t and  SCC case $63.2/t and   SCC case $118/t and
                                                                    7% low NOX values     7% low NOX values     7% low NOX values     7% low NOX values
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................                 3.103                 4.320                 5.236                 7.507
2...............................................................                 4.367                 6.259                 7.685                11.213
3...............................................................                 5.131                 7.882                 9.957                15.083
4...............................................................                 5.475                 8.481                10.748                16.349
5...............................................................                 9.338                14.998                19.256                29.832
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The SCC case values represent the global SCC in 2015, in 2015$ per metric ton (t), 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 
products shipped in 2020-2049. Because CO2 emissions have a 
very long residence time in the atmosphere,\72\ the SCC values in 
future years reflect future climate-related impacts that continue 
beyond 2100.
---------------------------------------------------------------------------

    \72\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, M.Z. Correction to ``Control of 
fossil-fuel particulate black carbon and organic matter, possibly 
the most effective method of slowing global warming.'' J. Geophys. 
Res. 2005. 110: D14105. doi: 10.1029/2005JD005888.
---------------------------------------------------------------------------

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)) In determining 
whether a standard is economically justified, the Secretary must 
determine whether the benefits of the standard exceed its burdens by, 
to the greatest extent practicable, considering the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or 
amended standard must also result in significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    For this final rule, DOE considered the impacts of amended 
standards for ceiling fans at each TSL, beginning with the maximum 
technologically feasible level, to determine whether that level was 
economically justified. Where the max-tech level was not justified, DOE 
then considered the next most efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each TSL, tables in this section present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results presented in the tables, DOE also considers other 
burdens and benefits that affect economic justification. These include 
the impacts on identifiable subgroups of consumers who may be 
disproportionately affected by a national standard and impacts on 
employment.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. There is evidence that consumers 
undervalue future energy savings (or appear to do so) as a result of 
(1) a lack of information; (2) a lack of sufficient salience of the 
long-term or aggregate benefits; (3) a lack of sufficient savings to 
warrant delaying or altering purchases; (4) excessive focus on the 
short term, in the form of inconsistent weighting of future energy cost 
savings relative to available returns on other investments; (5) 
computational or other difficulties associated with the evaluation of 
relevant tradeoffs; and (6) a divergence in incentives (for example, 
between renters and owners, or builders and purchasers). Having less 
than perfect foresight and a high degree of uncertainty about the 
future, consumers may trade off these types of investments at a higher 
than expected rate between current consumption and uncertain future 
energy cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways. First, if consumers forego the 
purchase of a

[[Page 6879]]

product in the standards case, this decreases sales for product 
manufacturers, and the impact on manufacturers attributed to lost 
revenue is included in the MIA. Second, DOE accounts for energy savings 
attributable only to products actually used by consumers in the 
standards case; if a regulatory option decreases the number of products 
purchased by consumers, this decreases the potential energy savings 
from an energy conservation standard. DOE provides estimates of 
shipments and changes in the volume of product purchases in chapter 9 
of the final rule TSD. However, DOE's current analysis does not 
explicitly control for heterogeneity in consumer preferences, 
preferences across subcategories of products or specific features, or 
consumer price sensitivity variation according to household income.\73\
---------------------------------------------------------------------------

    \73\ P.C. Reiss and M.W. White. Household Electricity Demand, 
Revisited. Review of Economic Studies. 2005. 72(3): pp. 853-883. 
doi: 10.1111/0034-6527.00354.
---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE is committed to developing a framework that can support empirical 
quantitative tools for improved assessment of the consumer welfare 
impacts of appliance standards. DOE has posted a paper that discusses 
the issue of consumer welfare impacts of appliance energy conservation 
standards, and potential enhancements to the methodology by which these 
impacts are defined and estimated in the regulatory process.\74\ DOE 
welcomes comments on how to more fully assess the potential impact of 
energy conservation standards on consumer choice and how to quantify 
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------

    \74\ Sanstad, A.H. Notes on the Economics of Household Energy 
Consumption and Technology Choice. 2010. Lawrence Berkeley National 
Laboratory. https://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Ceiling Fan Standards
    Table V.31 and Table V.32 summarize the quantitative impacts 
estimated for each TSL for ceiling fans. The national impacts are 
measured over the lifetime of ceiling fans purchased in the 30-year 
period that begins in the anticipated first full year of compliance 
with amended standards (2020-2049). The energy savings, emissions 
reductions, and value of emissions reductions refer to full-fuel-cycle 
results. The efficiency levels contained in each TSL are described in 
section V.A of this notice.

                                    Table V.31--Summary of Analytical Results for Ceiling Fans TSLs: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                            Category                                  TSL 1            TSL 2             TSL 3             TSL 4             TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative FFC National Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
quads..........................................................           0.807            1.260             1.839             2.008             3.738.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   NPV of Consumer Costs and Benefits (billion 2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate...............................................           6.464            9.286            11.388            12.123            21.006.
7% discount rate...............................................           2.700            3.744             4.228             4.488             7.454.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Cumulative FFC Emissions Reduction (Total FFC Emission)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)......................................           48.43            75.50            110.09            120.24            224.66.
SO2 (thousand tons)............................................           25.87            40.26             58.59             63.97            120.13.
NOX (thousand tons)............................................           89.51           139.66            203.85            222.65            414.87.
Hg (tons)......................................................            0.10             0.15              0.22              0.24              0.44.
CH4 (thousand tons)............................................          212.85           332.31            485.41            530.11            985.69.
CH4 (thousand tons COeq) *.....................................        5,959.68         9,304.79         13,591.50         14,843.04         27,599.41.
N2O (thousand tons)............................................            0.54             0.84              1.23              1.34              2.51.
N2O (thousand tons COeq) *.....................................          143.43           223.33            325.12            354.94            665.94.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Value of Emissions Reduction (Total FFC Emissions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (billion 2015$) **.........................................  0.340 to 4.743   0.527 to 7.373   0.764 to 10.716   0.835 to 11.708   1.586 to 22.080.
NOX--3% discount rate (million 2015$)..........................  156.1 to 355.9   241.9 to 551.6    351.2 to 800.7    385.5 to 878.9   730.9 to 1,666.3.
NOX--7% discount rate (million 2015$)..........................   63.1 to 142.2    96.9 to 218.5    139.4 to 314.2    153.1 to 345.3    297.9 to 671.8.
--------------------------------------------------------------------------------------------------------------------------------------------------------
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.32--Summary of Analytical Results for Ceiling Fans TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
                           Category                                 TSL 1 *           TSL 2 *           TSL 3 *           TSL 4 *           TSL 5 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (million 2015$) (No-new-standards case INPV =     1,200.8-1,232.8   1,188.6-1,275.8   1,107.9-1,213.2   1,092.1-1,206.8   926.7 to 1,265.3.
 1,211.6)....................................................
Industry NPV (% change)......................................        (0.9)-1.8         (1.9)-5.3         (8.6)-0.1       (9.9)-(0.4)     (23.5) to 4.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Consumer Average LCC Savings ** (2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard.....................................................            46.61             37.20             25.78             25.78             26.80.
Hugger.......................................................            39.01             31.75             21.50             21.50             19.20.
Very Small-Diameter..........................................            16.10             16.10              4.29              4.29           (25.94).
High-Speed Small-Diameter....................................            20.17             20.17           (15.81)             19.80             19.80.
Large-Diameter...............................................           291.52            291.52            128.90            128.90            347.93.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Consumer Simple PBP *** (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard.....................................................              0.0               0.0               1.7               1.7               4.0.

[[Page 6880]]

 
Hugger.......................................................              0.0               0.0               1.8               1.8               4.1.
Very Small-Diameter..........................................              0.0               0.0               9.3               9.3              13.4.
High-Speed Small-Diameter....................................              0.0               0.0               9.8               6.9               6.9.
Large-Diameter...............................................              0.0               0.0               4.1               4.1               4.3.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Percent of Consumers that Experience a Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
Standard.....................................................              0.0               0.0              27.5              27.5              50.4.
Hugger.......................................................              0.0               0.0              27.8              27.8              51.4.
Very Small-Diameter..........................................              0.0               0.0               2.1               2.1              75.8.
High-Speed Small-Diameter....................................              0.0               0.0              70.0              38.7              38.7.
Large-Diameter...............................................              0.0               0.0              23.3              23.3              16.2.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change in the standard at certain TSLs.
** The calculation excludes consumers with zero LCC savings (no impact).
*** Simple PBP results are calculated assuming that all consumers use products at that efficiency level.
The PBP is measured relative to the baseline product.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save 3.738 quads of energy, an amount 
DOE considers significant. Under TSL 5, the NPV of consumer benefit 
would be $7.454 billion using a discount rate of 7 percent, and $21.006 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 224.66 Mt of 
CO2, 120.13 thousand tons of SO2, 414.87 thousand 
tons of NOX, 0.44 ton of Hg, 985.69 thousand tons of 
CH4, and 2.51 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 5 
ranges from $1.586 billion to $22.080 billion.
    At TSL 5, the average LCC impact for affected consumers is a cost 
of $25.94 for VSD ceiling fans and a savings of $19.20, $26.80, $19.80, 
and $347.93 for hugger, standard, HSSD and large-diameter ceiling fans, 
respectively. The simple payback period is 13.4 years for VSD ceiling 
fans, 4.1 years for hugger ceiling fans, 4.0 years for standard ceiling 
fans, 6.9 years for HSSD ceiling fans, and 4.3 years for large-diameter 
ceiling fans. The fraction of consumers experiencing a net LCC cost is 
76 percent for VSD ceiling fans, 51 percent for hugger ceiling fans, 50 
percent for standard ceiling fans, 39 percent for HSSD ceiling fans, 
and 16 percent for large-diameter ceiling fans.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$284.8 million to an increase of $53.8 million, which represents a 
decrease of 23.5 percent and an increase of 4.4 percent.
    At TSL 5, the corresponding efficiency levels for all product 
classes are the max-tech efficiency levels. Specifically for the VSD, 
hugger, and standard ceiling fan product classes, the percentages of 
consumers that experience net cost are greater than 50 percent. 
Additionally, specific to the VSD ceiling fan product class, the 
average LCC savings in 2015$ for all consumers, and affected consumers 
relative to no standards case is negative. Manufacturers may experience 
a loss in INPV of up to 23.5 percent.
    The Secretary 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 percentage of consumers that experience net cost for 
the VSD, hugger, and standard ceiling fan product classes, the negative 
average LCC savings for the VSD ceiling fan product class, and the 
potential reduction in manufacturer industry value. Consequently, the 
Secretary has tentatively concluded that TSL 5 is not economically 
justified.
    DOE then considered TSL 4, which corresponds to the maximum NPV 
with an AC motor for all product classes other than HSSD fans, and 
maximum NPV for HSSD fans. At this TSL, less than 50 percent of 
consumers experience a net cost, and large-diameter ceiling fans that 
provide high levels of airflow are not disproportionally impacted. TSL 
4 would save 2.008 quads of energy, an amount DOE considers 
significant. Under TSL 4, the NPV of consumer benefit would be $4.488 
billion using a discount rate of 7 percent, and $12.123 billion using a 
discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 120.24 Mt of 
CO2, 63.97 thousand tons of SO2, 222.65 thousand 
tons of NOX, 0.24 ton of Hg, 530.11 thousand tons of 
CH4, and 1.34 thousand tons of N2O. The estimated 
monetary value of the CO2 emissions reduction at TSL 4 
ranges from $0.835 billion to $11.708 billion.
    At TSL 4, the average LCC impact for affected consumers is a 
savings of $4.29 for VSD ceiling fans, $21.50 for hugger ceiling fans, 
$25.78 for standard ceiling fans, $19.80 for HSSD ceiling fans, and 
$128.90 for large-diameter ceiling fans. The simple payback period is 
9.3 years for VSD ceiling fans, 1.8 years for hugger ceiling fans, 1.7 
years for standard ceiling fans, 6.9 years for HSSD ceiling fans, and 
4.1 years for large-diameter ceiling fans. The fraction of consumers 
experiencing a net LCC cost is 2 percent for VSD ceiling fans, 28 
percent for hugger ceiling fans, 27 percent for standard ceiling fans, 
39 percent for HSSD ceiling fans, and 23 percent for large-diameter 
ceiling fans.
    At TSL 4, the projected change in INPV ranges from decreases of 
$119.4 million to $4.8 million, which represent decreases of 9.9 
percent and 0.4 percent, respectively.
    For TSL 4, the efficiency levels for each product class correspond 
to the following: max-tech for HSSD ceiling fan product class, EL 3 for 
the hugger, standard, and large-diameter ceiling fan product classes, 
and EL 2 for the very-small diameter ceiling fan product class. Within 
large-diameter ceiling fans, TSL 4 does not disproportionately impact 
fans that provide high levels of airflow. At TSL 4, the average LCC 
savings in 2015$ are positive for all product classes. Also, the 
fraction of consumers that experience net savings at TSL 4 is greater 
than the fraction of consumers that experience a net cost. 
Manufacturers may experience a loss in INPV of up to 9.9 percent.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has concluded that at TSL 4 for ceiling fans, 
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

[[Page 6881]]

consumers and on manufacturers, including the conversion costs that 
could result in a reduction in INPV for manufacturers. Accordingly, the 
Secretary has concluded that TSL 4 would offer the maximum improvement 
in efficiency that is technologically feasible and economically 
justified, and would result in the significant conservation of energy.
    Therefore, based on the above considerations, DOE adopts the energy 
conservation standards for ceiling fans at TSL 4. The amended energy 
conservation standards for ceiling fans, which are expressed as minimum 
CFM/W, are shown in Table V.33.

   Table V.33--Amended Energy Conservation Standards for Ceiling Fans
------------------------------------------------------------------------
                                             Minimum efficiency equation
               Product class                          (CFM/W)*
------------------------------------------------------------------------
Very Small-Diameter (VSD).................  D <= 12 in.: 21
                                            D > 12 in.: 3.16 D -17.04
Standard..................................  0.65 D + 38.03
Hugger....................................  0.29 D + 34.46
High-Speed Small-Diameter (HSSD)..........  4.16 D + 0.02
Large Diameter............................  0.91 D -30.00
------------------------------------------------------------------------
*D is the ceiling fan's blade span, in inches, as determined in Appendix
  U.

2. Summary of Annualized Benefits and Costs of the Adopted Standards
    The benefits and costs of the adopted standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
the sum of (1) the annualized national economic value (expressed in 
2015$) of the benefits from operating products that meet the adopted 
standards (consisting primarily of operating cost savings from using 
less energy, minus increases in product purchase costs, and (2) the 
annualized monetary value of the benefits of CO2 and 
NOX emission reductions.\75\
---------------------------------------------------------------------------

    \75\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2015. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 
reductions, for which DOE used case-specific discount rates. Using 
the present value, DOE then calculated the fixed annual payment over 
a 30-year period, starting in the compliance year that yields the 
same present value.
---------------------------------------------------------------------------

    Table V.34 shows the annualized values for ceiling fans under TSL 
4, 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 reductions (for which DOE used a 3-percent discount rate 
along with the average SCC series corresponding to a value of $40.6/t 
in 2015 (2015$)), the estimated cost of the adopted standards for 
ceiling fans is $245.1 million per year in increased equipment costs, 
while the estimated benefits are $688.1 million per year in reduced 
equipment operating costs, $214.1 million per year in CO2 
reductions, and $15.1 million per year in reduced NOX 
emissions. In this case, the net benefit amounts to $672.2 million per 
year.
    Using a 3-percent discount rate for all benefits and costs and the 
average SCC series corresponding to a value of $40.6/t in 2015 (in 
2015$), the estimated cost of the adopted standards for ceiling fans is 
$243.2 million per year in increased equipment costs, while the 
estimated annual benefits are $919.0 million in reduced operating 
costs, $214.1 million in CO2 reductions, and $21.5 million 
in reduced NOX emissions. In this case, the net benefit 
amounts to $911.4 million per year.

                     Table V.34--Selected Categories of Annualized Benefits and Costs of Adopted Standards (TSL 4) for Ceiling Fans
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                   High-net-benefits
                                              Discount rate                Primary  estimate      Low-net-benefits  estimate           estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Million 2015$/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings...  7%..............................  688.1.....................  579.7.....................  793.5.
                                    3%..............................  919.0.....................  764.2.....................  1081.9.
CO2 Reduction (using mean SCC at    5%..............................  62.8......................  53.7......................  71.0.
 5% discount rate) **.
CO2 Reduction (using mean SCC at    3%..............................  214.1.....................  182.2.....................  242.6.
 3% discount rate) **.
CO2 Reduction (using mean SCC at    2.5%............................  314.2.....................  267.2.....................  356.3.
 2.5% discount rate) **.
CO2 Reduction (using 95th           3%..............................  652.7.....................  555.4.....................  739.8.
 percentile SCC at 3% discount
 rate ) **.
NOX Reduction [dagger]............  7%..............................  15.1......................  13.1......................  38.1.
                                    3%..............................  21.5......................  18.4......................  55.3.
Total Benefits [Dagger]...........  7% plus CO2 range...............  766 to 1,356..............  647 to 1,148..............  903 to 1,571.
                                    7%..............................  917.3.....................  775.0.....................  1,074.2.
                                    3% plus CO2 range...............  1,003 to 1,593............  836 to 1,338..............  1,208 to 1,877.
                                    3%..............................  1,154.6...................  964.8.....................  1,379.9.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Costs ***
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product Costs  7%..............................  245.1.....................  288.1.....................  272.8.
                                    3%..............................  243.2.....................  298.7.....................  273.7.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [Dagger]....................  7% plus CO2 range...............  521 to 1,111..............  358 to 860................  630 to 1,299.
                                    7%..............................  672.2.....................  487.0.....................  801.4.
                                    3% plus CO2 range...............  760 to 1,350..............  538 to 1,039..............  935 to 1,603.

[[Page 6882]]

 
                                    3%..............................  911.4.....................  666.1.....................  1,106.2.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with ceiling fans shipped in 2020-2049. These results include benefits to consumers
  which accrue after 2049 from the ceiling fans purchased from 2020-2049. The incremental installed costs include incremental equipment cost as well as
  installation costs. The CO2 reduction benefits are global benefits due to actions that occur nationally. The Primary Estimate assumes the Reference
  case electricity prices and housing starts from AEO 2015 and decreasing product prices for ceiling fans with DC motors, due to price trend on the
  electronics components. The Low Benefits Estimate uses the Low Economic Growth electricity prices and housing starts from AEO 2015 and no price trend
  for ceiling fans with DC motors. The High Benefits Estimate uses the High Economic Growth electricity prices and housing starts from AEO 2015 and the
  same product price decrease for ceiling fans with DC motors as in the Primary Estimate. The methods used to derive projected price trends are
  explained in section IV.G.4. 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-percent, 3-
  percent, and 2.5-percent discount rates, respectively. The fourth represents the 95th percentile of the SCC distribution calculated using a 3-percent
  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 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 www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L.2 for further discussion. For the
  Primary Estimate and Low Net Benefits Estimate, DOE used national benefit-per-ton estimates 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 the High Net Benefits Estimate, the benefit-per-ton
  estimates were based on the Six Cities study (Lepuele et al. 2011); these are nearly two-and-a-half times larger than those from the ACS study.
[Dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using only the average SCC with 3-percent discount rate. In the rows
  labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those
  values are added to the full range of CO2 values.
*** For certain assumed design options (e.g. fan optimization) that are included at the selected standard level, DOE estimated no incremental costs to
  consumers, but did estimate a one-time industry conversion cost to manufacturers to make their products compliant with the selected standards that are
  not reflected in the Consumer Incremental Product Costs. The one-time industry conversion cost to manufacturers of these design options contribute to
  a loss in industry net present value of $4.8 million, which is equivalent to an annualized cost of $0.4 million/year at a 7.4-percent discount rate
  over the analysis period.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that the adopted standards for ceiling fans 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 that are not captured by the users of such 
equipment. These benefits include externalities related to public 
health, environmental protection and national energy security that are 
not reflected in energy prices, such as reduced emissions of air 
pollutants and greenhouse gases that impact human health and global 
warming. DOE attempts to qualify some of the external benefits through 
use of social cost of carbon values.
    The Administrator of the Office of Information and Regulatory 
Affairs (OIRA) in the OMB has determined that the regulatory action in 
this document is a significant regulatory action under section (3)(f) 
of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) 
of the Order, DOE has provided to OIRA: (i) The text of the draft 
regulatory action, together with a reasonably detailed description of 
the need for the regulatory action and an explanation of how the 
regulatory action will meet that need; and (ii) an assessment of the 
potential costs and benefits of the regulatory action, including an 
explanation of the manner in which the regulatory action is consistent 
with a statutory mandate. DOE has included these documents in the 
rulemaking record.
    In addition, the Administrator of OIRA has determined that the 
regulatory action is an ``economically'' significant regulatory action 
under section (3)(f)(1) of Executive Order 12866. Accordingly, pursuant 
to section 6(a)(3)(C) of the Order, DOE has provided to OIRA an 
assessment, including the underlying analysis, of benefits and costs 
anticipated from the regulatory action, together with, to the extent 
feasible, a quantification of those costs; and an assessment, including 
the underlying analysis, of costs and benefits of potentially effective 
and reasonably feasible alternatives to the planned regulation, and an 
explanation why the planned regulatory action is preferable to the 
identified potential alternatives. These assessments can be found in 
the technical support document for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281, Jan. 21, 2011. EO 13563 
is supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required by 
Executive Order 13563 to (1) propose or adopt a regulation only upon a 
reasoned determination that its benefits justify its costs (recognizing 
that some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits (including

[[Page 6883]]

potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, OIRA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that this final rule is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of a final regulatory flexibility analysis (FRFA) for any 
final rule where the agency was first required by law to publish a 
proposed rule for public comment. As required by Executive Order 13272, 
``Proper Consideration of Small Entities in Agency Rulemaking,'' 67 FR 
53461 (Aug. 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 website (http://energy.gov/gc/office-general-counsel). DOE has prepared the following FRFA for the products 
that are the subject of this rulemaking.
1. Need for, and Objectives of, the Rule
    A description of the need for, and objectives of, this rule is set 
forth elsewhere in the preamble and not repeated here.
2. Significant Comments in Response to the IRFA
    DOE did not receive comments in response to the IRFA. Comments on 
the economic impacts of amended standards are addressed in section 
IV.J.2.a and section IV.J.3 and did not result in significant changes 
to the FRFA.
3. Comments Filed by the Chief Counsel for Advocacy
    The SBA's Chief Counsel for Advocacy did not submit comments on 
this rulemaking.
4. Description and Estimate of the Number of Small Entities Affected
    For manufacturers of ceiling fans, the SBA has set a size 
threshold, which defines those entities classified as ``small 
businesses'' for the purposes of the statute. DOE used the SBA's small 
business size standards to determine whether any small entities would 
be subject to the requirements of the rule. See 13 CFR part 121. The 
size standards are listed by North American Industry Classification 
System (NAICS) code and industry description available at: https://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Ceiling 
fan manufacturing is classified under NAICS code 335210, ``Small 
Electrical Appliance Manufacturing.'' The SBA sets a threshold of 1,500 
employees or less for an entity to be considered as a small business 
for this category.
    To estimate the number of companies that manufacture ceiling fans 
covered by this rulemaking, DOE conducted a market survey using 
publicly available information. DOE first attempted to identify all 
ceiling fan manufacturers by researching industry trade associations 
(e.g., ALA \76\), information from previous rulemakings, individual 
company websites, and SBA's database. DOE then attempted to gather 
information on the location and number of employees to see if these 
companies met SBA's definition of a small business for each potential 
ceiling fan manufacturer by reaching out directly to those potential 
small businesses and using market research tools (e.g., 
www.hoovers.com, www.manta.com, glassdoor.com, www.linkedin.com, etc.). 
DOE also asked interested parties and industry representatives if they 
were aware of any small businesses during manufacturer interviews and 
DOE public meetings. DOE used information from these sources to create 
a list of companies that manufacture or sell ceiling fans and would be 
affected by this rulemaking.
---------------------------------------------------------------------------

    \76\ ALA. Membership Directory and Buyer's Guide 2015. Last 
Accessed June 9, 2015. http://www.lightrays-digital.com/lightrays/2015_membership_directory#pg1.
---------------------------------------------------------------------------

    For ceiling fans, DOE identified 66 companies that sell ceiling 
fans covered by this rulemaking. 25 of these companies are large 
businesses with more than 1,500 total employees or are foreign-owned 
and operated. DOE determined that of the remaining 41 companies with 
less than 1,500 employees, only six companies are small businesses that 
maintain domestic production facilities.
5. Description of Compliance Requirements
    There are six small domestic ceiling fan manufacturers identified. 
Four small businesses manufacture HSSD ceiling fans and three small 
businesses manufacture large-diameter ceiling fans (one of these small 
businesses manufactures both HSSD and large-diameter ceiling fans and 
are therefore counted in each of these small business counts). To 
estimate conversion costs for small manufacturers, DOE multiplied an 
estimate of the number of platforms that would need to be redesigned at 
TSL 4 by the per-platform conversion cost estimated for the respective 
type of conversion cost, efficiency level, and product class for each 
manufacturer. Additionally, DOE obtained company revenue information 
from publicly available databases such as Hoovers \77\ and Manta.\78\
---------------------------------------------------------------------------

    \77\ www.hoovers.com.
    \78\ www.manta.com.
---------------------------------------------------------------------------

    Leveraging these assumptions, DOE estimated total conversion costs 
and conversion costs relative to small ceiling fan manufacturers' 
annual revenues. DOE presents the estimated total conversion costs 
incurred by small domestic ceiling fan manufacturers at TSL 4 in Table 
VI.1.

[[Page 6884]]



 Table VI.1--Conversion Costs for Small Ceiling Fan Manufacturers at the
                      Adopted Trial Standard Level
                                 [TSL 4]
------------------------------------------------------------------------
                                                          Average total
     Product            Capital       Total conversion  conversion costs
 conversion costs   conversion costs    costs (2015$     as a percentage
 (2015$ millions)   (2015$ millions)      millions)         of annual
                                                             revenue
------------------------------------------------------------------------
           $0.7               $1.6               $2.3               2.6
------------------------------------------------------------------------

    There are four small manufacturers that make HSSD fans. For one of 
these small manufacturers, their entire HSSD product offerings use DC 
motors and they should be able to meet the HSSD standard without any 
modifications to their product offerings. For the other three HSSD 
small manufacturer, two only offer one HSSD ceiling fan and one only 
offers five HSSD ceiling fans. These small manufacturers primarily sell 
commercial, industrial, and/or agricultural fans not covered by this 
rulemaking. DOE does not believe that HSSD ceiling fan sales 
significantly contribute to these companies' revenue. HSSD small 
manufacturers either make compliant HSSD ceiling fans or these HSSD 
ceiling fans do not comprise a significant portion of their company's 
revenue. If these manufacturers decide not to invest in making 
compliant HSSD ceiling fans, DOE does not believe their revenue will be 
significantly reduced.
    There are three small manufacturers that make large-diameter fans. 
Two of these small manufacturers primarily make ceiling fans that have 
DC motors and exceed the efficiency levels required for large-diameter 
ceiling fans at the adopted standard. The last small manufacturer has 
eight large-diameter ceiling fans that would have to be converted to 
comply with the adopted standards for this product class. This would 
require replacing the motor on these eight large-diameter ceiling fans 
with a more efficient AC motor.
6. Significant Alternatives Considered and Steps Taken To Minimize 
Significant Economic Impacts on Small Entities
    The discussion in section VI.B.5 analyzes impacts on small 
businesses that would result from DOE's adopted final rule, TSL 4. In 
reviewing alternatives to the adopted rule, DOE examined energy 
conservation standards set at higher and lower efficiency levels; TSL 
1, TSL 2, TSL 3, and TSL 5.
    DOE considered TSL 5, but determined that the 86 percent increase 
in the energy savings and 66 percent increase in NPV compared to TSL 4 
did not justify the total industry conversion costs of $155.9 million, 
the potential loss of up to 23.5 percent of INPV, and increased burden 
on small manufacturers.
    DOE also considered TSLs lower than the TSL adopted. At TSL 1, the 
energy savings was reduced by 60 percent and consumer NPV was reduced 
by 40 percent compared to TSL 4. At TSL 2, the energy savings was 
reduced by 37 percent and consumer NPV was reduced by 17 percent 
compared to TSL 4. At TSL 3, the energy savings was reduced by 8 
percent and consumer NPV was reduced by 6 percent compared to TSL 4. 
DOE concludes that establishing standards at TSL 4 balances the 
benefits of the energy savings and consumer NPV with the potential 
burdens placed on ceiling fan manufacturers, including small 
businesses. Accordingly, DOE is declining to adopt one of the other 
TSLs, or the other policy alternatives detailed as part of the 
regulatory impacts analysis included in chapter 17 of the final rule 
TSD.
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure (see 10 CFR 430.27). Further, EPCA 
provides that a manufacturer whose annual gross revenue from all of its 
operations does not exceed $8 million may apply for an exemption from 
all or part of an energy conservation standard for a period not longer 
than 24 months after the effective date of a final rule establishing 
the standard. Additionally, Section 504 of the Department of Energy 
Organization Act, 42 U.S.C. 7194, provides authority for the Secretary 
to adjust a rule issued under EPCA in order to prevent ``special 
hardship, inequity, or unfair distribution of burdens'' that may be 
imposed on that manufacturer as a result of such rule. Manufacturers 
should refer to 10 CFR part 430, subpart E, and 10 CFR part 1003 for 
additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of ceiling fans must certify to DOE that their 
products comply with any applicable energy conservation standards. In 
certifying compliance, manufacturers must test their products according 
to the DOE test procedures for ceiling fans, including any amendments 
adopted for those test procedures. DOE has established regulations for 
the certification and recordkeeping requirements for all covered 
consumer products and commercial equipment, including ceiling fans. 76 
FR 12422 (March 7, 2011); 80 FR 5099 (Jan. 30, 2015). 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 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 rule fits within this 
category of actions because it is a rulemaking that establishes energy 
conservation standards for consumer products or industrial equipment, 
and for which none of the exceptions identified in CX B5.1(b) apply. 
Therefore, DOE has made a CX determination for this rulemaking, and DOE 
does not need to prepare an Environmental Assessment or Environmental 
Impact Statement for this rule. DOE's CX determination for this rule is 
available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999) 
imposes

[[Page 6885]]

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

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity, (2) write regulations to minimize litigation, (3) 
provide a clear legal standard for affected conduct rather than a 
general standard, and (4) promote simplification and burden reduction. 
61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 
3(a), section 3(b) of Executive Order 12988 specifically requires that 
Executive agencies make every reasonable effort to ensure that the 
regulation (1) clearly specifies the preemptive effect, if any, (2) 
clearly specifies any effect on existing Federal law or regulation, (3) 
provides a clear legal standard for affected conduct while promoting 
simplification and burden reduction, (4) specifies the retroactive 
effect, if any, (5) adequately defines key terms, and (6) addresses 
other important issues affecting clarity and general draftsmanship 
under any guidelines issued by the Attorney General. Section 3(c) of 
Executive Order 12988 requires Executive agencies to review regulations 
in light of applicable standards in section 3(a) and section 3(b) to 
determine whether they are met or it is unreasonable to meet one or 
more of them. DOE has completed the required review and determined 
that, to the extent permitted by law, this final rule meets the 
relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE has concluded that this final rule may require expenditures of 
$100 million or more in any one year by the private sector. Such 
expenditures may include (1) investment in research and development and 
in capital expenditures by ceiling fans manufacturers in the years 
between the final rule and the compliance date for the new standards 
and (2) incremental additional expenditures by consumers to purchase 
higher-efficiency ceiling fans, starting at the compliance date for the 
applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements 
of section 202(b) of UMRA relevant to a private sector mandate 
substantially overlap the economic analysis requirements that apply 
under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this document and chapter 17 of 
the TSD for this final rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(d), 
(f), and (o), 6313(e), and 6316(a), In accordance with the statutory 
provisions discussed in this document, this final rule establishes 
amended energy conservation standards for ceiling fans that are 
designed to achieve the maximum improvement in energy efficiency that 
DOE has determined to be both technologically feasible and economically 
justified. A full discussion of the alternatives considered by DOE is 
presented in chapter 17 of the TSD for this final rule.

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

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

I. Review Under Executive Order 12630

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

[[Page 6886]]

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 final rule under the OMB 
and DOE guidelines and has concluded that it is consistent with 
applicable policies in those guidelines.

K. Review Under Executive Order 13211

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

L. Review Under the Information Quality Bulletin for Peer Review

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

M. Congressional Notification

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

VII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 430

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

    Issued in Washington, DC, on November 21, 2016.
David J. Friedman,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

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

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

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


0
2. Section 430.32 is amended by:
0
a. Redesignating paragraphs (s)(2), (3), (4) and (5) as (s)(3), (4), 
(5) and (6), respectively; and
0
b. Adding a new paragraph (s)(2) to read as follows:


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

* * * * *
    (s) * * *
    (2)(i) Ceiling fans manufactured on or after January 21, 2020 shall 
meet the requirements shown in the table:

------------------------------------------------------------------------
                                              Minimum efficiency  (CFM/
  Product class as defined in Appendix U                W)\1\
------------------------------------------------------------------------
Very small-diameter (VSD).................  D <= 12 in.: 21
                                            D > 12 in.: 3.16 D -17.04
Standard..................................  0.65 D + 38.03
Hugger....................................  0.29 D + 34.46
High-speed small-diameter (HSSD)..........  4.16 D + 0.02
Large-diameter............................  0.91 D-30.00
------------------------------------------------------------------------
\1\ D is the ceiling fan's blade span, in inches, as determined in
  Appendix U of this part.

    (ii) The provisions in this appendix apply to ceiling fans except:
    (A) Ceiling fans where the plane of rotation of a ceiling fan's 
blades is not less than or equal to 45 degrees from horizontal, or 
cannot be adjusted based on the manufacturer's specifications to be 
less than or equal to 45 degrees from horizontal;
    (B) Centrifugal ceiling fans, as defined in Appendix U of this 
part;
    (C) Belt-driven ceiling fans, as defined in Appendix U of this 
part;
    (D) Oscillating ceiling fans, as defined in Appendix U of this 
part; and
    (E) Highly-decorative ceiling fans, as defined in Appendix U of 
this part.
* * * * *

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

U.S. DEPARTMENT OF JUSTICE


[[Page 6887]]


Antitrust Division:

William J. Baer,

Assistant Attorney General, Main Justice Building, 950 Pennsylvania 
Avenue NW., Washington, DC 20530-0001, (202) 514-2401/(202) 616-2645 
(Fax).

March 21, 2016

Anne Harkavy,

Deputy General Counsel for Litigation, Regulation and Enforcement 
U.S. Department of Energy, Washington, DC 20585.

Dear Deputy General Counsel Harkavy:

    I am responding to your January 21, 2016, letter seeking the 
views of the Attorney General about the potential impact on 
competition of proposed energy conservation standards for ceiling 
fans.
    Your request was submitted under Section 325(o)(2)(B)(i)(V) of 
the Energy Policy and Conservation Act, as amended, 42 U.S.C. 
6295(o)(2)(B)(i)(V), which requires the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for responding to 
requests from other departments about the effect of a program on 
competition has been delegated to the Assistant Attorney General for 
the Antitrust Division in 28 CFR 0.40(g).
    In conducting its analysis, the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice or increasing industry 
concentration. A lessening of competition could result in higher 
prices to consumers.
    We have reviewed the proposed standards contained in the Notice 
of Proposed Rulemaking (81 FR. 1688, January 13, 2016) and the 
related Technical Support Document. We have also reviewed 
supplementary information submitted to the Attorney General by the 
Department of Energy, as well as materials presented at the public 
meeting held on the proposed standards on February 3, 2016, and have 
conducted interviews with industry representatives.
    Based on the information currently available, we do not believe 
that the proposed energy conservation standards for ceiling fans are 
likely to have a significant adverse effect on competition. Our 
opinion is subject to some uncertainty, in part because 
manufacturers indicated to us that they cannot reliably determine 
which of their products will be able to comply with the new 
standards. The manufacturers understand that a new test procedure 
will likely be used to determine ceiling fan efficiency performance, 
and believe that there is insufficient test data using this new test 
procedure for the manufacturers to be able to predict their ceiling 
fans' compliance with the proposed standards, particularly in the 
popular ``Standard'' and ``Hugger'' categories.

    Sincerely,

William J. Baer

[FR Doc. 2017-00474 Filed 1-18-17; 8:45 am]
 BILLING CODE 6450-01-P