[Federal Register Volume 85, Number 7 (Friday, January 10, 2020)]
[Rules and Regulations]
[Pages 1504-1592]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26355]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

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


Energy Conservation Program: Energy Conservation Standards for 
Air Compressors

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, as amended 
(``EPCA''), prescribes energy conservation standards for various 
consumer products and certain commercial and industrial equipment. EPCA 
also authorizes DOE to establish standards for certain other types of 
industrial equipment, including air compressors. Such standards must be 
technologically feasible and economically justified, and must save a 
significant amount of energy. In this final rule, DOE is adopting new 
energy conservation standards for air compressors. It has determined 
that the adopted 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 10, 2020. Compliance 
with the new standards established for compressors in this final rule 
is required on and after January 10, 2025.

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.
    The docket web page can be found at: www.regulations.gov/docket?D=EERE-2013-BT-STD-0040. The docket web page contains simple 
instructions on how to access all documents, including public comments, 
in the docket.
    For further information on how to review the docket, contact the 
Appliance and Equipment Standards Program staff at (202) 586-6636 or by 
email: [email protected].

FOR FURTHER INFORMATION CONTACT: James Raba, U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, Building Technologies 
Office, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-8654. Email: 
[email protected].
    Mary Greene, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-1817. Email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Regulatory History for Compressors
    C. Process Rule
III. General Discussion
    A. Definitions
    1. Definition of Covered Equipment
    2. Air- and Liquid-Cooled Compressors
    B. Scope of Energy Conservation Standards
    1. Equipment System Boundary
    2. Compression Principle: Rotary and Reciprocating Compressors
    3. Driver Style
    4. Compressor Capacity
    5. Full-Load Operating Pressure
    6. Lubricant Presence
    7. Water-injected Compressors
    8. Specialty Purpose Compressors
    C. Test Procedure and Metric
    D. Impacts of Sampling Plan on Energy Conservation Standards 
Analysis
    E. Compliance Date
    F. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    G. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    H. Economic Justification
    1. Specific Criteria
    2. Rebuttable Presumption
    I. Other Issues
    1. Comments on the Proposed Standards
    2. Other Comments
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Equipment Classes
    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Summary of Data Sources
    2. Impacts of Test Procedure on Source Data
    3. Representative Equipment
    4. Design Options and Available Energy Efficiency Improvements
    5. Efficiency Levels
    6. Manufacturer Selling Price
    7. Manufacturer Production Cost
    8. Other Analytical Outputs
    D. Markups Analysis
    E. Energy Use Analysis
    1. Applications
    2. Annual Hours of Operation
    3. Load Profiles
    4. Capacity Control Strategies
    F. Life-Cycle Cost and Payback Period Analyses
    1. Equipment Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Maintenance and Repair Costs
    6. Equipment Lifetime
    7. Discount Rates
    8. Energy Efficiency Distribution in the No-New-Standards Case
    9. Payback Period Analysis
    G. Shipments Analysis
    H. National Impact Analysis
    1. Equipment Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model and Key Inputs
    3. Discussion of Comments
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    2. Social Cost of Methane and Nitrous Oxide
    3. 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

[[Page 1505]]

    2. Economic Impacts on Manufacturers
    3. National Impact Analysis
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    7. Other Factors
    8. Summary of National Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Compressors 
Standards
    2. Annualized Benefits and Costs of the Adopted Standards
VI. Certification Requirements
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Need for, Objectives of, and Legal Basis, for Rule
    2. Significant Issues Raised in Response to the IRFA
    3. Description on Estimated Number of Small Entities Affected
    4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    5. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Synopsis of the Final Rule

    Title III of the Energy Policy and Conservation Act of 1975, as 
amended (``EPCA'' or, in context, ``the Act''), sets forth a variety of 
provisions designed to improve energy efficiency. (42 U.S.C. 6291, et 
seq.) Part C of Title III, which for editorial reasons was re-
designated as Part A-1 upon incorporation into the U.S. Code (42 U.S.C. 
6311-6317), establishes the ``Energy Conservation Program for Certain 
Industrial Equipment.'' EPCA provides that DOE may include a type of 
industrial equipment as covered equipment if it determines that to do 
so is necessary to carry out the purposes of Part A-1. (42 U.S.C. 
6312(b)). EPCA authorizes DOE to prescribe energy conservation 
standards for those types of industrial equipment which the Secretary 
classifies as covered equipment. (42 U.S.C. 6314) On November 15, 2016, 
DOE published a final rule, which determined coverage for compressors 
is necessary to carry out the purposes of Part A-1 of Title III of EPCA 
(herein referred to as ``notice of final determination''). 81 FR 79991
    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6316(a)) Furthermore, the new or 
amended standard must result in a significant conservation of energy. 
(42 U.S.C. 6295(o)(3)(B) and 42 U.S.C. 6316(a))
    In accordance with these and other statutory provisions discussed 
in this document, DOE is adopting new energy conservation standards for 
compressors. The adopted standards, which are expressed in package 
isentropic efficiency (i.e., the ratio of the theoretical isentropic 
power required for a compression process to the actual power required 
for the same process), are shown in Table I.1. These standards apply to 
all compressors listed in Table I.1 and manufactured in, or imported 
into, the United States starting on January 10, 2025.
    In Table I.1, the term V1 denotes the full-load actual 
volume flow rate of the compressor, in cubic feet per minute (``cfm''). 
Standard levels are expressed as a function of full-load actual volume 
flow rate for each equipment class, and may be calculated by inserting 
values from the rightmost two columns into the second leftmost column. 
Doing so yields an efficiency-denominated function of full-load actual 
volume flow rate.

                      Table I.1--Adopted Energy Conservation Standards for Air Compressors
----------------------------------------------------------------------------------------------------------------
                                                                          [eta]Regr (package       d (percentage
             Equipment class                Standard level (package      isentropic efficiency         loss
                                            isentropic efficiency)         reference curve)         reduction)
----------------------------------------------------------------------------------------------------------------
Rotary, lubricated, air-cooled, fixed-    [eta]Regr + (1 -            -0.00928 * ln\2\(.4719 *               -15
 speed.                                    [eta]Regr) * (d/100).       V1) + 0.13911 * ln(.4719
                                                                       * V1) + 0.27110.
Rotary, lubricated, air-cooled, variable- [eta]Regr + (1 -            -0.01549 * ln\2\(.4719 *               -10
 speed.                                    [eta]Regr) * (d/100).       V1) + 0.21573 * ln(.4719
                                                                       * V1) + 0.00905.
Rotary, lubricated, liquid-cooled, fixed- .02349 + [eta]Regr + (1 -   -0.00928 * ln\2\(.4719 *               -15
 speed.                                    [eta]Regr) * (d/100).       V1) + 0.13911 * ln(.4719
                                                                       * V1) + 0.27110.
Rotary, lubricated, liquid-cooled,        .02349 + [eta]Regr + (1 -   -0.01549 * ln\2\(.4719 *               -15
 variable-speed.                           [eta]Regr) * (d/100).       V1) + 0.21573 * ln(.4719
                                                                       * V1) + 0.00905.
----------------------------------------------------------------------------------------------------------------

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of air compressors, as measured by the 
average life-cycle cost (``LCC'') savings and the simple payback period 
(``PBP'').\1\ The average LCC savings are positive for all equipment 
classes for which standards are being adopted, and the PBP is less than 
the average lifetime of air compressors; that lifetime is estimated to 
be approximately 13 years for the covered equipment classes.
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    \1\ The average LCC savings are measured relative to the no-new 
standards case efficiency distribution in the no-new-standards case, 
which depicts the market in the compliance year in the absence of 
standards (see section IV.F.9). The simple PBP, which is designed to 
compare specific efficiency levels, is measured relative to the 
baseline model (see section IV.C.1.a).

[[Page 1506]]



Table I.2--Impacts of Adopted Energy Conservation Standards on Consumers
                           of Air Compressors
------------------------------------------------------------------------
                                            Average LCC
             Equipment class                  savings     Simple payback
                                              (2015$)     period (years)
------------------------------------------------------------------------
Rotary positive, fixed speed,                      8,002             2.4
 lubricated, air cooled (RP_FS_L_AC )...
Rotary positive, fixed speed,                     10,559             2.7
 lubricated, liquid cooled (RP_FS_L_WC).
Rotary positive, variable speed,                   2,618             4.9
 lubricated, air cooled (RP_VS_L_AC)....
Rotary positive, variable speed,                   5,145             4.9
 lubricated, liquid cooled (RP_VS_L_WC).
------------------------------------------------------------------------

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

B. Impact on Manufacturers

    The industry net present value (``INPV'') is the sum of the 
discounted cash flows to the industry from the base year through the 
end of the analysis period (2016-2051). Using a real discount rate of 
8.7 \2\ percent, DOE estimates that the (INPV) for manufacturers of air 
compressors in the case without new standards is $409.7 million in 
2015$. Under the adopted standards, DOE expects the change in INPV to 
range from -13.5 percent to -10.2 percent, which is approximately -
$55.1 million to -$42.0 million. In order to bring products into 
compliance with adopted standards, DOE expects the industry to incur 
total conversion costs ranging from a high of $121.3 million to $98.1 
million.\3\
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    \2\ DOE estimated preliminary financial metrics, including the 
industry discount rate, based on publicly available financial 
information, including Securities and Exchange Commission (``SEC'') 
filings and S&P bond ratings. DOE presented the preliminary 
financial metrics to manufacturers in manufacturer impact analysis 
(``MIA'') interviews. DOE adjusted those values based on feedback 
from manufacturers. The complete set of financial metrics and more 
detail about the methodology can be found in chapter 12 of the final 
rule technical support document (``TSD'').
    \3\ For the MIA, DOE modeled two standards-case conversion cost 
scenarios to represent uncertainty regarding the potential impacts 
on manufacturers following the implementation of energy conservation 
standards. More details about the methodology can be found in 
section IV.J.2 of this document and in chapter 12 of the final rule 
TSD.
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    DOE's analysis of the impacts of the adopted standards on 
manufacturers is described in section IV.J and section V.B.2 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 air compressors would save a significant amount of 
energy. Relative to the case without new standards (no new standards 
case), the lifetime energy savings for air compressors purchased in the 
30-year period that begins in the anticipated first full year of 
compliance with the adopted standards (2022-2051) \5\ amount to 0.16 
quadrillion British thermal units (``Btu''), or quads.\6\ This 
represents a savings of 0.6 percent relative to the energy use of these 
products in the no new standards case A.
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    \5\ The analysis uses January 1st, 2022, to represent the 
expected compliance date in late 2021. Therefore, the 30-year 
analysis period is referred to as 2022-2051 in this document.
    \6\ 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.
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    The cumulative net present value (``NPV'') of total consumer costs 
and savings of the standards for air compressors ranges from $0.2 
billion (at a 7-percent discount rate) to $0.4 billion (at a 3-percent 
discount rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased equipment costs 
for air compressors purchased in 2022-2051.
    In addition, the adopted standards for compressors are projected to 
yield significant environmental benefits. DOE estimates that the 
standards will result in cumulative emission reductions (over the same 
period as for energy savings) of 8.2 million metric tons (``Mt'') \7\ 
of carbon dioxide (CO2), 6.5 thousand tons of sulfur dioxide 
(SO2), 11.0 tons of nitrogen oxides (NOX), 40.8 
thousand tons of methane (CH4), 0.1 thousand tons of nitrous 
oxide (N2O), and 0.02 ton of mercury (Hg).\8\ The estimated 
cumulative reduction in CO2 emissions through 2030 amounts 
to 0.9 Mt, which is equivalent to the emissions resulting from the 
annual electricity use of more than 95 thousand homes.
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    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the no-new-
standards-case, which reflects key assumptions in the Annual Energy 
Outlook 2016 (AEO 2016). AEO 2016 represents current federal and 
state legislation and final implementation of regulations as of the 
end of February 2016. DOE is using the projection consistent with 
the cases described on page E-8 of AEO 2016.
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    The value of the CO2 reduction is calculated using a 
range of values per metric ton (``t'') of CO2 (otherwise 
known as the ``social cost of CO2,'' or ``SC-
CO2'') developed by a Federal interagency working group.\9\ 
The derivation of the SC-CO2 values is discussed in section 
IV.L.1 of this document. Using discount rates appropriate for each set 
of SC-CO2 values, DOE estimates that the present value of 
the CO2 emissions reduction is between $0.05 billion and 
$0.76 billion, with a value of $0.25 billion using the central SC-
CO2 case represented by $47.4/metric ton (t) in 2020.
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    \9\ 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. 
www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
---------------------------------------------------------------------------

    DOE also calculated the value of the reduction in emissions of the 
non-CO2 greenhouse gases, methane and nitrous oxide, using 
values for the social cost of methane (``SC-CH4'') and the 
social cost of nitrous oxide (``SC-N2O'') recently developed 
by the interagency working group.\10\ See section IV.L.2 for 
description of the methodology and the values used for DOE's analysis. 
The estimated present value of the methane emissions reduction is 
between $0.01 billion and $0.11 billion, with a value of $0.04 billion 
using the central SC-CH4 case represented by $1,353/t in 
2020; and the estimated present value of the N2O emissions 
reduction is between $0.000 billion and $0.003 billion, with a value of 
$0.001 billion using the central SC-N2O case, represented by 
$16,916/t.
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    \10\ United States Government-Interagency Working Group on 
Social Cost of Greenhouse Gases. Addendum to Technical Support 
Document on Social Cost of Carbon for Regulatory Impact Analysis 
under Executive Order 12866: Application of the Methodology to 
Estimate the Social Cost of Methane and the Social Cost of Nitrous 
Oxide. August 2016. www.whitehouse.gov/sites/default/files/omb/inforeg/august_2016_sc_ch4_sc_n2o_addendum_final_8_26_16.pdf.
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    DOE also estimates the present value of the NOX 
emissions reduction to be $6.1 million using a 7-percent discount

[[Page 1507]]

rate, and $16.8 million using a 3-percent discount rate.\11\ DOE is 
still investigating appropriate valuation of the reduction in other 
emissions, and therefore did not include any such values in the 
analysis for this final rule.
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    \11\ DOE estimated the monetized value of NOX 
emissions reductions associated with electricity savings using 
benefit per ton estimates from the Regulatory Impact Analysis for 
the Clean Power Plan Final Rule, published in August 2015 by EPA's 
Office of Air Quality Planning and Standards. Available at 
www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis. See section IV.L.3 for further discussion. The U.S. 
Supreme Court has stayed the rule implementing the Clean Power Plan 
until the current litigation against it concludes. Chamber of 
Commerce, et al. v. EPA, et al., Order in Pending Case, West 
Virginia v. EPA, 136 S. Ct. 1000, 194 L. Ed. 2d 17 (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. To be conservative, DOE is primarily using a national 
benefit-per-ton estimate for NOX emitted from the 
Electricity Generating Unit sector based on the low-end estimates of 
premature mortality used by EPA. If the benefit-per-ton estimates 
were based on the high-end estimates, the values would be nearly 
two-and-a-half times larger. 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 air compressors.

   Table I.3--Summary of Economic Benefits and Costs of Adopted Energy
              Conservation Standards for Air Compressors *
------------------------------------------------------------------------
                                           Present value
                Category                     (billion      Discount rate
                                              2015$)         (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Consumer Operating Cost Savings.........             0.2               7
                                                     0.6               3
GHG Reduction (using avg. social costs               0.1               5
 at 5% discount rate) **................
GHG Reduction (using avg. social costs               0.3               3
 at 3% discount rate) **................
GHG Reduction (using avg. social costs               0.5             2.5
 at 2.5% discount rate) **..............
GHG Reduction (using 95th percentile                 0.9               3
 social costs at 3% discount rate) **...
NOX Reduction [dagger]..................           0.006               7
                                                    0.02               3
Total Benefits [Dagger].................             0.5               7
                                                     0.9               3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Consumer Incremental Installed Costs                 0.1               7
 [Dagger]...............................
                                                     0.2               3
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including GHG and NOX Reduction                      0.5               7
 Monetized Value [dagger][dagger].......
                                                     0.8               3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with compressors
  shipped in 2022-2051. These results include benefits to consumers that
  accrue after 2022 from the products shipped in 2022-2051.
** The interagency group selected four sets of SC-CO2 SC-CH4, and SC-N2O
  values for use in regulatory analyses. Three sets of values are based
  on the average social costs from the integrated assessment models, at
  discount rates of 5-percent, 3-percent, and 2.5-percent. The fourth
  set, which represents the 95th percentile of the social cost
  distributions calculated using a 3-percent discount rate, is included
  to represent higher-than-expected impacts from climate change further
  out in the tails of the social cost distributions. The social cost
  values are emission year specific. The GHG reduction benefits are
  global benefits due to actions that occur domestically. See section
  IV.L 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.3 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 the low-end estimates of premature
  mortality used by EPA. If the benefit-per-ton estimates were based on
  the high-end estimates, the values would be nearly two-and-a-half
  times larger. 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 the average social costs with 3-percent discount rate.
[dagger][dagger] The incremental installed costs include incremental
  equipment cost as well as installation costs. The costs account for
  the incremental variable and fixed costs incurred by manufacturers due
  to the proposed standards, some of which may be incurred in
  preparation for the rule.

    The benefits and costs of the adopted standards for air compressors 
sold in 2022-2051 can also be expressed in terms of annualized values. 
The monetary values for the total annualized net benefits are the sum 
of (1) the national economic value of the benefits in reduced consumer 
operating costs, minus (2) the increases in product purchase prices and 
installation costs, plus (3) the value of the benefits of 
CO2 and NOX emission reductions, all 
annualized.\12\
---------------------------------------------------------------------------

    \12\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2016, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2016. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I.3. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year, which 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 and are measured for the lifetime of compressors 
shipped in 2022-2051. The benefits associated with reduced 
CO2 emissions achieved as a result of the adopted standards 
are also calculated based on the lifetime of compressors shipped in 
2022-2051. Because CO2 emissions have a very long residence 
time in the atmosphere, the SC-CO2 values for CO2 
emissions in future years

[[Page 1508]]

reflect impacts that continue through 2300. The CO2 
reduction is a benefit that accrues globally. DOE maintains that 
consideration of global benefits is appropriate because of the global 
nature of the climate change problem.
    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 GHG reduction (for which DOE used average social costs with a 3-
percent discount rate),\13\ the estimated cost of the standards in this 
rule is $9.9 million per year in increased equipment costs, while the 
estimated annual benefits are $28.1 million in reduced equipment 
operating costs, $17.2 million in GHG reductions, and $0.7 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $36 million per year. Using a 3-percent discount rate for all 
benefits and costs, the estimated cost of the standards is $10.4 
million per year in increased equipment costs, while the estimated 
annual benefits are $36.8 million in reduced operating costs, $17.2 
million in GHG reductions, and $1.0 million in reduced NOX 
emissions. In this case, the net benefit amounts to $45 million per 
year.

                                     Table I.4--Annualized Benefits and Costs of Adopted Standards for Compressors *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Low-net- benefits        High-net- benefits
                                            Discount rate (percent)             Primary estimate              estimate                  estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        (million 2015$/year)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings....  7....................................  28.1....................  24.8....................  35.1.
                                     3....................................  36.8....................  32.2....................  46.6.
GHG Reduction (using avg. social     5....................................  5.4.....................  4.7.....................  6.6.
 costs at 5% discount rate) **.
GHG Reduction (using avg. social     3....................................  17.2....................  14.8....................  21.2.
 costs at 3% discount rate) **.
GHG Reduction (using avg. social     2.5..................................  24.8....................  21.4....................  30.6.
 costs at 2.5% discount rate) **.
GHG Reduction (using 95th            3....................................  51.5....................  44.4....................  63.4.
 percentile social costs at 3%
 discount rate) **.
NOX Reduction [dagger].............  7....................................  0.7.....................  0.6.....................  1.9.
                                     3....................................  1.0.....................  0.9.....................  2.8.
Total Benefits [Dagger]............  7 plus CO2 range.....................  34 to 80................  30 to 70................  44 to 100.
                                     7....................................  46......................  40......................  58.
                                     3 plus CO2 range.....................  43 to 89................  38 to 77................  56 to 113.
                                     3....................................  55......................  48......................  71.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment       7....................................  9.9.....................  8.8.....................  11.4.
 Costs [dagger][dagger].
                                     3....................................  10.4....................  9.3.....................  12.0.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [Dagger].....................  7 plus CO2 range.....................  24 to 70................  21 to 61................  32 to 89.
                                     7....................................  36......................  31......................  47.
                                     3 plus CO2 range.....................  33 to 79................  28 to 68................  44 to 101.
                                     3....................................  45......................  39......................  59.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with the considered compressors shipped in 2022-2051. These results include benefits
  to consumers which accrue after 2051 from the compressors purchased from 2022-2051. The incremental installed costs include incremental equipment cost
  as well as installation costs. The results account for the incremental variable and fixed costs incurred by manufacturers due to the adopted
  standards, some of which may be incurred in preparation for the rule. The GHG reduction benefits are global benefits due to actions that occur
  nationally. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO 2016 Economic Growth
  cases. In addition, incremental product costs reflect constant prices in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a
  high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. Note that the
  Benefits and Costs may not sum to the Net Benefits due to rounding.
** The interagency group selected four sets of SC-CO2 SC-CH4, and SC-N2O values for use in regulatory analyses. Three sets of values are based on the
  average social costs from the integrated assessment models, at discount rates of 5 percent, 3 percent, and 2.5 percent. The fourth set, which
  represents the 95th percentile of the social cost distributions calculated using a 3-percent discount rate, is included to represent higher-than-
  expected impacts from climate change further out in the tails of the social cost distributions. The social cost values are emission year specific. The
  GHG reduction benefits are global benefits due to actions that occur nationally. See section IV.L 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.3 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 used by EPA. 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 American Cancer Society (``ACS'') study.
[Dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using the average social costs with 3-percent discount rate. In the
  rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and
  those values are added to the full range of social cost values.
[dagger][dagger] The incremental installed costs include incremental equipment cost as well as installation costs. The results account for the
  incremental variable and fixed costs incurred by manufacturers due to the proposed standards, some of which may be incurred in preparation for the
  rule.

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

D. Conclusion

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

    \13\ DOE used average social costs with a 3-percent discount 
rate because these values are considered as the ``central'' 
estimates by the interagency group.
---------------------------------------------------------------------------

II. Introduction

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

[[Page 1509]]

A. Authority

    Title III of the Energy Policy and Conservation Act of 1975, as 
amended (``EPCA'' or, in context, ``the Act''), sets forth a variety of 
provisions designed to improve energy efficiency. (42 U.S.C. 6291, et 
seq.) Part C of Title III, which for editorial reasons was re-
designated as Part A-1 upon incorporation into the U.S. Code (42 U.S.C. 
6311-6317), establishes the ``Energy Conservation Program for Certain 
Industrial Equipment.'' EPCA provides that DOE may include a type of 
industrial equipment, including compressors, as covered equipment if it 
determines that to do so is necessary to carry out the purposes of Part 
A-1. (42 U.S.C. 6311(2)(B)(i) and 42 U.S.C. 6312(b)). The purpose of 
Part A-1 is to improve the efficiency of electric motors and pumps and 
certain other industrial equipment in order to conserve the energy 
resources of the Nation. (42 U.S.C. 6312(a)). On November 15, 2016 DOE 
published a Notice of Final Determination of Coverage determining that 
compressors meet the statutory criteria for classifying industrial 
equipment as covered, because compressors are a type of industrial 
equipment (1) which in operation consume, or are designed to consume, 
energy; (2) are to a significant extent distributed in commerce for 
industrial or commercial use; and (3) are not covered under 42 U.S.C. 
6291(a)(2). 81 FR 79991.
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. For commercial and industrial 
products, DOE is primarily responsible for labeling requirements. 
Subject to certain criteria and conditions, DOE is required to develop 
test procedures to measure the energy efficiency, energy use, or 
estimated annual operating cost of each covered product. (42 U.S.C. 
6295(o)(3)(A), 42 U.S.C. 6316(a) and 42 U.S.C. 6314) Manufacturers of 
covered products must use the prescribed DOE test procedure as the 
basis for certifying to DOE that their products comply with the 
applicable energy conservation standards adopted under EPCA and when 
making representations to the public regarding the energy use or 
efficiency of those products. (42 U.S.C. 6295(s), 42 U.S.C. 6316(a) and 
42 U.S.C. 6314(d)) Similarly, DOE must use these test procedures to 
determine whether the products comply with standards adopted pursuant 
to EPCA. (42 U.S.C. 6295(s) and 42 U.S.C. 6316(a)) DOE test procedures 
for compressors appear at title 10 of the Code of Federal Regulations 
(``CFR'') part 431, subpart T, appendix A.
    DOE follows specific statutory criteria for prescribing new or 
amended standards for covered equipment, including compressors. Any new 
or amended standard for a covered product must be designed to achieve 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified. (42 U.S.C. 6316(a), and 42 U.S.C. 
6295(o)(2)(A)) Furthermore, DOE may not adopt any standard that would 
not result in the significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B) and 42 U.S.C. 6316(a)) In deciding whether a proposed 
standard is economically justified, DOE must determine whether the 
benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i) and 42 U.S.C. 6316(a)) DOE must make this 
determination after receiving comments on the proposed standard and by 
considering, to the greatest extent practicable, the following seven 
statutory factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the standard;
    (3) The total projected amount of energy (or as applicable, water) 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from the standard;
    (5) The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary of Energy considers relevant. (42 
U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 42 U.S.C. 6316(a))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 42 
U.S.C. 6316(a))
    EPCA, as codified, also contains an ``anti-backsliding'' provision, 
which prevents the Secretary from prescribing any amended standard that 
either increases the maximum allowable energy use or decreases the 
minimum required energy efficiency of a covered product. (42 U.S.C. 
6295(o)(1) and 42 U.S.C. 6316(a)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States in any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4) and 42 U.S.C. 6316(a))
    Additionally, 42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(a) specify 
requirements when promulgating an energy conservation standard for a 
covered product that has two or more subcategories. DOE must specify a 
different standard level for a type or class of product that has the 
same function or intended use, if DOE determines that products within 
such group: (1) Consume a different kind of energy from that consumed 
by other covered products within such type (or class); or (2) have a 
capacity or other performance-related feature that other products 
within such type (or class) do not have, and such feature justifies a 
higher or lower standard. (42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(a)) 
In determining whether a performance-related feature justifies a 
different standard for a group of products, DOE must consider such 
factors as the utility to the consumer of the feature and other factors 
DOE deems appropriate. Id. Any rule prescribing such a standard must 
include an explanation of the basis on which such higher or lower level 
was established. (42 U.S.C. 6295(q)(2) and 42 U.S.C. 6316(a))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c) and 42 U.S.C. 6316(a)) DOE may, 
however, grant waivers of Federal preemption for particular State laws 
or regulations, in accordance with the procedures and other provisions 
set forth under 42 U.S.C. 6297(d) and 42 U.S.C. 6316(a)).

B. Regulatory History for Compressors

    Currently, there are no Federal energy conservation standards for 
air

[[Page 1510]]

compressors. On December 31, 2012, DOE issued a Notice of Proposed 
Determination of Coverage (``2012 proposed determination of coverage'') 
that proposed to establish compressors as covered equipment on the 
basis that (1) DOE may only prescribe energy conservation standards for 
covered equipment; and (2) energy conservation standards for 
compressors would improve the efficiency of such equipment more than 
would be likely to occur in the absence of standards, so including 
compressors as covered equipment is necessary to carry out the purposes 
of Part A-1. 77 FR 76972 (Dec. 31, 2012). The 2012 proposed 
determination of coverage tentatively determined that the standards 
would likely satisfy the provisions of 42 U.S.C. 6312(B). On February 
7, 2013, DOE published a notice reopening the comment period on the 
2012 proposed determination of coverage. 78 FR 8998.
    As noted above, on November 15 2016, DOE published a notice of 
final determination, which determined that coverage for compressors is 
necessary to carry out the purposes of Part A-1 of Title III of EPCA. 
81 FR 79991.
    On February 5, 2014, DOE published in the Federal Register a notice 
of public meeting, and provided a Framework document that addressed 
potential standards and test procedures for these products. 79 FR 6839. 
DOE held a public meeting to discuss the framework document on April 1, 
2014. At this meeting, DOE discussed and received comments on the 
Framework document, which covered the analytical framework, models, and 
tools that DOE uses to evaluate potential standards; and all other 
issues raised relevant to the development of energy conservation 
standards for the different categories of compressors. On March 18, 
2014, DOE extended the comment period. 79 FR 15061.
    On May 5, 2016, DOE issued a notice of proposed rulemaking 
(``NOPR'') to propose test procedures for certain compressors. 87 FR 
27220. On June 20, 2016, DOE held a public meeting to discuss the test 
procedure NOPR and receive comments from interested parties. On 
December 1, 2016, DOE issued a test procedure final rule that amends 
subpart T of Title 10 of the Code of Federal Regulations, part 431 (10 
CFR part 431), and which contains definitions, materials incorporated 
by reference, and test procedures for determining the energy efficiency 
of certain varieties of compressors. The test procedure final rule also 
amended 10 CFR part 429 to establish sampling plans, representations 
requirements, and enforcement provisions for certain compressors.
    On May 19, 2016, DOE published a notice of proposed rulemaking 
pertaining to energy conservation standards for compressors (``May 2016 
NOPR'').\14\ 81 FR 31680. DOE held a public meeting to discuss the May 
2016 NOPR on June 20, 2016.
---------------------------------------------------------------------------

    \14\ Available at: www.regulations.gov/document?D=EERE-2013-BT-STD-0040-0038.
---------------------------------------------------------------------------

    In this final rule, DOE responds to comments received from 
interested parties in response to the proposals presented in the May 
2016 NOPR, either during the June 2016 NOPR public meeting or in 
subsequent written comments.\15\ In response to the May 2016 NOPR, DOE 
received 24 written comments in addition to the verbal comments made by 
interested parties during the June 2016 NOPR public meeting. The 
commenters included: The Alliance to Save Energy (ASE); the American 
Council for an Energy Efficient Economy (ACEEE); the Appliance 
Standards Awareness Project (ASAP); Atlas Copco AB (Atlas Copco); 
Castair; the U.S. Chamber of Commerce, representing the American 
Chemistry Council, the American Coke and Coal Chemicals Institute, the 
American Forest & Paper Association, the American Fuel & Petrochemical 
Manufacturers, the American Petroleum Institute (API), the Association 
of Home Appliance Manufacturers, the Brick Industry Association, the 
Council of Industrial Boiler Owners, the National Association of 
Manufacturers, the National Mining Association, the National Oilseed 
Processors Association, and the Portland Cement Association 
collectively referred to as the ``U.S. Chamber of Commerce'' (U.S. 
Chamber of Commerce); the Compressed Air & Gas Institute (CAGI); 
Compressed Air Systems; Industrial Energy Consumers of America (IECA); 
Institute for Policy Integrity representing the Environmental Defense 
Fund, Institute for Policy Integrity at New York University School of 
Law, the Natural Resources Defense Council, and the Union of Concerned 
Scientists, collectively referred to as the ``Joint Advocates'' (Joint 
Advocates); Ingersoll Rand; Jenny Products, Kaeser Compressors; the 
Natural Resources Defense Council (NRDC); the Northeast Energy 
Efficiency Partnership (NEEP); the Northwest Energy Efficiency Alliance 
(NEEA); Michaels and Knappenberger, of the Center for the Study of 
Science, Cato Institute (Cato Institute); the Pacific Gas and Electric 
Company (PG&E), San Diego Gas and Electric (SDG&E), Southern California 
Edison (SCE), and Southern California Gas Company (SCGC), collectively 
referred to as the California Investor Owned Utilities (CA IOUs); the 
People's Republic of China (P. R. China); Scales Industrial 
Technologies (Scales); Sullair; Saylor-Beall Manufacturing Company and 
Sullivan-Palatek, collectively referred to as ``Sullivan-Palatek.'' In 
this document, DOE identifies comments received in response to the May 
2016 standard NOPR by the commenter, the number of document as listed 
in the docket maintained at www.regulations.gov (Docket No. EERE-2013-
BT-STD-0040), and the page number of that document where the comment 
appears (for example: CAGI, No. 10 at p. 4). If a comment was made 
verbally during the NOPR public meeting, DOE specifically identifies 
those as being located in the NOPR public meeting transcript (for 
example: CAGI, public meeting transcript, No. 16 at p. 100). This final 
rule also contains certain relevant comments submitted in response to 
the compressors test procedure rulemaking (Docket No. EERE-2014-BT-TP-
0054) and the December 2012 proposed determination of coverage (Docket 
No. EERE-2012-BT-DET-0033); such comments will be identified with the 
appropriate docket number.
---------------------------------------------------------------------------

    \15\ DOE notes that certain comments pertaining to the 
definition of ``compressors'' were addressed in the 2016 notice of 
final determination.
---------------------------------------------------------------------------

C. Process Rule

    DOE notes that Appendix A established procedures, interpretations, 
and policies to guide DOE in the consideration and promulgation of new 
or revised appliance efficiency standards under EPCA. (See section 1 of 
10 CFR part 430 subpart C, appendix A) These procedures are a general 
guide to the steps DOE typically follows in promulgating energy 
conservation standards. The guidance recognizes that DOE can and will, 
on occasion, deviate from the typical process. (See 10 CFR part 430, 
subpart C, appendix A, section 14(a)) The 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. In this particular instance, DOE deviated from 
its typical process and issued the energy conservation standards notice 
of proposed rulemaking prior to finalizing the test procedure. DOE 
believed this action was appropriate in this specific instance because 
DOE was proposing a commonly used industry test procedure methodology 
with few modifications. DOE developed the proposed energy

[[Page 1511]]

conservation standards using representations for isentropic efficiency 
from manufacturers' CAGI datasheets that were developed consistent with 
the proposed test procedure methodology and are readily available on 
the market today. Thus, DOE believes that industry has a common 
understanding of the resulting efficiencies of different compressors 
designs being contemplated in the energy conservation standards 
rulemaking and could provide meaningful comments to DOE about the 
impacts of such standards. Based on the test procedure adopted in the 
December 2016 final rule, DOE remains confident that the timing 
deviation did not adversely impact the manufacturers ability to 
understand and provide reasonable comments on the proposed energy 
conservation standards rulemaking due to the widespread availability of 
data consistent with DOE's test procedure and DOE's ability to take 
those comments into consideration in developing the final standard 
levels as included in this final rule.

III. General Discussion

A. Definitions

1. Definition of Covered Equipment
    In the November 2016 notice of final determination, DOE adopted the 
following definition for compressor:
    Compressor means a machine or apparatus that converts different 
types of energy into the potential energy of gas pressure for 
displacement and compression of gaseous media to any higher pressure 
values above atmospheric pressure and has a pressure ratio at full-load 
operating pressure greater than 1.3.
    To support the definition of compressors, DOE adopts the following 
definition for pressure ratio at full-load operating pressure in the 
test procedure final rule:
    Pressure ratio at full-load operating pressure means the ratio of 
discharge pressure to inlet pressure, determined at full-load operating 
pressure in accordance with the test procedures prescribed in 10 CFR 
431.344.
    DOE received comments on the definition of ``compressor'' in both 
the energy conservation standard and test procedure dockets. DOE 
addresses all comments related to the definition of compressor in the 
November 2016 notice of final determination.
2. Air- and Liquid-Cooled Compressors
    In the energy conservation standards NOPR, DOE proposed the 
following definition for water-cooled compressors: A compressor that 
utilizes chilled water provided by an external system to cool both the 
compressed air and, if present, any auxiliary substance used to 
facilitate compression. DOE also proposed the following definition for 
air-cooled compressors: A compressor that utilizes air to cool both the 
compressed air and, if present, any auxiliary substance used to 
facilitate compression. 81 FR 31680, 31699 (May 19, 2016)
    In response to the definition of water-cooled compressors in the 
energy conservation standards NOPR, Kaeser Compressors suggested 
replacing the term ``chilled water'' with ``water'' as the water is not 
always chilled. (Kaeser Compressors, Public Meeting Transcript, No. 
0044 at pp. 22-23) Edison Electric Institute stated that the definition 
of water-cooled compressors does not account for compressors that use a 
combination of different fluids. (Edison Electric Institute, Public 
Meeting Transcript, No. 0044 at p. 23) Sullair commented that glycol 
cooling, which has a percentage of water, is an example in which the 
definition for water-cooled compressors fails to define all non-air 
cooling methods. (Sullair, No. 0056 at p. 13)
    In response to commenters' concerns, DOE recognizes that the term 
``chilled water'' may be unduly limiting. For this final rule, DOE is 
revising the term ``water-cooled compressor'' and its associated 
definition to refer to ``liquid'' instead of ``chilled water.'' DOE 
believes that the term ``liquid'' is sufficiently broad to encompass 
the concerns raised by commenters. Omission of the term ``chilled'' 
similarly aids that objective, as it is not DOE's intent to limit the 
definition to compressors that use only chilled liquids.
    Sullair also commented that compressors could have both liquid and 
air cooling (such as a closed-loop water system with a radiator and 
fan), and thus would represent a potential loophole to classify the 
compressor within an equipment class with a less-stringent standard. 
(Sullair, No. 0056 at pp. 13-14; Sullair, Public Meeting Transcript, 
No. 0044 at p. 23) DOE believes Sullair is referring to a scenario 
where a compressor with both liquid and air-cooling could be classified 
as an air-cooled compressor, rather than a liquid-cooled compressor, as 
the standards proposed in the energy conservation standards NOPR are 
less stringent for air-cooled equipment.
    In response to Sullair's comment, DOE recognizes potential 
ambiguity between the definition of ``air-cooled compressor'' and 
``liquid-cooled compressor.'' Specifically, the definitions proposed in 
the energy conservation standards NOPR are not mutually exclusive, as a 
compressor could feasibly employ both liquid and air cooling in the 
same model. As a result, in this final rule, DOE is modifying the 
definition of ``air-cooled compressor'' to expressly exclude 
compressors that meet the definition of ``liquid-cooled compressor.'' 
Doing so establishes mutual exclusivity among the equipment varieties, 
ensuring that no compressors can meet the definition of both air-cooled 
and liquid-cooled compressors.
    With respect to Sullair's specific example (a closed-loop water 
system with a radiator and fan), DOE clarifies that such a compressor 
would not meet the definition of ``liquid-cooled compressor,'' because 
the coolant system is part of the compressor package and is not an 
external system. Specifically, the use of the term ``provided by an 
external system'' in the definition of liquid-cooled compressors means 
that the system that provides the liquid coolant is not integral to the 
compressor package, and the liquid coolant system energy consumption 
and power draw are not accounted for when the compressor is tested 
according to the DOE test procedure.
    Further, in the test procedure final rule, DOE adopts a list of 
ancillary equipment that must be attached to the compressor during 
performance testing. DOE includes two lists; the first describes 
ancillary equipment that must be included on a unit when testing, 
regardless of whether it is distributed in commerce with the basic 
model under test; the second list contains ancillary equipment that is 
only required if it is distributed in commerce with the basic model 
under test. ``Cooling fan(s) and motors'' appear on the second list. 
However, there is no requirement that cooling equipment beyond 
``cooling fan(s) and motors,'' including equipment related to closed-
loop liquid coolant circulation, be connected for testing purposes. As 
such, Sullair's specific example (a closed-loop water system with a 
radiator and fan within the package) is an air-cooled compressor and is 
tested with cooling fans engaged, but any water pumping equipment is 
not be required to be running.
    Based on the discussion in this section, DOE is adopting the 
following, revised, definitions for liquid-cooled and air-cooled 
compressors.
    ``Liquid-cooled compressor'' means a compressor that utilizes 
liquid coolant provided by an external system to cool both the 
compressed air and, if present, any auxiliary substance used to 
facilitate compression.

[[Page 1512]]

    ``Air-cooled compressor'' means ``a compressor that utilizes air to 
cool both the compressed air and, if present, any auxiliary substance 
used to facilitate compression, and that is not a liquid-cooled 
compressor.''

B. Scope of Energy Conservation Standards

    In the energy conservation standards NOPR, DOE proposed to limit 
the scope of applicability of standards to compressors that meet the 
following criteria:
     Are air compressors,
     are rotary compressors,
     are driven by a brushless electric motor,
     are distributed in commerce with a compressor motor 
nominal horsepower greater than or equal to 1 and less than or equal to 
500 horsepower (``hp''), and
     operate at a full-load operating pressure of greater than 
or equal to 31 and less than or equal to 225 pounds per square inch 
gauge (``psig''). 81 FR 31680, 31689-31693 (May 19, 2016).
    In the test procedure final rule, DOE limits the scope of test 
procedure applicability to compressors that meet the following 
criteria:
     Are air compressors;
     are rotary compressors;
     are not liquid ring compressors;
     are driven by a brushless electric motor;
     are lubricated compressors;
     have a full-load operating pressure of 75-200 psig;
     are not designed and tested to the requirements of The 
American Petroleum Institute standard 619, ``Rotary-Type Positive-
Displacement Compressors for Petroleum, Petrochemical, and Natural Gas 
Industries;'' and
     have a capacity that is either:
    [cir] 10-200 compressor motor nominal horsepower (hp), or
    [cir] 35-1,250 full-load actual volume flow rate (cfm).
    After considering comments received in response to the energy 
conservation standards NOPR, DOE is aligning the scope of energy 
conservation standards in this final rule to be similar, but less broad 
than the aforementioned scope of the test procedure final rule. The 
following sections, III.B.1 through III.B.8, discuss, in detail, each 
scope limitation, interested party comments, and DOE's conclusions.
1. Equipment System Boundary
    In the energy conservation standards NOPR, DOE proposed to limit 
the scope of the standards to ``air compressors'' that compress 
atmospheric air and consist of a bare compressor, driver(s), mechanical 
equipment to transfer energy from the driver to the bare compressor, 
and any ancillary equipment shipped in commerce with the compressor. 
DOE also proposed definitions for the terms ``air compressor,'' ``bare 
compressor,'' ``driver,'' ``mechanical equipment,'' and ``ancillary 
equipment.'' 81 FR 31680, 31688-31690 (May 19, 2016). DOE received 
comments on its proposal to limit the scope of the energy conservation 
standards to air compressors. These comments are discussed in detail 
below.
a. Air Compressor
    Generally, DOE considered and responded to comments relating to the 
definition of the term ``air compressor'' in the test procedure final 
rule. Beyond those comments considered in the test procedure final 
rule, Scales Industrial Technologies commented that there are 
opportunities to improve the overall efficiency of a compressed air 
system on the demand side that should also be considered. (EERE-2014-
BT-TP-0054, Scales Industrial Technologies, No. 0013 at p. 9)
    In the energy conservation standards NOPR, DOE discussed the 
possibility of establishing standards at the ``compressed air system'' 
(``CAS'') level, but ultimately proposed standards at the packaged 
compressor level for the following reasons:
     Each CAS is often unique to a specific installation;
     each CAS may include equipment from several different 
manufacturers; and
     a single CAS can include several different compressors, of 
different types, which may all have different full-load operating 
pressures. 81 FR 31680, 31689-31690 (May 19, 2016).
    As discussed in the energy conservation standards NOPR, 
implementing a broader, CAS-based approach to compressor efficiency 
would require DOE to (1) establish a methodology for measuring losses 
in a given air-distribution network; and (2) assess what certification, 
compliance, or enforcement practices would be required for a large 
variety of system designs, and potential waiver criteria. For these 
reasons, in the energy conservation standards NOPR, DOE concluded that 
the CAS is not a viable equipment classification level for coverage. 
DOE recognizes the argument set forth by Scales Industrial Technologies 
and does not dispute the potential for savings beyond the compressor 
package. Nonetheless, the decision not to pursue standards at the CAS 
level was made, not due to absence of potential energy savings, but due 
to impracticality of creating a single standard and test procedure that 
would apply meaningfully to the great variety of air distribution 
systems. DOE continues to conclude that the CAS is not appropriate for 
this final rule.
    Castair commented that the scope of the energy conservation 
standards should be limited only to air ends, stating that the 
assemblers of air compressors can do little to improve efficiency. 
(Castair, No. 0045 at p. 1)
    In the energy conservation standards NOPR, DOE also discussed the 
possibility of establishing standards at the bare compressor level. 
Ultimately, DOE opted not to limit standards to the bare compressor, 
concluding that greater savings were available at the packaged 
compressor level. 81 FR 31680, 31689-31690 (May 19, 2016). In response 
to Castair's comment, DOE notes that energy savings can be achieved 
through proper component selection (including the bare compressor and 
driver) and system design. For this reason, DOE maintains the approach 
proposed in the energy conservation standards NOPR and is applying 
standards at the compressor package level.
b. Ancillary Equipment
    In the test procedure NOPR, DOE proposed using the term ``ancillary 
equipment'' to mean ``any equipment distributed in commerce with an air 
compressor that is not a bare compressor, driver, or mechanical 
equipment.'' 81 FR 31680, 31690 (May 19, 2016). In other words, it 
served as a catch-all for package components that did not fall into 
another category but were part of the package purchased by an end user.
    In the test procedure final rule, DOE adopts a requirement 
different from what DOE proposed in the test procedure NOPR. DOE 
defines two lists of equipment; the first list includes items that must 
be attached during testing, and the second list includes items that 
must be attached during testing if the package is distributed in 
commerce configured as such. However, manufacturers may opt to test 
with additional equipment than is on the two lists, at their 
preference.
    CAGI commented that the definition of ancillary equipment should be 
more specific and provided a list of ancillary equipment that is common 
and required for safe operation of a compressor. Ingersoll Rand, Kaeser 
Compressors, Mattei Compressors, Sullair, and Sullivan-Palatek 
supported the CAGI position and list. (CAGI, No. 0052 at pp. 6-8; 
Ingersoll Rand, No. 0055 at pp. 1, 4; Kaeser Compressors, No. 0053 at 
p.1;

[[Page 1513]]

Mattei Compressors, No. 0063 at p. 2; Sullair, No. 0056 at pp. 1, 6; 
Sullivan-Palatek, No. 0051 at p.1) CAGI further commented that the list 
is almost identical to the European Union's Lot 31 Draft Ecodesign 
Regulation (hereafter ``Lot 31 draft regulation,'' which is discussed 
in section IV.C.1.b) list of ancillary equipment, and clarified that 
manufacturers should provide missing ancillary equipment that is not 
installed on their compressor for compliance and enforcement testing. 
(CAGI, No. 0052 at pp. 6-8)
    Atlas Copco commented that the definition of ancillary equipment as 
proposed in both the test procedure NOPR and the energy conservation 
standards NOPR is not consistent, as the DOE hoped, with the draft EU 
standards. Atlas Copco further stated that the definition as proposed 
penalizes manufacturers who efficiently include dryers within the 
design of the compressor package. Finally, Atlas Copco emphasizes the 
need for an equitable standard for defining ancillary equipment that 
allows for comparison across units, similar to the draft EU standards. 
(Atlas Copco, No. 0054 at p. 13)
    DOE has considered and responded to the preceding comments in the 
test procedure final rule by adopting two lists to describe the minimum 
equipment configuration for compressor testing. The first list contains 
equipment that must be included on a unit when testing, regardless of 
whether it is distributed in commerce with the basic model under test. 
This table aligns with many of the items that CAGI specified to be part 
of a standard package. The second list contains equipment that is only 
required if it is distributed in commerce with the basic model under 
test. DOE believes that it is impossible to require that items from 
this second list of ancillary equipment be connected for testing, as 
many basic models do not require some of this ancillary equipment to 
achieve their basic functionality and as adding such components would 
be impossible or impractical.
    ASAP, ACEEE, NEEA, NRDC, NEEP, and ASE commented that DOE should 
independently investigate the energy consumption of ancillary equipment 
that manufacturers wish to exclude, such as dryers, as this equipment 
has a significant impact on air compressor energy efficiency. (ASAP, 
ACEEE, NEEA, NRDC, NEEP, and ASE, No. 0060 at p. 4)
    Dryers and other unrequired ancillary equipment may consume 
significant energy in certain applications. However, because they are 
not universally included as part of a compressor package, DOE did not 
include them in the list of equipment required for testing. DOE may 
investigate the appropriateness of test procedures for air dryers and 
other unrequired ancillary equipment--either as part of a compressor, 
or separately--as part of future rulemakings.
2. Compression Principle: Rotary and Reciprocating Compressors
    In the energy conservation standards NOPR, DOE analyzed rotary and 
reciprocating compressors as separate equipment classes, and concluded 
that each provides a distinct utility that materially affects energy 
consumption. 81 FR 31680, 31697-31698 (May 19, 2016). Ultimately, DOE 
did not propose energy conservation standards for reciprocating 
compressors because the energy conservation standards NOPR analyses 
showed that such proposed standards were not economically justified. 81 
FR 31680.
    As discussed in the energy conservation standards NOPR and during 
the accompanying public meeting, DOE performed the reciprocating 
compressor analyses based on a limited data set. Specifically, DOE had 
limited data characterizing reciprocating compressor performance, 
manufacturer selling price,\16\ and shipments in the U.S. market. 81 FR 
31680, 31707, 31717, 31724 (May 19, 2016). In the energy conservation 
standards NOPR, DOE put forth analysis based on the limited data that 
was available and requested both comment and better data from 
interested parties in order to strengthen its analysis.
---------------------------------------------------------------------------

    \16\ DOE notes that it had retail price data from online 
retailers, but limited direct manufacturer selling price data. DOE 
did estimate manufacturer selling price from the retail price data 
using estimated markups.
---------------------------------------------------------------------------

    In response, DOE received no quantitative reciprocating compressor 
data from commenters. Additionally, in the time since the energy 
conservation standards NOPR, DOE was unable to obtain, from other 
sources, any additional reciprocating compressor data. As discussed in 
the energy conservation standards NOPR, the availability of 
reciprocating compressor performance data is extremely limited. 81 FR 
31680, 31707 (May 19, 2016). This continues to remain true. 
Specifically, manufacturers of reciprocating compressors do not 
typically performance test their equipment or publish performance 
information. Consequently, to collect the performance data required to 
establish energy conservation standards, DOE will need to work with 
manufacturers, independent labs, and/or other interested parties to 
test and gather such data. DOE may pursue such avenues in the future, 
however at this time DOE's performance data remains limited.
    Sullivan-Palatek commented that because DOE does not have 
performance data on reciprocating compressors, it should delay any 
decision to combine or separate an equipment class until reciprocating 
data can be collected and analyzed. (Sullivan-Palatek, No. 0051 at p. 
6)
    In the absence of new quantitative data, DOE agrees with Sullivan-
Palatek and is not confident that the reciprocating compressor data 
underlying the energy conservation standards NOPR analyses is 
sufficient to definitively conclude, in this final rule, that energy 
conservation standards for reciprocating compressors are not 
economically justifiable. Therefore, DOE is deferring consideration of 
energy conservation standards until it can obtain performance data to 
assess the possibility for economically justified energy savings for 
different categories of reciprocating compressors. DOE makes no 
determination regarding such savings in this final rule, and reiterates 
that reciprocating compressors remain as covered equipment.
    Regarding reciprocating compressors, interested parties also 
provided comments related to equipment classes, potential energy 
savings, substitution risk, harmonization with the European Union, and 
potential energy conservation standard levels. These topics are 
discussed in the following sections.
a. Equipment Classes
    CAGI, Castair, and Compressed Air Systems agreed with DOE's 
conclusion that rotary and reciprocating compressors warranted separate 
equipment classes. (CAGI, Public Meeting Transcript, No. 0044 at p. 19; 
Compressed Air Systems, No. 0061 at p. 2) Specifically, Castair stated 
that the different designs of rotary and reciprocating equipment make 
the technologies better suited to continuous and intermittent demand 
cycles, respectively. (Castair, No. 0062 at p. 1)
    DOE agrees with commenters that reciprocating and rotary 
compressors should be analyzed in separate equipment classes for the 
reasons presented in the energy conservations standards NOPR, and that 
they carry differential utility and ability to reach greater 
efficiencies. 81 FR 31680, 31697-31698 (May 19, 2016). However, because 
DOE is not establishing energy conservation standards reciprocating 
compressors in this final rule, DOE will

[[Page 1514]]

not be establishing formal equipment classes for reciprocating 
compressors in this final rule. DOE may consider CAGI's and Castair's 
remarks in any future rulemaking.
b. Energy Savings
    ASAP and NEEA commented that the shipment data for reciprocating 
compressors led them to believe that a large amount of energy 
consumption is attributed to reciprocating compressors. ASAP asserted 
that by not setting standards for the equipment class, DOE misses a 
significant opportunity to reduce the energy consumption of 
compressors. (ASAP, Public Meeting Transcript, No. 0044 at pp. 9-10; 
NEEA, Public Meeting Transcript, No. 0044 at p. 115) Additionally, 
ASAP, ACEEE, NEEA, NRDC, NEEP, and ASE commented that DOE should reduce 
the scope of compressor capacity to include only the large 
reciprocating compressors used in commercial and industrial 
applications, which do not have the low-duty cycles of the residential 
hobby compressors and, therefore, should produce a greater consumer 
benefit at the proposed standard levels. (ASAP, ACEEE, NEEA, NRDC, 
NEEP, ASE, No. 0060 at p. 2) The CA IOUs also cited the missed 
opportunity for ``significant energy savings'' as the reason to 
establish a standard for reciprocating compressors. (CA IOUs, No. 0059 
at pp. 2-3)
    DOE reiterates that it is not analyzing reciprocating compressors 
in this final rule due to a lack of data, but DOE may consider comments 
received in any future rulemaking.
c. Substitution Risk
    ASAP, ACEEE, NRDC, NEEP, ASE, the CA IOUs, NEEA, and NWPCC 
suggested that DOE establish standards for a subset of reciprocating 
compressors, with ASAP suggesting inclusion of large commercial and 
industrial reciprocating compressors, and NEEA and NWPCC suggesting 
inclusion of reciprocating compressors from 20 to 100 compressor motor 
nominal horsepower. NEEA and NWPCC further commented that the absence 
of energy conservation standards for reciprocating compressors between 
20 and 100 compressor motor nominal horsepower would pose a 
substitution risk due to the increased cost of rotary compressors 
subject to an energy conservation standard. (NEEA and NWPCC, No. 0057 
at p. 2)
    Atlas Copco commented that using a ``technology approach'' in 
establishing the scope of an energy conservation standards rule grants 
unfair advantage to unregulated technologies at the low and high ends 
of capacity ranges covered. Specifically, Atlas Copco asserted that 
turbo and piston compressors (if not included in the DOE test procedure 
and energy conservation standards) would realize the increased cost due 
to regulation, and therefore may gain popularity over the regulated 
rotary compressors. (Atlas Copco, No. 0054 at pp. 2, 11-12)
    In response to Atlas Copco's concerns regarding unfair competition, 
DOE notes that it adopts a smaller compressor motor nominal horsepower 
range in the test procedure final rule, and is also doing so in this 
energy conservation standards final rule. The new scope alleviates 
Atlas Copco's concerns, as DOE's research indicates that few 
reciprocating compressors are offered with a compressor motor nominal 
horsepower greater than 10 hp; section III.B.4 provides further 
discussion of this topic. In that section, DOE directly addresses Atlas 
Copco's concerns and considers competition from unregulated compressor 
technologies in determining whether to reduce scope.
    In response to NEEA and NWPCC, DOE reviewed marketing literature of 
major reciprocating compressor manufacturers, and found that the 
largest marketed reciprocating compressor available (between 75 and 200 
psig) has 30 compressor motor nominal horsepower, with 20 compressor 
motor nominal horsepower being a more typical upper limit.\17\ 
Additionally, based on confidential discussions with manufacturers, DOE 
believes that shipments of the available compressors with greater than 
or equal to 20 hp are extremely limited. For these reasons, DOE 
believes a substitution incentive is unlikely.
---------------------------------------------------------------------------

    \17\ See: www.quincycompressor.com/products/reciprocating-piston/, www.saylor-beall.com/base-mounted/, www.atlascopco.us/en-
us/compressors/products/Air-compressor/Oil-injected-rotary-screw-
air-compressor/LE-LT-industrial-oil-lubricated-piston-compressors, 
www.ingersollrandproducts.com/am-en/products/air/small-reciprocating-air-compressors/electric-driven-two-stage, http://usa.boge.com/artikel/Screw_Compressors/CL.jsp?msf=200%2C100%2C100, 
www.gardnerdenver.com/gdproducts/compressors/reciprocating/r-series-low-pressure-reciprocating-compressors/#13223.
---------------------------------------------------------------------------

d. Harmonization With the European Union
    Atlas Copco recommended that DOE base its regulation on standard 
air as defined by Lot 31, and noted that the Lot 31 regulation is 
``technology independent.'' Atlas Copco clarified that Lot 31 defines 
categories for standard air compressors that group compressors based on 
three flow profiles: (1) Fixed flow, (2) variable flow, and (3) 
intermittent use. Reciprocating compressors are typically in the 
intermittent use category. Atlas Copco notes that the intermittent use 
category may not be included in the Lot 31 draft regulation due to the 
small potential energy savings. (Atlas Copco, No. 0054 at p. 12)
    In response to this comment, DOE first notes that the Lot 31 draft 
regulation on ``standard air compressors'' does not classify 
compressors by ``fixed flow, variable flow and intermittent use.'' 
Rather, the Lot 31 draft regulation establishes and defines two 
equipment groupings, ``rotary standard'' and ``piston standard'' air 
compressors, in a similar manner to the equipment classes proposed in 
the energy conservation standards NOPR.\18\ Further, DOE evaluated all 
publicly available reports and information on the Lot 31 website,\19\ 
and found no mention of any regulatory approach that would define three 
sub-categories of fixed flow, variable flow and intermittent use. DOE 
recognizes that work to amend the Lot 31 draft regulation may be 
occurring in private. However, without any published or publicly 
available regulatory information, DOE does not believe it is 
appropriate to speculate on hypothetical decisions that the EU 
regulators may make.
---------------------------------------------------------------------------

    \18\ For copies of the EU draft regulation: www.regulations.gov/contentStreamer?documentId=EERE-2013-BT-STD-0040-0031&disposition=attachment&contentType=pdf
    \19\ As viewed here: www.eco-compressors.eu/documents.htm
---------------------------------------------------------------------------

    As a result, DOE's proposal in the energy conservation standards 
NOPR to separate equipment classes for reciprocating and rotary 
compressors aligns with the current published version of the Lot 31 
draft regulation,\20\ as the Lot 31 draft regulation proposes different 
minimum energy efficiency requirements for rotary and reciprocating 
compressors. Atlas Copco's claim that the whole category of 
intermittent use could possibly be exempted because it has too little 
savings potential also supports DOE's conclusion in the energy 
conservation standards NOPR that reciprocating and rotary compressors 
each offer distinct utility that materially affects energy consumption, 
and that these differences necessitate separate equipment classes. 81 
FR 31680, 31697-31698 (May 19, 2016).
---------------------------------------------------------------------------

    \20\ For copies of the EU draft regulation: www.regulations.gov/contentStreamer?documentId=EERE-2013-BT-STD-0040-0031&disposition=attachment&contentType=pdf

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

[[Page 1515]]

e. Potential Standards for Reciprocating Compressors
    ASAP, ACEEE, NRDC, NEEP, ASE, NEEA and NWPCC argued that 
establishing baseline standards for reciprocating compressors would 
both promote efficiency in the marketplace and generate test data for 
future rulemakings. (ASAP, Public Meeting Transcript, No. 0044 at p. 
152; NEEA and NWPCC, No. 0057 at p. 2; ASAP, ACEEE, NEEA, NRDC, NEEP, 
ASE, No. 0060 at pp. 2-3)
    DOE agrees that a baseline standard for reciprocating compressors 
would generate performance data. However, DOE reiterates that it lacks 
sufficient data to conclude whether any energy conservation standard, 
including a baseline standard, would be economically justified. 
Therefore, DOE is not analyzing reciprocating compressor in this final 
rule, but may do so in a future rulemaking.
3. Driver Style
    In the energy conservation standards NOPR, DOE proposed to 
establish the scope of energy conservation standards using driver style 
as a differentiator. Specifically, DOE defined the scope of driver 
styles covered under the proposed standard by only including single-
phase and three-phase brushless electric motors. 81 FR 31680, 31691-
31692 (May 19, 2016).
    The following sections discuss the comments that DOE received 
regarding the scope of drivers proposed in the energy conservation 
standards NOPR.
a. Exclusion of Non-Electric Drivers
    In the energy conservation standards NOPR, DOE proposed to align 
the scope of the energy conservation standards with the scope of 
applicability of the test procedure NOPR and not include engine-driven 
equipment in the scope. 81 FR 31680, 31691 (May 19, 2016).
    The Edison Electric Institute expressed disappointment that the 
NOPR was only focused on electric motors and was not more fuel-neutral 
with respect to compressor drivers, pointing out the savings potential 
for compressors driven by natural gas would be high, given their usage 
in 2015 was 0.86 quad. (Edison Electric Institute, Public Meeting 
Transcript, No. 0044 at p. 5)
    In response to EEI's comment, engine-driven compressors were 
considered in the February 5, 2014 Framework document for compressors 
and discussed extensively in the May 5, 2016 test procedure NOPR. 79 FR 
6839 and 81 FR 27220. Specifically, in the test procedure NOPR, DOE 
concluded that the inclusion of engine-driven compressors was not 
appropriate for various reasons, including their differing utility 
compared to electric compressors, their existing coverage under the 
U.S. Environmental Protection Agency's Tier 4 emissions regulations, 
and the limited test data available under Annex D of ISO 1217:2009 to 
verify suitability as a DOE test procedure. For these reasons, DOE 
noted that engine-driven compressors would more appropriately be 
considered as part of a future rulemaking. 81 FR 27220, 27229 (May 5, 
2016).
    DOE continues to conclude that engine-driven compressors are unique 
equipment with different performance, applications, and test 
requirements from compressors driven by electric motors. As a result, 
DOE continues to conclude engine-driven compressors would be more 
appropriate to address as part of a separate rulemaking specifically 
considering such equipment. DOE is limiting the scope of this final 
rule to only compressors driven by electric motors.
b. Exclusion of Brushed Motors
    In the energy conservation standards NOPR, DOE proposed to align 
with the scope of applicability of the test procedure NOPR and only 
include those compressors that are driven by brushless motors in the 
scope. 81 FR 31680, 31692 (May 19, 2016).
    The CA IOUs commented that DOE should cover brushed motors in 
addition to brushless motors, citing the potential loophole of a market 
shift toward unregulated brushed motors and the higher potential for 
energy savings as reasons for their inclusion. (CA IOUs, No. 0059 at p. 
3)
    DOE reiterates that brushed motors are uncommon in compressors with 
significant potential energy savings (i.e., high operating hours) due 
to higher maintenance costs, short operating lives, significant 
acoustic noise, and electrical arcing. For these reasons, DOE concludes 
that brushed motors are not a viable substitution risk for compressors 
within the scope of the compressor test procedures. DOE is continuing 
to exclude compressors driven by brushed motors from the scope of this 
final rule.
c. Exclusion of Single-Phase Motors
    In the energy conservation standards NOPR DOE proposed a standard 
that was applicable to both single- and three-phase rotary compressors, 
while acknowledging that compressors with single-phase motors may be 
less efficient. 81 FR 31680, 31691-31692 (May 19, 2016).
    Castair commented that single-phase motors should be excluded from 
the scope of the standard because of their small sales volume. Castair 
argued that single-phase compressors comprise a small portion of the 
market, three-phase compressor offerings are expanding, and customers 
that do not have three-phase power typically cannot afford to install 
three-phase power. (Castair, No. 0062 at p. 1) Sullair also recommended 
that DOE limit the scope of the energy conservation standards to 
compressors with compressor motor nominal horsepower greater than 10 
hp, but only cited the simplicity of reducing the number of equipment 
classes and solving the issue of single-phase rotary compressors. 
(Sullair, No. 0056 at pp. 7-8)
    Sullivan-Palatek suggested that DOE limit the scope of the energy 
conservation standard to compressors with compressor motor nominal 
horsepower greater than 10 hp.\21\ According to Sullivan-Palatek, 
limiting the scope of the energy conservation standard to compressors 
with compressor motor nominal horsepower greater than 10 hp would 
eliminate single-phase compressors from the scope of the standards and 
eliminate the risk of product substitution of unregulated reciprocating 
and scroll compressors. (Sullivan-Palatek, No. 0051 at p. 6; Sullivan-
Palatek, No. 0051 at p. 7)
---------------------------------------------------------------------------

    \21\ Sullivan-Palatek's comment included recommendations for a 
scope of both greater than or equal to 10 nominal hp, and greater 
than 10 nominal hp.
---------------------------------------------------------------------------

    Sullair commented that, although single-phase and three-phase 
compressor packages are mostly identical, the motor and electrical 
equipment (e.g., the starter) differ. Sullair also stated that the 
customer decision in choosing a single-phase or three-phase compressor 
is driven by the electrical supply at the installation location; 
customers are not incentivized to purchase a single-phase motor as the 
installation cost is typically higher than an equivalent three-phase 
motor when three-phase power facility is available at the installation 
point. (Sullair, No. 0056 at pp. 7-8)
    Ingersoll Rand requested that DOE exclude single-phase compressors 
if DOE intends to include compressors with a compressor motor nominal 
horsepower of less than 10 hp. Ingersoll Rand stated that single-phase 
compressors are purchased out of utility need and do not have the same 
energy efficiency potential as three-phase

[[Page 1516]]

compressors in that compressor motor nominal horsepower range. 
Ingersoll Rand comments that regulating single-phase compressors under 
10 nominal hp would penalize small businesses by requiring the purchase 
of a more expensive compressor, or requiring the conversion of its 
existing power supply to three-phase power. (Ingersoll Rand, No. 0055 
at p. 5)
    As discussed in section III.B.4 of this document, DOE is limiting 
the scope of this final rule to compressors with compressor motor 
nominal horsepower of 10 hp or greater. For compressor packages that 
are within this compressor motor nominal horsepower range and available 
in single- and three-phase variations through online retailers, DOE 
found single-phase compressors offered at a similar price, or more 
expensive than comparable three-phase models. Additionally, DOE 
acknowledges Sullair's comment that, when three-phase power is 
available, installation costs for a single-phase compressors may be 
higher. Based on the similar prices DOE found through retailers, and 
the potential higher installation costs for single-phase compressors, 
DOE agrees with Sullair's comment that there is not an incentive to 
choose single-phase equipment instead of three-phase equipment. 
Therefore, DOE is limiting the scope of this final rule to compressors 
with three-phase motors. With the reduction of scope to include only 
three-phase compressors of 10 nominal hp or greater, Ingersoll Rand's 
concern regarding single-phase compressors of 10 nominal hp or less is 
no longer applicable.
    DOE also received the following comments regarding the separation 
of equipment classes. Because single-phase compressors are not included 
within the scope of the standards established by this final rule, these 
comments are no longer relevant.
    Castair, Compressed Air Systems, and Sullair both supported the 
creation of equipment classes based on motor phase count. Compressed 
Air Systems argued that single-phase compressors should be separated 
from three-phase compressors because there is little data available for 
single-phase compressors to make an informed decision. Furthermore, 
Compressed Air Systems argued that a single-phase compressor would not 
be able to meet a three-phase standard. (Compressed Air Systems, No. 
0061 at p. 2)
    Sullair made several arguments to support establishing equipment 
classes based on motor phase count. First, Sullair argued that the 
availability of premium efficiency single-phase motors is limited, 
resulting in difficulty in sourcing motors that would meet an energy 
efficiency standard. Sullair also stated that the customer decision in 
choosing a single-phase or three-phase compressor is driven by the 
electrical supply at the installation location; and as noted 
previously, customers are not incentivized to purchase a single-phase 
motor as the installation cost is typically higher than an equivalent 
three-phase motor, when three-phase power is in the facility. Finally, 
Sullair stated there is a risk of product substitution to unregulated 
single-phase products, such as reciprocating or scroll compressors, if 
DOE adopts one standard for single- and three-phase rotary compressors. 
Sullair argued that manufacturers will likely stop producing single-
phase rotary compressors due to the unfair competitive disadvantage 
relative to competing technologies. (Sullair, No. 0056 at pp. 7-8; 
Sullair, Sullair, Public Meeting Transcript, No. 0044 at p. 60; 
Sullair, Public Meeting Transcript, No. 0044 at p. 27)
    Sullivan-Palatek supported separating single-phase and three-phase 
compressors into two separate equipment classes, but also commented 
that limiting the scope would eliminate the need to create equipment 
classes for reciprocating and rotary compressors. (Sullivan-Palatek, 
No. 0051 at pp. 6-7)
    With respect to consumer utility, a prime consideration in the 
establishment of equipment classes, Sullivan-Palatek stated that any 
application that can support three-phase power can also support single-
phase power, but that the reverse is not true. (Sullivan-Palatek, 
Public Meeting Transcript, No. 0044 at p. 27)
    As noted in this section, the matter of equipment classes by phase 
count is no longer applicable due to DOE's decision in limiting scope 
to compressors with three-phase motors. DOE may consider standards for 
single-phase equipment in a future rule.
4. Compressor Capacity
    In the energy conservation standards NOPR, DOE proposed to limit 
the scope of compressors energy conservation standards to compressors 
with compressor motor nominal horsepower greater than or equal to 1, 
and less than or equal to 500 hp. In that NOPR, DOE also reasoned that 
the compressor industry typically used ``nominal'' motor horsepower as 
a descriptor of compressor capacity. 81 FR 31680, 31692-31693 (May 19, 
2016).
    DOE received a number of comments in response to the proposed 
compressor capacity limitations. Commenters raised concerns regarding 
two facets of the compressor capacity scope: (1) The compressor motor 
nominal horsepower range included in the scope and (2) the coupling of 
compressor motor nominal horsepower and actual volume flow rate in the 
scope definition. These comments are discussed in sections III.B.4.a 
and III.B.4.b of this document.
a. Compressor Motor Nominal Horsepower Range
    Interested parties commented broadly on compressor motor nominal 
horsepower scope. ASAP, ACEEE, NEEA, NRDC, NEEP, ASE and the CA IOUs 
supported the proposed horsepower scope limitations. (ASAP, ACEEE, 
NEEA, NRDC, NEEP, ASE, No. 0060 at p. 4; CA IOUs, No. 0059 at p. 3)
    CAGI suggested a compressor motor nominal horsepower range of 10 to 
200 hp. (CAGI, No. 0052 at p. 9) Ingersoll Rand,\22\ Kaeser 
Compressors, Mattei Compressors, Sullair, and Sullivan-Palatek 
commented in support of CAGI's recommendations. (Ingersoll Rand, No. 
0055 at p. 1; Kaeser Compressors, No. 0053 at p. 1; Mattei Compressors, 
No. 0063 at p. 2; Sullair, No. 0056 at pp. 1, 9-10; Sullivan-Palatek, 
No. 0051 at p. 1)
---------------------------------------------------------------------------

    \22\ DOE notes that in response to the 2012 proposed 
determination of coverage, Ingersoll Rand commented that a number of 
small compressors (retail, consumer or commercial-based) are sold in 
the US market, but may not have a significant impact of energy 
savings if included in this rulemaking; further, the costs 
associated with coverage would have to be passed to the consumer as 
the profit margins are low for this type of compressor. (Docket No. 
EERE-2012-BT-DET-0033, Ingersoll Rand, No. 0004 at pp. 2-3) DOE 
views Ingersoll Rand's more recent 2016 test procedure NOPR comments 
as superseding the views presented in response to the 2012 proposed 
determination of coverage.
---------------------------------------------------------------------------

    Scales Industrial Technologies suggested a compressor motor nominal 
horsepower scope of 15 hp to 200 or 250 hp. (EERE-2014-BT-TP-0054, 
Scales Industrial Technologies, No. 0013 at p. 3) Atlas Copco stated 
that it had no objection to inclusion of compressors of greater than 
500 nominal hp, with no upper limit specified. (Atlas Copco, No. 0054 
at p. 13)
    Interested parties also provided a variety of specific rationales 
to support their recommendations. DOE grouped the specifics of 
interested party comments into six categories: Data scarcity, 
substitution incentive, certification, consistency with the European 
Union, and energy savings. The following sections discuss these 
comments.
Data Scarcity
    CAGI noted the scarcity of compressor data above a compressor motor 
nominal

[[Page 1517]]

horsepower of 200 hp, citing that 200 hp is the upper limit of the CAGI 
Performance Verification Program. Ingersoll Rand, Kaeser Compressors, 
Mattei Compressors, Sullair, Sullivan-Palatek supported CAGI's 
position. (CAGI, No. 0052 at p. 9; CAGI, No. 0052 at p. 9; Ingersoll 
Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 1; Mattei 
Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p. 1; Sullivan-
Palatek, No. 0051 at pp. 1, 6) The commenters argued that DOE's 
regression curves, which were used to establish efficiency levels and 
trial standard levels, were created with data that is not readily 
available for larger (above 200 nominal hp) or smaller (below 10 
nominal hp) compressors, and that the regression curves are not 
appropriate above 200 nominal hp. In response to the 2012 proposed 
determination of coverage, NEEA commented that performance testing at 
horsepower levels below 15 was rare and that corresponding data is 
unreliable. (Docket No. EERE-2012-BT-DET-0033, NEEA, No. 0010 at p. 1).
    Although compressors with a compressor motor nominal horsepower 
greater than 200 hp may publish performance data using CAGI data 
sheets, Sullair noted that these compressors do not formally 
participate in the Performance Verification Program and are not subject 
to independent testing, and the data associated with those compressors 
is posted voluntarily and not subject to verification. (EERE-2014-BT-
TP-0054, Sullair, Public Meeting Transcript, No. 0016 at p. 52) As a 
result, DOE does not view such data as suitable to establish an energy 
conservation standard without further investigation. For this reason, 
and others outlined in the upcoming sections, DOE is not including 
compressors outside the range of 10-200 compressor motor nominal 
horsepower in the scope this energy conservation standards final rule. 
DOE may explore standards for compressors outside the range of 10-200 
compressor motor nominal horsepower, in a future rulemaking.
Substitution Incentive
    CAGI, Sullair, Kaeser Compressors, and Sullivan-Palatek suggested a 
compressor motor nominal horsepower range of 10 to 200 hp. They 
reasoned that the proposed scope in the energy conservation standards 
NOPR would create an unfair competitive advantage for certain 
unregulated equipment below 10 nominal hp and over 200 nominal hp. They 
believe that this competitive advantage could translate to a risk of 
product substitution from unregulated equipment. The commenters 
specified scroll and reciprocating equipment as possible competition 
below 10 nominal hp and centrifugal equipment above 200 nominal hp. 
(CAGI, No. 0052 at p. 9; Kaeser Compressors, No. 0053 at p. 1; Sullair, 
No. 0056 at pp. 8-12; Sullair, Public Meeting Transcript, No. 0044 at 
pp. 129-130) Ingersoll Rand and Mattei Compressors commented in support 
of CAGI's recommendations. (Ingersoll Rand, No. 0055 at p. 1; Mattei 
Compressors, No. 0063 at p. 2)
    DOE agrees that inclusion of small (less than 10 nominal hp) and 
larger (greater than 200 nominal hp) rotary compressors could create a 
competitive disadvantage for manufacturers of rotary compressors. 
Currently, without any energy conservation standards in place, rotary, 
centrifugal, reciprocating, and scroll compressors compete with each 
other over certain overlapping compressor motor nominal horsepower 
ranges. Adopting standards for rotary compressors alone, in these 
overlapping nominal horsepower ranges, may disturb the competitive 
equilibrium. The costs associated with regulation may give the 
manufacturers of unregulated equipment (e.g., centrifugal, scroll, 
reciprocating) a competitive advantage, and allow them to incentivize 
end users to switch from a regulated (rotary) to an unregulated 
compressor, diminishing the impact of the proposed standard.
    For this reason, and others outlined in the preceding and upcoming 
sections, DOE is not including compressors outside the range of 10 to 
200 compressor motor nominal horsepower in the scope of this energy 
conservation standard final rule.
Certification, Sampling, and Enforcement
    Commenters argued against standards for compressors with a 
compressor motor nominal horsepower greater than 200 hp because of 
substantial difficulty with sampling and enforcement. Basic models in 
this range are highly customized and carry low (and sometimes zero, 
over a period) production volumes. (CAGI, No. 0052 at p. 9; Sullair, 
No. 0056 at pp. 8-10) Sullair commented that testing costs for units of 
greater than 200 nominal hp are large relative to those of smaller 
compressors. (Sullair, Public Meeting Transcript, No. 0044 at pp. 129-
130) Ingersoll Rand, Kaeser Compressors, Mattei Compressors, and 
Sullivan-Palatek commented in support of CAGI's recommendations. 
(Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 
1; Mattei Compressors, No. 0063 at p. 2; Sullivan-Palatek, No. 0051 at 
p. 1)
    In arguing against standards for compressors of less than 10 
nominal hp, Sullair cited the relatively high cost of certification and 
testing. Sullair argued the cost certification and testing for this 
type of compressor may be more than 60 percent of the manufacturer 
selling price (``MSP'') of the compressor unit. (Sullair, No. 0056 at 
pp. 11-12)
    In general, DOE agrees with the concerns that the representations, 
sampling, and enforcement provisions proposed in the test procedure 
NOPR may cause significant burden for compressors greater than 200 
nominal hp, as many of the larger compressor motor nominal horsepower 
models are infrequently built and often unavailable for testing. 
However, regarding compressors of less than 10 nominal hp, DOE asserts 
that testing cost as a percentage of MSP is not an appropriate metric 
to evaluate the economic justification of test procedures or energy 
conservation standard. According to the test procedure final rule, each 
basic model must test a minimum of two unique models (or use an 
alternative efficiency determination method, ``AEDM'') to determine 
compliance. DOE does not require performance or certification testing 
for all units distributed in commerce. The upfront costs associated 
with certifying a basic model amortize over all shipments of that basic 
model, and the ratio of initial testing cost to MSP have no bearing on 
the overall impact to manufacturers. DOE assesses the specific impacts 
of certification testing costs (and other upfront conversion costs) in 
detail in section IV.J.2.c of this document.
    For this reason, and others outlined in the preceding and upcoming 
sections, DOE is not including compressors with greater than 200 
compressor motor nominal horsepower in the scope this energy 
conservation standards final rule.
Consistency With European Union
    Atlas Copco expressed support for expanding the scope of covered 
compressor motor nominal horsepower to include all compressors above 
500 hp, noting that this would be consistent with the draft EU 
standards for compressors, which proposed no upper limit of scope for 
coverage. (Atlas Copco, No. 0054 at p. 13)
    Although the draft EU standards for compressors do not limit 
applicability based on motor power per se, DOE notes that the motor 
horsepower is constrained implicitly by the explicit limitations on 
pressure and flow. Interaction between flow and

[[Page 1518]]

compressor motor nominal horsepower is discussed further in section 
III.B.4.b of this document.
    Generally, DOE recognizes the value of aligning requirements with 
other major regulatory bodies, but DOE will always evaluate alignment 
on a case-by-case basis. In this particular case, DOE does not view the 
harmonization benefit associated with coverage of compressor motor 
nominal horsepower levels greater that 200 as outweighing the burdens. 
The burdens, as discussed in the previous subsections, include risks of 
forming a standard based on insufficient data, creating market 
incentive to substitute to unregulated technologies less than 10 
nominal hp or greater than 200 nominal hp, and imposing undue sampling 
and certification burden on low-volume compressor models. As a result, 
DOE does not find alignment with the European Union scope limitation to 
be appropriate in this case.
Energy Savings
    In response to the test procedure NOPR, Sullair stated that the 
number of units and associated potential energy savings above 200 
nominal hp are too small to warrant inclusion of those compressors 
within the test procedure applicability. (EERE-2014-BT-TP-0054, 
Sullair, No. 0006 at p. 2) In response to the energy conservation 
standards NOPR, CAGI and Sullair cited the relatively low number of 
shipments above 200 nominal hp as a reason to reduce the scope of the 
energy conservations standards. (CAGI No. 0052 at p. 9; Sullair, No. 
0056 at pp. 9-10) Similarly, the People's Republic of China questioned 
the justification for including compressors with low compressor motor 
nominal horsepower and, consequently, a low potential for energy 
savings, into the scope of the standard. (EERE-2014-BT-TP-0054, P. R. 
China, No. 0019 at p. 3)
    Other commenters argued that DOE should maintain the scope as 
proposed. ASAP, ACEEE, NEEA,\23\ NRDC, NEEP, and ASE supported the 
proposed compressor motor nominal horsepower scope limitations. ASAP, 
ACEEE, NEEA, NRDC, NEEP and ASE stated that 5-percent and 7-percent of 
the fixed-speed and variable-speed compressor markets, respectively, 
would not be covered if the scope was limited to a maximum of 200 
nominal hp. ASAP ACEEE, NEEA, NRDC, NEEP and ASE further commented that 
the higher nominal horsepower units represent even greater energy 
savings potential on a per-unit basis given their energy consumption. 
(ASAP, ACEEE, NEEA, NRDC, NEEP, ASE, No. 0060 at p. 4)
---------------------------------------------------------------------------

    \23\ DOE notes that in response to the 2012 proposed 
determination of coverage, NEEA urged DOE to cover compressors <15 
hp, stating that this range represented commodity-type compressors 
purchased without consideration of operating cost and, therefore, 
offering the opportunity for substantial energy savings. (NEEA, No. 
0010 at p. 1) Further, NEEA stated that performance testing in this 
horsepower range was rare or unreliable. (Docket No. EERE-2012-BT-
DET-0033, NEEA, No. 0010 at p. 1) DOE views NEEA's more recent 2016 
test procedure NOPR comments as superseding the views presented in 
response to the 2012 proposed determination of coverage.
---------------------------------------------------------------------------

    The CA IOUs supported the proposed range of 1-500 nominal hp, which 
aligns with the motors rulemaking, but encouraged DOE to expand the 
scope of coverage beyond 500 nominal hp to maximize the potential 
energy savings of the proposed rulemaking. (CA IOUs, No. 0059 at p. 3)
    DOE evaluated the impact of reducing compressor motor nominal 
horsepower scope to the level recommended by CAGI, Kaeser Compressors, 
Ingersoll Rand, and Sullivan-Palatek (i.e., 10-200 hp), and estimates 
that adopting this scope would retain 96.6 percent of the energy 
savings of the proposed 1-500 hp range. For compressors removed from 
scope at lower capacities, the low impacts are the result of smaller 
compressor capacities. For those removed from scope at the higher 
capacities, the low impacts are the result of extremely low shipments.
Conclusion
    As noted previously in this section, DOE received multiple comments 
regarding the scope of compressor motor nominal horsepower that should 
be included in this final rule. CAGI, Kaeser Compressors, Ingersoll 
Rand, Mattei Compressors, Sullair, and Sullivan-Palatek recommended 10 
to 200 nominal hp and Scales Industrial Technologies recommended 15 to 
200 or 250 nominal hp. Alternatively, ASAP, ACEEE, NEEA, NRDC, NEEP, 
and ASE supported the proposed horsepower scope limitations, while 
Atlas Copco and the CA IOUs stated that they had no objection to 
inclusion of compressors of greater than 500 nominal hp, with no upper 
limit specified.
    In this section, DOE reviewed the recommendations and the 
justifications provided by commenter, and responded to each. In 
summary, the aforementioned data scarcity, substitution incentives, 
certification costs, and limited available shipments and energy savings 
for compressor outside the 10 to 200 compressor motor nominal 
horsepower range all contribute to DOE's decision to limit the scope of 
the energy conservation standards, in this final rule, to compressors 
of 10 to 200 nominal hp. In conjunction with the limit of compressor 
motor nominal horsepower range, DOE also establishes a limit on 
compressor full-load actual volume flow rate as discussed in section 
III.B.4.b of this document.
b. Coupling of Compressor Motor Nominal Horsepower and Actual Volume 
Flow Rate in the Scope Definition
    In addition to comments regarding potential horsepower limitations, 
CAGI and Sullair suggested establishing scope by limiting both 
compressor motor nominal horsepower and flow. In other words, a 
compressor would be subject to standards if it falls within either a 
given horsepower range or within a given flow range (or both). 
Specifically, CAGI supported an airflow limitation of 35 to 1,250 cfm, 
inclusive, while Sullair supported an airflow limitation of 30 to 1,250 
cfm, inclusive. CAGI reasoned that an airflow range will prevent 
manufacturers possibly altering horsepower ratings at the margins in 
order to move compressors out of the scope of energy conservation 
standards. Sullair expanded upon this reasoning, and commented that a 
manufacturer may be encouraged to add a nominally larger horsepower 
motor to circumvent the standards. (CAGI, No. 0052 at p. 9; Sullair, 
No. 0056 at pp. 9-10, 11-12, 13) Ingersoll Rand, Kaeser Compressors, 
Mattei Compressors, and Sullivan-Palatek commented in support of CAGI's 
recommendations. (Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, 
No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; Sullivan-
Palatek, No. 0051 at p. 1)
    DOE agrees with CAGI and Sullair that, by not limiting flow rate, 
manufacturers could conceivably circumvent compressor regulations by 
using a motor of horsepower slightly greater than 200 hp. For example, 
two similar compressors, one with a 200 hp motor and one with a 225 hp 
motor, would supply nearly identical flow rates and pressure (i.e., 
utility) to the end user; however the one with the 225 hp motor would 
not be subject to proposed standards or proposed test procedures. In 
contrast, any alterations in flow rate would directly impact consumer 
utility.
    A review of all available CAGI performance data sheets indicates 
that the flow rate ranges recommended by CAGI and Sullair are 
reasonable. The full-load actual volume flow rate range of 35 to 1,250 
cfm, inclusive, is slightly broader than the compressor motor nominal 
horsepower range of 10 to 200 hp; i.e., the flow range encompasses 
slightly more compressors models. This

[[Page 1519]]

aligns with the intent of the recommendations put forth by CAGI and 
Sullair. Specifically, the full-load actual volume flow rate range of 
35 to 1,250 cfm includes 9.2-percent more fixed-speed compressors and 
2.9-percent more variable-speed compressors in the scope of the 
rulemaking.
    For the reasons outlined in this section (i.e., reduction of 
circumvention risk and the reasonable nature of the ranges proposed), 
in this final rule, DOE adopts a coupled airflow and compressor motor 
nominal horsepower limit, as recommended by Sullair and CAGI. DOE notes 
that the recommendations from Sullair and CAGI are not completely 
aligned, with Sullair recommending a lower limit of 30 cfm and CAGI 
recommending a lower limit of 35 cfm. Given general support by 
Ingersoll Rand, Kaeser Compressors, and Sullivan-Palatek for CAGI's 
recommendations, DOE is adopting the higher limit of 35 cfm. 
Specifically, energy conservation standards apply to compressors with 
either a compressor motor nominal horsepower of 10 to 200 hp, or a 
full-load actual volume flow rate of 35 to 1,250 cfm.
5. Full-Load Operating Pressure
    In the energy conservation standards NOPR, DOE proposed to limit 
the scope of the standard to compressors with full-load operating 
pressures between 31 psig and 225 psig. DOE chose the proposed full-
load operating pressure scope to align with the test procedure NOPR, 
noting that equipment outside of that pressure range generally 
represents a low sales volume, specialized equipment type for 
applications that do not often overlap with what is generally 
considered in the market to be industrial air. 81 FR 31680, 31693 (May 
19, 2016). In the energy conservation standards NOPR, DOE also 
concluded that isentropic efficiency is approximately invariant with 
pressure over the pressure range under consideration and, as a result, 
DOE used data from equipment with full-load operating pressures between 
31 and 225 psig to establish efficiency levels for each equipment 
class. 81 FR 31680, 31705 (May 19, 2016). In the test procedure final 
rule, DOE restricts the scope of applicability of the test procedure to 
compressors with full-load operating pressures between 75 and 200 psig. 
DOE may not establish energy conservation standards for equipment that 
does not have an established test procedure. For this reason, DOE may 
only consider energy conservation standards for equipment with full-
load operating pressures between 75 and 200 psig in this final rule.
    In response to DOE's energy conservation standards proposal, CAGI 
and Jenny Products commented that a pressure range between 75 and 200 
psig is appropriate for the scope of the standard. Jenny Products 
stated that most air compressors are used in the 80-125 psig range, and 
that some are used in the 125-175 psig range; therefore a range of 75-
200 psig would include almost all commercially available compressors 
built today. (EERE-2014-BT-TP-0054, Jenny Products, No. 0020 at p. 3) 
CAGI reasoned that package isentropic efficiency is relatively 
independent of pressure between 75 and 200 psig, and this range 
represents the largest segment of the industry. (CAGI, No. 0052 at pp. 
9-10) CAGI's statement aligns with its comment on the breakdown of 
output pressures in the rotary compressors market, which was discussed 
in the NOPR as:
     Approximately 4.4 to 30 pounds per square inch gauge 
(psig) (pressure ratio greater than 1.3 and less than or equal to 3.0): 
The compressors industry generally refers to these products as 
blowers--a term DOE is considering defining as part of its fans and 
blowers rulemaking (Docket No. EERE-2013-BT-STD-0006). The majority of 
these units are typically distributed in commerce as bare compressors 
and do not include a driver, mechanical equipment, or controls.
     31 to 79 psig (pressure ratio greater than 3.1 and less 
than or equal to 6.4): There are relatively few compressed air 
applications in this pressure range, contributing to both low product 
shipment volume and low annual energy consumption.
     80 to 139 psig (pressure ratio greater than 6.4 and less 
than or equal to 10.5): This range represents the majority of general 
compressed air applications, shipments, and annual energy use.
     140 to 215 psig (pressure ratio greater than 10.5 and less 
than or equal to 15.6): This range represents certain specialized 
applications, relatively lower sales volumes and annual energy 
consumption when compared to the 80 to 139 psig rotary compressor 
segment.
     Greater than 215 psig (pressure ratio greater than 15.6): 
This range represents even more specialized applications, which require 
highly engineered rotary compressors that vary based on each 
application. 81 FR 31680, 31693 (May 19, 2016).
    Ingersoll Rand, Kaeser Compressors, Mattei Compressors, Sullair, 
and Sullivan-Palatek commented in support of CAGI's recommendations. 
(Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 
1; Mattei Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p. 1; 
Sullivan-Palatek, No. 0051 at p. 1)
    Sullair commented that isentropic efficiency is independent of 
pressure across the range of 80-200 psig, which is nearly the same as 
the 75-200 range suggested by Ingersoll Rand, Kaeser Compressors, 
Sullivan-Palatek, and by Sullair, itself, indirectly in support of 
CAGI's comments. (Sullair, No. 0056 at p. 15).
    Alternatively, Atlas Copco suggested that 80 to 170 psig (7 to 15 
bar) [sic] as range where the dependence of isentropic efficiency on 
outlet pressure is limited, which is in alignment with the limited 
pressure range covered by the EU Lot 31 draft regulation. (Atlas Copco, 
No. 0054 at pp. 19-20) However, DOE believes that Atlas Copco's unit 
conversions were inaccurate and thus, the suggested range does not 
align with the scope proposed in the EU Lot 31 draft regulation. Based 
these ambiguities, DOE cannot directly consider Atlas Copco's 
recommendation when considering the range where package isentropic 
efficiency can be considered independent of full-load operating 
pressure. For this reason, DOE defers to the recommendation of CAGI, 
Ingersoll Rand, Sullivan-Palatek, and Sullair, and concludes that 
package isentropic is relatively independent of full-load operating 
pressure at full-load operating pressures between 75 and 200 psig.
    As a result, in this final rule, DOE is establishing the broadest 
scope of applicability of standards that is possible, under the current 
test procedure, i.e. a full-load operating pressure of 75 to 200 psig.
6. Lubricant Presence
    In the energy conservation standards NOPR, DOE proposed to include 
lubricant-free compressors in the scope of the standards. However, DOE 
recognized differences in design, efficiency, cost, and utility for 
lubricant-free compressors when establishing separate equipment classes 
for compressors based on lubricant presence. 81 FR 31680, 31698 (May 
19, 2016). DOE proposed, in the energy conservation standards NOPR, a 
``new standards at baseline'' standard for lubricant-free compressors. 
This baseline would not have resulted in national energy savings, as 
reflected in the national impact analysis (``NIA''), but would have 
prevented potential new, less efficient equipment from the entering the 
market and potentially

[[Page 1520]]

increasing future national energy consumption. 81 FR 31680, 31736.
    In the test procedure final rule, DOE excludes lubricant-free 
compressors from the scope of test procedures based on three general 
reasons: (1) The lack of applicability of the test method and metric 
proposed in the test procedure NOPR; (2) the desire to retain the 
opportunity to harmonize with the European Union regulatory process for 
the benefit of manufacturers and consumers; and (3) to avoid creating 
an incentive to substitute unregulated technologies (such as dynamic) 
for regulated lubricant-free compressors.
    Because there is no test procedure for lubricant-free compressors, 
DOE cannot consider energy conservation standards for this equipment, 
in this final rule. DOE is making no determination of the technological 
feasibility or economic justification of potential standards for 
lubricant-free compressors in this final rule. DOE may evaluate 
standards for lubricant-free compressors in the future, if an 
appropriate test procedure can be developed.
    Although DOE is unable to consider energy conversation standards 
for lubricant-free compressors, at this time, the following subsections 
summarize relevant interested party comments. DOE may consider these 
comments if it chooses to pursue energy conservations for lubricant-
free equipment in the future. In reviewing the comments, DOE observed 
that comments tended to fall into one of three groups. One group of 
comments focused on a lack of available performance data to inform the 
establishment of a standard. A second group focused on a possible 
unfair advantage conferred to substitute products outside of DOE's 
scope of standards. The final group of comments focused on the benefits 
of harmonizing standards with those proposed in the European Union.
Scarcity of Data
    In response to the energy conservation standards NOPR, ASAP, ACEEE, 
NEEA, NRDC, NEEP, and ASE noted that lubricant-free compressors serve 
specialized applications and are less common, which makes establishing 
a standard difficult in the absence of data. However, ASAP, ACEEE, 
NEEA, NRDC, NEEP, and ASE suggested that DOE include lubricant-free 
compressors within the scope of the final rule, as the data gathered to 
certify these compressors will provide useful information for future 
rulemakings. To balance those two considerations, ASAP, ACEEE, NEEA, 
NRDC, NEEP and ASE suggested setting the energy conservation standards 
for lubricant-free compressors at efficiency level zero. (ASAP, ACEEE, 
NEEA, NRDC, NEEP, ASE, No. 0060 at p. 4)
    Kaeser Compressors and Sullair also commented that there were a 
limited number of data points available for lubricant-free compressors, 
with Sullair commenting that there are few manufacturers of this type 
of equipment that participate in the CAGI Performance Verification 
Program. Kaeser Compressors further stated that the lack of data makes 
the regression curves for the efficiency levels look possibly 
inaccurate toward the lower end of the covered airflow range, and that 
it preferred to wait until the EU finishes its assessment of lubricant-
free compressors. (Kaeser Compressors, No. 0053 at p. 1; Kaeser 
Compressors, Public Meeting Transcript, No. 0044 at pp. 56-57; Sullair, 
Public Meeting Transcript, No. 0044 at pp. 31-32)
    CAGI commented that DOE should exclude lubricant-free compressors 
in the scope of the final rule due to the limited compressor 
performance data available to inform a standard. (CAGI, No. 0052 at p. 
12) Ingersoll Rand, Kaeser Compressors, Mattei Compressors, Sullair, 
and Sullivan-Palatek commented in support of CAGI's recommendations. 
(Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 
1; Mattei Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p. 1; 
Sullivan-Palatek, No. 0051 at p. 1)
Substitution Incentive
    CAGI commented that DOE should exclude lubricant-free compressors 
in the scope of the final rule in order to reduce risk of product 
substitution to unregulated technologies, such as dynamic compressors 
above a compressor motor nominal horsepower of 150 hp. (CAGI, No. 0052 
at p. 12) Ingersoll Rand, Kaeser Compressors, Mattei Compressors, 
Sullair, and Sullivan-Palatek supported CAGI's comments. (Ingersoll 
Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 1; Kaeser 
Compressors, No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; 
Sullair, No. 0056 at p. 1; Sullivan-Palatek, No. 0051 at p. 1)
Harmonization With European Union
    Ingersoll Rand commented that DOE should consider waiting to revise 
the efficiency levels for lubricant-free compressors until the draft EU 
standards for lubricant-free compressors are published. Ingersoll Rand 
also stated, however, that it did not oppose efficiency level zero, 
which DOE proposed in the energy conservation standards NOPR. 
(Ingersoll Rand, No. 0055 at p. 4)
    CAGI also commented that DOE should exclude lubricant-free 
compressors in the scope of the final rule in order to preserve 
opportunity to align with EU once the EU establishes standards for 
lubricant-free compressors. (CAGI, No. 0052 at p. 12) Ingersoll Rand, 
Kaeser Compressors, Mattei Compressors, Sullair, and Sullivan-Palatek 
supported CAGI's comments. (Ingersoll Rand, No. 0055 at p. 1; Kaeser 
Compressors, No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; 
Sullair, No. 0056 at p. 1; Sullivan-Palatek, No. 0051 at p. 1)
Conclusion
    As noted earlier in this section, DOE is not adopting standards for 
lubricant-free compressors because no test procedure exists. DOE is 
making no determination of the technological feasibility or economic 
justification of potential standards for lubricant-free compressors in 
this final rule. DOE may evaluate standards for lubricant-free 
compressors in a future rule.
7. Water-Injected Compressors
    DOE is aware that some compressors inject water into the 
compression chamber, in place of oil or other lubricants, in order to 
avoid risk of air contamination and to serve applications that require 
inherently clean air. In the energy conservation standards NOPR, DOE 
proposed to define ``lubricated compressor'' as ``a compressor that 
introduces an auxiliary substance into the compression chamber during 
compression'' and ``auxiliary substance'' as ``any substance 
deliberately introduced into a compression process to aid in 
compression of a gas by any of the following: Lubricating, sealing 
mechanical clearances, or absorbing heat.'' In the energy conservation 
standards NOPR, DOE interpreted water to be an auxiliary substance. 81 
FR 31680, 31698 (May 19, 2016).\24\ Consequently, water-injected 
compressors would be classified as lubricated compressors.
---------------------------------------------------------------------------

    \24\ This definition was adopted, unchanged, in the test 
procedure final rule.
---------------------------------------------------------------------------

    In response to the energy conservation standards NOPR, Jenny 
Products commented that water screw compressors (also known as ``water 
injected compressors'') are quite different from the compressors 
mentioned in the energy conservation standards NOPR proposal, and that 
DOE's proposed standard attempt to lump too many compressors into a one 
size fits all model. (Jenny Products, No. 0058 at p. 2). Sullivan-
Palatek also cited water screw compressors as an example

[[Page 1521]]

of specialized technology that could be eliminated from the market if 
grouped with other lubricated compressors. Beyond these comments, DOE 
did not receive any specific evidence or data supporting the inclusion 
or exclusion of water-injected compressors.
    DOE performed research to better understand water-injected 
compressor technology and determine whether water-injection both 
provides consumer utility and inhibits the ability to reach higher 
efficiency levels.
    Water-injected compressors operate similarly to conventional (i.e., 
oil or synthetic oil) lubricated compressors in that they introduce a 
liquid into the compression chamber to lubricate moving parts, seal 
mechanical clearances against the egress of air, and absorb heat. DOE 
understands the chief consumer utility of using water, in place of an 
oil- or synthetic oil-based auxiliary substance, is freedom from risk 
of output air contamination. Failure of a filter or other downstream 
oil removal apparatus does not permit oil to become present in the 
delivered air as no oil is present in the system. However, water and 
vapor are present and require removal. Because of the similar utility 
of an inherently oil-free process, water-injected compressors more 
often compete with lubricant-free compressors rather than lubricated 
compressors.
    A limitation of replacing oil with water is that water tends to be 
more corrosive to many types of metals commonly used to constructed 
compressors. This is particularly true if the water contains trace 
quantities of minerals, as does any water drawn from the environment or 
public water supply. To reduce corrosion, water-injected compressors 
employ advanced filtration (commonly, reverse osmosis) to create highly 
purified water for introduction into the compression process. The 
advanced filtration systems used by water-injected compressors may add 
nontrivial energy consumption to a compressor package and ultimately 
reduce efficiency. Reverse osmosis systems typically require creation 
of large pressure gradients and several stages of filtration. The 
filtration systems may also contain elements to eliminate biological 
agents, of particular concern in medical applications.
    Even with advanced filtration systems, water-injected compressors 
may require the use of more corrosion-resistant materials for any 
componentry downstream of the water injection site. These materials may 
be less resistant to mechanical deformation and exhibit diminished 
lifespan relative to conventional construction materials. As a result, 
designers tend to open mechanical clearances, as compared with 
conventionally lubricated compressors, in anticipation of mechanical 
deformation associated with less durable materials used to resist 
corrosion. Wider clearances allow more air leakage during operation, 
and ultimately reduce efficiency.
    These modifications that alter efficiency--filtration, corrosion-
resistant material, altered geometry--are also likely to add cost to a 
water-injected compressor, relative to a conventionally lubricated 
compressor of similar specification.
    With respect to market share, DOE knows of only three manufacturers 
currently offering water-injected compressors in the United States 
market,\25\ and DOE believes that shipments of water-injected 
compressors are very low, as compared to oil- or synthetic oil-injected 
compressors. As a result, DOE expects energy savings associated with 
water-injected compressors to be minimal.
---------------------------------------------------------------------------

    \25\ Sullivan-Palatek, Atlas Copco, and CompAir (a brand of 
Gardner Denver).
---------------------------------------------------------------------------

    In conclusion, DOE's research indicates that water-injected 
compressors may provide additional end user utility, but with reduced 
ability to meet higher efficiency levels. As a result, water-injected 
compressors may warrant a separate equipment class from lubricated 
compressors. However, because no performance data is available to 
characterize water-injected compressors, DOE has no basis to establish 
a standard. As a result, DOE excludes water-injected compressors from 
the scope of this final rule. To clearly establish what is meant by the 
term, DOE is adopting a definition in this final rule. ``Water-injected 
compressor'' means ``a lubricated compressor that uses injected water 
as an auxiliary substance.''
8. Specialty Purpose Compressors
    In the energy conservation standards NOPR, DOE did not explicitly 
exclude any categories of specialty compressors. DOE made no specific 
scope exclusion for what the compressor industry refers to as 
``customized'' or ``specialty-purpose'' compressors. 81 FR 31680, 
31690, 31693, 31696 (May 19, 2016). Although specialty compressors were 
not explicitly excluded, DOE expects that many would be effectively 
excluded by other scope limitations, including full-load operating 
pressure, compression principle, variety of gas compressed, capacity, 
driver variety, and lubricant presence.
    DOE received comments with respect to customized and specialty-
purpose compressors; generally, many commenters recommended that DOE 
expressly exclude customized and specialty-purpose compressors from the 
scope of the test procedure and energy conservation standards. 
Commenters provided information on what they viewed as customized and 
specialty-purpose compressors, as well as rationale for their 
suggestions. In section III.B.8.a, DOE discusses comments related to 
compliance burden. In sections III.B.8.b through III.B.8.d, DOE 
summarizes the remaining comments by topic. In section III.B.8.e, DOE 
provides a response to the comments discussed in sections III.B.8.b 
through III.B.8.d.
a. Compliance Burden
    Atlas Copco and Sullair objected to the inclusion of customized 
compressors due to the burden of compliance for these low-volume units 
and noted that the customer modifications affect efficiency. Atlas 
Copco suggested use of a de minimis exception for low-volume 
compressors that would exclude them from the test procedure and energy 
conservation standard. (Atlas Copco, No. 0054 at pp. 14-15; Sullair, 
No. 0056 at p. 7)
    The DOE test procedure allows manufacturers to use a testing-based 
sampling plan or AEDMs to determine the performance of a compressor. 
Manufacturers can use AEDMs to model the performance of compressors 
with lower sales volumes based on compressors with higher sales 
volumes, thereby reducing the burden of testing. DOE discusses and 
estimates all costs related to compliance with this final rule in 
section IV.J.
b. Limited Data
    Jenny Products commented that specialty equipment was not addressed 
in the energy conservation standards NOPR and that limited data is 
available for this equipment. (Jenny Products, No. 0058 at p. 2) 
Sullivan-Palatek argued that specialty compressors rarely publish data 
sheets, and as a result, that DOE's proposed energy conservation 
standards do not reflect the existence of specialized compressors. 
(Sullivan-Palatek, No. 0051 at pp. 4-5; EERE-2014-BT-TP-0054, Sullivan-
Palatek, Public Meeting Transcript, No. 0016 at p. 115; EERE-2014-BT-
TP-0054, Sullivan-Palatek, No. 0007 at p. 2)
    Similarly, Sullair commented that the data used to form the 
efficiency levels proposed by DOE does not contain data from custom 
units and will drop the overall efficiency of the compressor 
population. (Sullair, Public Meeting

[[Page 1522]]

Transcript, No. 0044 at p. 49) Sullair stated that the options for 
customized compressors (which are more frequently larger air 
compressors over 200 hp) are modifications that impact the compressor 
package efficiency but are required by the customer for use in a 
specific application. (Sullair, No. 0056 at p. 6)
c. Inability To Reach Higher Efficiency Levels
    Sullivan-Palatek objected to the inclusion of special, custom, or 
low-volume models in the scope of energy conservation standards. 
(Sullivan-Palatek, No. 0051 at p. 5) Sullivan-Palatek argued that the 
number of product classes is too limited to reflect the variety of 
compressed air products, leading to an oversimplified standard that 
could make specialty products illegal and thus limit the number of 
configurations that can be offered to customers for hazardous duty or 
special weather applications. (Sullivan-Palatek, No. 0051 at p. 4) 
Castair commented that the proposed regulations will limit the 
customization of compressors for unique applications, which primarily 
affects small businesses. (Castair, No. 0045 at p. 1; EERE-2014-BT-TP-
0054, Castair, No. 0018 at p. 1)
d. Examples of Specialties
    CAGI provided examples of specific specializations, such as 
hazardous locations, breathing air, marine environments, ambient 
conditions above 45 degrees C or below 0 degrees C, and weather 
protection. (CAGI, No. 0052 at p. 8; Docket No. EERE-2014-BT-TP-0054, 
CAGI, No. 0010, p. 4) Ingersoll Rand, Kaeser Compressors, Mattei 
Compressors, Sullair, and Sullivan-Palatek commented in support of 
CAGI's recommendations. (Ingersoll Rand, No. 0055 at p. 1; Kaeser 
Compressors, No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; 
Sullair, No. 0056 at p. 1; Sullivan-Palatek, No. 0051 at p. 1)
    Sullair agreed with CAGI's recommendation and provided additional 
examples of custom requirements, such as hazardous locations or 
corrosive environments (such as standards set by Atmosph[egrave]res 
Explosibles [``ATEX''],\26\ the American Petroleum Institute [``API''], 
the Mine Safety and Health Administration [``MSHA''], etc.), marine 
environments (e.g., American Bureau of Shipping [``ABS'']), alternate 
cooling methods (remote coolers, water-cooled, closed-loop cooling, 
etc.), ambient conditions exceeding 45 [deg]C, ambient conditions below 
5 [deg]C, energy or heat recovery options, environmental protections 
(such as standards set by the National Electrical Manufacturers 
Association [``NEMA''], the International Electrotechnical Commission 
[``IEC''], etc.), and dimensional changes or enclosure modifications. 
(Sullair, No. 0056 at p. 7; Docket No. EERE-2014-BT-TP-0054, Sullair, 
No. 0006 at p. 8) Sullair noted that sump heating, extra fans, and 
special marine applications where motors have to be built for ABS 
applications may increase energy consumption of the package. (Docket 
No. EERE-2014-BT-TP-0054, Sullair, Public Meeting Transcript, No. 0016 
at p. 113) DOE considered the suggested industry standards in 
evaluating whether a particular specialty application warranted 
exclusion from energy conservation standards, and discusses the details 
in section III.B.8.e.
---------------------------------------------------------------------------

    \26\ ATEX is the common industry phrasing for European 
Parliament and Council Directive 2014/34/EU of 26 February 2014, 
which governs equipment and protective systems intended for use in 
potentially explosive atmospheres. The term ``ATEX'' is a 
portmanteau of ``atmosph[egrave]res explosibles'', French for 
``explosive atmospheres.''
---------------------------------------------------------------------------

    Jenny Products provided examples of specialty applications, such as 
explosion-proof applications, weather-proof applications, dental 
applications, and climate-control applications. (Jenny Products, No. 
0058 at p. 2)
    Sullivan-Palatek commented that compressor products usually start 
with the basic package, but often substitute nonstandard electric 
motors, controls or coolers along with adding numerous other options 
and features specified by the customer or required by the location 
where the compressor is installed. (Docket No. EERE-2014-BT-TP-0054, 
Sullivan-Palatek, No. 0007 at p. 2)
    Atlas Copco provided examples of custom equipment, including 
customized liquid cooling systems, drive systems, safety systems, 
filtration systems, dryers, heaters, and air receiver/surge tanks. 
Atlas Copco also noted that each type of customization can have a 
significant impact on the energy efficiency of the total compressor 
system. (Docket No. EERE-2014-BT-TP-0054, Atlas Copco, No. 0009 at pp. 
4-5)
e. Response to Comments
    As discussed in the test procedure final rule, DOE incorporates 
CAGI's recommended list of equipment (with certain modifications) to 
define the minimum testing configuration for a compressor basic model. 
Consequently, customized or specialty-purpose equipment that is created 
by adding additional equipment to what the industry refers to as a 
standard or basic package compressor, would be tested without the 
additional equipment, and achieve the same rating as the basic package 
compressor it was derived from. For this reason, DOE finds no reason to 
expressly exclude from scope, any compressors that are created by 
adding additional equipment to the basic testing configuration 
specified in the test procedure.
    Based on DOE's interpretation of interested party comments, two 
additional concerns remain: (1) Specialty-purpose equipment that is 
created by modifying or replacing equipment on a standard package 
compressor, and (2) specialty-purpose equipment that is not derivative 
of other standard equipment. However, DOE notes that interested parties 
did not provide specific examples of specialty-purpose compressors 
models (i.e., basic models) that have been distributed into commerce, 
nor did they provide any direct or quantitative evidence that such 
compressors consume more energy and are more burdensome to certify than 
their ``general-purpose'' counterparts (beyond noting that more models 
may need to be certified). Regardless, given the interested party 
concerns, DOE performed research (using interested party comments as a 
starting point) to determine if any additional scope exclusions are 
warranted. Specifically, DOE was able to identify 11 applications and 
feature categories that could possibly be used to characterize 
specialty-purpose compressors in the compressor industry:

(1) Corrosive Environments
(2) Hazardous Environments
(3) Extreme Temperatures
(4) Marine Environments
(5) Weather-protected
(6) Mining Environments
(7) Military Applications
(8) Food Service Applications
(9) Medical Air Applications (including dental)
(10) Climate-control Applications
(11) Petroleum, Gas, and Chemical Applications

    Given the concerns raised by commenters, DOE established three 
criteria to help determine if exclusions are warranted for each of the 
aforementioned applications and feature categories. A compressor 
category must meet all three criteria to be considered for exclusion. 
The criteria are distinguishability, consumer utility, and material 
disadvantage.
    The first criterion, distinguishability, is that compressors under 
consideration must be able to be distinguished from general-purpose 
compressors. In this case, to be distinguishable extends beyond being 
able to identify any

[[Page 1523]]

difference whatsoever. Specifically, distinguishability is determined 
in the context of the test procedure. DOE's test procedure final rule 
contains instructions regarding compressor configuration during 
testing. During a test, only specific, enumerated ancillary equipment 
is required to be connected to the compressor; manufacturers may remove 
non-required ancillary equipment if they chose to do so. If the 
specialized nature of a compressor arises from a non-required component 
of ancillary equipment, manufacturers have the option to remove its 
influence on compressor performance. In that scenario, the specialty 
compressor, from the perspective of the test procedure, has 
``collapsed'' to a general-purpose unit with no remaining distinction. 
In considering whether a compressor meets the distinguishability 
criterion, DOE will assess whether the specialized nature of the 
compressor arises from ancillary equipment or configurations that would 
vanish under the specific provisions of DOE's test.
    As stated previously, DOE is incorporating CAGI's recommended list 
of equipment (with certain modifications), so the only specialty-
purpose compressors that could warrant exclusion are (1) those that are 
created by modifying or replacing equipment on a standard package 
compressor, and (2) specialty-purpose equipment that is not derivative 
of other standard equipment.
    The second criterion, consumer utility, is that the specialty 
compressor must offer clear and unique utility to the end-user. If the 
specialty compressor can be easily substituted for a general-purpose 
compressor without significant consequence, unique consumer utility is 
not supplied. The criterion is also important for ensuring that 
exclusion would not create a substitution incentive for consumers to 
switch to non-regulated specialty equipment, as a means to reduce 
first-cost.
    The final criterion, material disadvantage, is that a manufacturer 
must face greater difficulty, in some regard, in increasing the 
efficiency of the specialty compressors in question relative to 
general-purpose compressors. For example, due to extra componentry 
required to serve a specialty application, a specialty compressor 
manufacturer may face greater obstacles to improving efficiency than 
would a general-purpose compressor manufacturer. Alternatively, a 
compressor may be able to achieve greater efficiency without trouble 
but create some disproportionate burden to manufacturers, for example 
in testing or demonstrating compliance.
    DOE performed research, using publicly available data, on each of 
the categories to determine if exclusions are warranted. In the 
following paragraphs, DOE discusses findings for each of the 
aforementioned 11 specialty applications.
Corrosive Environments
    Corrosive environments can be damaging to both the external 
components of a compressor and the internal components, if corrosive 
agents are ingested with the air. DOE's research indicated that 
corrosive agents are found in wide range of varieties and severities. 
Certain corrosive agents may harm some materials but not others.
    Compressors may be adapted to corrosive environments by using 
special materials, having special coatings, using additional intake air 
filtration, or using special or remote enclosures to isolate the 
compressor from the corrosive environment. However, most requirements 
for corrosive environments are customer-specific, making it difficult 
to create a generalized scope exclusion. Some end users also use 
general-purpose compressors in a corrosive environment, opting to 
replace the compressor at an earlier interval instead of purchasing a 
more expensive compressor that can last longer in the corrosive 
environment.
    Based on this information, DOE does not believe that all corrosive 
environment compressors meet the first criterion of distinguishability; 
however, certain corrosive environment compressors utilizing special 
materials and/or coatings may be distinguishable.
    DOE did find that certain corrosive environment compressors meet 
the second criterion of consumer utility. Although some consumers opt 
to simply replace compressors more frequently, this may be impractical 
in locations for which frequent replacement is impractical (e.g., a 
remote location) or for which downtime is intolerable. Further, some 
corrosive agents may significantly accelerate wear. As a result, 
measures employed to avert corrosive agents or resist their effect can 
be said to grant utility.
    DOE does not find that such compressors meet the third criterion of 
material disadvantage. DOE was unable to find evidence that most 
compressors suited to corrosive environments would generally face 
disproportionate difficulty in reaching the same efficiency levels as 
general-purpose compressors. Specifically, DOE was unable to find 
evidence that identifiable components, such as special materials and 
coatings, affect efficiency. As a result, DOE does not find sufficient 
evidence that compressors suited to corrosive environments face 
disproportionate difficulty in reaching the same efficiency levels as 
general-purpose compressors. Furthermore, DOE found no evidence 
suggesting corrosive environment compressors would be subject to 
disproportionate burden in testing or demonstrating compliance.
    Because corrosive environment compressors do not meet the criteria 
of distinguishability and material disadvantage, DOE does not exclude 
them from the scope of this final rule.
Hazardous Environments
    Hazardous environments include those in which there is the 
possibility of combustion or explosion. Compressors may be adapted to 
hazardous environments through modified electrical components and 
enclosures that protect against sparks and high temperatures. At least 
some of these components would need to be included as part of the basic 
package during testing. Several standards specify the type and level of 
precautions required for these environments, so certification with one 
or more of these could be a method for defining the scope of exclusion.
    For these reasons, DOE finds that hazardous environment compressors 
to meet the first criterion of distinguishability. Hazardous 
environment compressors in the United States are designated as such by 
independent agencies such as UL, and given a rating that corresponds to 
the specific attributes of the hazardous environment for which the unit 
is being certified. Independent agencies, such as UL, certify that 
compressors are suitable for hazardous environments against the 
National Electrical Code (``NEC''), which is the common term for the 
National Fire Protection Association using a system of classes, zones, 
and groups of hazardous materials for which the equipment is being 
rated safe. DOE examined standards set by Atmosph[egrave]res 
Explosibles [``ATEX''],\27\ but found that this designation is 
predominantly used in the European market and largely overlaps, in 
terms of the information it conveys to the consumer, with the NFPA 70 
rating system.
---------------------------------------------------------------------------

    \27\ ATEX is the common industry phrasing for European 
Parliament and Council Directive 2014/34/EU of 26 February 2014, 
which governs equipment and protective systems intended for use in 
potentially explosive atmospheres. The term ``ATEX'' is a 
portmanteau of ``atmosph[egrave]res explosibles'', French for 
``explosive atmospheres.''
---------------------------------------------------------------------------

    DOE also found that hazardous environment compressors meet the 
second criterion of consumer utility. Using non-explosion-safe 
equipment, in

[[Page 1524]]

hazardous environments, can create profound risk to life and property.
    However, DOE does not find that hazardous environment compressor 
meet the third criterion of material disadvantage. DOE was unable to 
find evidence that compressors suited to hazardous environments would 
face disproportionate difficulty in reaching the same efficiency levels 
as general-purpose compressors. DOE believes that the modified 
electrical components and enclosures used in hazardous environments 
have little impact on energy use. Additionally, DOE found no evidence 
suggesting hazardous environment compressors would be subject to 
disproportionate burden in testing or demonstrating compliance.
    Because hazardous environment compressors do not meet the criterion 
of material disadvantage, DOE does not exclude them from the scope of 
this final rule.
Extreme Temperatures
    CAGI and Sullair identified the need to exclude compressors used in 
extreme temperatures. (CAGI, No. 0010, p. 4; Sullair, No. 0006 at p. 8) 
For high extremes, both commenters identified temperatures above 45 
[deg]C. For low extremes, Sullair indicated temperatures below 5 
[deg]C, while CAGI indicated temperatures below 0 [deg]C. DOE notes 
that CAGI and Sullair did not present any standardized tests or 
inspections that might be used to uniformly classify the acceptable 
temperature range for a compressor.
    In the absence of that information, DOE performed research and 
found neither industry-accepted, standardized test methods to determine 
allowable operating temperature, nor any industry-accepted 
certification programs to classify compressors for extreme 
temperatures. DOE also researched what types of modification and 
components might be employed to adapt compressors for extremely high- 
and low-temperature environments. For lower temperatures, a variety of 
heating devices may be used to heat the compressor package in various 
ways--such equipment would not be required as a part of test procedure 
testing configuration and is, therefore, not a distinguishing feature.
    In hotter environments, compressors may employ larger output air 
heat exchangers and associated fans. Unlike package heating and 
cooling, heat exchangers and fans would necessarily be part of the test 
configuration. However, manufacturers may employ larger heat exchangers 
and fans for a variety of reasons, e.g., recovering waste heat for use 
in space heating. Furthermore, heat exchanger and fan size (as compared 
to compressor capacity) is not a standardized feature across the 
compressor industry, with different manufacturers choosing different-
sized components to meet their specific design goals. Consequently, DOE 
is unable to establish a clear threshold to delineate larger heat 
exchangers and fans employed for high temperature applications. 
Furthermore, doing so would open a significant circumvention risk, as 
manufacturers could purposely substitute larger heat exchangers and 
fans in order to exclude compressors from regulation. For these 
reasons, DOE concludes that compressors designed for extreme 
temperature operation are not clearly distinguishable from general-
purpose compressors.
    Due to the difficulty in distinguishing compressors designed for 
extreme temperature operation from general-purpose compressors, DOE 
could not determine whether compressors designed for extreme 
temperature operation meet the second criterion of consumer utility, or 
the third criterion of material disadvantage. DOE adds that if a 
specialty purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor provides clear and unique utility to the end user that a 
general-purpose compressor would not provide. Similarly, if a specialty 
purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor has a material disadvantage compared to a general-purpose 
compressor. Consequently, DOE is unable to exclude these compressors 
from the scope of this final rule.
Marine Environments
    Marine air compressors are intended for use aboard ships, offshore 
platforms, and similar environments. In general, DOE found this to be a 
very broad category of compressors. There are a wide variety of 
standards for these applications, but many of the requirements are 
customer-specific, making it difficult to clearly identify the scope 
for exclusion. Marine compressors may be space constrained if installed 
on ships. However, this may not always be the case, and some marine 
environments may be able to utilize general-purpose compressors. 
Further, DOE found no way to distinguish clearly, from general-purpose 
compressors, those compressors specifically developed for constrained 
spaces. DOE's research found that other items, such as saltwater 
coolers, may be employed with marine air compressors, however, this 
equipment would not need to be included for testing. For these reasons, 
DOE does not find marine environment compressors to meet the first 
criterion of distinguishability.
    Due to the difficulty in distinguishing marine environment 
compressors from general-purpose compressors, DOE could not determine 
whether marine environment compressors meet the second criterion of 
consumer utility, or the third criterion of material disadvantage. DOE 
adds that if a specialty purpose compressor fails to meet the first 
criterion of distinguishability, then it is unlikely that the specialty 
purpose compressor provides clear and unique utility to the end user 
that a general-purpose compressor would not provide. Similarly, if a 
specialty purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor has a material disadvantage compared to a general-purpose 
compressor. Because marine environment compressors do not meet the 
first criteria for consideration of exclusion, DOE does not exclude 
them from the scope of this final rule.
Weather-Protected
    Weather-protected compressors require features to prevent the 
ingress of water and debris, as well as accommodation for extreme 
temperatures in some cases. Design accommodations related to extreme 
temperatures are discussed in that eponymous subsection of III.B.8.e 
and, therefore, the scope of this section is confined to those design 
accommodations related to aspects of weather-protection for reasons 
other than extreme temperature. DOE found that third-party standards 
exist for ingress protection of the electrical components. However, DOE 
could find no indication of a standard or certification for other 
aspects of weather protection, making it difficult to clearly identify 
a general scope for exclusion for all weather-protected equipment. 
However, DOE believes that certain weather-protected compressors (i.e., 
those with electrical components rated for ingress protection) meet the 
first criterion of distinguishability.
    Similarly, DOE believes that certain weather-protected compressors 
(i.e., those with electrical components rated for ingress protection) 
meet the second criterion of consumer utility, as such equipment is 
designed to operate in environments where non-rated equipment cannot.

[[Page 1525]]

    However, DOE does not find that weather-protected compressors meet 
the third criterion of material disadvantage. Most weather-protected 
compressors would generally not face disproportionate difficulty in 
reaching the same efficiency levels as general-purpose compressors. 
Some components added for weather protection, such as special 
electrical components, have little impact on energy use. As a result, 
DOE does not find evidence to suggest that weather-protected 
compressors face disproportionate difficulty in reaching the same 
efficiency levels as general-purpose compressors. DOE found no evidence 
suggesting weather-protected compressors would be subject to 
disproportionate burden in demonstrating compliance.
    Because weather-protected compressors do not meet the third 
criteria for exclusion, DOE does not exclude them from the scope of 
this final rule.
Mining Environments
    Mining environments can include both surface and subsurface mine 
compressor applications. There are some industry standards for these 
applications, for example those developed by the MSHA. However, DOE did 
not locate any which could be used to reliably designate compressors 
for mining environments. Furthermore, many of the design requirements 
for mining environment compressors are customer-specific, making it 
difficult to clearly identify the scope for exclusion. Some mining 
applications also use general-purpose compressors. For this reason, DOE 
does not find mining environment compressors to meet the first 
criterion of distinguishability. DOE was not able to determine that 
compressors for mining environments are always distinguishable from 
general-purpose compressors. There is no universally recognized 
designator.
    Due to the difficulty in distinguishing mining environment 
compressors from general-purpose compressors, DOE could not determine 
whether mining environment compressors meet the second criterion of 
consumer utility, or the third criterion of material disadvantage. DOE 
adds that if a specialty purpose compressor fails to meet the first 
criterion of distinguishability, then it is unlikely that the specialty 
purpose compressor provides clear and unique utility to the end user 
that a general-purpose compressor would not provide. Similarly, if a 
specialty purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor has a material disadvantage compared to a general-purpose 
compressor.
    Ultimately, because mining environment compressors do not meet the 
first criteria for consideration of exclusion, DOE does not exclude 
them from the scope of this final rule.
Military Applications
    Compressors used in military applications have a wide range of 
applications. Many military applications use common commercial or 
industrial compressors. Other military applications, however, must meet 
extensive customer-specific requirements. These requirements can vary 
greatly with the customer, and there are no commonly used standards for 
compressors in military applications. This makes it difficult to 
clearly identify the scope for exclusion. For this reason, DOE does not 
find military compressors to meet the first criterion of 
distinguishability.
    Due to the difficulty in distinguishing military compressors from 
general-purpose compressors, DOE could not determine whether military 
compressors meet the second criterion of consumer utility, or the third 
criterion of material disadvantage. DOE adds that if a specialty 
purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor provides clear and unique utility to the end user that a 
general-purpose compressor would not provide. Similarly, if a specialty 
purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor has a material disadvantage compared to a general-purpose 
compressor.
    Ultimately, because military compressors do not meet the first 
criteria for consideration of exclusion, DOE does not exclude them from 
the scope of this final rule.
Food Service Applications
    Food service applications can have requirements for air purity and 
for the use of food-grade lubricants. Food grade lubricants would need 
to be included for testing, so at least some compressors designed for 
food service applications would meet the first criterion of 
distinguishability.
    DOE found that food service application compressors also met the 
second criterion of consumer utility. Without food grade lubricants, 
compressors would not be permitted to be used in food processing 
environments.
    DOE does not find that food service application compressors meet 
the third criterion of material disadvantage. DOE found no evidence 
that food-grade lubricants, would impact efficiency. As a result, DOE 
does not find evidence to suggest that food service compressors face 
disproportionate difficulty in reaching the same efficiency levels as 
general-purpose compressors.
    Because food service applications compressors do not meet the third 
criterion of material disadvantage, DOE does not exclude them from the 
scope of this final rule.
Medical Air Applications
    Medical air applications can have requirements for air purity, 
which is rated according to ISO 8573-1,\28\ and also included in the 
National Fire Protection Association Standard for Health Care 
Facilities (NFPA 99).\29\ DOE notes that most medical air compressors 
are lubricant-free; as such, any lubricant-free medical air compressors 
are already excluded from this final rule. In lubricated compressors, 
high air purity is attained using a combination of filters and dryers 
added to the system after the compressor. These items are outside the 
basic compressor package, so a medical air compressor would collapse to 
a standard basic package for testing. For this reason, DOE does not 
find medical air application compressors to meet the first criterion of 
distinguishability.
---------------------------------------------------------------------------

    \28\ See: www.iso.org/iso/catalogue_detail.htm?csnumber=46418.
    \29\ See: www.nfpa.org/codes-and-standards/all-codes-and-standards/list-of-codes-and-standards?mode=code&code=99.
---------------------------------------------------------------------------

    Due to the difficulty in distinguishing medical air compressors 
from general-purpose compressors, DOE could not determine whether 
medical air compressors meet the second criterion of consumer utility, 
or the third criterion of material disadvantage. DOE adds that if a 
specialty purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor provides clear and unique utility to the end user that a 
general-purpose compressor would not provide. Similarly, if a specialty 
purpose compressor fails to meet the first criterion of 
distinguishability, then it is unlikely that the specialty purpose 
compressor has a material disadvantage compared to a general-purpose 
compressor.
    Ultimately, because medical air compressors do not meet the first 
criteria for consideration of exclusion,

[[Page 1526]]

DOE does not exclude them from the scope of this final rule.
Climate-Control Applications
    As noted in section III.B.8.d, Jenny Compressors argued that DOE 
should exclude climate control compressors. (Jenny Products, No. 0058 
at p. 2) DOE reviewed available information for climate-control 
compressors and found that the most commonly advertised unique feature 
was an ``oil carryover'' of less than or equal to 2 parts per million 
(``ppm'').\30\ DOE knows of one established standard for measurement of 
air purity, ISO 8573-1.\31\ However, this standard expresses oil 
content using mg/m\3\, and would require conversion to ppm.
---------------------------------------------------------------------------

    \30\ Gardner Denver: www.gardnerdenver.com/gdproducts/compressors/reciprocating/climate-control-low-pressure-reciprocating-compressors/#9816.
    Quincy: www.aavsales.com/pdfs/ClimateControl-Quincy.pdf.
    Champion: www.championpneumatic.com/assets/0/176/184/468/488/6ffebc83-bd76-463c-9ebb-bce58e1489d7.pdf.
    CPR: www.cprindustries.com/climate-control-compressors.html.
    \31\ See: www.iso.org/iso/catalogue_detail.htm?csnumber=46418.
---------------------------------------------------------------------------

    DOE reviewed compressors that are currently available for sale and 
marketed for climate-control applications. DOE found that all 
compressors currently listed as being for ``climate-control'' are 
reciprocating compressors. Because reciprocating compressors are not 
within the scope of this energy conservation standards rulemaking, DOE 
finds no reason to exclude climate-control compressors from this 
rulemaking.
Petroleum, Gas, and Chemical Applications
    The American Petroleum Institute standard 619, ``Rotary-Type 
Positive-Displacement Compressors for Petroleum, Petrochemical, and 
Natural Gas Industries,'' (API 619) \32\ specifies certain minimum 
requirements for compressors used in the petroleum, gas, and chemical 
industry. While API 619 contains many specific design requirements, it 
also indicates that customers must specify many design requirements 
themselves. As a result, compressors designed to meet API 619 
requirements are not uniform; rather, they are, by definition, 
customized compressors. In addition to the design requirements, API 619 
imposes rigorous testing, data reporting, and data retention 
requirements on manufacturers. For example, manufacturers are required 
to perform specific hydrostatic and operational mechanical vibration 
testing on each individual unit distributed in commerce. Furthermore, 
manufacturers must retain certain data for at least 20 years, such as 
certification of materials, test data and results, records of all heat 
treatment, results of quality control tests and inspections, and 
details of all repairs. Based on these testing, data reporting, and 
data retention requirements, DOE concludes that compressors designed 
and tested to the requirements of API 619 meet the first criterion of 
distinguishability. Specifically, DOE concludes that any manufacturer 
claiming a potential exclusion from energy conservation standards would 
be able to furnish test data proving that the compressor was designed 
and tested to API 619 (and associated customer-specific) requirements.
---------------------------------------------------------------------------

    \32\ Available for purchase at: www.techstreet.com/standards/api-std-619?product_id=1757746.
---------------------------------------------------------------------------

    Based on DOE's assessment of API 619, DOE believes that the minimum 
design and testing requirements specified in API 619 are created to 
achieve, among other goals, safety and reliability in the petroleum, 
gas, and chemical industry. These requirements ensure that the 
compressor can be operated and maintained safely, in the safety-
critical petroleum, gas, and chemical industry. Consequently, DOE 
concludes that compressors tested to, and meeting minimum design 
requirements of API 619 provide additional consumer utility.
    At this time, DOE has insufficient evidence to conclusively 
determine if compressors meeting the minimum design and testing 
requirements specified in API 619 are at a material disadvantage, with 
respect to achievable compressors efficiency. However, given the role 
of API 619 in ensuring operational safety in the petroleum, gas, and 
chemical industry, DOE believes it is appropriate to exclude from the 
scope of energy conservation standards compressors meeting the minimum 
design and testing requirements specified in API 619. In other words, 
DOE finds that including compressors meeting the minimum design and 
testing requirements specified in API 619 may have adverse impacts on 
health or safety.
    Furthermore, DOE believes that excluding compressors meeting the 
minimum design and testing requirements specified in API 619 will not 
create an appreciable risk of API 619 compressors being used in general 
purpose applications, due to the rigorous and burdensome requirements 
associated with complying with API 619. DOE may request that a 
manufacturer provide DOE with copies of the original design and test 
data that were submitted in accordance with the requirements of API 619 
as evidence that the compressor is designed and tested to API 619.

C. Test Procedure and Metric

    This section discusses DOE's requirements with respect to test 
procedures and summarizes the test procedure for compressors adopted by 
DOE. EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314) 
Manufacturers of covered equipment must use these test procedures to 
certify to DOE that their equipment complies with energy conservation 
standards and to quantify the efficiency of their equipment. (42 U.S.C. 
6295(s), 42 U.S.C. 6316(a) and 42 U.S.C. 6314(d)).
    On May 5, 2016, DOE issued a notice of proposed rulemaking, to 
propose test procedures for certain compressors. 87 FR 27220. On June 
20, 2016, DOE held a public meeting to discuss the test procedure NOPR 
and accept comments from interested parties. In December 2016, DOE 
issued a test procedure Final Rule, which establishes definitions, 
materials incorporated by reference, and test procedures for 
determining the energy efficiency of certain varieties of compressors 
in subpart T of Title 10 of the Code of Federal Regulations, Part 431 
(10 CFR part 431). The test procedure Final Rule also amends 10 CFR 
part 429 to establish sampling plans, representations requirements, and 
enforcement provisions for certain compressors.
    In the test procedure final rule, DOE prescribes a test procedure 
for measuring the full- and part-load package isentropic efficiency for 
certain varieties of rotary compressors. The test procedure final rule 
is applicable to compressors that meet the following criteria:
     are air compressors;
     are rotary compressors;
     are not liquid ring compressors;
     are driven by a brushless electric motor;
     are lubricated compressors;
     have a full-load operating pressure of 75-200 psig;
     are not designed and tested to the requirements of The 
American Petroleum Institute standard 619, ``Rotary-Type Positive-
Displacement Compressors for Petroleum, Petrochemical, and Natural Gas 
Industries;'' and
     have a capacity that is either:
    [cir] 10-200 compressor motor nominal horsepower (hp), or

[[Page 1527]]

    [cir] 35-1,250 full-load actual volume flow rate (cfm).
    For those applicable varieties of compressors, DOE prescribes 
methods to measure and calculate part- and full-load package isentropic 
efficiency by incorporating by reference sections of ISO 1217:2009(E), 
(ISO 1217:2009(E)), ``Displacement compressors--Acceptance tests,'' as 
amended through ISO 1217:2009(E)/Amd.1:2016.\33\ DOE also provides 
additional testing instructions not included in ISO 1217:2009(E) in the 
test procedure final rule.
---------------------------------------------------------------------------

    \33\ ISO 1217:2009(E)/Amd.1:2016 is titled ``Calculation of 
isentropic efficiency and relationship with specific energy.''
---------------------------------------------------------------------------

    Full-load package isentropic efficiency is applicable to fixed-
speed compressors, and calculated per section 3.6.1 of ISO 
1217:2009(E). It is the ratio of isentropic power required for 
compression to real packaged compressor power input (both at full-load 
operating pressure and full-load actual volume flow rate). The test 
procedure final rule provides complete instructions on measuring and 
calculating each of these variables.
    Part-load package isentropic efficiency is applicable to variable-
speed compressors, and calculated as the weighted average of package 
isentropic efficiency at three reference load points 100-, 70-, and 40-
percent of full-load actual volume flow rate). Package isentropic 
efficiency at each of these load points is calculated in a similar 
manner to full-load package isentropic efficiency, and the test 
procedure final rule provides complete instructions on all measurements 
and calculations needed for determining part-load package isentropic 
efficiency.
    The test procedure final rule also contains specific methods to 
determine the full-load actual volume flow rate and full-load operating 
pressure of a compressor, both of which are necessary to test a 
compressor model and determine the applicable energy conservation 
standard for certain varieties of compressors in a repeatable way.

D. Impacts of Sampling Plan on Energy Conservation Standards Analysis

    DOE defines, as part of the test procedure for compressors, the 
sampling requirements in part 429 of Chapter II, subchapter D of Title 
10, Code of Federal Regulations. In accordance with Sec.  429.63, 
manufacturers must determine the represented rating for each basic 
compressor model either by testing in conjunction with the applicable 
sampling provisions or by applying an AEDM. If the represented value is 
determined through testing, manufacturers must use a sample of not less 
than two units and any represented value of the full- or part-load 
package isentropic efficiency of a basic model must be calculated as 
the lower of (1) the mean of the test sample, and (2) the lower 95 
percent confidence limit (``LCL'') divided by 0.95. DOE also 
establishes that package specific power, full-load actual volume flow 
rate, full-load operating pressure, and pressure ratio at full-load 
operating pressure must be represented as the mean of the test sample.
    In the energy conservation standards NOPR, DOE directly calculated 
the full- or part-load isentropic efficiency of each compressor using 
values reported in the CAGI Performance Verification Program data 
sheets.\34\ Ultimately, DOE used this performance data to establish 
efficiency levels for each equipment class. DOE assumed that the 
compressor performance data published as part of the CAGI Performance 
Verification Program represented the population mean for each 
compressor model.
---------------------------------------------------------------------------

    \34\ CAGI Performance Verification Program data sheets are 
discussed in section IV.C.1.a.
---------------------------------------------------------------------------

    DOE received many comments from interested parties that were 
concerned that the data used to develop efficiency levels and 
ultimately propose energy conservation standards was not reflective of 
the sampling plan adopted in the test procedure final rule. 
Specifically, CAGI, Ingersoll Rand, and Sullivan-Palatek commented that 
the efficiency levels proposed by DOE do not consider the certification 
sampling plan proposed in the test procedure, stating that the use of 
the 95-percent lower confidence limit would result in a more 
conservative rating than what is currently represented on CAGI 
Performance Verification Program Data sheets. Commenters argued that 
DOE must adjust standard level, because the proposed standard level did 
not consider the impact of the sampling plan. (EERE-2014-BT-TP-0054, 
CAGI, No. 0010 at pp. 14, 15; Ingersoll Rand, No. 0055 at p. 2; EERE-
2014-BT-TP-0054, Ingersoll Rand, No. 0011 at p. 2; Ingersoll Rand, 
Public Meeting Transcript, No. 0044 at p. 57; EERE-2014-BT-TP-0054, 
Ingersoll Rand, Public Meeting Transcript, No. 0016 at pp. 121-2; 
Sullivan-Palatek, No. 0051 at p. 4; EERE-2014-BT-TP-0054, Sullivan-
Palatek, No. 0007 at pp. 2, 4) Sullair supported CAGI's comments 
regarding sampling. (EERE-2014-BT-TP-0054, Sullair, No. 0006 at p. 1) 
Sullivan-Palatek further commented that the proposed standards, if left 
without adjustment, place an extra level of performance above and 
beyond that required by the proposed standard. (EERE-2014-BT-TP-0054, 
Sullivan-Palatek, No. 0007 at p. 4)
    DOE agrees with comments made by CAGI, Ingersoll Rand, Sullair, and 
Sullivan-Palatek that the industry's approach to testing in accordance 
with ISO 1217:2009 does not have the sampling and certification 
requirements that DOE adopts in the test procedure final rule. Further, 
DOE acknowledges that the data used to develop the efficiency levels 
presented in the energy conservation standards NOPR, predominantly 
collected from publicly available data published in accordance with the 
CAGI Performance Verification Program, was not assessed for, or 
adjusted to account for, potential impacts of the test procedure 
sampling plan.
    At the June 20, 2016 test procedure public meeting, DOE requested 
information regarding the process that manufacturers currently use to 
rate compressors. (EERE-2014-BT-TP-0054, DOE, Public Meeting 
Transcript, No. 0016 at pp. 42-43). DOE received feedback from 
Ingersoll Rand, Sullair, and Sullivan-Palatek indicating that they use 
a combination of test data and calculations. (EERE-2014-BT-TP-0054, 
Ingersoll Rand, Public Meeting Transcript, No. 0016 at pp. 44-45; EERE-
2014-BT-TP-0054, Sullair, Public Meeting Transcript, No. 0016 at p. 43; 
EERE-2014-BT-TP-0054, Sullivan-Palatek, Public Meeting Transcript, No. 
0016 at p. 44) However, DOE did not receive any specific performance 
test data or specific information on unit-to-unit variability, nor did 
DOE receive specific information on how a manufacturers arrives at a 
compressor rating (i.e., the sample mean of tested compressor).
    In written comments, DOE did receive general information on the 
topic. Specifically, Ingersoll Rand noted that ISO 1217:2009(E) is 
designed to provide values closer to the population's ``true mean,'' 
whereas DOE's proposed sampling plan is designed to give conservative 
results. (Ingersoll Rand, No. 0055 at p. 2) Similarly, CAGI stated that 
for any given basic compressor package model, one can expect there will 
be a distribution of efficiency around the ``true mean'' of the 
population. (EERE-2014-BT-TP-0054, CAGI, No. 0010 at pp. 12-13) 
Further, CAGI stated that they believe that current manufacturer rating 
programs are designed to provide values that are closer to the 
population's ``true mean''

[[Page 1528]]

than does DOE's proposal. (EERE-2014-BT-TP-0054, CAGI, No. 0010 at p. 
14)
    Regarding the distribution of the test results, Ingersoll Rand and 
Sullivan-Palatek commented that the data used to form the efficiency 
levels proposed by DOE is reflective of a 5-percent enforcement 
tolerance under the CAGI Performance Verification Program. (Ingersoll 
Rand, No. 0055 at p. 2; Sullivan-Palatek, No. 0051 at p. 4; Sullivan-
Palatek, Public Meeting Transcript, No. 0044 at p. 106) DOE interprets 
the 5-percent enforcement tolerance referred to by Ingersoll Rand and 
Sullivan-Palatek to reflect the 5-percent allowable variation in 
specific power allowed per Table C.2 of Annex C of ISO 1217:2009(E) for 
actual volume flow rates exceeding 0.250 cubic meters per second. DOE 
further assumes that this tolerance represents the bounds of the 
distribution of specific power for ISO 1217:2009(E).
    To evaluate the effect of DOE's sampling plan in the test procedure 
final rule, DOE would prefer to have used the source data recorded in 
accordance with ISO 1217:2009(E) and directly calculate the certified 
value of full- or part-load isentropic efficiency for each compressor 
to develop the efficiency levels for each compressors as specified in 
the DOE test procedure. In the absence of source data, DOE would prefer 
to capture the variability of the CAGI Performance Verification Program 
data with detailed information of representative unit-to-unit 
variability. Unfortunately, DOE did not receive compressor test data 
with which DOE could directly calculate the certified full- or part-
load isentropic efficiency (i.e., DOE does not have multiple tested 
values for each compressor basic model).
    In the absence of receiving full test data or a detailed 
description of testing variability, DOE uses the feedback from 
manufacturers regarding the CAGI Performance Verification Program data 
to conduct a statistical analysis to assess the impact of the sampling 
plan in the test procedure final rule on package isentropic efficiency 
ratings. Specifically, DOE employs a Monte Carlo simulation of 
compressor ratings using Oracle Crystal Ball. A Monte Carlo simulation 
is a series of randomized trials that, after many repetitions, 
converges on a solution with a distribution of results. The resulting 
solution of a Monte Carlo analysis reflects the interactions between 
known ``input'' distributions; for the purposes of this analysis, the 
Monte Carlo analysis reflects the interaction between the distribution 
of specific power for each compressor, the known sampling plan in the 
compressors test procedure, and the resulting compressor package 
isentropic efficiency rating. The simulation calculates the full- or 
part-load package isentropic efficiency of each compressor by using the 
value of actual volume flow rate and compressor discharge pressure from 
the updated CAGI database along with the value of specific power 
(according to the assumed distribution of specific power) for each 
compressor in the test sample. From there, the simulation selects the 
lower of the (1) sample mean or (2) 95 percent LCL of the sample 
divided by 0.95 for each compressor basic model and stores the value as 
the ``simulated'' value of compressor full- or part-load isentropic 
efficiency for each trial. In addition, the Monte Carlo analysis stores 
the difference between the ``simulated'' and calculated mean-value \35\ 
of full- or part-load isentropic efficiency for each compressor in the 
DOE database, for each trial. DOE calculates statistics on the 
simulation data to understand the likelihood and magnitude of a change 
in compressor rating under the DOE sampling and certification plan. 
Additional details of the calculations in the Monte Carlo simulation 
and a more comprehensive results section is in Chapter 5 of the TSD.
---------------------------------------------------------------------------

    \35\ The calculated mean value of full- or part-load isentropic 
efficiency is derived by direct calculations from reported values on 
the CAGI Performance Verification Program data sheets. As noted by 
manufacturer comments, the specific power of a compressor is assumed 
to represent the ``true mean'' or ``population mean'' of the 
represented compressor model.
---------------------------------------------------------------------------

    To construct a Monte Carlo simulation with the goal of 
understanding the impacts of the sampling plan on full- and part-load 
isentropic efficiency, DOE makes assumptions regarding the mean and 
statistical variation of specific power. As noted previously, DOE 
received information that the specific power data represented as a part 
of CAGI Performance Verification Program is representative of the 
``true mean'' of a compressor model's performance. As such, in the 
Monte Carlo model, DOE assumes that the specific power values 
represented on CAGI performance verification data sheets represent the 
population mean.
    DOE also recognizes that the CAGI Performance Verification Program 
guarantees that the tested specific power performance of any 
participating compressor will be within the bounds of Table III.1.\36\ 
Therefore, DOE assumes that the range of compressor specific power 
variation mirror the bounds of variation defined in Table III.1.
---------------------------------------------------------------------------

    \36\ International Organization for Standardization (ISO), ISO 
1217 (E), Displacement compressors-- Acceptance tests, International 
Organization for Standardization (ISO), 2009, Annex H, Table H.3.

   Table III.1--Permissible Deviation of Specific Power and Isentropic
   Efficiency During Customer Acceptance Test for Electrically Driven
                   Packaged Displacement Compressors *
------------------------------------------------------------------------
                                                         Specific power
                                                         tolerances (%)
 Volume flow rate at specified conditions * (m\3\/s) * -----------------
                         10-3                            Upper    Lower
                                                         limit    limit
------------------------------------------------------------------------
0 < v <= 8.3..........................................       +8       -8
8.3 < v <= 25.........................................       +7       -7
25 < v <= 250.........................................       +6       -6
v > 250...............................................       +5       -5
------------------------------------------------------------------------
\*\ The column titles were edited from the source document for clarity.

    With the mean and range of the test sample established, DOE needed 
to assume a statistical distribution centered about the mean and 
bounded by the allowable tolerance in Table III.1. DOE considered 
multiple distributions which could characterize tested compressor 
specific power. Specifically, DOE considered two general distributions: 
(1) A uniform distribution which assumed equal probability of values 
between the lower and upper limit of specific power variation as 
defined in Table III.1, and (2) a normal distribution.
    Per Table C.2 of Annex C of ISO 1217:2009(E), the rationale for 
establishing a tolerance for specific power is to account for variation 
due to manufacturing and measurement tolerances. DOE interprets the 
statement to mean that the specific power tolerance accounts for unit-
to-unit performance differences due to manufacturing tolerances as well 
as the inherent repeatability of the ISO 1217:2009(E) test procedure. A 
literature review conducted by DOE found that a uniform probability 
distribution, which has an equal probability of values between the 
lower and upper tolerance, does not commonly represent distributions 
that have continuous outcomes (such as specific power). Alternatively, 
literature states that of the commonly occurring probability 
distributions, a normal distribution is the most appropriate choice to 
represent the probability of a continuous outcome that is a function of 
the interaction between random and independent

[[Page 1529]]

variables.\37\ Because the CAGI Performance Verification Program 
guarantees that performance and specific power is a function of random 
and independent variables, including manufacturing tolerances and test 
to test variation, it is much more likely that a normal probability 
distribution is the most representative of compressor specific power. 
For these reasons, a normal distribution is most appropriate to 
represent the unit-to-unit variability of compressor specific power. 
However, DOE explores the impact of this assumption as part of the 
sensitivity analysis and concludes that the assumption of a normal or 
uniform distribution, by itself, did not have an impact on the 
conclusion drawn from the analysis. A complete discussion of the 
sensitivity analysis can be found at the conclusion of this section.
---------------------------------------------------------------------------

    \37\ Tennett, Geoff. Six Sigma: SPC and TQM in Manufacturing and 
Services. 2001. Gower Publishing Company: Burlington, VT.
---------------------------------------------------------------------------

    With the distribution type selected, DOE then considered the 
standard deviation of the distribution. As previously stated, Table 
III.1 represents the allowable ``enforcement tolerance'' that CAGI uses 
as part of the Performance Verification Program. Because the CAGI 
Performance Verification Program guarantees performance within these 
tolerances, DOE concludes that, for all compressors that participate in 
this program, each unit distributed in commerce should achieve 
performance within these tolerances. Consequently, DOE assumes that the 
tolerance range specified in Table III.1 represents a range of plus or 
minus three standard deviations from the mean; i.e., 99.7-percent of 
test units will fall within that range specified in Table III.1. 
Functionally, this translates to a standard deviation of compressor 
specific power that represented one-third of the tolerance listed in 
Table III.1. As an example, if the tolerance for a compressor's 
represented specific power is 6-percent, the standard 
deviation for the distribution of specific power for that compressor 
would be 2-percent of the compressor's specific power.
    With DOE's establishing assumptions for the distribution of 
compressor specific power in the Monte Carlo simulation, the last 
remaining assumption is the number of units in the test sample to 
certify the full- and part-load isentropic efficiency for a compressor 
basic model. The test procedure final rule specifies a minimum sample 
size of two compressors is necessary to certify the full- or part-load 
isentropic efficiency of a basic model; there is no upper limit to the 
number of units that can be tested. DOE assumes that a manufacturer 
would test more than two units if the calculated full- or part-load 
isentropic efficiency (according to the sample plan) does not meet the 
expectations of the manufacturer. DOE recognizes that there is a 
practical limit to the number of units that can be tested and assumes 
that four units of each basic model are tested in the simulation, to 
calculate the full- and part-load package isentropic efficiency of the 
compressor. DOE explores the impact of this assumption as part of the 
sensitivity analysis and concludes that the assumption of testing three 
or four units, by itself, does not have an impact on the results of the 
analysis. A complete discussion of the sensitivity analysis is in the 
conclusion of this section.\38\
---------------------------------------------------------------------------

    \38\ The cost of testing four units to certify the full- or 
part-load package isentropic efficiency is accounted for in the 
Manufacturer Impact Analysis, section IV.J.2.c.
---------------------------------------------------------------------------

    Based on the results of the Monte Carlo, DOE does not expect that, 
on average, the sampling plan will result in a lower certified full- or 
part-load package isentropic efficiency values, in comparison to the 
value calculated from the CAGI Performance Verification Program data 
sheets. Put differently, for each iteration of the Monte Carlo 
simulation, given a random sample of four units, the mean of the sample 
is nearly always lower than the 95th lower confidence interval divided 
by 0.95.
    DOE also conducted a sensitivity analysis to understand the impact 
of two key assumptions: the number of units tested to certify the full- 
and part-load isentropic efficiency and the assumed shape of the 
specific power distribution. Specifically, DOE adjusted the number of 
units in the Monte Carlo analysis to reflect a sample size of three 
units and adjusted the distribution of compressor specific power to 
represent a uniform distribution. A uniform distribution is the most 
conservative assumption for the distribution of specific power; it 
provides an equal probability of a specific power value between the 
tolerance range permitted in Table III.1. The results of the 
sensitivity analysis for fixed-speed compressors and variable-speed 
compressors, expressed as the average change in certified rating 
(difference between the calculated and simulated mean-value), in points 
of efficiency, are in Table III.2 and Table III.3, respectively.

 Table III.2--Sensitivity Analysis Results for Fixed-Speed Compressors:
   Average Change in Compressor Full- or Part-Load Package Isentropic
                            Efficiency Rating
------------------------------------------------------------------------
                                              Uniform         Normal
                                           distribution    distribution
        Number of units in sample           of specific     of specific
                                          power (points)  power (points)
------------------------------------------------------------------------
3.......................................            -0.7             0.0
4.......................................             0.0             0.0
------------------------------------------------------------------------


      Table III.3--Sensitivity Analysis Results for Variable-Speed
  Compressors: Average Change in Compressor Full- or Part-Load Package
                      Isentropic Efficiency Rating
------------------------------------------------------------------------
                                              Uniform         Normal
                                           distribution    distribution
        Number of units in sample           of specific     of specific
                                          power (points)  power (points)
------------------------------------------------------------------------
3.......................................            -0.7             0.0
4.......................................             0.0             0.0
------------------------------------------------------------------------

    Based on the results of the analysis, DOE expects that, for 
compressors participating in the CAGI Performance Verification Program 
and abiding by the tolerance in Table III.1, the sampling plan 
established in the test procedure will result in certified package 
isentropic efficiency values that represents the sample mean. Further, 
DOE reiterates that in the absence of test data or detailed information 
from manufacturers, a normal distribution best represents the unit-to-
unit variability among compressors; however, the analysis shows that 
this assumption had little influence on the results of the sampling 
plan analysis. Additionally, DOE found that the results of the analysis 
are not sensitive to the assumption of testing four units, as the same 
conclusion is reached with a sample size of three units. Therefore, DOE 
concludes that while the assumptions that DOE made are grounded in 
reasoned logic and research, the results would be the same with a more 
conservative set of assumptions. For all of the reasons discussed in 
this section, DOE concludes that no adjustments are necessary to the 
efficiency levels presented in the energy conservation standards NOPR.

E. Compliance Date

    DOE has determined that any standards established by this rule will

[[Page 1530]]

apply to compressors manufactured 5 years after the date on which any 
standard is published.\39\ Therefore, the compliance date of this rule 
is January 10, 2025.
---------------------------------------------------------------------------

    \39\ EPCA specifies that the provisions of subsections (l) 
through (s) of 42 U.S.C. 6295 shall apply to any other type of 
industrial equipment which the Secretary classifies as covered 
equipment, which includes compressors. (42 U.S.C. 6316(a)) 42 U.S.C. 
6295(l)(2) states that any new or amended standard for any other 
type of consumer product which the Secretary classifies as a covered 
product shall not apply to products manufactured within five years 
after the publication of a final rule establishing such standard. 
This 5-year lead time also applies to other types of industrial 
equipment, such as compressors.
---------------------------------------------------------------------------

F. 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 document 
discusses the results of the screening analysis for compressors, 
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 chapter 4 of the final rule TSD.
2. Maximum Technologically Feasible Levels
    When DOE adopts a new or amended standard for a type or class of 
covered equipment, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1) and 42 U.S.C. 6316(a)) 
Accordingly, in the engineering analysis, DOE determined the maximum 
technologically feasible (``max-tech'') improvements in energy 
efficiency for compressors, using the design parameters for the most 
efficient products available on the market or in working prototypes. 
The max-tech levels that DOE determined for this rulemaking are 
described in section IV.C.5.b of this final rule and in chapter 5 of 
the final rule TSD.

G. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to compressors purchased in the 30-
year period that begins in the first full year of compliance with the 
standards (2022-2051).\40\ 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 energy conservation 
standards.
---------------------------------------------------------------------------

    \40\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis spreadsheet models to 
estimate national energy savings (``NES'') from potential standards for 
compressors. The NIA spreadsheet model (described in section IV.H of 
this rule) calculates energy savings in terms of site energy, which is 
the energy directly consumed by products at the locations where they 
are used. For electricity, DOE reports national energy savings in terms 
of primary energy savings, which is the savings in the energy that is 
used to generate and transmit the site electricity. For natural gas, 
the primary energy savings are considered to be equal to the site 
energy savings. DOE also calculates NES 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.\41\ 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.2 of this final 
rule.
---------------------------------------------------------------------------

    \41\ 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 any new or amended standards for a covered product, DOE 
must determine that such action would result in significant 
conservation of energy. (42 U.S.C. 6295(o)(3)(B) and 42 U.S.C. 6316(a)) 
Although the term ``significant'' is not defined in the Act, the U.S. 
Court of Appeals, for the District of Columbia Circuit in Natural 
Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 
1985), indicated 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, including the adopted standards, resulting in positive net 
benefits to the Nation, and are nontrivial, and, therefore, DOE 
considers them ``significant'' within the meaning of 42 U.S.C. 
6295(o)(3)(B).

H. Economic Justification

1. Specific Criteria
    As noted above, EPCA provides seven factors to evaluate in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 42 
U.S.C. 6316(a)) The following sections discuss how DOE has addressed 
each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of potential standards on manufacturers, 
DOE conducts a manufacturer impact analysis (``MIA''), as discussed in 
section IV.J of this document. DOE first uses an annual cash-flow 
approach to determine the quantitative impacts. This step includes both 
a short-term assessment--based on the cost and capital requirements 
during the period between when a regulation is issued and when entities 
must comply with the regulation--and a long-term assessment over a 30-
year period. The industrywide impacts analyzed include (1) industry

[[Page 1531]]

net present value (INPV), which values the industry based on expected 
future cash flows; (2) cash flows by year; (3) changes in revenue and 
income; and (4) other measures of impact, as appropriate. Second, DOE 
analyzes and reports the impacts on different types of manufacturers, 
including impacts on small manufacturers. Third, DOE considers the 
impact of standards on domestic manufacturer employment and 
manufacturing capacity, as well as the potential for standards to 
result in plant closures and loss of capital investment. Finally, DOE 
takes into account cumulative impacts of various DOE regulations and 
other regulatory requirements on manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For consumers 
in the aggregate, DOE also calculates the national net present value of 
the 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) and 42 U.S.C. 6316(a)) DOE conducts this 
comparison in its LCC and PBP analyses.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating 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 analyses, DOE assumes that consumers will 
purchase the covered products in the first full year of compliance with 
new standards. The LCC savings for the considered efficiency levels are 
calculated relative to the case that reflects projected market trends 
in the absence of new standards. DOE's LCC and PBP analyses are 
discussed in further detail in section IV.F of this document.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 42 
U.S.C. 6316(a)) 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) and 42 U.S.C. 
6316) Based on data available to DOE, the standards adopted in this 
final rule would not reduce the utility or performance of the products 
subject to this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and 42 
U.S.C. 6316(a)) It also directs the Attorney General to determine the 
impact, if any, of any lessening of competition likely to result from a 
standard and to transmit such determination to the Secretary within 60 
days of the publication of a proposed rule, together with an analysis 
of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii) 
and 42 U.S.C. 6316(a)) 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 compressors 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) and 42 U.S.C. 6316(a)) The 
energy savings from the adopted standards are likely to provide 
improvements to the security and reliability of the Nation's energy 
system. Reductions in the demand for electricity also may result in 
reduced costs for maintaining the reliability of the Nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how standards may affect the Nation's needed power generation capacity, 
as discussed in section IV.M of this document.
    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.8 of this document. DOE also 
estimates the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L of this document.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 42 
U.S.C. 6316(a)) To the extent interested parties submit any relevant 
information regarding economic justification that does not fit into the 
other categories described above, DOE could consider such information 
under ``other factors.''
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a), 
EPCA creates a rebuttable presumption that an energy conservation 
standard is economically justified if the additional cost to the 
consumer of a product that meets the standard is less than three times 
the value of the first year's energy

[[Page 1532]]

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 new or amended energy conservation 
standards would have on the payback period for consumers. These 
analyses include, but are not limited to, the 3-year payback period 
contemplated under the rebuttable-presumption test. In addition, DOE 
routinely conducts an economic analysis that considers the full range 
of impacts to consumers, manufacturers, the Nation, and the 
environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 
6316(a). The results of this analysis serve as the basis for DOE's 
evaluation of the economic justification for a potential standard level 
(thereby supporting or rebutting the results of any preliminary 
determination of economic justification). The rebuttable presumption 
payback calculation is discussed in section IV.F of this final rule.

I. Other Issues

1. Comments on the Proposed Standards
    In the energy conservation standards NOPR, DOE proposed to 
establish energy conservation standards at TSL 2. However, DOE also 
noted that it was strongly considering TSL 3 due to its greater net 
benefits. 81 FR 31680, 31683 (May 19, 2016). DOE received numerous, 
generalized comments related to its proposal; these comments are 
summarized in this section. All comments related to DOE's analyses and 
specific technical proposal are located in the appropriate subsections 
of sections III and IV of this final rule.
a. Recommended Energy Conservation Standard Level
    Ingersoll Rand supported TSL 2 and noted that the proposed standard 
level struck an appropriate balance between a more energy efficient 
marketplace and the increase in associated costs, leading to an 
economically justified rulemaking that maximizes consumer benefits. 
(Ingersoll Rand, No. 0055 at pp. 2-3) Similarly, CAGI and Sullair 
commented that they support TSL 2, provided that DOE make adjustments 
to the standard that reflect CAGI's and Sullair's comments. (Sullair, 
No. 0056 at pp. 5-6; CAGI, No. 0052 at p. 3)
    CAGI also stipulated that it would support TSL 2, provided that the 
trial standard level is technically feasible and economically justified 
after accounting for CAGI's other suggestions as well as the impact of 
the test procedure on assumed product compliance. (CAGI, No. 0052 at p. 
3) Kaeser Compressors, Mattei Compressors, Sullair, and Sullivan-
Palatek commented in support of CAGI's recommendations. (Kaeser 
Compressors, No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; 
Sullair, No. 0056 at p. 1; Sullivan-Palatek, No. 0051 at p. 1)
    The CA IOUs commented that they support TSL 2, but suggest that DOE 
adopt TSL 3 due to the higher benefits associated with TSL 3, such as 
increased energy savings, a simple payback period of 4.1 years or less 
for each equipment class, and reduced CO2 emissions that 
assist California with meeting state greenhouse gas emissions goals. 
(CA IOUs, No. 0059 at pp. 1-2)
    ASAP, ACEEE, NEEA, NRDC, NEEP, and ASE commented that they support 
TSL 3, noting that TSL 3 offered increased energy savings, increased 
NPV for consumers, and reduced CO2 emissions when compared 
to TSL 2. (ASAP, ACEEE, NEEA, NRDC, NEEP, ASE, No. 0060 at pp. 1-2)
    The CA IOUs, ASAP, ACEEE, NEEA, NRDC, NEEP, NWPCC, and ASE all 
commented that TSL 3 aligned closely with EU regulation, which 
consequently reduces the burden on manufacturers to comply with two 
standards when selling their products globally. (CA IOUs, No. 0059 at 
pp. 1-2; ASAP, ACEEE, NEEA, NRDC, NEEP, ASE, No. 0060 at pp. 1-2; NEEA 
and NWPCC, No. 0057 at p. 3)
    Sullivan-Palatek commented that TSL 3 is an aggressive approach to 
setting initial conservation standards and suggested that DOE collect 
test data and observe the program prior to adopting a higher standard 
than TSL 2. (Sullivan-Palatek, No. 0051 at p. 5) Similarly, Ingersoll 
Rand did not support standards at TSL 3 and stated that standards at 
TSL 3 are not economically justified. (Ingersoll Rand, No. 0055 at pp. 
2-3)
    DOE discusses respective benefits and burdens of each TSL and, 
ultimately, presents reasoning for the TSL adopted as a standard in 
section V.C. DOE takes into consideration all of the factors mentioned 
by commenters, including consumer benefits, impacts to manufacturers, 
emissions reductions, and the benefits of harmonizing with the European 
Union.
    Castair opposed standards at TSL 2. First Castair argued that 
electric motors are already subject to energy conservations standards 
and thus compressors do not need to be further regulated. Second, 
Castair commented that the compressor industry competes on the basis of 
efficiency, and therefore efficiency standards are not necessary. 
(Castair, No. 0062 at p. 2) Similarly, Jenny Products commented that 
more efficient compressors are commercially available for all proposed 
equipment classes, which negates the need for an energy conservation 
standard for compressors. (Jenny Products, No. 0058 at p. 5)
    In response to Castair and Jenny's comments, DOE notes that 
although some consumers may choose efficient compressors in the current 
market, they do not need to purchase efficient compressors. An energy 
conservation standard removes the lowest performing compressors from 
the market, and ensures that consumers receive, on average, 
economically justified energy savings. Consumers purchasing above that 
level voluntarily are unaffected. However, consumers who previously 
purchased below the standard level would be unable to do so, thus 
ensuring that consumers purchase more efficient equipment, which 
provides a corresponding improvement in life-cycle cost. While it is 
true that some compressor designs use motors that are currently subject 
to energy conservations standards, compressor manufacturers do not need 
to construct packages using motors within scope of standards. Moreover, 
a motor being subject to energy conservation standards does not 
preclude the possibility of finding economically justified savings at 
the compressor package level. There are many other opportunities to 
improve the efficiency of a compressor package beyond the driver.
    Compressed Air Systems commented that DOE did not provide proof 
that (1) the proposed standards would improve efficiency over current 
designs, (2) the proposed standards were technically feasible, and (3) 
the proposed standards provide an economic benefit for consumers. 
Finally, Compressed Air Systems alleged that DOE did not collect 
sufficient data to support DOE's conclusions for the standards proposed 
in the NOPR. (Compressed Air Systems, No. 0061 at p. 1)
    As discussed in section III.B.6, DOE acknowledges that it lacks 
sufficient data for certain varieties of compressors and is reducing 
the scope of this final rule appropriately. For the compressors that 
remain in scope, DOE maintains that sufficient data exists to support 
adoption of a standard under the provisions of EPCA, as amended. 
Specifically, DOE discusses efficiency improvement in section IV.C.4, 
technological feasibility in section III.F, and the economic benefits 
to consumers in section V.B.1.

[[Page 1533]]

b. Reciprocating Compressors
    The CA IOUs suggested that DOE should consider EL 2 for 
reciprocating compressors in the standard adopted in the final rule. 
(CA IOUs, No. 0059 at pp. 1-2; CA IOUs, Public Meeting Transcript, No. 
0044 at p. 152-153) As discussed in section III.B.2, DOE is excluding 
reciprocating compressors from the scope of this final rule. Therefore, 
no EL is selected.
2. Other Comments
    The P. R. of China commented that DOE is obliged to share the data 
used to determine that energy conservation standards were justified in 
accordance with Article 2.5 of World Trade Organization Agreement on 
Technical Barriers to Trade.\42\ (P. R. China, No. 0049 at p. 32)
---------------------------------------------------------------------------

    \42\ Agreement on Technical Barriers to Trade, 1868 U.N.T.S. 
120.
---------------------------------------------------------------------------

    DOE discussed and documented its data, assessments, analysis, and 
rationale as part of the May 2016 energy conservation standards NOPR 81 
FR 31680, this final rule, and the associated TSDs. All relevant data 
and analysis has been publicly shared through the aforementioned 
documents.
    CAGI also provided a general comment related to DOE's energy 
conservation standards NOPR proposal. CAGI commented that the most 
effective way to encourage efficiency is through improving the 
education and training of individuals who design compressed air demand 
and supply systems. CAGI argued that the proposed energy conservation 
standard for compressors diverts limited personnel and financial 
resources from education and training. (CAGI, No. 0052 at p. 3) 
Ingersoll Rand, Kaeser Compressors, Mattei Compressors, Sullair, and 
Sullivan-Palatek commented in support of CAGI's recommendations. 
(Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 
1; Mattei Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p. 1; 
Sullivan-Palatek, No. 0051 at p. 1) Ingersoll Rand suggested that 
compressor package efficiency policy should include a regularly 
scheduled equipment maintenance program, and that efforts in compressed 
air system efficiency could lead to significant energy savings. (Docket 
No. EERE-2012-BT-DET-0033, Ingersoll Rand, No. 0004 at p. 3)
    DOE notes that it addresses all individual suggestions provided by 
CAGI in this final rule, incorporating such suggestions where 
appropriate. DOE evaluates the benefits and burdens associated with all 
potential energy conservation standard levels in section V.C. In 
response to Ingersoll Rand's and CAGI's comments regarding training, 
maintenance, and education, DOE recognizes that although such efforts 
may save energy, they are beyond the extent of DOE's EPCA authority to 
require in an energy conservation standards rulemaking.
    Sullivan-Palatek commented that DOE did not have access to 
performance data for models with variations; rather DOE used CAGI data 
sheets for basic model package compressors to develop efficiency 
levels. Sullivan-Palatek believes that developing a standard from basic 
model data and applying it to models with variations would be 
erroneous, as it is like comparing apples to oranges. (EERE-2014-BT-TP-
0054, Sullivan-Palatek, No. 0007 at p. 2).
    In response, DOE notes that, in the test procedure final rule, DOE 
incorporated CAGI's recommended list of equipment (which was supported 
by Sullivan-Palatek), with certain modifications, to define the minimum 
testing configuration for a compressor basic model. Consequently, basic 
model variants which add additional equipment to an existing basic 
model will be tested without the additional equipment, and achieve the 
same rating as the basic package compressor it was derived from. 
Furthermore, as discussed in section III.B.8, for equipment varieties 
currently distributed in commerce, DOE was unable to find evidence that 
variants created by substituting components from basic models would 
have a material disadvantage, with respect to energy efficiency. For 
these reasons, DOE believes that the efficiency levels established in 
this final rule are applicable to all compressors within the scope of 
this final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking. Separate subsections address each component of DOE's 
analyses.
    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 potential amended or new 
energy conservation standards. The national impacts analysis uses a 
second spreadsheet set that provides shipments projections and 
calculates national energy savings and net present value of total 
consumer costs and savings expected to result from potential energy 
conservation standards. DOE uses the third spreadsheet tool, the 
Government Regulatory Impact Model (``GRIM''), to assess manufacturer 
impacts of potential standards. These three spreadsheet tools are 
available on the DOE website for this rulemaking: https://www1.eere.energy.gov/buildings/appliance_standards/standards.aspx?productid=63. Additionally, DOE used output from the 
latest version of the Energy Information Administration's (``EIA'') 
Annual Energy Outlook (``AEO'') for the emissions and utility impact 
analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the equipment 
concerned, including the purpose of the equipment, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the equipment. This activity includes both quantitative and 
qualitative assessments based primarily on publicly available 
information. The subjects addressed in the market and technology 
assessment for this rulemaking include a determination of equipment 
classes and an assessment of technologies and design options that could 
improve the energy efficiency of compressors. Chapter 3 of the final 
rule TSD provides further discussion of these topics as well as 
discussions on definitions, scope of coverage, test procedures, trade 
associations, manufacturers, shipments, regulatory and non-regulatory 
programs.
1. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
divides covered equipment into equipment classes by the type of energy 
used, by capacity, or other performance-related features that justify 
differing standards. In making a determination of whether a 
performance-related feature justifies a different standard, DOE must 
consider such factors as the utility of the feature to the consumer and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q) and 42 
U.S.C. 6316(a)). In the energy conservation standards NOPR for 
compressors, DOE proposed creating equipment classes based on the 
following factors:
     Compression principle,
     lubricant presence,
     cooling method,
     motor speed type, and
     motor phase count. 81 FR 31680, 31697-31700 (May 19, 
2016).
    After taking into consideration the changes to scope presented in 
section III.B, DOE is establishing fewer equipment classes than it 
proposed to establish in the energy conservation standards NOPR. In 
this final rule, the

[[Page 1534]]

remaining equipment classes are differentiated only by motor speed 
range and cooling method. The following sections, IV.A.1.a through 
IV.A.1.f, discuss these equipment class-setting factors, as well as 
those considered in the NOPR, in detail.
a. Compression Principle
    In the energy conservation standards NOPR, DOE proposed to create 
equipment classes based on compression principle. Specifically, DOE 
proposed to create separate equipment classes for rotary compressors 
and reciprocating compressors on the basis that they have different 
achievable efficiencies and distinct utility to end users with 
different duty cycles. 81 FR 31680, 31697-31698 (May 19, 2016).
    As discussed in section III.B.2, DOE is including only rotary 
compressors within the scope of this rulemaking. Therefore, in this 
final rule DOE is not establishing separate equipment classes for 
reciprocating compressors.
b. Lubricant Presence
    In the energy conservation standards NOPR, DOE proposed to create 
separate equipment classes for lubricated and lubricant-free 
compressors on the basis that lubricant-free compressors are less able 
to achieve higher efficiencies but offer utility to end users with 
applications requiring especially clean air. 81 FR 31680, 31698 (May 
19, 2016).
    As discussed in section III.B.4, DOE is not including lubricant-
free compressors within the scope of this rulemaking. Therefore, in 
this final rule, DOE is not establishing separate equipment classes for 
lubricant-free compressors.
c. Motor Speed Range
    In the energy conservation standards NOPR, DOE proposed to 
establish separate equipment classes for fixed-speed compressors and 
for variable-speed compressors on the basis that variable-speed 
compressors are generally less efficient at full-load than fixed-speed 
compressors, but variable-speed compressors offer additional utility in 
applications in which demand varies. Conversely, fixed-speed 
compressors are generally more efficient at full load, but do not offer 
the utility of reduced-speed operation to match variable demand. 81 FR 
31680, 31699 (May 19, 2016).
    In response to DOE's proposal, Atlas Copco supported separate 
equipment classes for fixed-speed and variable-speed compressors.\43\ 
(Atlas Copco, No. 0054 at pp. 15-16)
---------------------------------------------------------------------------

    \43\ DOE notes that in this comment Atlas Copco also suggested 
that fixed-speed and variable-speed compressors should be tested and 
have results reported both for the full-load package isentropic 
efficiency as well as the part-load package isentropic efficiency. 
Atlas Copco argued that this would allow for comparisons across 
equipment classes and for variable-speed compressors that cannot 
reach 40-percent flow to calculate the cycle loss and, consequently, 
calculate the efficiency at 40-percent flow. DOE addressed this 
aspect of Atlas Copco's concerns in the test procedure final rule.
---------------------------------------------------------------------------

    DOE received no other comments regarding the creation of separate 
equipment classes for fixed-speed and variable-speed compressors. 
Therefore, in this final rule, DOE establishes separate equipment 
classes for fixed-speed and variable-speed compressors.
d. Number of Motor Phases
    In the energy conservation standards NOPR, DOE proposed to divide 
single-phase and three-phase reciprocating compressors into separate 
equipment classes. DOE reasoned that compressors with a compressor 
motor nominal horsepower of less than 10 hp can be packaged with either 
single-phase or three-phase electric motors. Single-phase motors, while 
typically less efficient than three-phase motors, offer utility in 
applications with no access to three-phase power. 81 FR 31680, 31699-
31700 (May 19, 2016).
    In the energy conservation standards NOPR, DOE made no equipment 
class distinction between single- and three-phase rotary compressors 
because it was unable to obtain data on the performance of single-phase 
rotary equipment. As a result, DOE was unable to make a determination 
regarding whether single-phase equipment could reach the same 
performance levels as three-phase. DOE noted that single-phase rotary 
equipment accounted for very few annual shipments, but that if the 
applicable single-phase motors were less efficient and less expensive 
than their three-phase counterparts, then to create a separate standard 
without data would be to risk creating a substitution incentive. 81 FR 
31680, 31699-31700 (May 19, 2016).
    As discussed in section III.B.3.c, DOE does not believe that an 
incentive to substitute unregulated single-phase compressors is likely 
in the absence of standards because single-phase compressors are 
similar in price to comparable three-phase models, and single-phase 
compressors have potentially higher installation costs. As a result, 
DOE is limiting the scope of the energy conservation standards to 
three-phase compressors. Therefore, in this final rule, DOE is not 
establishing separate equipment classes based on phase count.
e. Variants of Rotary Compression Technology
    In the energy conservation standards NOPR, DOE did not propose to 
establish equipment classes based on variants of rotary compression 
technology. 81 FR 31680 (May 19, 2016). For the purpose of this 
discussion, ``variant'' refers to a style of rotary compressor that is 
recognized by the industry as a distinct technology. ``Rotary vane'' 
and ``rotary screw'' are examples of rotary variants.
    In response to the energy conservation standards NOPR, Jenny 
Products stated that vane compressors are inherently different than 
screw compressors, and that the only similarities between screw and 
vane compressors is that they are both rotary and positive-
displacement. Jenny Products added that vane compressors should not be 
grouped with screw, piston or centrifugal compressors, and should 
instead have their own standard. Jenny products further noted that 
scroll compressors are different from the compressors that are 
mentioned in the energy conservations standards NOPR proposal and that 
the standard combines too many compressors into an overly general 
model. (Jenny Products, No. 0058 at p. 2) Sullivan-Palatek also 
commented that the NOPR proposal was overly general, with too few 
equipment classes to reflect the variety and specialization of products 
on the market. Sullivan-Palatek commented that this overgeneralization 
could make certain technologies illegal. As examples, Sullivan-Palatek 
mentioned scroll compressors and vane compressors. (Sullivan-Palatek, 
No. 0051 at p. 4) DOE clarifies that scroll compressors are not within 
the scope of this final rule because they are not rotary compressors; 
scroll compressors orbit \44\ without changing angular position. 
Further, scroll compressors on the market today are generally 
lubricant-free compressors, which are also not within the scope of this 
final rule.
---------------------------------------------------------------------------

    \44\ For example, see: www.emersonclimate.com/en-us/products/compressors/scroll_compressors/pages/scroll_compressors.aspx.
---------------------------------------------------------------------------

    In response to Jenny Products' and Sullivan-Palatek's comments on 
vane compressors, neither commenter provided any performance data or 
quantitative information to support the claim that vane compressors 
have significantly different utility and/or performance when compared 
to screw compressors.
    In the absence of quantitative information from commenters, DOE

[[Page 1535]]

reviewed publicly available performance data for rotary vane 
compressors to determine if differences in performance exist between 
vane and screw compressors.\45\ DOE found that only one vane compressor 
manufacturer currently participates in the CAGI Performance 
Verification Program; as a result, all available vane compressor data 
is associated with this manufacturer. For comparison, eight unique 
rotary compressor manufacturers currently participate in the CAGI 
Performance Verification Program.\46\
---------------------------------------------------------------------------

    \45\ The performance data was obtained from data sheets 
published through the CAGI Performance Verification Program: 
www.cagi.org/performance-verification/.
    \46\ For a list of manufacturers currently participating in the 
CAGI Performance Verification Program, please this website: 
www.cagi.org/performance-verification/data-sheets.aspx. Note that 
Chicago Pneumatic and Quincy are subsidiaries of Atlas Copco.
---------------------------------------------------------------------------

    DOE found that the available fixed-speed vane compressors perform 
similarly to fixed-speed screw compressors. For example, of 29 in-scope 
fixed-speed vane compressors for which data was available, 86-percent 
were able to reach EL 2; \47\ in comparison, 84-percent of fixed-speed 
screw compressors were able to reach EL 2. Further, for this same set 
of fixed-speed vane compressors, 55-percent were able to reach EL 3; 
\48\ in comparison, 53-percent of fixed-speed screw compressors were 
able to reach EL 3.\49\ Given the comparable performance of rotary 
screw and rotary vane compressors, DOE finds no justification to 
establish a separate equipment class for these two variants of rotary 
compressors. Consequently, in this final rule, DOE makes no change to 
its NOPR proposal and does not adopt a separate equipment class for 
vane compressors.
---------------------------------------------------------------------------

    \47\ EL 2 represents the standard level proposed for this 
equipment in the energy conservation standards NOPR. See section 
IV.C.5 for more information on efficiency levels.
    \48\ EL 3 represents the approximate middle of the market, with 
respect to efficiency. See section IV.C.5 for more information on 
efficiency levels.
    \49\ See chapter 3 of the TSD for more information on this 
analysis.
---------------------------------------------------------------------------

f. Cooling Method
    In the energy conservation standards NOPR, DOE proposed creating 
separate equipment classes for air- and liquid-cooled compressors. DOE 
discussed the utility of each cooling method, as well as the efficiency 
differences between the two cooling methods, as reasons to separate 
compressors based on cooling method. 81 FR 31680, 31699 (May 19, 2016). 
The following subsections summarize interested party comments related 
to DOE's proposal.
Utility
    NEEA, NWPCC and Sullair stated that the cooling method offers 
utility wherein air-cooled equipment can be used where water may not be 
available. (NEEA and NWPCC, No. 0057 at p. 3; Sullair, No. 0056 at pp. 
13-14) Compressed Air Systems also supported the creation of equipment 
classes and stated that the water cooler requires no electrical energy 
from the package and, as a result, that the same standard would not be 
applicable to both cooling methods. (Compressed Air Systems, No. 0061 
at p. 2) Alternatively, CAGI stated that the decision on cooling method 
is based on site-specific capabilities and it is not appropriate to 
separate air- and liquid-cooled compressors into equipment classes. 
(CAGI, No. 0052 at p. 10; CAGI, Public Meeting Transcript, No. 0044 at 
p. 22) This position was supported by ASAP based on information 
provided by industry at the public meeting. (ASAP, Public Meeting 
Transcript, No. 0044 at p. 24) Ingersoll Rand, Kaeser Compressors, 
Mattei Compressors, Sullair and Sullivan-Palatek supported CAGI's 
comment that it is not appropriate to separate compressors into 
equipment classes. (Ingersoll Rand, No. 0055 at p. 1; Kaeser 
Compressors, No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; 
Sullair, No. 0056 at p. 1; Sullivan-Palatek, No. 0051 at p. 1)
    Pursuant to EPCA, DOE must consider such factors as the utility of 
the feature to the consumer and other factors DOE determines are 
appropriate. (42 U.S.C. 6295(q) and 42 U.S.C. 6316(a)) DOE shares the 
view of commenters arguing that cooling method offers utility to the 
end user. Whereas air-cooled compressors may shed heat to the ambient 
environment, liquid-cooled compressors require a source of cooling 
liquid from an external system, which not all applications may have. 
Conversely, compressors operating in warm environments may be thermally 
limited and unable to operate at full capacity, and end users may 
improve compressor performance by opting for liquid cooling if the 
possibility exists. In either case, cooling method offers utility to 
the consumer.
Performance
    ASAP, the CA IOUs and Edison Electric Institute supported the 
creation of equipment classes by cooling method, with the CA IOUs 
arguing that combining the two equipment classes would effectively 
lower the standard for liquid-cooled compressors. (CA IOUs, No. 0059 at 
pp. 3-4) ASAP and Edison Electric Institute further commented that a 
single efficiency level for both cooling methods would result in the 
elimination of air-cooled compressors, which are less efficient, from 
the market. (NEEA and NWPCC, No. 0057 at p. 3; Edison Electric 
Institute, Public Meeting Transcript, No. 0044 at pp. 23-24)
    Sullair suggested that DOE merge the liquid-cooled equipment class 
with the air-cooled equipment class and apply the proposed standards of 
the air-cooled class; liquid-cooled compressors are low volume and tend 
to have better efficiency than air-cooled compressors. (Sullair, No. 
0056 at pp. 13-14) Similarly, Sullivan-Palatek commented that liquid-
cooled compressors are produced in low volumes and, as such, should not 
have their own equipment class and should be held to the air-cooled 
compressor standards. (Sullivan-Palatek, No. 0051 at p. 6; Sullivan-
Palatek, Public Meeting Transcript, No. 0044 at p. 24) Sullair also 
noted that liquid-cooled compressors are generally more efficient than 
air-cooled compressors and would not encounter difficulty in meeting 
standards derived from air-cooled compressors. Furthermore, Sullair 
noted that integration with other infrastructure such as heat recovery 
could be discouraged because the liquid-cooled standard is more 
stringent. (Sullair, No. 0056 at pp. 13-14)
    Atlas Copco pointed out that the efficiency difference between 
cooling methods for lubricated compressors is small, which is why the 
draft EU standards for compressors propose the same standard levels for 
air-cooled and liquid-cooled lubricated compressors. (Atlas Copco, 
Public Meeting Transcript, No. 0044 at pp. 24-25)
    CAGI commented that the efficiency of a compressor is not dictated 
by cooling method and, thus, compressors should not be separated into 
equipment classes based on cooling method. (CAGI, No. 0052 at p. 10; 
CAGI, Public Meeting Transcript, No. 0044 at p. 22) Ingersoll Rand, 
Kaeser Compressors, Mattei Compressors, Sullair, and Sullivan-Palatek 
commented in support of CAGI's recommendations. (Ingersoll Rand, No. 
0055 at p. 1; Kaeser Compressors, No. 0053 at p. 1; Mattei Compressors, 
No. 0063 at p. 2; Sullair, No. 0056 at p. 1;Sullivan-Palatek, No. 0051 
at p. 1)
    DOE shares ASAP, the CA IOUs, Edison Electric Institute, Atlas 
Copco, Sullivan-Palatek and Sullair's viewpoint that cooling method 
does affect efficiency. In doing so, DOE disputes CAGI's claim that 
compressor efficiency is unaffected by cooling method if measured at 
the package level, as

[[Page 1536]]

specified by DOE's test procedure final rule. Specifically, air-cooled 
compressors may employ additional fans or other energy-consuming 
technology that could be superfluous for a liquid-cooled compressor. 
The effect of air cooling on energy consumption appears directly in the 
CAGI Performance Verification Program data, which indicates that 
liquid-cooled compressors achieve greater isentropic efficiencies than 
air-cooled compressors of otherwise equivalent design. DOE discusses 
the relationship between the package isentropic efficiencies of air- 
and liquid-cooled compressors in section IV.C.5.a of this document.
    In specific response to Sullair's comment, DOE does not anticipate 
that an end user's decision to employ heat recovery will be affected by 
energy conservation standards for liquid-cooled compressors. Instead, 
DOE believes an end user's decision will continue to be made based on 
whether the application site has use for waste heat. Specifically, in 
the energy conservation NOPR, DOE proposed efficiency levels for 
liquid-cooled compressors that conservatively accounted for this 
difference in efficiency.\50\ 81 FR 31680, 31710-31711 (May 19, 2016). 
Further, according to the testing configuration established in the test 
procedure final rule, DOE does not require manufacturers to install 
heat recovery equipment during certification testing. For these 
reasons, DOE concludes that the efficiency levels established in the 
NOPR provide no advantage or disadvantage to liquid-cooled systems that 
employ heat recovery equipment.
---------------------------------------------------------------------------

    \50\ See section 5.7.5.1 of the NOPR TSD here: 
www.regulations.gov/document?D=EERE-2013-BT-STD-0040-0037.
---------------------------------------------------------------------------

    Based on the aforementioned discussion of differences in efficiency 
and utility between air-cooled and liquid-cooled compressors, DOE 
concludes that separate equipment classes are warranted and justified, 
and DOE is adopting separate equipment classes for air- and liquid-
cooled compressors in this final rule.
Substitution Risk
    Sullair noted that certain cooling designs, such as hybrid systems, 
would be difficult to classify, leading to loopholes. (Sullair, No. 
0056 at pp. 13-14) CAGI stated that an end user's decision on cooling 
method is based on site-specific capabilities. (CAGI, No. 0052 at p. 
10; CAGI, Public Meeting Transcript, No. 0044 at p. 22) This position 
was supported by ASAP based on information provided by industry at the 
public meeting. (ASAP, Public Meeting Transcript, No. 0044 at p. 24) 
Ingersoll Rand, Kaeser Compressors, Mattei Compressors, Sullair, and 
Sullivan-Palatek commented in support of CAGI's recommendations. 
(Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 
1; Mattei Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p. 1; 
Sullivan-Palatek, No. 0051 at p. 1)
    DOE acknowledges Sullair's concern that certain equipment may be of 
hybrid design, and is updating its definitions for the final rule to 
address those cases so that an incentive to substitute such equipment 
does not arise. See III.A.2 for details. DOE interprets CAGI's and 
ASAP's arguments to mean that an end user's choice of cooling method is 
made largely due to site-specific factors and infers that substitution 
is unlikely to occur, especially at the standard levels adopted in this 
final rule. Therefore, DOE continues to believe that it is appropriate 
to establish separate equipment classes and corresponding standards, as 
is done in this final rule.
Certification and Compliance Burden
    In response to the energy conservation standards NOPR, Sullair 
commented that certifying based on cooling method would be burdensome 
to two different equipment classes and suggested that DOE merge the 
liquid-cooled equipment class with the air-cooled equipment class and 
apply the proposed standards of the air-cooled class. (Sullair, No. 
0056 at pp. 13-14)
    DOE disagrees that separate equipment classes for liquid-cooled and 
air-cooled compressors would lead to significant increases in 
compliance burden. The DOE test procedure allows manufacturers to use a 
testing-based sampling plan or AEDMs to determine the performance of a 
compressor. Manufacturers can use AEDMs to model the performance of 
compressors with lower sales volumes based on compressors with higher 
sales volumes, thereby reducing the burden of testing. In the case of 
liquid-cooled and air-cooled compressors, the similarities between 
models, as noted by Sullivan-Palatek, would allow for relatively 
straightforward modeling of liquid-cooled models based on test data 
from otherwise-similar air-cooled models.
    Additionally, in the test procedure final rule, DOE defines basic 
model to mean all units of a class of compressors manufactured by one 
manufacturer, having the same primary energy source, the same 
compressor motor nominal horsepower, and essentially identical 
electrical, physical, and functional (or pneumatic) characteristics 
that affect energy consumption and energy efficiency. 81 FR 27220, 
27243 (May 5, 2016). As discussed previously, air- and liquid-cooled 
compressors clearly have different characteristics that affect energy 
consumption and efficiency. Consequently, even if liquid- and air-
cooled compressors were combined into a single equipment class, as 
requested by commenters, analogous liquid- and air-cooled compressors 
would be classified as separate basic models and thus require separate 
certification. Therefore, combining air- and liquid cooled compressors 
into one equipment class will not reduce the incremental testing 
burden.
g. List of Equipment Classes
    In the energy conservation standards NOPR, DOE proposed a list of 
equipment classes and associated equipment class designations. 81 FR 
31680, 31700 (May 19, 2016). Based on the discussion in this section, 
and the scope of this final rule as discussed in section III.B, there 
are four equipment classes in this final rule. DOE's list of equipment 
classes for this final rule is provided in Table IV.1.

                                                          Table IV.1--List of Equipment Classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Compressor type            Lubrication type      Cooling method        Driver type          Motor phase          Equipment class designation
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rotary..........................  Lubricated.........  Air-cooled.........  Fixed-speed........  Three-phase........  RP_FS_L_AC
                                                       Liquid-cooled......                                            RP_FS_L_WC
                                                       Air-cooled.........  Variable-speed.....                       RP_VS_L_AC
                                                       Liquid-cooled......                                            RP_VS_L_WC
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 1537]]

2. Technology Options
    In the energy conservation standards NOPR, DOE discussed design 
options as in three general categories, rather than as independent 
individual strategies. This is because technology options are, in some 
cases, able to be deployed independently (e.g., cooling fan 
efficiency), and in other cases require coordination (e.g., using a 
more efficient motor). Instead of a bottom-up approach, wherein DOE 
could attempt to assign a characteristic improvement to each technology 
option, DOE proposed a top-down approach, wherein the primary 
consideration is the overall package efficiency and the associated 
overall cost required to achieve that efficiency. Instead of 
independent options, DOE generally considered all efficiency 
improvement to come from a package redesign. This package redesign can 
be thought of as including three broad categories of improvements:
     Multi-staging;
     air-end improvement; and
     auxiliary component improvement. 81 FR 31680, 31701-31703 
(May 19, 2016).
    DOE received no comment in response to its characterization of 
compressor technology options. As a result, in this final rule, DOE is 
making no changes to its characterization of compressor technology 
options. The following sections summarize the package redesign options 
that were originally discussed in the energy conservation standards 
NOPR. (81 FR 31680, 31701-31703)
a. Multi-Staging
    Compressors ingest air at ambient conditions and compress it to a 
higher pressure required by the specific application. Compressors can 
perform this compression in one or multiple stages, where a stage 
corresponds to a single air-end and offers the opportunity for heat 
removal before the next stage. Units that compress the air from ambient 
to the specified design pressure of the compressor in one stage are 
referred to as single-stage compressors, while units that use multiple 
stage are referred to as multistage compressors.
    The act of compression generates inherent heat in a gas. If the 
process occurs quickly enough to limit the transfer of that heat to the 
environment, the compression is known as ``adiabatic.'' By contrast, 
compression may be performed slowly, such that heat flows from the gas 
at the same rate at which it is generated and such that the temperature 
of the gas never exceeds that of the environment. This process is 
called ``isothermal.'' DOE notes that a hotter gas is conceptually 
``harder'' to compress; the compressor must overcome the heat energy 
present in the gas in order to continue the compression process. As a 
result, compression to a given volume requires less work if performed 
isothermally. ``Real'' (i.e., not idealized in any respect) compressors 
are neither adiabatic nor isothermal, and dissipate some portion of 
compressive heat during the process. If a compressor is able to 
dissipate more heat, the resulting act of compression becomes easier 
and the compressor requires less input energy.
    Multi-stage compressors are specifically designed to take advantage 
of this principle and split the compression process into two or more 
stages (each performed using a single air-end) to allow heat removal 
between the stages using a heat-exchange device sometimes called an 
``intercooler.'' The more stages used, the closer the compressor 
behavior comes to the isothermal ideal. Eventually, however, the 
benefits to adding further stages diminish; gains from each marginal 
stage are countered by the inherent inefficiencies of using smaller 
compressor units. Depending on the specific pressure involved, the 
optimal number of stages may vary widely. Most standard industrial air 
applications, however, do not use more than two stages.
    In response to the 2012 proposed determination of coverage, 
Ingersoll Rand stated that two-stage compression technology can offer 
an improvement in efficiency of 12- to 15-percent when compared to 
single-stage compression. (Docket No. EERE-2012-BT-DET-0033, Ingersoll 
Rand, No. 0004 at pp. 3-4). DOE considers multistaging to be a valid 
path to higher efficiency, and has included performance data from 
single-stage and multistage compressors alike in its analysis.
b. Air-End Improvement
    The efficiency of any given air-end depends upon a number of 
factors, including:
     Rated compressor output capacity;
     compression chamber geometry;
     operating speed;
     surface finish;
     manufacturing precision; and
     designed equipment tolerances.
    Each individual air-end has a best-efficiency operating point based 
upon the characteristics listed. However, because air-ends can operate 
at multiple flow rates, manufacturers commonly utilize a given air-end 
in multiple compressor packages to reduce overall costs. This results 
in air-ends operating outside of the best-efficiency point. Using one 
air-end in multiple compressor packages reduces the total number of 
air-ends a manufacturer needs to provide across the entire market, 
reducing costs at the price of reduced efficiency for those packages 
operating outside of the best efficiency point for the air-end. 
However, a manufacturer could redesign and optimize air-ends for any 
given flow rate and discharge pressure, increasing the overall 
efficiency of the compressor package.
    Manufacturers can use two viable design pathways to increase 
compressor efficiency via air-end improvement. The first is to enhance 
a given air-end design's properties that affect efficiency, which could 
include manufacturing precision, surface finish, mechanical design 
clearances, and overall aerodynamic efficiency. The second is to more 
appropriately match air-ends and applications by building an overall 
larger number of air-end designs. As a result, a given air-end will be 
used less frequently in applications requiring it to operate further 
from its optimal operating point. These two practices may be employed 
independently or jointly; the option that is prioritized will depend on 
the specifics of a manufacturer's equipment line and the ultimate 
efficiency level sought.
c. Auxiliary Component Improvement
    As discussed in the previous section, compressor manufacturers 
normally use one air-end in multiple compressor packages that are 
designed to operate at different discharge pressures and flow rates. 
Each compressor package consists of multiple design features that 
affect package efficiency, including valves, piping system, motor, 
capacity controls, fans, fan motors, filtration, drains, and driers. 
This equipment, for example, may control the flow of air, moisture, or 
oil, or the temperature and humidity of output air, or regulate 
temperature and other operating parameters. Compressor manufacturers do 
not normally provide end users with the option to replace any 
individual part of a compressor package to increase efficiency, as each 
feature also has a direct effect on compressor performance. However, 
improving the operating characteristics of any of these ``auxiliary'' 
parts may offer a chance to improve the overall efficiency of the 
compressor package.
    For example, package isentropic efficiency can be increased by 
reducing the internal pressure drop of the package using improved 
valves and pipe systems, or by improving the efficiency of (1) both the 
drive and fan motors (if present), (2) the fan, itself (if present),

[[Page 1538]]

(3) condensate drains, (4) both air and lubricant filters, and (5) 
controls. The improvement must be considered relative to a starting 
point, however. Even if the modifications could be deployed 
independently of each other, and not all can, the spread of 
efficiencies available in the market likely already reflects the more 
cost-effective choice for improving efficiency at any given point. 
Perhaps one manufacturer, by virtue of features of its product lines, 
finds that reaching a given efficiency level in a particular equipment 
class is most cost-effectively done by improving Technology X. Another 
may find that it is more cost effective to improve Technology Y. Both 
could be correct because each may have had a different starting point. 
Adding to this difficulty in ascertaining exactly when a given 
technology should be deployed (as with a bottom-up technology option 
approach) is the manufacturing reality that it is not cost-effective to 
offer an infinite number of combinations and equipment sizes. Perhaps a 
compressor of output level between two others would most optimally use 
a fan sized specifically for that compressor. Because it is not cost 
effective for that compressor's manufacturer to stock another fan size, 
however, the compressor ends up sub-optimally using a fan either 
slightly too large or slightly too small, both at some cost to 
efficiency. Thus, less may be learned by scrutinizing the design 
choices of a specific model than is learned by considering the overall 
spread of costs and efficiencies available in the market at large.
    Because the compressor packages function as an ensemble of 
complementary parts, changing one part often leads to changing others. 
A special case may come with more-efficient electric motors. 
Compressors normally use induction motors, which generally vary 
operating speed as efficiency is improved. Using a more efficient (but 
otherwise identical) induction motor without considering the rest of 
the compressor design could be counterproductive if the gains in motor 
efficiency were more than offset by subsequent loss in performance of 
the air-end and other parts. DOE's proposal assumes that the best-
performing compressors on the market are built using the most-efficient 
available electric motors that are suited to the task. However, it 
could not confirm instances of a manufacturer using ``super premium'' 
or ``IE4'' induction motors, which appear to only recently have been 
made available commercially.\51\ The terms ``super premium'' and 
``IE4'' have been used in the United States and in Europe, 
respectively, to describe the motor industry's next tier of efficiency. 
Possible reasons for this include the motors not being suitable for use 
in compressors, manufacturers still exploring the relatively new motors 
and not yet having introduced equipment redesigned to make use of them, 
or that manufacturers are already, using the motors in the most 
efficient compressor offerings.
---------------------------------------------------------------------------

    \51\ One manufacturer, for example, describes its IE4 offerings 
here: www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-
0033.
---------------------------------------------------------------------------

    As an example of the influence of auxiliary componentry on 
compressor efficiency, in the test procedure final rule, DOE presents 
two lists of ancillary equipment to describe compressor configuration 
requirements. The first includes ancillary equipment that must be 
included as part of a compressor package when testing, regardless of 
whether it is distributed in commerce with the basic model under test; 
the second list contains ancillary equipment that is only required if 
it is distributed in commerce with the basic model under test. Any 
ancillary equipment on these lists may affect efficiency, and these 
lists illustrate the set of ancillary equipment that needs to function 
harmoniously for the package to perform well.

           Table IV.2--List of Equipment Required During Test
------------------------------------------------------------------------
                                                        Variable-speed
            Equipment             Fixed-speed rotary      rotary air
                                    air compressors       compressors
------------------------------------------------------------------------
Driver..........................  Yes...............  Yes.
Bare compressors................  Yes...............  Yes.
Inlet filter....................  Yes...............  Yes.
Inlet valve.....................  Yes...............  Yes.
Minimum pressure check valve/     Yes...............  Yes.
 backflow check valve.
Lubricant separator.............  Yes...............  Yes.
Air piping......................  Yes...............  Yes.
Lubricant piping................  Yes...............  Yes.
Lubricant filter................  Yes...............  Yes.
Lubricant cooler................  Yes...............  Yes.
Thermostatic valve..............  Yes...............  Yes.
Electrical switchgear or          Yes...............  Not applicable.*
 frequency converter for the
 driver.
Device to control the speed of    Not applicable **.  Yes.
 the driver (e.g., variable-
 speed drive).
Compressed air cooler(s)........  Yes...............  Yes.
Pressure switch, pressure         Yes...............  Yes.
 transducer, or similar pressure-
 control device.
Moisture separator and drain....  Yes...............  Yes.
------------------------------------------------------------------------
* This category is not applicable to variable-speed rotary air
  compressors.
** This category is not applicable to fixed-speed rotary air
  compressors.


  Table IV.3--List of Equipment Required During Test, if Distributed in
                      Commerce With the Basic Model
------------------------------------------------------------------------
                                                        Variable-speed
            Equipment             Fixed-speed rotary      rotary air
                                    air compressors       compressors
------------------------------------------------------------------------
Cooling fan(s) and motors.......  Yes...............  Yes.
Mechanical equipment............  Yes...............  Yes.
Lubricant pump..................  Yes...............  Yes.
Interstage cooler...............  Yes...............  Yes.

[[Page 1539]]

 
Electronic or electrical          Yes...............  Yes.
 controls and user interface.
All protective and safety         Yes...............  Yes.
 devices.
------------------------------------------------------------------------

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on product utility or product availability. If it is 
determined that a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not be 
considered further.
    (4) Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further. 10 CFR part 430, subpart C, appendix 
A, 4(a)(4) and 5(b)
    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed 
below.
    The subsequent sections include 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.
1. Screened-Out Technologies
    In the energy conservation standards NOPR, DOE was not able to 
identify technology options that would fail the screening criteria. 81 
FR 31680, 31703 (May 19, 2016). DOE received no comments related to the 
technology options and screening analysis presented in the energy 
conservation standards NOPR. As a result, DOE is making no changes to 
its screening analysis in this final rule.
2. Remaining Technologies
    Through a review of each technology, DOE concludes that all of the 
other identified technologies listed in section IV.A.1.g met all four 
screening criteria. In summary, DOE did not screen out the following 
technology options:

 Multi-staging
 air-end improvement
 auxiliary component improvement

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

C. Engineering Analysis

    In the engineering analysis, DOE describes the relationship between 
manufacturer selling price (MSP) and improved compressor package 
isentropic efficiency. This relationship serves as the basis for cost-
benefit calculations for individual end users, manufacturers, and the 
Nation. DOE conducted the engineering analysis for this rulemaking 
using an efficiency level approach. The efficiency level approach uses 
estimates of costs and efficiencies of equipment available on the 
market at distinct efficiency levels to develop the cost-efficiency 
relationship. The efficiency levels in this analysis range from that of 
the least-efficient compressor sold today (i.e., the baseline) to the 
maximum technologically feasible efficiency level. At each efficiency 
level examined, DOE determines the MSP; this relationship is referred 
to as a cost-efficiency curve.
    In the following sections, DOE summarizes the engineering analysis 
presented in the NOPR, addresses potential changes to the analysis 
resulting from the test procedure final rule, discusses comments 
received, presents analytical changes in response to comments, and 
summarizes the cost-efficiency results passed to the downstream 
economic analyses.
1. Summary of Data Sources
    In the energy conservation standards NOPR, DOE discussed several 
sources of data that it used in the engineering analysis. Specifically, 
DOE discussed the CAGI Performance Verification Program data, the 
European Union Lot 31 Ecodesign Preparatory Study on Electric Motor 
Systems/Compressors (hereafter ``Lot 31 study,'' which is discussed in 
section IV.C.1.b), confidential U.S. MSP data, and the online retailer 
price database; these sources are discussed in the following sections. 
Chapter 5 of the final rule TSD contains further detail on these data 
sources, beyond what is discussed in this document.
a. CAGI Performance Verification Program Data
    CAGI's Performance Verification Program provides manufacturers a 
standardized test method and performance data reporting format for 
rotary compressors. In the energy conservation standards NOPR, DOE 
compiled the information contained in every CAGI Performance 
Verification data sheet available from the websites of individual 
manufacturers into one database, and referred to this as the ``CAGI 
database'' throughout the NOPR.\52\ As part of this final rule, DOE 
compiled information from newly available CAGI data sheets, as well as 
updated data sheets from the same compressor models, and compiled them 
into a new database; this is referred to as the ``updated CAGI 
database'' in this final rule.
---------------------------------------------------------------------------

    \52\ For more information regarding CAGI's Performance 
Verification Program, please see: www.cagi.org/performance-verification/.

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

[[Page 1540]]

b. European Union Lot 31 Study
    As described in the energy conservation standards NOPR, the 
European Union Ecodesign directive established a framework under which 
manufacturers of energy-using products are obliged to reduce the energy 
consumption and other negative environmental impacts occurring 
throughout the product life cycle.\53\ Air compressors were examined in 
the Lot 31 study. Lot 31 published a final report in June 2014 \54\ and 
a draft regulation for standards for air compressors (``Lot 31 draft 
regulation'').\55\ 81 FR 31680, 31700-31701 (May 19, 2016).
---------------------------------------------------------------------------

    \53\ Source: www.eceee.org/ecodesign/products/Compressors.
    \54\ For copies of the Lot 31 Final Report on Compressors, 
please go to: www.regulations.gov/#!documentDetail;D=EERE-2013-BT-
STD-0040-0031.
    \55\ For copies of the EU draft regulation: www.regulations.gov/contentStreamer?documentId=EERE-2013-BT-STD-0040-0031&disposition=attachment&contentType=pdf.
---------------------------------------------------------------------------

    In the energy conservation standards NOPR engineering analysis, DOE 
used several relationships developed in the Lot 31 study. The first 
relationship represented the market average package isentropic 
efficiency, as a function of output flow, for each compressor variety; 
this relationship is referred to herein as the ``Lot 31 regression 
curve.'' The second relationship, the ``Lot 31 regulation curve,'' was 
scaled from each Lot 31 regression curve using ``d-values.'' The d-
values describe the percent reduction in losses from the regression 
curve, and establish a Lot 31 regulation curve. 81 FR 31680, 31704 (May 
19, 2016).
    The Lot 31 study also established relationships among compressor 
package isentropic efficiency, output flow rate, and list selling price 
for each compressor variety. List price represents the price paid by 
the final customer, and can be scaled to estimate MSP by using a 
constant markup factor. These relationships are referred to as ``Lot 31 
MSP-flow-efficiency relationships'' in the NOPR and this final rule. In 
this final rule, DOE continues to reference the aforementioned 
relationships from the Lot 31 study, without any modifications. 81 FR 
31680, 31704 (May 19, 2016).
c. Confidential MSP and Performance Data
    For the energy conservation standards NOPR analysis, DOE's 
contractor collected MSP and performance data for a range of compressor 
sizes and equipment classes from manufacturers. This data is 
confidential and subject to a nondisclosure agreement between the DOE 
contractor and the manufacturers. Data collected included pressure, 
flow rate, compressor motor nominal horsepower, full-load input power 
(in kilowatts), motor efficiency, package specific power, and MSP for 
individual compressor models. Throughout the NOPR and this final rule, 
these values are referred to as the ``confidential U.S. MSP data.'' 81 
FR 31680, 31704 (May 19, 2016). This data is unchanged from the energy 
conservation standards NOPR.
d. Public Price Data
    In the energy conservation standards NOPR, DOE used a database of 
prices from online retailers, referred to as the ``online retailer 
price database.'' 81 FR 31680, 31704 (May 19, 2016). DOE did not use 
this database in this final rule, because it was used to develop 
relationships for reciprocating compressors, which are not analyzed as 
part of this final rule.
2. Impacts of Test Procedure on Source Data
    Ingersoll Rand and Kaeser Compressors commented that the publicly 
available data and data submitted by manufacturers to the department 
represent what they consider a ``standard'' compressor package, which 
does not encompass all of the ancillary equipment defined in the test 
procedure. (EERE-2014-BT-TP-0054, Ingersoll Rand, Public Meeting 
Transcript, No. 0016 at p. 36; Kaeser Compressors, Public Meeting 
Transcript, No. 0044 at p. 49)
    DOE made several modifications in the test procedure final rule, 
such that the set of compressor ancillary equipment required for 
testing are now explicitly specified. As discussed in the test 
procedure final rule, the equipment configuration for testing now 
aligns with current industry practice. Therefore, in this final rule, 
DOE is basing analysis on the updated CAGI database without 
modification.
    Additionally, DOE received many comments from interested parties 
that were concerned that the data DOE used to develop efficiency levels 
and ultimately propose energy conservation standards was not reflective 
of the sampling plan adopted in the test procedure final rule. DOE 
notes that these comments are directly addressed in section III.D of 
this final rule.
3. Representative Equipment
    In the energy conservation standards NOPR, DOE selected 
representative pressures as the basis for developing the relationship 
between manufacturer selling price and package isentropic efficiency. 
Specifically, DOE chose 125 psig for the rotary equipment classes and 
175 psig for the reciprocating equipment classes because they 
represented the majority of equipment in the CAGI database and online 
retailer database, respectively. 81 FR 31680, 31704-31705 (May 19, 
2016).
    Sullair commented that it agreed with the proposed representative 
pressures, but clarified that the pressures listed on CAGI data sheets 
is not a proxy for the market. Sullair further stated that the bulk of 
the market is at 100 and 125 psig. (Sullair, Public Meeting Transcript, 
No. 0044 at p. 42) DOE agrees with Sullair that availability of 
compressor models at certain pressures does not represent shipments by 
pressure. However, as discussed in the energy conservation standards 
NOPR, DOE used the data sheets to determine a representative pressure 
for the engineering analysis, which was the most common pressure 
available. The representative pressure and data used to determine it 
does not to represent a market distribution or a specific percentage of 
shipments at that representative pressure. Based on the support from 
Sullair's comment and for the reasons presented in the energy 
conservation standards NOPR, DOE retains in this final rule the 
representative discharge pressure of 125 psig as a basis for 
determining MSP-efficiency relationships for rotary compressors.
    Kaeser Compressors and Ingersoll Rand commented that reciprocating 
compressors run cyclically, typically starting at 125 psig and stopping 
at 175 psig. (Kaeser Compressors, Public Meeting Transcript, No. 0044 
at p. 43; Ingersoll Rand, Public Meeting Transcript, No. 0044 at p. 44) 
Ingersoll Rand expanded on their comment, stating that it would be more 
appropriate to choose a much lower representative pressure than the 
``start'' pressure of 175 psig. (Ingersoll Rand, Public Meeting 
Transcript, No. 0044 at pp. 45-46)
    Compressed Air Systems commented that reciprocating compressors can 
operate at a range of pressures and selecting one pressure to evaluate 
its efficiency may be inappropriate as that is not how the compressors 
designed to operate. (Compressed Air Systems, Public Meeting 
Transcript, No. 0044 at pp. 43-44) Compressed Air Systems stated that 
testing compressors at the representative pressure of 175 psig may be 
unsafe for some compressors to do safely. (Compressed Air Systems, No. 
0061 at p. 3)

[[Page 1541]]

    As discussed in section III.B.2, DOE is excluding reciprocating 
compressors from the scope of this final rule, and therefore is not 
asserting any conclusions regarding representative equipment 
configurations for reciprocating compressors at this time. DOE will 
consider the aforementioned input if it analyzes standards for 
reciprocating compressors in a future rulemaking.
4. Design Options and Available Energy Efficiency Improvements
    In the energy conservation standards NOPR, DOE identified package 
redesign as the primary design option available to improve compressor 
package isentropic efficiency and described multi-staging, air-end 
improvement, and auxiliary component improvement as specialized cases 
of package redesign. 81 FR 31680, 31705 (May 19, 2016). As discussed in 
section IV.B in this final rule, package redesign remains the only 
design option considered in this engineering analysis. Consistent with 
the energy conservation standards NOPR, in this final rule, DOE is 
using an efficiency level approach, focusing on the total efficiency 
observed at various price levels rather than attempting to quantify the 
impact on package isentropic efficiency of all of the subcomponents 
that form a compressor package.
5. Efficiency Levels
    In the energy conservation standards NOPR, DOE established and 
analyzed six efficiency levels and a baseline to assess the 
relationship between MSP and package isentropic efficiency. 81 FR 
31680, 31705 (May 19, 2016). In this final rule, the engineering 
analysis remains generally the same as presented in the energy 
conservation standards NOPR. However, the following sections describe 
specific modifications to the NOPR analysis that DOE made in response 
to interested party comments.
a. Air-Cooled and Liquid-Cooled Scaling Relationships
    In the energy conservation standards NOPR, DOE proposed efficiency 
levels for liquid-cooled equipment classes established by scaling 
analogous air-cooled efficiency levels. DOE developed this scaling 
relationship using the CAGI database and accounted for the differences 
in package isentropic efficiency due to the lack of a fan motor in 
liquid-cooled equipment. 81 FR 31680, 31710 (May 19, 2016).
    Sullair commented that DOE's approach to scale liquid-cooled 
equipment classes from air-cooled using a fixed variable may not be 
accurate at high and low compressor motor nominal horsepower ranges. 
(Sullair, Public Meeting Transcript, No. 0044 at pp. 59-60) In response 
to Sullair's comment, DOE notes that it reduced the compressor motor 
nominal horsepower scope of the final rule to 10 to 200 hp, as 
described in section III.B.4.a. Sullair was specifically concerned with 
the scaling at high and low compressor motor nominal horsepower ranges, 
including compressors less than 10 nominal hp and greater than 200 
nominal hp, which are no longer within scope. For the remaining scope, 
10 to 200 nominal hp, DOE examined pairs of air-cooled and liquid-
cooled compressors from the updated CAGI database and did not find a 
strong relationship between the difference in package isentropic 
efficiency and flow rate. The results of this analysis are provided in 
chapter 5 of the final rule TSD. For these reasons, DOE maintains the 
methodology for efficiency level scaling relationships between air-
cooled and liquid-cooled equipment classes in this final rule.
    Finally, DOE re-evaluated the constant used for the scaling 
relationships using the updated CAGI database. DOE found similar 
results that supported the relationship and constant scaling factor 
proposed in the NOPR, and therefore maintains the scaling relationships 
proposed in the NOPR. The results of this analysis are provided in 
chapter 5 of the final rule TSD.
b. Baseline, Max-Tech, and Efficiency Levels
    For all equipment classes, the baseline efficiency level 
characterizes the lowest efficiency equipment present in the market for 
each equipment class. DOE established baselines in the energy 
conservation standards NOPR, described by their d-values, for each 
equipment class using the CAGI database. 81 FR 31680, 31705-31713 (May 
19, 2016). DOE received no comments regarding baseline efficiency 
levels presented in the energy conservation standards NOPR. As noted in 
section IV.C.1.b, DOE updated the CAGI database using the most recent 
available data and subsequently re-evaluated the d-values used for the 
baseline of each equipment class. DOE compared the baselines proposed 
in the NOPR to the updated CAGI database, and concluded that the 
baselines accurately represent the new data. Therefore, DOE adopts the 
baselines used in the NOPR for all equipment classes. The results of 
this analysis are provided in chapter 5 of the final rule TSD.
    For all equipment classes, the max-tech efficiency level (EL 6) 
represents the highest efficiency level possible for an equipment 
class. DOE established max-tech efficiency levels, represented by d-
values, for each equipment class using the CAGI database in the NOPR. 
81 FR 31680, 31705-31713 (May 19, 2016). DOE received no comments 
regarding max-tech efficiency levels presented in the energy 
conservation standards NOPR. As noted in section IV.C.1.b, DOE updated 
the CAGI database and subsequently re-evaluated the d-values used for 
the max-tech efficiency level of each equipment class. DOE compared the 
max-tech efficiency levels proposed in the NOPR to the updated CAGI 
database and concluded that the max-tech efficiency levels accurately 
represent the new data. Therefore, DOE adopts the max-tech efficiency 
levels used in the NOPR for all equipment classes. The results of this 
analysis are provided in chapter 5 of the final rule TSD.
    DOE received no comments regarding the intermediate efficiency 
levels presented in the energy conservation standards NOPR. As such, 
DOE is making no changes to the d-values for ELs 1, 2, 3, 4, and 5 
presented in the energy conservation standards NOPR. Chapter 5 of the 
final rule TSD contains a detailed discussion of baseline, max-tech and 
efficiency levels.
c. Efficiency Level Relationships
    In the energy conservation standards NOPR, DOE proposed equations 
for efficiency levels based on an analysis of public data, in a manner 
consistent with the Lot 31 draft regulation for air compressors. DOE 
summarized the efficiency levels for each equipment class with the 
following information: An equation for the regression curve, an 
equation for the efficiency levels, and a d-value used in the equation 
for efficiency levels. 81 FR 31680, 31705-31713 (May 19, 2016).
    DOE received overarching comments regarding the efficiency levels 
proposed in the energy conservation standards NOPR. Specifically, CAGI 
and Sullair commented that there was an error in the formula presented 
at the public meeting. The formulae on these pages include the term 
ln(X)\2\, but should state ln\2\(X). (CAGI, No. 0052 at p. 11; Sullair, 
No. 0056 at p. 17; Sullair, Public Meeting Transcript, No. 0044 at p. 
15; Sullair, Public Meeting Transcript, No. 0044 at p. 148) Ingersoll 
Rand, Kaeser Compressors, Mattei Compressors, and Sullivan-Palatek 
commented in support of CAGI's recommendations. (Ingersoll Rand, No. 
0055 at p. 1; Kaeser Compressors, No. 0053 at p. 1; Mattei

[[Page 1542]]

Compressors, No. 0063 at p. 2; Sullivan-Palatek, No. 0051 at p. 1)
    DOE agrees with CAGI and Sullair's comment and notes that the 
comments point out a typographical error in the NOPR equation 
structure, which, when corrected, represents the intent of the 
equations. Therefore, the equations presented in this final rule have 
been modified to address the typographical error, but these changes 
have no impact on the analytical results in this final rule.
    Additionally, CAGI and Sullair stated that DOE based the efficiency 
level equations presented in the NOPR on the Lot 31 draft regulation 
for air compressors, but rounded and truncated some equations 
coefficients. CAGI and Sullair further stated that the rounding creates 
a situation where a compressor may meet one proposed efficiency 
standard, but fail the other. CAGI and Sullair recommend aligning the 
coefficients in the efficiency level equations with the equations in 
the Lot 31 draft regulation to prevent this potential issue. (CAGI, No. 
0052 at p. 12; Sullair, Public Meeting Transcript, No. 0044 at p. 16; 
Sullair, No. 0056 at p. 17) Ingersoll Rand, Kaeser Compressors, Mattei 
Compressors, and Sullivan-Palatek commented in support of CAGI's 
recommendations. (Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, 
No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; Sullivan-
Palatek, No. 0051 at p. 1)
    DOE examined the equations in the Lot 31 draft regulation and found 
that coefficients used were all reported to the thousandth (i.e., 
0.001) and varied between 3 and 5 significant digits. In the energy 
conservation standards NOPR, DOE presented equations for efficiency 
levels with 3 significant digits. DOE also notes that in the test 
procedure final rule, all calculations of package isentropic efficiency 
must be rounded to the thousandth (i.e., 0.001). DOE's original intent 
was to align with the equations used in the Lot 31 draft regulation, 
and DOE is modifying the equations in this final rule to include all 
significant digits presented in the Lot 31 draft regulation equations. 
DOE notes that the original, unrounded and untruncated Lot 31 draft 
regulation equations were used in DOE's energy conservation standards 
NOPR analysis. As such, this is a typographical change to the 
presentation of the equations in the regulatory text, and thus this 
change has no impact on the analytical results in this final rule.
    Sullivan-Palatek commented that the efficiency level equations 
presented in the energy conservation standards NOPR did not seem 
reasonable, stating that the package isentropic efficiency of a given 
compressor would not consistently rise with respect to compressor motor 
nominal horsepower. Sullivan-Palatek suggested that the efficiency 
level curves should begin to flatten at 100 to 150 nominal hp, meaning 
that the package isentropic efficiency for a given efficiency level 
would remain flat beyond 100 or 150 nominal hp. (EERE-2014-BT-TP-0054, 
Sullivan-Palatek, No. 0007 at p. 3; EERE-2014-BT-TP-0054, Sullivan-
Palatek, Public Meeting Transcript, No. 0016 at p. 51)
    Additionally, the People's Republic of China noted that it was 
unreasonable to use a single efficiency curve spanning the range of 1-
500 nominal hp as a considered regulation. The People's Republic of 
China requested that DOE provide the data used to develop this curve in 
accordance with Article 2.5 of World Trade Organization Agreement on 
Technical Barriers to Trade, which permits a World trade Organization 
member to request another member to provide technical justification for 
a regulation.\56\ (P. R. China, No. 0049 at p. 3)
---------------------------------------------------------------------------

    \56\ Agreement on Technical Barriers to Trade, 1868 U.N.T.S. 
120.
---------------------------------------------------------------------------

    In response to the comments from Sullivan-Palatek and the People's 
Republic of China, the efficiency levels analyzed in this final rule 
are all based on Lot 31 regression curves, which were created from 
empirical data. Specifically, the Lot 31 regression curves were created 
from CAGI Performance Verification Program data. Further, in the energy 
conservation standards NOPR, DOE independently confirmed that 
regressions of the CAGI database performance data would result in 
curves similar to the Lot 31 regression curves. 81 FR 31680, 31706-
31707 (May 19, 2016). DOE notes that Sullivan-Palatek did not provide 
any supporting data or justification as to why they believed the 
regression curve shape was incorrect. Additionally, no other interested 
parties commented on the regression curve shape. For these reasons, in 
this final rule, DOE makes no further adjustments to the shape of the 
efficiency level curves.
    CAGI and Sullair commented that Table 1 in the May 19, 2016 energy 
conservation standards NOPR (81 FR 31767) contains an error for the 
rotary, lubricated, air-cooled, variable-speed compressor equipment 
class d-value of -10. CAGI and Sullair believe this value should be -15 
to align with the rotary, lubricated, water-cooled, variable-speed 
compressor equipment class d-value. (CAGI, No. 0052 at p. 11; Sullair, 
No. 0056 at p. 17) Ingersoll Rand, Kaeser Compressors, Mattei 
Compressors, and Sullivan-Palatek commented in support of CAGI's 
recommendations. (Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, 
No. 0053 at p. 1; Mattei Compressors, No. 0063 at p. 2; Sullivan-
Palatek, No. 0051 at p. 1) DOE notes that the d-values in Table 1 of 
the NOPR align with the corresponding EL 2 analyzed in the NOPR 
engineering analysis. EL 2 for these two equipment classes do not have 
the same d-value because DOE determined that they have different 
baseline d-values, based on data in the CAGI database. This results in 
a different d-value for EL 2, which DOE described as two-thirds of the 
way between the baseline and EL 3 in the energy conservation standards 
NOPR. 81 FR 31706 (May 19, 2016). Therefore, DOE concludes that no 
error was present, and does not make any modifications based on this 
comment from CAGI and Sullair.
    Beyond the changes discussed in this section, DOE uses the same 
efficiency level relationships proposed in the energy conservation 
standards NOPR for this final rule. The following sections present the 
efficiency levels for equipment classes analyzed in this final rule and 
discuss specific comments from interested parties. As discussed in 
section III.B, certain air compressors that DOE analyzed in the energy 
conservation standards NOPR are no longer within the scope of this 
final rule. Therefore, DOE is only presenting engineering analysis 
results for equipment within the scope of this rule. Specifically, DOE 
is only presenting engineering analysis results for fixed- and 
variable-speed, lubricated, rotary, three-phase compressors within the 
scope of this rule. Chapter 5 of the final rule TSD contains a detailed 
discussion of all efficiency level relationships.
RP_FS_L_AC
    The regression curve for the rotary, lubricated, air-cooled, fixed-
speed equipment class is unchanged from the energy conservation 
standards NOPR, except for the typographical corrections noted in this 
section, and is as follows:

[[Page 1543]]

[GRAPHIC] [TIFF OMITTED] TR10JA20.002

Where:

[eta] Isen\Regr\RP\FS\L\AC = regression curve package isentropic 
efficiency for the rotary, lubricated, air-cooled, fixed-speed 
equipment class, and
V1 = full-load actual volume flow rate (cubic feet per 
minute).

    The efficiency levels for the rotary, lubricated, air-cooled, 
fixed-speed equipment class are unchanged from the energy conservation 
standards NOPR. All efficiency levels, are defined by the following 
equation, in conjunction with the d-values in Table IV.4.
[GRAPHIC] [TIFF OMITTED] TR10JA20.003

Where:

[eta] Isen\STD\RP\FS\L\AC = package isentropic efficiency for the 
rotary, lubricated, air-cooled, fixed-speed equipment class, for a 
selected efficiency level,
[eta] Isen\Regr\RP\FS\L\AC = regression curve package isentropic 
efficiency for the rotary, lubricated, air-cooled, fixed-speed 
equipment class, and
d = d-value for each proposed efficiency level, as specified in 
Table IV.4.

   Table IV.4--Efficiency Levels Analyzed for Rotary, Lubricated, Air-
                    Cooled, Fixed- Speed, Three-Phase
------------------------------------------------------------------------
                    Efficiency level                          d-Value
------------------------------------------------------------------------
Baseline................................................             -49
EL 1....................................................             -30
EL 2....................................................             -15
EL 3....................................................               0
EL 4....................................................               5
EL 5....................................................              13
EL 6....................................................              30
------------------------------------------------------------------------

RP_FS_L_WC
    The efficiency levels for the rotary, lubricated, liquid-cooled, 
fixed-speed equipment class are derived from the rotary, lubricated, 
air-cooled, fixed-speed equipment class.
    The efficiency levels for the rotary, lubricated, liquid-cooled, 
fixed-speed equipment class are unchanged from the energy conservation 
standards NOPR. All efficiency levels are defined by the following 
equation, in conjunction with the d-values in Table IV.5.
[GRAPHIC] [TIFF OMITTED] TR10JA20.004

Where:

[eta] Isen\STD\RP_FS_L_WC = package isentropic efficiency 
for the rotary, lubricated, liquid-cooled, fixed-speed equipment 
class, for a selected efficiency level,
[eta] Isen\Regr_RP_FS_L_AC = regression curve package 
isentropic efficiency for the rotary, lubricated, air-cooled, fixed-
speed equipment class, and
d = d-value for each proposed efficiency level, as specified in 
Table IV.5.

 Table IV.5--Efficiency Levels Analyzed for Rotary, Lubricated, Liquid-
                    Cooled, Fixed- Speed, Three-Phase
------------------------------------------------------------------------
                    Efficiency level                          d-Value
------------------------------------------------------------------------
Baseline................................................             -49
EL 1....................................................             -30
EL 2....................................................             -15
EL 3....................................................               0
EL 4....................................................               5
EL 5....................................................              13
EL 6....................................................              30
------------------------------------------------------------------------

RP_VS_L_AC
    The regression curve for the rotary, lubricated, air-cooled, 
variable-speed equipment class is unchanged from the energy 
conservation standards NOPR, except for the typographical corrections 
noted in this section, and is as follows:
[GRAPHIC] [TIFF OMITTED] TR10JA20.005

Where:

[eta] Isen\Regr_RP_FS_L_AC = regression curve package 
isentropic efficiency for the rotary, lubricated, air-cooled, 
variable-speed equipment class, and
V1 = full-load actual volume flow rate (cubic feet per 
minute).

    The efficiency levels for the rotary, lubricated, air-cooled, 
variable-speed equipment class are unchanged from the

[[Page 1544]]

energy conservation standards NOPR. All efficiency levels are defined 
by the following equation, in conjunction with the d-values in Table 
IV.6.
[GRAPHIC] [TIFF OMITTED] TR10JA20.006

Where:

[eta] Isen\STD\RP\VS\L\AC = package isentropic efficiency for the 
rotary, lubricated, air-cooled, variable-speed equipment class, for 
a selected efficiency level,
[eta] Isen\Regr\RP\VS\L\AC = regression curve package isentropic 
efficiency for the rotary, lubricated, air-cooled, variable-speed 
equipment class, and
d = d-value for each proposed efficiency level, as specified in 
Table IV.6.

   Table IV.6--Efficiency Levels Analyzed for Rotary, Lubricated, Air-
                  Cooled, Variable- Speed, Three-Phase
------------------------------------------------------------------------
                    Efficiency level                          d-Value
------------------------------------------------------------------------
Baseline................................................             -30
EL 1....................................................             -20
EL 2....................................................             -10
EL 3....................................................               0
EL 4....................................................               5
EL 5....................................................              15
EL 6....................................................              33
------------------------------------------------------------------------

RP_VS_L_WC
    The efficiency levels for the rotary, lubricated, liquid-cooled, 
variable-speed equipment class are derived from the rotary, lubricated, 
air-cooled, variable-speed equipment class.
    The efficiency levels for the rotary, lubricated, liquid-cooled, 
variable-speed equipment class are unchanged from the energy 
conservation standards NOPR. All efficiency levels are defined by the 
following equation, in conjunction with the d-values in Table IV.7:
[GRAPHIC] [TIFF OMITTED] TR10JA20.007

Where:

[eta] Isen\STD\RP_VS_L_WC = package isentropic efficiency for the 
rotary, lubricated, liquid-cooled, variable-speed equipment class, 
for a selected efficiency level,
[eta] Isen\Regr_RP_VS_L_AC = regression curve package isentropic 
efficiency for the rotary, lubricated, air-cooled, variable-speed 
equipment class, and
d = d-value for each proposed efficiency level, as specified in 
Table IV.7.

 Table IV.7--Efficiency Levels Analyzed for Rotary, Lubricated, Liquid-
                   Cooled, Variable-Speed, Three-Phase
------------------------------------------------------------------------
                    Efficiency level                          d-Value
------------------------------------------------------------------------
Baseline................................................             -45
EL 1....................................................             -30
EL 2....................................................             -15
EL 3....................................................               0
EL 4....................................................               5
EL 5....................................................              15
EL 6....................................................              34
------------------------------------------------------------------------

6. Manufacturer Selling Price
    In the energy conservation standards NOPR, DOE's general approach 
was to collect public and confidential manufacturer selling price data 
(in U.S. dollars) for compressors distributed in commerce in the United 
States, in order to scale relationships established in the Lot 31 study 
to the U.S. market. 81 FR 31680, 31703-31704, 31713-31718 (May 19, 
2016). The following sections discuss interested party comments related 
to MSP of lubricant-free equipment (section IV.C.6.a), potential 
overestimation of MSP and its impact on analyses (section IV.C.6.b), 
the unchanged relationship between air-cooled and liquid-cooled MSP 
(section IV.C.6.c), and a summary of MSP results (section IV.C.6.d).
a. MSP of Lubricant-Free Equipment Classes
    In the energy conservation standards NOPR, DOE analyzed lubricant-
free equipment classes. DOE developed a relationship between MSP for 
lubricated and lubricant-free equipment classes and requested comment 
on the relationship.
    In response, CAGI commented that scaling the MSP of lubricated, 
air-cooled equipment to determine the MSP of lubricant-free, air-cooled 
equipment is not justified as there is no proven relationship between 
lubricant-free MSP and lubricated MSP. (CAGI, No. 0052 at pp. 10-11) 
Ingersoll Rand, Kaeser Compressors, Mattei Compressors, Sullair, and 
Sullivan-Palatek commented in support of CAGI's recommendations. 
(Ingersoll Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 
1; Mattei Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p. 1; 
Sullivan-Palatek, No. 0051 at p. 1)
    As discussed in section III.B.4, DOE is excluding lubricant-free 
compressors from the scope of this final rule, and therefore DOE is not 
asserting any conclusions regarding MSP for lubricant-free compressors 
at this time.
b. Potential Overestimation of MSP Due to Non-Efficiency-Related 
Equipment
    Sullivan-Palatek stated that customers who order more efficient 
compressors typically require other optional non-efficiency-related 
ancillary equipment, which artificially inflates the cost of the more 
efficient equipment. (Sullivan-Palatek, Public Meeting Transcript, No. 
0044 at pp. 63-64; Sullivan-Palatek, Public Meeting Transcript, No. 
0044 at p. 67; Sullivan-Palatek, Public Meeting Transcript, No. 0044 at 
p. 68) Ingersoll Rand supported Sullivan-Palatek's comments. (Ingersoll 
Rand, Public Meeting Transcript, No. 0044 at pp. 67-68)
    In the energy conservation standards NOPR, DOE established MSP-
flow-efficiency relationships using the Lot 31 study of MSP-flow-
efficiency relationships, and MSPs for compressor packages sold in the 
United States. As discussed in the NOPR, DOE scaled the Lot 31 study's 
absolute equipment MSPs to a magnitude that represents MSPs offered in 
the U.S. market, but maintained the incremental MSP trends established 
in the Lot 31 study. 81 FR 31680, 31715 (May 19, 2016). The Lot 31 MSP-
flow-efficiency relationships were developed using cost data that was

[[Page 1545]]

confined to basic packages only, any packages with additional features, 
such as ``active cooling'' were omitted to reduce complexity of the 
analysis.\57\ Additionally, the Lot 31 study explained that some basic 
packages have more opportunities to upgrade functions in the future and 
are more expensive because they have space and material for potential 
future upgrades.\58\ These descriptions indicate that there may be some 
small costs included in the Lot 31 MSP-flow-efficiency relationships 
that are not related to efficiency improvements (e.g., costs for extra 
space in the package for optional components). DOE scaled the Lot 31 
MSP-flow-efficiency relationships using U.S. prices of basic compressor 
packages, as distributed in commerce. In alignment with the Lot 31 
study, DOE did not explicitly exclude any costs from more efficient 
models. Therefore, the MSPs presented in the NOPR engineering analysis 
represent the total price of the basic package, as distributed in 
commerce, which is consistent with the Lot 31 methodology.
---------------------------------------------------------------------------

    \57\ See the Lot 31 Ecodesign Preparatory Study on Compressors 
Task 7 section 2.4.1 here: www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
    \58\ Ibid.
---------------------------------------------------------------------------

    As discussed in the energy conservation standards NOPR, DOE 
leveraged the Lot 31 MSP-flow-efficiency relationship because it is 
based on an analysis which was publicly vetted through the European 
Union regulation process. At this time (and at the time of the NOPR 
analysis), no additional data is available that would allow DOE to 
parse out the impact of certain ancillary equipment on the Lot 31 MSP-
flow-efficiency relationship.
    DOE understands that the potential slight overestimation of MSP at 
higher efficiency levels due to non-efficiency-related equipment could 
affect the results of DOE's analyses. Therefore, DOE has assessed the 
potential impacts of including costs of optional ancillary equipment 
that do not affect package isentropic efficiency in the outputs of the 
engineering analysis. Specifically, potential overestimation of MSP at 
higher efficiency levels is most likely to produce conservative results 
at higher efficiency levels, as it overestimates the cost to increase 
package isentropic efficiency. If incremental MSPs in the NOPR are 
overestimated, then it follows that corresponding consumer benefits 
presented in the NOPR are underestimated. In the energy conservation 
standards NOPR, DOE presented consumer benefits that were positive 
above the proposed standard level, and revising any potentially 
overestimated incremental MSPs would only increase the benefits of 
these levels. 81 FR 31680, 31737-31744 (May 19, 2016). As explained in 
the NOPR, DOE proposed TSL 2 after walking down to a potential 
reduction in INPV for manufacturers that DOE concluded was economically 
justified. Consumer and national benefits were positive from TSL 2 
through max-tech for all equipment classes considered in this final 
rule. 81 FR 31753-31755. Revising any potentially, slightly 
overestimated incremental MSPs (to lower values) at higher efficiency 
levels would increase NOPR estimated consumer benefits, with little 
impact on NOPR-estimated reduction in INPV for manufacturers and, 
therefore, not change the justification for the standard proposed in 
the NOPR.
    Further, as discussed previously, DOE based the MSPs trends in the 
energy conservation standards NOPR on trends established in Lot 31 
study. DOE does not have cost data which could be used to evaluate how 
costs of more efficient compressor packages may increase due to non-
efficiency-related items. Additionally, commenters did not provide any 
quantitative data related to this.
    Consequently, based on the potential minimal impact of revising 
MSP-flow-efficiency relationships according to Sullivan-Palatek's 
comment, and the lack of available cost data to do so, DOE is adopting 
in this final rule the MSP-flow-efficiency relationships as proposed in 
the energy conservation standards NOPR.
c. Air-Cooled and Liquid-Cooled MSP Relationships
    In the energy conservations standards NOPR, DOE used MSPs for air-
cooled equipment classes to represent MSPs for liquid-cooled equipment 
classes. DOE reasoned that any difference in incremental MSP between 
air- and liquid-cooled compressors would not be significant, when 
compared to the incremental MSP of the greater package. Consequently, 
DOE concluded that the incremental cost and price of efficiency would 
be the same for both air-cooled and liquid-cooled equipment classes at 
each efficiency level. 81 FR 31680, 31716-31717 (May 19, 2016). As 
discussed in section IV.A.1.f, DOE maintains separate equipment classes 
for air-cooled and liquid-cooled equipment in this final rule.
    In response to the NOPR, Sullair commented that generally there is 
an analogous air-cooled and liquid-cooled compressor for lubricated 
equipment, and when ignoring the cost of the cooling system, the 
manufacturer production cost (``MPC'') for each is the same. This 
mirrors the assumption made in DOE's energy conservation standards NOPR 
analysis. However, Sullair added that DOE's assumption that the 
incremental cost of efficiency for air-cooled and water-cooled 
equipment classes are equal may not work because air-cooled equipment 
can improve package isentropic efficiency by using premium efficiency 
fan motors, while liquid-cooled equipment cannot. (Sullair, Public 
Meeting Transcript, No. 0044 at pp. 65-66)
    DOE acknowledges that air-cooled equipment has a technology option 
that is not available to liquid-cooled equipment (i.e., more-efficient 
fan motors). In response, DOE assessed the impact of its assumption 
that any difference in incremental MSP between air- and liquid-cooled 
systems would not be significant when compared to the incremental MSP 
of the greater package.
    In the energy conservation standards NOPR, DOE derived MSP at each 
air-cooled efficiency level from empirical pricing data. It is 
therefore reasonable to assume that the MSP at the baseline level 
represents compressors with low efficiency fan motors. At each 
subsequent efficiency level, the likelihood of improved efficiency fan 
motors increases. As a result, it is reasonable to assume that the 
empirically based MSPs at each subsequent efficiency level already 
represent compressors with fan motors of increasing efficiency.
    In the energy conservation standards NOPR, DOE established 
efficiency levels for liquid-cooled compressors at a uniform 2.35 
package isentropic efficiency points above the analogous air-cooled 
efficiency level. As discussed in section IV.C.5.a and the energy 
conservation standards NOPR, this increase of 2.35 package isentropic 
efficiency points represents the average difference in package 
isentropic efficiency between 269 pairs of analogous fixed-speed air-
cooled and liquid-cooled models. The air- and liquid-cooled pairs in 
this analysis represented the range of fan motor efficiency available 
on the market. Following the logic established by Sullair's comment, 
theoretically, pairs with lower efficiency fan motors should have 
greater differences in package isentropic efficiency, and pairs with 
higher efficiency fan motors should have smaller differences in package 
isentropic efficiency. Thus, if DOE is to precisely account for 
improvements in fan motor efficiency (while using the same incremental 
MSPs for air- and

[[Page 1546]]

liquid-cooled efficiency levels), the increase in package isentropic 
efficiency between air- and liquid-cooled compressors should be 
slightly more than 2.35 at baseline and slightly less than 2.35 at max-
tech. Such an adjustment would result in liquid-cooled compressors 
gaining slightly less package isentropic efficiency between each 
efficiency level, when compared to air-cooled compressors. However, the 
increase in MSP at each efficiency level would be the same for both 
air- and liquid-cooled compressors.
    DOE quantified the impact of the aforementioned relationship. Data 
within the updated CAGI database show that most fan motors are less 
than five percent the size of the compresses motor (e.g., a compressor 
with a 100 hp motor typically has a fan motor less than 5 hp). One 
common air-cooled configuration in the updated CAGI database, for 
example, is a compressor with a compressor motor nominal horsepower of 
100 hp and a 3 hp fan motor. The efficiency of 3 hp fan motors 
typically range from 81.5- to 89.5-percent. With all else held 
constant, DOE estimates that upgrading from the least efficient fan 
motor to the most efficient would increase package isentropic 
efficiency by approximately 0.20 percentage points for a 100 nominal hp 
compressor. DOE also assessed a 200 nominal hp compressor with a 10 hp 
fan motor, and found a similar result: package isentropic efficiency 
increased by approximately 0.18 percentage points. DOE examined this 
impact for 25 nominal hp compressors, as well. Based on the updated 
CAGI database, DOE found that 1 hp fan motor are typically associated 
with 25 nominal hp compressors, and these fan motors ranged from 65.0- 
to 85.5-percent efficient. This range resulted in an increase in 
package isentropic efficiency of approximately 0.78 percentage points. 
Chapter 5 of the final rule TSD contains a detailed discussion of the 
impact of fan motor efficiency on package isentropic efficiency.
    Practically, if DOE were to apply this result to the analysis for a 
compressor with a compressor motor nominal horsepower of 25 hp, the 
air- to liquid-cooled offset would range from 2.74 at baseline to 1.96 
at max-tech (a range of 0.78 percentage points identified in 25 nominal 
hp compressors); instead of being a constant 2.35 package isentropic 
efficiency points. At EL 2, (the standard level proposed in the energy 
conservation standards NOPR) the offset would be approximately 2.47 
points of package isentropic efficiency.\59\
---------------------------------------------------------------------------

    \59\ DOE estimated the offset for 25 hp compressors at EL 2 by 
linearly interpolating between the offsets and d-values at baseline 
and EL 3. As such, DOE estimates that the package isentropic 
efficiency offset should be 2.47 at EL 2, by interpolating between 
2.74 (baseline) and 2.35 (EL 3). Chapter 5 of the final rule TSD 
contains details on this calculation.
---------------------------------------------------------------------------

    For compressors with a compressor motor nominal horsepower of 100 
hp, the air- to liquid-cooled offset would range from 2.45 at baseline 
to 2.25 at max-tech (a range of 0.20 percentage points identified in 
100 nominal hp compressors); instead of being a constant 2.35 package 
isentropic efficiency points. At EL 2 the offset would be approximately 
2.38 percentage points of package isentropic efficiency.\60\ Compressor 
with a motor nominal horsepower of 200 hp would have an almost 
identical offset, based on DOE's analysis.
---------------------------------------------------------------------------

    \60\ DOE estimated the offset for 100 hp compressors at EL 2 by 
linearly interpolating between the offsets and d-values at baseline 
and EL 3. As such, DOE estimates that the package isentropic 
efficiency offset should be 2.38 at EL 2, by interpolating between 
2.45 (baseline) and 2.35 (EL 3). Chapter 5 of the final rule TSD 
contains details on this calculation.
---------------------------------------------------------------------------

    DOE asserts that the potential changes to the package isentropic 
efficiency offset at EL 2, for the example compressors with a 
compressor motor nominal horsepower of 25, 100, and 200 hp, are very 
small, and will result in negligible impact on downstream analyses. 
Specifically, this analysis showed that package isentropic efficiency, 
for EL 2, for liquid-cooled equipment classes, should be slightly 
higher (i.e., more stringent) than what was analyzed in the NOPR, while 
maintaining the same MSP. Revising EL 2 for liquid-cooled equipment 
classes to be more stringent would increase NOPR estimated consumer 
benefits, which are positive from TSL 2 through max-tech for all 
equipment classes considered in this final rule. 81 FR 31753-31755.
    Further, revising EL 2 for liquid-cooled equipment classes to be 
more stringent would have a negligible impact on the estimated 
reduction in INPV for manufacturers. Specifically, in this scenario, 
MSP (one of the key inputs to calculating INPV) does not change. With a 
slightly more stringent EL 2, DOE expects only negligible changes in 
the number of models failing and shipment estimates (other key inputs 
to calculating INPV), because the potential change to the efficiency 
level is so small. As explained in the NOPR, DOE proposed TSL 2 after 
walking down to a potential reduction in INPV for manufacturers that 
DOE concluded was economically justified. Therefore, the potential 
impact of revising EL 2 does not change the justification for the 
standard proposed in the NOPR.
    Further, DOE's analysis shows that efficiency levels above EL 3 for 
liquid-cooled equipment classes should be slightly lower (i.e., less 
stringent) than what was analyzed in the NOPR. Therefore, the NOPR 
analyses would have shown slightly less economic benefits if EL 3 were 
revised. However, economic benefits were significantly positive at 
these higher ELs, and ultimately DOE walked down below these levels 
based on INPV impacts, which similarly to EL 2 would have negligible 
changes.
    As such, DOE maintains its assertion that any difference in 
incremental MSP between air- and liquid-cooled systems would not be 
significant, when compared to the incremental MSP of the greater 
package. Furthermore, implementing such changes, with rigor, adds 
significant complexity to DOE's analysis, with little-to-no increase in 
analytical resolution. For these reasons, for this final rule, DOE 
maintains the relationships between air- and liquid-cooled compressors, 
for EL 1 through EL 6, as established in the energy conservation 
standards NOPR.
d. Summary of Manufacturer Selling Price Relationships
    Based on the discussions in sections IV.C.6.a, IV.C.6.b, and 
IV.C.6.c, DOE is adopting the MSP-flow-efficiency relationships in the 
following sections in this final rule. DOE notes that the relationships 
for these equipment classes are unchanged from the NOPR analysis. 81 FR 
31680, 31714-31717 (May 19, 2016).
RP_FS_L_AC
    The MSP-flow-efficiency relationship for the rotary, lubricated, 
air-cooled, fixed-speed equipment class is as follows:

[[Page 1547]]

[GRAPHIC] [TIFF OMITTED] TR10JA20.008

Where:

MSPRP\FS\L\AC = manufacturer selling price for the rotary, 
lubricated, air-cooled, fixed-speed equipment class at a selected 
efficiency level and full-load actual volume flow rate,
[eta]Isen\STD\RP\FS\L\AC = package isentropic efficiency for the 
rotary, lubricated, air-cooled, fixed-speed equipment class, for a 
selected efficiency level and full-load actual volume flow rate, and
V1 = full-load actual volume flow rate (cubic feet per 
minute).

    MSP for each efficiency level for the rotary, lubricated, air-
cooled, fixed-speed equipment class is presented in Table IV.8 at 
representative full-load actual volume flow rates.

                                           Table IV.8--Representative MSPs for the RP_FS_L_AC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Full-load actual volume flow rate (cfm)
                    Efficiency level                     -----------------------------------------------------------------------------------------------
                                                               20 *             50              100             200             500            1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          $2,437          $3,350          $4,975          $8,517         $20,350         $41,492
EL 1....................................................           2,784           4,007           6,039          10,319          24,243          48,764
EL 2....................................................           3,192           4,680           7,063          11,983          27,719          55,158
EL 3....................................................           3,742           5,506           8,264          13,877          31,572          62,159
EL 4....................................................           3,960           5,818           8,707          14,562          32,943          64,633
EL 5....................................................           4,349           6,357           9,460          15,716          35,230          68,739
EL 6....................................................           5,349           7,677          11,257          18,414          40,484          78,091
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 20 cfm is outside of the scope of this final rule, however the MSP at this point was used for interpolation purposes in downstream analyses.

RP_FS_L_WC
    As discussed in section IV.C.6.a, DOE uses the MSP for air-cooled 
equipment classes to represent MSP for liquid-cooled equipment classes. 
Therefore, the MSP-flow-efficiency relationship for the rotary, 
lubricated, liquid-cooled, fixed-speed equipment class is the same as 
the rotary, lubricated, air-cooled, fixed-speed equipment class. The 
MSP for each efficiency level for the rotary, lubricated, liquid-
cooled, fixed-speed equipment class is presented in Table IV.9 at 
representative full-load actual volume flow rates.

                                           Table IV.9--Representative MSPs for the RP_FS_L_WC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Full-load actual volume flow rate (cfm)
                    Efficiency level                     -----------------------------------------------------------------------------------------------
                                                                20              50              100             200             500            1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          $2,437          $3,350          $4,975          $8,517         $20,350         $41,492
EL 1....................................................           2,784           4,007           6,039          10,319          24,243          48,764
EL 2....................................................           3,192           4,680           7,063          11,983          27,719          55,158
EL 3....................................................           3,742           5,506           8,264          13,877          31,572          62,159
EL 4....................................................           3,960           5,818           8,707          14,562          32,943          64,633
EL 5....................................................           4,349           6,357           9,460          15,716          35,230          68,739
EL 6....................................................           5,349           7,677          11,257          18,414          40,484          78,091
--------------------------------------------------------------------------------------------------------------------------------------------------------

RP_VS_L_AC
    The MSP-flow-efficiency relationship for the rotary, lubricated, 
air-cooled, variable-speed equipment class is as follows:
[GRAPHIC] [TIFF OMITTED] TR10JA20.009

Where:

MSPRP\VS\L\AC = manufacturer selling price for the rotary, 
lubricated, air-cooled, variable-speed equipment class at a selected 
efficiency level and full-load actual volume flow rate,
[eta]lsen\STD\RP\VS\L\AC = package isentropic efficiency for the 
rotary, lubricated, air-cooled, variable-speed equipment class, for 
a selected efficiency level and full-load actual volume flow rate, 
and

[[Page 1548]]

V1 = full-load actual volume flow rate (cubic feet per 
minute).

    MSP for each efficiency level for the rotary, lubricated, air-
cooled, variable-speed equipment class is presented in Table IV.10 at 
representative full-load actual volume flow rates.

                                           Table IV.10--Representative MSPs for the RP_VS_L_AC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Full-load actual volume flow rate  (cfm)
                    Efficiency level                     -----------------------------------------------------------------------------------------------
                                                                20              50              100             200             500            1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          $3,606          $4,935          $7,577         $13,526         $33,464         $68,234
EL 1....................................................           3,818           5,474           8,526          15,189          37,092          75,013
EL 2....................................................           4,131           6,139           9,624          17,044          41,031          82,293
EL 3....................................................           4,565           6,943          10,883          19,101          45,292          90,093
EL 4....................................................           4,834           7,401          11,576          20,209          47,548          94,193
EL 5....................................................           5,488           8,437          13,097          22,590          52,317         102,806
EL 6....................................................           7,109          10,743          16,314          27,461          61,802         119,743
--------------------------------------------------------------------------------------------------------------------------------------------------------

RP_VS_L_WC
    As discussed in section IV.C.6.a, DOE uses the MSP for air-cooled 
equipment classes to represent MSP for liquid-cooled equipment classes. 
Therefore the MSP-flow-efficiency relationship for the rotary, 
lubricated, liquid-cooled, variable-speed equipment class is the same 
as the as the rotary, lubricated, air-cooled, variable-speed equipment 
class. The MSP for each efficiency level for the rotary, lubricated, 
liquid-cooled, variable-speed equipment class is presented in Table 
IV.11 at representative full-load actual volume flow rates.

                                           Table IV.11--Representative MSPs for the RP_VS_L_WC Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Full-load actual volume flow rate (cfm)
                    Efficiency level                     -----------------------------------------------------------------------------------------------
                                                                20              50              100             200             500            1,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline................................................          $3,436          $4,332          $6,410         $11,370         $28,574         $58,968
EL 1....................................................           3,606           4,935           7,577          13,526          33,464          68,234
EL 2....................................................           3,960           5,790           9,056          16,092          39,022          78,589
EL 3....................................................           4,565           6,943          10,883          19,101          45,292          90,093
EL 4....................................................           4,834           7,401          11,576          20,209          47,548          94,193
EL 5....................................................           5,488           8,437          13,097          22,590          52,317         102,806
EL 6....................................................           7,218          10,889          16,512          27,755          62,364         120,739
--------------------------------------------------------------------------------------------------------------------------------------------------------

7. Manufacturer Production Cost
    In the energy conservation standards NOPR, DOE estimated 
manufacturer markups based on confidential data gathered during 
interviews with manufacturers. The markups help to differentiate the 
manufacturer production cost from the manufacturer selling price of 
compressors and feed into downstream analyses such as the Manufacturer 
Impact Analysis. 81 FR 31680, 31718 (May 19, 2016).
    In response to DOE's analysis, Atlas Copco commented that there is 
a large variation in the markups from manufacturer production cost to 
manufacturer selling price for global and U.S. manufacturers, because 
global manufacturers may elect to assemble some compressors at non-U.S. 
facilities. (Atlas Copco, Public Meeting Transcript, No. 0044 at p. 72)
    DOE agrees with Atlas Copco's comment that there is variation in 
markups between different manufacturers. As noted in the NOPR, DOE 
developed the baseline markup estimates based on confidential data 
obtained during confidential manufacturer interviews from both global 
and U.S. based manufacturers. 81 FR 31680, 31718 (May 19, 2016). The 
markups are intended to represent the industry average, and DOE 
acknowledges that any individual manufacturer may have different 
markups.
    Additionally, DOE did not receive any new information that could be 
used to revise the NOPR values for baseline markup estimates or 
breakdown for manufacturer production cost (MPC) for compressors. 
Therefore, in this final rule, DOE adopts the estimates for baseline 
markup estimates and breakdown for MPC for compressors presented in the 
NOPR.
8. Other Analytical Outputs
    In the energy conservation standards NOPR, DOE calculated values 
for full-load power and no-load power for use in cost-benefit 
calculations for individual end users, manufacturers, and the Nation. 
Full-load power was calculated for each equipment class using the 
formula proposed for package isentropic efficiency in the test 
procedure NOPR and the outputs of package isentropic efficiency, full-
load actual volume flow rate, and pressure from the engineering 
analysis. DOE used the CAGI database to establish a relationship and 
calculate values for no-load power based on full-load power. 81 FR 
31680, 31718 (May 19, 2016).
    DOE received no comments regarding the other analytical outputs 
discussed in this section. Thus, for the reasons discussed in the 
energy conservation standards NOPR, in this final rule DOE does not 
modify the other analytical outputs of the engineering analysis from 
the NOPR. Chapter 5 of the final rule TSD contains a detailed 
discussion of these outputs.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) in the distribution 
chain and in sales taxes to convert the MSP estimates derived in the

[[Page 1549]]

engineering analysis to end user prices. The end user prices are then 
used in the LCC and PBP analyses and in the manufacturer impact 
analysis. At each step in the distribution channel, companies mark up 
the price of the equipment to cover business costs and profit margin. 
For compressors, the main distribution channels are (1) manufacturers 
directly to end users, (2) manufacturers to distributors to end users, 
(3) manufacturers to contractors to end users, and (4) manufacturers to 
end users through other means. Table IV.12 shows the estimated market 
shares of each channel, based on compressor capacity.

               Table IV.12--Compressors Distribution Chain
------------------------------------------------------------------------
                                                     Lubricated rotary
                                                   positive compressors
                Channel structure                -----------------------
                                                   <500 cfm    >=500 cfm
                                                      (%)         (%)
------------------------------------------------------------------------
Manufacturer:
  User..........................................         7.5        20.0
Manufacturer:
  Distributor/Manufacturer Rep:
    User........................................        85.0        77.5
Manufacturer:
  Distributor/Manufacturer Rep:
    Contractor:
    User........................................         5.0         2.5
Manufacturer:
  Other:
    User........................................         2.5         0.0
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
      Total.....................................         100         100
------------------------------------------------------------------------

    DOE developed separate markups for baseline equipment (baseline 
markups) and for the incremental cost of more-efficient equipment 
(incremental markups). Incremental markups are coefficients that relate 
the change in the MSP of higher efficiency models to the change in the 
sales price.
    To develop markups for the parties involved in the distribution of 
compressors, DOE utilized several sources, including: (1) The U.S. 
Census Bureau 2007 Economic Census Manufacturing Industry Series (NAICS 
33 Series) \61\ to develop original equipment manufacturer markups; (2) 
the U.S. Census Bureau 2012 Annual Wholesale Trade Survey, Machinery, 
Equipment, and Supplies Merchant Wholesalers \62\ to develop 
distributor markups; and (3) 2013 RS Means Electrical Cost Data \63\ to 
develop mechanical contractor markups.
---------------------------------------------------------------------------

    \61\ U.S. Census Bureau (2007). Economic Census Manufacturing 
Industry Series (NAICS 33 Series). www.census.gov/manufacturing/asm.
    \62\ U.S. Census Bureau (2012). Annual Wholesale Trade Survey, 
Machinery, Equipment, and Supplies Merchant Wholesalers (NAICS 
4238). www.census.gov/wholesale/index.html.
    \63\ RS Means (2013), Electrical Cost Data, 36th Annual Edition 
(Available at: www.rsmeans.com).
---------------------------------------------------------------------------

    In addition to the markups, DOE derived State and local taxes from 
data provided by the Sales Tax Clearinghouse. This data represents 
weighted-average taxes that include county and city rates. DOE derived 
shipment-weighted-average tax values for each region considered in the 
analysis.
    CAGI commented that it found no errors with DOE's distribution 
channel and markups assumptions presented in the NOPR. (CAGI, No. 044 
Public Meeting Transcript, at p. 94). DOE received no other comments to 
this approach, therefore; DOE is maintaining the same approach for the 
final rule as it did in the NOPR.
    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for compressors.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of air compressors at different efficiencies in 
representative U.S. manufacturing and commercial facilities, and to 
assess the energy savings potential of increased air compressor 
efficiency. The energy use analysis estimates the range of energy use 
of air compressors in the field (i.e., as they are actually used by end 
users). The energy use analysis provides the basis for other analyses 
DOE performed, particularly assessments of the energy savings and the 
savings in end user operating costs that could result from adoption of 
new standards.
    Annual energy use of air compressors depends on the utilization of 
the equipment, which is influenced by air compressor application, 
annual hours of operation, load profiles, capacity controls, and 
compressor capacity. DOE calculates the annual energy use as the sum of 
input power at each load point multiplied by the annual operating hours 
at each respective load point.
1. Applications
    Air compressors operate in response to system demands in three 
general ways, or applications. DOE determined these applications after 
examining available field assessment data from two database sources: 
(1) A database of motor nameplate and field data compiled by the 
Washington State University (``WSU'') Extension Energy Program, Applied 
Proactive Technologies (``APT''), and New York State Energy Research 
and Development Authority (``NYSERDA'') (``WSU/NYSERDA database'') \64\ 
and (2) the Northwest Industrial Motor Database.\65\ Based on the 
distribution of compressor-specific assessments found in these 
databases, DOE defined three application types to capture statistical 
variations in air demand and control strategies. DOE defined the three 
application types as follows:
---------------------------------------------------------------------------

    \64\ The motors database is composed of information gathered by 
WSU and APT during 123 industrial motor surveys or assessments: 11 
motor assessments were conducted between 2005 and 2011 and occurred 
in industrial plants; 112 industrial motor surveys were conducted 
between 2005 and 2011 and were funded by NYSERDA and conducted in 
New York State.
    \65\ Northwest Industrial Motor Database Summary, 2009, 
Strategic Energy Group.
---------------------------------------------------------------------------

    Trim: Compressors equipped with controls configured to serve 
fluctuating air demand. The trim application represents either the 
operation of an individual compressor, or a compressor within a 
compressor plant, that serves the fluctuating portion of the demand.
    Base load: Compressors equipped with controls configured to serve 
steady-state air demands. The base-load application represents a 
compressor within a compressor plant that serves the constant portion 
of fluctuating demand, while the remaining fluctuating portion of 
demand covered by a trim application.\66\
---------------------------------------------------------------------------

    \66\ Air demand (in cfm) can vary considerably during plant 
operations. A portion of this air demand may be steady-state, 
driving equipment that is run constantly, while the remaining 
portion may be fluctuating.
---------------------------------------------------------------------------

    Intermittent: Compressors equipped with controls configured to 
serve sporadic loads. For example, these could be operated as back-up 
compressors for either base-load or trim compressors, or as a dedicated 
air compressor to a specific process such as sand blasting or 
fermentation.
    Table IV.13 shows the estimated distribution of air compressor 
application.

       Table IV.13--Distribution of Air Compressors by Application
------------------------------------------------------------------------
                                                            Probability
                       Application                              (%)
------------------------------------------------------------------------
Trim....................................................              50
Base-load...............................................              28
Intermittent............................................              22
------------------------------------------------------------------------

    CAGI commented that based on experience, more than 28-percent of 
compressors in the field are operating at full usage as base-load 
compressors. CAGI further commented that rotary compressors are not 
designed for intermittent use. (CAGI, No. 0044 at p. 82; CAGI, No. 0052 
at pp. 5-6) Ingersoll

[[Page 1550]]

Rand, Kaeser Compressors, Mattei Compressors, Sullair, and Sullivan-
Palatek commented in support of CAGI's recommendations. (Ingersoll 
Rand, No. 0055 at p. 1; Kaeser Compressors, No. 0053 at p. 1; Mattei 
Compressors, No. 0063 at p. 2; Sullair, No. 0056 at p.1; Sullivan-
Palatek, No. 0051 at p. 1) While CAGI may feel that more than 28-
percent of compressors operating in the field are base-load 
compressors, they did not offer an alternative value. DOE acknowledges 
that rotary compressors they may not be designed for intermittent use, 
DOE undemands that rotary compressors may be used in an intermittent 
fashion in the field. DOE acknowledges that the definition of these 
applications does have similarities with the way compressors are 
marketed and distributed in commerce. They are not meant to be literal 
representations of these occurrences; instead, they are labels used to 
categorize the statistical variation of the wide range of conditions in 
which compressors operate in the field.
2. Annual Hours of Operation
    In the NOPR DOE constructed a probability distribution of average 
annual hours of operation (``AHO'') for each of the three application 
types based on NYSERDA and WSU system assessments data discussed 
previously, and on the Lot 31 study.
    Several stakeholders commented that the annual hours of operation 
used in the NOPR analysis were too high, resulting in an overstatement 
of potential savings. Sullivan-Palatek commented that the annual hours 
of operation were overstated, by as much as a factor of three, and that 
as compressor capacity (in hp) increases, so do the hours of operation. 
(Sullivan-Palatek, No. 044 Public Meeting Transcript at pp. 84-85) 
Atlas Copco commented that the annual hours of operation were 
overstated for some equipment categories by a factor of two. (Atlas 
Copco, No. 0054 at pp. 4-5) Jenny Products commented that the annual 
hours of operations were overstated by a factor of two. (Jenny 
Products, No. 0058 at p. 3) Ingersoll Rand commented that the annual 
hours of operation were overstated, and agreed with the distribution of 
annual hours of operation provided by CAGI. (Ingersoll Rand, No. 0055 
at pp. 3-4) Sullair commented that the annual hours of operation were 
skewed toward compressors operated by heavier industries, and not 
likely operated by single-shift operations. (Sullivan-Palatek, No. 0044 
Public Meeting Transcript at p. 85) Compressed Air Systems commented 
that annual hours of operation were overstated by 50- to 75-percent 
(Compressed Air Systems, No. 0061 at p. 5), and that 80-percent of 
compressors under 250 hp operate 8 to 10 hours per workday. (Compressed 
Air Systems, No. 0044 at p. 88) Compressed Air Systems agreed that 
compressors rated at lower capacities would be used less (fewer hours 
of operation) than those with higher capacities. (Compressed Air 
Systems, No. 0061 at p. 3) Jenny Products commented that most 
compressors operate at 2,000 hours per year based on single shift, 8 
hours per day, 5 days per week, 50 weeks per year. (Jenny Products, No. 
0058 at p. 3) CAGI commented that the operating hours per year is 
between 2,800 and 4,600 hours. CAGI also provided a distribution of 
average annual operating hours. (CAGI, No. 0052 at pp. 4-5) Kaeser 
Compressors and Mattei Compressors commented in support of CAGI's 
recommendations. (Kaeser Compressors, No. 0053 at p. 1; Mattei 
Compressors, No. 0063 at p. 2)
    The distribution AHO provided by CAGI in response to the NOPR were 
skewed toward higher operating hours than those estimated by DOE. The 
weighted averages of the distribution provided by CAGI and DOE's NOPR 
analysis are 5,166 and 4,081, respectively. Table IV.14 shows the AHO 
distribution used by DOE in the NOPR compared to that submitted by 
CAGI.

          Table IV.14--Comparison of Annual Hours of Operation
------------------------------------------------------------------------
                                                           % of Total
                                                           compressors
               Annual hours of operation               -----------------
                                                                   DOE
                                                          CAGI     NOPR
------------------------------------------------------------------------
<1000.................................................      5.6      2.4
1000-2000.............................................      5.0     17.1
2001-3000.............................................     12.2      9.0
3001-4000.............................................     12.1     20.4
4001-5000.............................................     12.7     17.1
5001-6000.............................................     11.3     19.0
6001-7000.............................................     11.2      8.2
7001-8000.............................................     10.2      4.6
>8000.................................................     19.6      2.1
------------------------------------------------------------------------

    CAGI's comments did not indicate how AHO changes with compressor 
capacity. However, Atlas Copco's comment did show how AHO changes by 
compressor capacity. (Atlas Copco, No. 0054 Appendix B, at p. 2) In 
response to the analysis provided by Atlas Copco, DOE adjusted average 
AHO by capacity for the final rule. Table IV.15 shows the average AHO 
at each capacity range used in this final rule.

 Table IV.15--Average Annual Hours of Operation by Compressors Capacity
------------------------------------------------------------------------
            Full-load actual volume flow rate (cfm)              DOE AHO
------------------------------------------------------------------------
>=35 to <50....................................................    3,385
>=50 to <100...................................................    3,238
>=100 to <200..................................................    3,308
>=200 to <300..................................................    3,346
>=500 to <1000.................................................    3,726
>=1,000 to <1250...............................................    4,248
------------------------------------------------------------------------

3. Load Profiles
    Information on typical load profiles for compressors is not 
available in the public domain. DOE reviewed resources provided by 
stakeholders, as well as sample compressed air system assessments of 
commercial and industrial customers. Given the lack of data, DOE 
developed several load profiles based on how typical compressor 
applications would likely be employed in the field. Each compressor 
load profile is approximated by weights that specify the percentage of 
time the compressor operates at one of four load points: 20-, 40-, 70-, 
and 100-percent of its duty point airflow.\67\ Load profiles are then 
mapped to each application type to capture compressor operation in the 
field. The four load profile types are described below.
---------------------------------------------------------------------------

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

    Flat-load profile: Represents a constant maximum airflow demand. 
All annual hours of operation are assigned to the duty point airflow. 
The flat-load profile is used for most base-load applications, and for 
intermittent applications to represent the event where an intermittent 
compressor is operating in a base-load role. It can also represent a 
situation where intermittent demand has been attenuated due to the 
inclusion of appropriately sized secondary (demand) air receiver 
storage to the compressed air system.
    High-load profile: Represents a high fraction of annual operating 
hours spent at, or near the maximum airflow demand. The annual hours of 
operation are distributed across the higher airflow load points. The 
high-load profile is used to represent most trim applications, and some 
base-load applications.
    Low-load profile: Represents a low fraction of annual operating 
hours spent at maximum air flow. Annual hours of operation are 
distributed across the lower airflow load points. Low-load profile, 
although undesirable, occurs if

[[Page 1551]]

a single compressor is supplying airflow to a range of tools, with only 
a small fraction of operating hours at which all of these tools are 
operating. This profile is used with both trim and intermittent 
applications.
    Even-load profile: Represents an even distribution of annual 
operating hours spent at each airflow load point. This load profile is 
a characteristic of trim or intermittent applications.
    Table IV.16 shows the percentage of annual operating hours at each 
of the load points described above for the four load profiles. Table 
IV.17 shows the assumed probability of each type of load profile being 
selected for each application type.

 Table IV.16--Fraction of Annual Operating Hours as a Fraction of Rated
                                 Airflow
------------------------------------------------------------------------
                                              Load profile (percent)
               Load point                -------------------------------
                                           Flat    High     Low    Even
------------------------------------------------------------------------
20%.....................................       0       0      30       0
40%.....................................       0      10      30    33.3
70%.....................................       0      40      30    33.3
100%....................................     100      50      10    33.3
------------------------------------------------------------------------


        Table IV.17--Distribution of Load Profiles by Application
------------------------------------------------------------------------
                                                           Load profile
            Application                 Load  profile       probability
                                                                (%)
------------------------------------------------------------------------
Trim..............................  Flat................  ..............
                                    Even................              40
                                    Low.................              40
                                    High................              20
Base-load.........................  Flat................              80
                                    Even................  ..............
                                    Low.................  ..............
                                    High................              20
Intermittent......................  Flat................              30
                                    Even................              20
                                    Low.................              20
                                    High................              30
------------------------------------------------------------------------

4. Capacity Control Strategies
    Facility demands for compressed air rarely match a compressor's 
rated air capacity. To account for this discrepancy, some form of 
compressed air control strategy is necessary. Some forms of capacity 
control only apply to certain compressor designs and are effective over 
a limited range of a compressor's capacity. In addition, some capacity 
controls can be used in combination. As the capacity is regulated, the 
power required for the compressor to meet the airflow demand will 
change depending on the chosen control strategy. Chapter 7 of the final 
rule TSD describes the implemented control in detail with mathematical 
models for each of the following control strategies: Start/Stop, Load/
Unload (2-step), Inlet Valve Modulation, and Variable Displacement. DOE 
also included the following combined control strategies: Inlet Valve 
Modulation/Unload, Variable Displacement/Unload, and Multi-step/Unload. 
DOE modeled these control strategies largely on the following sources: 
Analysis Methodology Manual for AIRMaster Compressed Air System Audit 
and Analysis Software,\68\ CAGI's Compressed Air and Gas Handbook,\69\ 
and Compressed Air System Controls.\70\
---------------------------------------------------------------------------

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

a. Load/Unload
    Sullair commented that for compressors with a compressor motor 
nominal horsepower over 10 hp, stop control is not available without 
load/unload controls. Further, Sullair commented that there is no 
variable displacement without variable displacement unload. (Sullair, 
LLC, No. 0044 at pp. 97) Consequently, DOE updated its analysis and 
removed start/stop without load/unload for compressors rated over 10 
nominal hp and included load/unload with all variable displacement 
compressors.
    Atlas Copco submitted average results, by capacity, showing the 
average number of running hours per year, and load ratios of a sample 
of lubricated air compressors in a draft report.\71\ (Atlas Copco, No. 
0054 Appendix B, at p. 3) From these results DOE was able to adjust the 
number of hours per year that compressors spend in the unload control 
state. In the NOPR DOE assumed a fixed 20-percent of time for rotary 
screw lubricated compressors. The adjusted average value used in this 
final rule is 40-percent. When applied to the energy use analysis, this 
results in 40-percent of a compressor's annual operating hours spent in 
the unload control state.
---------------------------------------------------------------------------

    \71\ Wouters, C., Measurement Principle on Cycle Losses, Atlas 
Copco, November, 2015.
---------------------------------------------------------------------------

b. Cycle Energy Requirement
    Atlas Copco submitted a second internal report \72\ that presented 
an approach to quantify the energy use of a compressor in the following 
operating states: (1) When the compressor is in its unloaded control 
state and transitions into delivering air; and (2) when the compressor 
stops delivering air and transitions into its unloaded control state 
(this is also known as ``blow-down''). (Atlas Copco, No. 0054 Annex A, 
at pp. 5-9) The approach for determining this energy use, called 
``cycle energy requirement'' (``CER''), is described in Atlas Copco's 
comment. (Atlas Copco, No. 0054 Appendix B, at p. 1) Although this 
approach bears interest, it has not been peer reviewed or accepted by 
industry. Further, the reports lack the necessary information needed to 
model the described transitionary states. Additionally, Atlas Copco 
submitted a technical report \73\ indicating that it is possible for a 
compressor to fractionally cycle through these stages. (Atlas Copco, 
No. 0054 Annex B, at p. 1) However, the report does not include metrics 
on the number of cycles that are at each fraction of these stages. For 
DOE to apply the proposed CER approach in the energy use analysis, 
these inputs would be required. While DOE acknowledges that energy is 
used during the transitionary stages outlined in the CER approach, at 
this time neither DOE nor industry have sufficient information to 
determine the CER of baseline equipment, or to estimate the decrease in 
CER as compressor efficiency increases. As such, DOE cannot ascertain 
the impacts of the submitted approach. Given the uncertainty 
surrounding this methodology, and given the lack of supporting 
information, DOE elected not to use the CER methodology for this final 
rule.
---------------------------------------------------------------------------

    \72\ Wouters, C., Air Compressors Total Energy Consumption, 
Atlas Copco, August, 2016.
    \73\ Van Nederkassel, L., The Relation between the Compressor 
Installation and its Energy Efficiency, Section 2-2, Compressors, 
Compressed Air and Vacuum Technology Association, September 2004.
---------------------------------------------------------------------------

F. Life-Cycle Cost and Payback Period Analyses

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual end users of potential energy conservation standards for 
air compressors. The effect of new or amended energy conservation 
standards on individual end users usually involves a reduction in 
operating cost and an increase in purchase cost. DOE used the following 
two metrics to measure end-user impacts:
     The LCC is the total end user expense of an appliance or 
equipment over the life of that equipment, consisting of total 
installed cost (manufacturer selling price, distribution chain markups, 
sales tax, and installation costs) plus operating costs (expenses for 
energy use, maintenance,

[[Page 1552]]

and repair). To compute the operating costs, DOE discounts future 
operating costs to the time of purchase and sums them over the lifetime 
of the equipment.
     The PBP is the estimated amount of time (in years) it 
takes end users to recover the increased purchase cost (including 
installation) of more-efficient equipment through lower operating 
costs. DOE calculates the PBP by dividing the change in purchase cost 
at higher efficiency levels by the change in annual operating cost for 
the year that amended or new standards are assumed to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to the LCC in the no-standards case, which reflects the 
estimated efficiency distribution of air compressors in the absence of 
new or amended energy conservation standards. In contrast, the PBP for 
a given efficiency level is measured relative to the baseline 
equipment.
    For each considered efficiency level in each equipment class, DOE 
calculated the LCC and PBP for a nationally representative set of air 
compressors. DOE used data from the NYSERDA and Northwest Industrial 
Motor Database databases, Lot 31 study and acquired system assessments 
to define each air compressor's application, load profile, annual hours 
or operation, and combination of employed controls. For each of the 
considered air compressors, DOE determined the energy consumption and 
the appropriate electricity price, thus capturing the variability in 
energy consumption and energy prices associated with the use of air 
compressors.
    Inputs to the calculation of total installed cost include equipment 
costs--which includes MPCs, manufacturer markups, retailer and 
distributor markups, and sales taxes--and installation costs. Inputs to 
the calculation of operating expenses include annual energy 
consumption, energy prices and price projections, repair and 
maintenance costs, equipment lifetimes, and discount rates. DOE created 
distributions of values for equipment lifetime, discount rates, and 
sales taxes, with probabilities attached to each value, to account for 
their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP relies on 
a Monte Carlo simulation to incorporate uncertainty and variability 
into the analysis. The Monte Carlo simulations randomly sample input 
values from the probability distributions and air compressor end user 
sample. The model calculated the LCC and PBP for equipment at each 
efficiency level for 10,000 end users per simulation run.
    DOE calculated the LCC and PBP for all end users as if each were to 
purchase a new equipment in the expected year of compliance with a new 
standard. DOE has determined that any standards would apply to air 
compressors manufactured five years after the date on which any 
standard is published.\74\ Table IV.18 summarizes the approach and data 
DOE used to derive inputs to the LCC and PBP calculations. The 
subsections that follow provide further discussion. Details of the 
spreadsheet model, and of all the inputs to the LCC and PBP analyses, 
are contained in chapter 8 of the final rule TSD and its appendices.
---------------------------------------------------------------------------

    \74\ EPCA specifies that the provisions of subsections (l) 
through (s) of 42 U.S.C. 6295 shall apply to any other type of 
industrial equipment which the Secretary classifies as covered 
equipment, which includes compressors. (42 U.S.C. 6316(a)) 42 U.S.C. 
6295(l)(2) states that any new or amended standard for any other 
type of consumer product which the Secretary classifies as a covered 
product shall not apply to products manufactured within five years 
after the publication of a final rule establishing such standard. 
This five-year lead time also applies to other types of industrial 
equipment, such as compressors.
    \75\ Edison Electric Institute (EEI), Typical Bills and Average 
Rates Report Summer, and Winger (2014).

 Table IV.18--Summary of Inputs and Methods for the LCC and PBP Analysis
                                    *
------------------------------------------------------------------------
              Inputs                            Source/method
------------------------------------------------------------------------
Equipment Cost....................  Derived by multiplying MPCs by
                                     manufacturer and retailer markups
                                     and sales tax, as appropriate. Used
                                     historical data to derive a price-
                                     scaling index to project equipment
                                     costs.
Installation Costs................  Baseline installation cost
                                     determined with data from
                                     stakeholders. Assumed no change
                                     with efficiency level.
Annual Energy Use.................  The total annual energy use
                                     multiplied by the hours per year.
                                     Average number of hours based on
                                     field data calibrated to data
                                     submitted by stakeholders.
Energy Prices.....................  Electricity: Marginal prices derived
                                     from EEI.\75\
Energy Price Trends...............  Based on AEO 2016 price projections.
Repair and Maintenance Costs......  Assumed no change with efficiency
                                     level.
Equipment Lifetime................  Assumed average lifetime of 12.5
                                     years for rotary.
Discount Rates....................  Approach involves identifying all
                                     possible debt or asset classes that
                                     might be used to purchase air
                                     compressors. Primary data source
                                     was the Damodaran Online.
Compliance Date...................  Late 2021 (2022 for analysis
                                     purposes).
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the final rule
  TSD.

1. Equipment Cost
    To calculate end user equipment costs, DOE multiplied the MSPs 
developed in the engineering analysis by the markups described in 
section IV.D (along with sales taxes). DOE used different markups for 
baseline equipment and higher efficiency equipment because DOE applies 
an incremental markup to the increase in MSP associated with higher 
efficiency equipment. As explained in section IV.D, DOE assumed that 
compressors are delivered by the manufacturer through one of four 
distribution channels. The overall markups used in the LCC analysis are 
weighted averages of all of the relevant distribution channel markups.
    To project an equipment price trend for the final rule, DOE derived 
an inflation-adjusted index of the Producer Price Index for air and gas 
compressor equipment manufacturers over the period 1984-2013.\76\ These 
data shows a slight decrease from 1989 through 2004. Since 2004, 
however, there has been an increase in the price index. Given the 
relatively slow global economic activity in 2009 through 2013, the 
extent to which a future trend can be predicted based on the last 
decade is uncertain. Because the observed data does not provide a firm 
basis for projecting future cost trends for compressor equipment, DOE 
used a constant price assumption as the default trend to project future 
compressor prices from 2022. Thus, prices projected

[[Page 1553]]

for the LCC and PBP analyses are equal to the 2014 values for each 
efficiency level in each equipment class.
---------------------------------------------------------------------------

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

    DOE received no adverse comments on its NOPR equipment cost 
estimates, and maintained the same approach for the final rule.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. In the NOPR, DOE 
requested information on whether installation costs would be expected 
to change with efficiency. Sullair responded that some high efficiency 
technologies would preclude installation into existing harsh industrial 
climates and would necessitate the construction of a clean room. 
(Sullair, LLC, No. 0044 at pp. 106-107) However, Sullair did not 
specify which high efficiency technologies would make the construction 
of a clean room for installation necessary, nor did Sullair indicate at 
which efficiency level this may become an issue. The range of equipment 
efficiencies presented in this final rule are currently available as 
``general purpose'' compressors that are designed to be operated 
without the need of a clean room.
    Ingersoll Rand commented that water-cooled compressors would have 
higher installation costs than air-cooled equipment. (Ingersoll Rand, 
No. 044 Public Meeting Transcript at pp. 107-108) For the final rule, 
compressors using liquid- and air-cooled cooling systems are considered 
separate equipment classes, and are not considered potential 
replacements for one another in the LCC analysis. DOE recognizes that 
installations cost would be different for water- versus air-cooled 
compressors, but for equipment using the same cooling method, DOE does 
not expect installation costs to change with increased efficiency.
    Atlas Copco responded that differences in installation costs would 
depend on what DOE considers as part of the equipment standard package. 
(Atlas Copco, No. 044 Public Meeting Transcript at p. 109) For the 
equipment defined as the standard package for the final rule, DOE does 
not expect installation cost to change as efficiency increases.\77\
---------------------------------------------------------------------------

    \77\ The equipment defined as part of the standard package are 
discussed in section IV.C.2.
---------------------------------------------------------------------------

    In conclusion, DOE does not expect installation cost to change with 
increased efficiency, so DOE did not include installation costs for 
this final rule.
3. Annual Energy Consumption
    For each sampled compressor, DOE determined the energy consumption 
for an air compressor at different efficiency levels using the approach 
described above in section IV.E of this document.
 4. Energy Prices
    DOE derived average and marginal annual non-residential (commercial 
and industrial) electricity prices at the National level using data 
from EIA's Form EIA-861 database (based on ``Annual Electric Power 
Industry Report''),\78\ EEI Typical Bills and Average Rates 
Reports,\79\ and information from utility tariffs. Electricity tariffs 
for non-residential end users can be very complex, with the principal 
difference from residential rates being the incorporation of demand 
charges. The presence of demand charges means that two end users with 
the same monthly electricity consumption may have very different bills, 
depending on their peak demand. For this final rule analysis, DOE used 
marginal electricity prices to estimate the impact of demand charges 
for end users of air compressors. The methodology used to calculate the 
marginal electricity rates is described in appendix 8B of the final 
rule TSD.
---------------------------------------------------------------------------

    \78\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
    \79\ Edison Electric Institute. Typical Bills and Average Rates 
Report. Winter 2014 published April 2014, Summer 2014 published 
October 2014: Washington, DC (Last accessed June 2, 2015.) 
www.eei.org/resourcesandmedia/products/Pages/Products.aspx.
---------------------------------------------------------------------------

    EEI noted that by using marginal electricity prices, which are 
sometimes higher than average electricity prices, DOE might be 
overstating the value of electricity savings for equipment operated 
outside of peak hours. (Edison Electric Institute, No. 0044 at pp. 99-
100) DOE assumes that compressors operating at low load factors are 
operated during normal business hours. As a result, demand is 
coincident with peak hours, which has higher costs per-unit energy than 
non-peak hours. EEI did not offer any data to support its conjecture 
and, therefore, DOE maintained the electricity price methodology it 
used in the NOPR for this final rule.
    To estimate energy prices in future years, DOE multiplied the 
average national energy prices by the projections of annual change in 
national-average commercial and industrial electricity prices in AEO 
2016, which has an end year of 2040.\80\ To estimate price trends after 
2040, DOE used the average annual rate of change in prices from 2020 to 
2040.
---------------------------------------------------------------------------

    \80\ U.S. Department of Energy, Energy Information 
Administration, Annual Energy Outlook 2016 with Projections to 2040 
(Available at: www.eia.gov/forecasts/aeo/). AEO 2016AEO 2016.
---------------------------------------------------------------------------

5. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product. Typically, 
small incremental increases in product efficiency produce no, or only 
minor, changes in repair and maintenance costs compared to baseline 
efficiency products.
    Compressed Air Systems stated that maintenance costs would be 
higher for more efficient equipment due to the need for more frequent 
service. (Compressed Air Systems, No. 0061 at p. 3) Compressed Air 
Systems did not provide any rationale for this increase in service. In 
the absence of information to indicate what would drive the need for 
additional service, or at which efficiency level DOE may need to 
consider an increase in repair or maintenance costs, or other drivers 
that would trigger higher repair or maintenance costs for more 
efficient equipment, DOE has maintained the same approach as the NOPR 
and not estimated repair or maintenance costs for this analysis.
6. Equipment Lifetime
    DOE defines equipment lifetime as the age when a given air 
compressor is retired from service. For this analysis, DOE continued to 
use an estimated average lifetime of 13 years for the compressors 
examined in this rulemaking, with a minimum and maximum of 4 and 35 
years, respectively
    DOE estimated average lifetime by equipment class based existing 
literature and used these estimates to develop statistical 
distributions. DOE defines two types of lifetime: (1) Mechanical 
lifetime, that is the total lifetime hours of operation (including 
routine maintenance and repairs); and (2) service lifetime, that is the 
number of years the consumer owns and uses the unit, and is equal to 
the mechanical lifetime divided by the annual hours of operation. The 
service lifetime is the direct input to the LCC. DOE presented the 
minimum, average, and maximum equipment lifetimes estimates in the NOPR 
and at the NOPR public meeting. 81 FR 71723.
    Sullivan-Palatek stated that they believed that DOE overstated the 
average life expectancy because DOE did not consider compressors 
removed from service when a plant closes or

[[Page 1554]]

when an upgrade to more capacity is needed. (Sullivan-Palatek, No. 0051 
at p. 3) Compressed Air Systems stated that it agreed with the lifetime 
DOE presented in the NOPR. (Compressed Air Systems, No. 0061 at p. 3)
    DOE reflects the uncertainty of equipment service lifetimes in the 
LCC analysis for equipment by using probability distributions described 
above. DOE maintains that the distribution of compressor lifetimes that 
it used captures situations such as those mentioned by Sullivan-
Palatek. For this final rule, DOE maintained its approach from the NOPR 
and based equipment lifetimes on information published in the Lot 31 
study.\81\
---------------------------------------------------------------------------

    \81\ Ecodesign Preparatory Study on Electric Motor Systems/
Compressors; 2014; Prepared for the European Commission by Van 
Holsteijn en Kemna B.V. (VHK); ENER/C3/413-2010-LOT 31-SI2.612161; 
www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0040-0031.
---------------------------------------------------------------------------

    Sullivan-Palatek commented that equipment life is affected by the 
number of hours used, maintenance, installation and duty cycle. 
(Sullivan-Palatek, No. 0051 at p. 7) DOE used a distribution of 
lifetimes to capture the variability of lifetimes of compressors in the 
field. Because air compressors with more annual operating hours tend to 
have shorter lifetimes in years, DOE used a distribution of lifetime in 
hours to allow for a negative correlation between annual operating 
hours and lifetime in years. Due to the overall decreases in annual 
operating hours described in section IV.E.2, the estimated average air 
compressor lifetime increased slightly from the NOPR (an average of 
12.5 years) to the final rule (an average of 13.3 years).
    Compressed Air Systems speculated that air compressors meeting the 
DOE standards may have a lower life expectancy as performance 
degradation will be more difficult to prevent. (Compressed Air Systems, 
No. 0061 at p. 3) Compressed Air Systems did not provide any evidence 
that would provide a basis for using different lifetimes for higher-
efficiency compressors. DOE maintained the approach in the NOPR of 
using the same lifetime distribution for all considered efficiency 
levels.
    Chapter 8 of the final rule TSD contains a detailed discussion of 
equipment lifetimes.
7. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. The weighted average cost 
of capital is commonly used to estimate the present value of cash flows 
to be derived from a typical company project or investment. Most 
companies use both debt and equity capital to fund investments, so the 
cost of capital is the weighted-average cost to the firm of equity and 
debt financing. DOE estimated the cost of equity using the capital 
asset pricing model, which assumes that the cost of equity for a 
particular company is proportional to the systematic risk faced by that 
company.
    The primary source of data for this analysis was Damodaran Online, 
a widely used source of information about company debt and equity 
financing for most types of firms.\82\ DOE estimated a separate 
distribution of weighted-average cost of capital for each business 
sector that purchases compressors. More details regarding DOE's 
estimates of end-user discount rates are provided in chapter 8 of the 
final rule TSD.
---------------------------------------------------------------------------

    \82\ Damodaran Online, The Data Page: Cost of Capital by 
Industry Sector, 2001-2013. (Last accessed March, 2014.) See: http:/
/pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------

8. Energy Efficiency Distribution in the No-New-Standards Case
    To accurately estimate the share of end users that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC analysis considered the projected 
distribution (i.e., market shares) of equipment efficiencies that end 
users purchase in the no-new-standards case (i.e., the case without new 
energy conservation standards). To estimate the efficiency distribution 
of air compressors for 2021, DOE examined the frequency of efficiencies 
made available under CAGI's voluntary testing program for each 
equipment class (CAGI database), and the distribution of efficiencies 
of shipments used in the pumps rulemaking,\83\ scaled to the capacity 
range of compressors. DOE found the distribution for both samples to be 
similar, with the distribution of efficiencies of shipments for pumps 
skewed slightly toward higher efficiencies. DOE continued to use the 
re-scaled distribution of pump efficiencies, as it did in the NOPR, as 
it is based on the efficiencies of shipments of a durable industrial 
product, rather than the frequency of efficiency of an entry in a 
catalog, and thus better reflects end user choice.
---------------------------------------------------------------------------

    \83\ U.S. Department of Energy. Energy Efficiency and Renewable 
Energy Office. Energy Conservation Program: Energy Conservation 
Standards for Pumps; Notice of proposed rulemaking. 2015. See: 
www.regulations.gov/#!documentDetail;D=EERE-2011-BT-STD-0031-0040.
---------------------------------------------------------------------------

    The estimated market shares for the no-new-standards case 
efficiency distribution for air compressors are shown in Table IV.19. 
See chapter 8 of the final rule TSD for further information on the 
derivation of the efficiency distributions.

   Table IV.19--Distribution of Compressor Efficiencies in the No-New-
                             Standards Case
------------------------------------------------------------------------
                                                          Average of
                                                        probability (%)
               Efficiency level  (EL)                -------------------
                                                        Air-     Liquid-
                                                       cooled    cooled
------------------------------------------------------------------------
0...................................................       12%       12%
1...................................................        16        16
2...................................................        16        16
3...................................................        18        18
4...................................................         6         6
5...................................................        11        11
6...................................................        22        22
------------------------------------------------------------------------

9. Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, but does not 
include the discount rates.
    As noted above, EPCA, as amended, establishes a rebuttable 
presumption that a standard is economically justified if the Secretary 
finds that the additional cost to the 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) and 42 U.S.C. 6316(a)) For each considered 
efficiency level, DOE determined the value of the first year's energy 
savings by calculating the energy savings in accordance with the 
applicable DOE test procedure, and multiplying those savings by the 
average energy price projection for the year in which compliance with 
the standards would be required.

G. Shipments Analysis

    DOE uses projections of annual equipment shipments to calculate the 
national impacts of potential energy

[[Page 1555]]

conservation standards on energy use, NPV, and future manufacturer cash 
flows.\84\ The shipments model takes an accounting approach, tracking 
market shares of each equipment class and the vintage of units in the 
stock. Stock accounting uses equipment shipments as inputs to estimate 
the age distribution of in-service equipment stocks for all years. The 
age distribution of in-service equipment stocks is a key input to 
calculations of both the NES and NPV, because operating costs for any 
year depend on the age distribution of the stock.
---------------------------------------------------------------------------

    \84\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales is lacking. In general 
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

    For the NOPR analysis, DOE received recent shipments data for 
rotary compressors from a number of stakeholders and subject matter 
experts. DOE received no adverse comments regarding the shipments 
projections presented in the NOPR of the equipment covered in this 
final rule, so DOE did not revise its overall approach to the shipments 
analysis for this final rule.
    The 2013 shipments estimates were disaggregated by compressor 
capacity in cubic feet per minute (``cfm''). To project future 
shipments of air compressors, DOE scaled the 2013 values using 
macroeconmic forecasts for Value of Total Manufacturing Shipments, and 
Commercial Floor Space trend from AEO 2016 for industrial and 
commercial sectors, respectively.
    Air compressors are used widely in both commercial and 
manufacturing/industrial sectors. DOE was not able to locate any 
information indicating what fraction of equipment is used in either 
sector. For the NOPR, DOE assumed that industrial/manufacturing 
processes require a greater volume of compressed air than commercial 
processes. Due to higher electrical load requirements in the 
industrial/manufacturing sector than in the commercial sector, DOE 
assumed that compressors greater than 50 cfm capacity are mainly used 
in manufacturing, and that compressors equal to or less than 50 cfm 
capacity are mainly used in commercial buildings.
    Sullivan-Palatek stated that DOE should not assume a hard break 
between commercial and industrial compressor at 50 cfm. Rather there is 
a gradual ``blend'' as capacity increases. (Sullivan-Palatek, No. 044 
Public Meeting Transcript at pp. 111-112) DOE agreed with this 
assessment and revised its distribution between industrial and 
commercial sectors by applying a more gradual shift as capacity 
increases. The assumed distribution of compressors to the commercial 
sector by capacity covered in this final rule are shown in Table IV.20.

                  Table IV.20--Distribution of Compressors to the Commercial Sector by Capacity
----------------------------------------------------------------------------------------------------------------
                                                                         Share of shipment  (percent)
          Full-load actual volume flow rate  (cfm)           ---------------------------------------------------
                                                               RP_FS_L_AC   RP_FS_L_WC   RP_VS_L_AC   RP_VS_L_WC
----------------------------------------------------------------------------------------------------------------
>=35 to <50.................................................           63           63           63           63
>=50 to <100................................................           31           31           31           31
>=100 to <200...............................................            6            6            6            6
>=200 to <300...............................................            0            0            0            0
>=500 to <1000..............................................            0            0            0            0
>=1,000 to <1250............................................            0            0            0            0
----------------------------------------------------------------------------------------------------------------

    For rotary equipment classes, DOE used CAGI test data for air 
compressors collected directly from manufacturers to distribute 
shipments into the different cooling type equipment classes. The 
equipment classes and their estimated market shares are shown in Table 
IV.21. DOE used the same shares for all years in the projection.

           Table IV.21--Share of Shipments by Equipment Class
------------------------------------------------------------------------
                                                           Market Share
        Equipment class                Description              (%)
------------------------------------------------------------------------
RP_FS_L_AC.....................  Rotary Screw, Fixed-                 70
                                  Speed, Lubricated, Air
                                  Cooled.
RP_FS_L_WC.....................  Rotary Screw, Fixed-                 13
                                  Speed, Lubricated,
                                  Liquid-Cooled.
RP_VS_L_AC.....................  Rotary Screw, Variable-              15
                                  Speed, Lubricated, Air
                                  Cooled.
RP_VS_L_WC.....................  Rotary Screw, Variable-               3
                                  Speed, Lubricated,
                                  Liquid-Cooled.
------------------------------------------------------------------------

    DOE recognizes that an increase in equipment price resulting from 
energy conservation standards may affect end-user decisions making 
regarding whether to purchase a new compressor, a refurbished one, or 
repair an existing failed unit. DOE has not found any information in 
the literature that indicates a demand price elasticity for commercial 
and industrial firms. In the NOPR, DOE used a medium elasticity of -0.5 
for commercial customers, and a lower elasticity (-0.25) for industrial 
customers.\85\ DOE used a lower elasticity for industrial customers 
because these customers are likely to place greater value on the 
reliability and efficiency provided by new equipment over the 
alternative of purchasing used equipment. DOE received no comments on 
its assumed purchase price elasticities presented in the NOPR analysis, 
and maintained these assumptions for this final rule.
---------------------------------------------------------------------------

    \85\ A price elasticity of -0.5 means that for every 1 percent 
increase in price, the demand for the product (i.e., shipments) 
would decline by 0.5 percent. An elasticity of 1 indicates very high 
elasticity of demand, whereas an elasticity of zero indicates no 
elasticity of demand. Elasticities are considered constant over 
time.
---------------------------------------------------------------------------

H. National Impact Analysis

    The NIA assesses the national energy savings and the national net 
present value from a national perspective of total consumer costs and 
savings expected to result from new or amended standards at specific 
efficiency levels. (``Consumer'' in this context refers to consumers of 
the covered equipment.) DOE calculates the NES and NPV for the 
potential standard levels considered based on projections of annual

[[Page 1556]]

equipment shipments, along with the annual energy consumption and total 
installed cost data from the energy use and LCC analyses.\86\ For the 
present analysis, DOE projected the energy savings, operating cost 
savings, equipment costs, and NPV of consumer benefits over the 
lifetime of air compressors sold from 2022 through 2051.
---------------------------------------------------------------------------

    \86\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

    DOE evaluates the impacts of potential standards for compressors by 
comparing a case without such standards with standards-case 
projections. For the no-new-standards case, DOE considers historical 
trends in efficiency and various forces that are likely to affect the 
mix of efficiencies over time. For the standards cases, DOE considers 
how a given standard would likely affect the market shares of equipment 
with efficiencies greater than the standard.
    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. Interested 
parties can review DOE's analyses by changing various input quantities 
within the spreadsheet. The NIA spreadsheet model uses typical values 
(as opposed to probability distributions) as inputs.
    Table IV.22 summarizes the inputs and methods DOE used for the NIA 
analysis for this final rule. Discussion of these inputs and methods 
follows the table. See chapter 10 of the final rule TSD for further 
details.

                   Table IV.22--Summary of Inputs and Methods for the National Impact Analysis
----------------------------------------------------------------------------------------------------------------
                             Inputs                                                   Method
----------------------------------------------------------------------------------------------------------------
Shipments......................................................  Annual shipments from shipments model.
Compliance Date of Standard....................................  Late 2021 (assumed Jan. 1, 2022 for analysis).
Efficiency Trends..............................................  No-new-standards case: Constant market shares.
Annual Energy Consumption per Unit.............................  Annual weighted-average values are a function
                                                                  of energy use at each TSL.
Total Installed Cost per Unit..................................  Annual weighted-average values are a function
                                                                  of cost at each TSL. Incorporates projection
                                                                  of future equipment prices based on historical
                                                                  data.
Annual Energy Cost per Unit....................................  Annual weighted-average values as a function of
                                                                  the annual energy consumption per unit and
                                                                  energy prices.
Repair and Maintenance Cost per Unit...........................  Annual values do not change with efficiency
                                                                  level.
Energy Prices..................................................  AEO 2016 projections (to 2040) and
                                                                  extrapolation thereafter.
Energy Site-to-Primary and FFC Conversion......................  Site-to-Primary: A time-series conversion
                                                                  factor based on AEO 2016. FFC: Utilizes data
                                                                  and projections published in AEO 2016.
Discount Rate..................................................  Three and seven percent.
Present Year...................................................  2016.
----------------------------------------------------------------------------------------------------------------

1. Equipment Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and for each of the standards 
cases. Section IV.F.1 of this document describes how DOE developed an 
energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered equipment classes for the first full year of anticipated 
compliance with a new standard.
    For the NOPR, DOE examined data on the number of air compressor 
designs by efficiency for 2006 through 2015 from manufacturer 
performance test reports. However, DOE could determine no clear trend 
from the examination of the data, and DOE had no data indicating what 
percentage of shipments are attributed to these more-efficient air 
compressors. Therefore, DOE did not apply a trend over time to air 
compressor efficiency.
    CAGI commented that it was not plausible to assume that that there 
is no change, over time, in the market share of more efficient 
equipment, and that it would be difficult to arrive at an exact figure. 
(CAGI, No. 0052 at p. 11)
    For the reasons described above, DOE maintained the approach from 
the NOPR for his final rule and did not apply a trend over time to air 
compressor efficiency in the no-new-standards case. However, DOE 
examined two scenarios where the efficiency of the market shifts to 
higher efficiency equipment over time. In the first scenario, the 
market shifts to higher efficiency levels at a rate of 0.5 percent each 
year; in the second scenario, the rate is 1 percent per year. The 
results of these scenarios can be found in appendix 10D of the final 
rule TSD.
    For each standards case, DOE used a ``roll-up'' scenario to 
establish the market shares by efficiency level for the year that 
compliance would be required with new standards (i.e., late 2021). 
While DOE could not determine a clear trend in efficiency improvement 
over time, nor could DOE identify any clear drivers for energy 
efficiency. DOE does acknowledge that the range of compressor 
efficiencies in the market varies widely, with the majority of 
equipment sold above baseline efficiency in the no-new-standards case. 
This distribution of efficiencies is in Table IV.19 where the no-new-
standards case DOE estimated that 88 percent of equipment sold is above 
baseline efficiency. Therefore, after the compliance year, DOE 
maintained consistency with the no-new-standards case and assumed no 
change in efficiency.
2. National Energy Savings
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered products between each 
potential standards case (TSL) and the case with no new 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 each higher 
efficiency standard case. 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 2016. Cumulative energy savings are the sum of the NES for each 
year over the timeframe of the analysis.
    The site-to-primary energy conversion factors are estimated by 
sector and end-

[[Page 1557]]

use. As there is no specific end-use for compressors for either the 
commercial or industrial sectors, in the NOPR DOE used conversion 
factors for refrigeration as a proxy because refrigeration has the 
potential to operate constantly as some compressors do in the field.
    Edison Electric Institute commented that using the site-to-source 
conversion factors for refrigerators as a proxy was incorrect, as most 
compressors do not operate like refrigerators. (EEI, Public Meeting 
Transcript, No. 0044 at p. 144) In response to this comment, for the 
final rule, DOE instead used an average of site-to-source conversion 
for all industrial and commercial end-uses.
    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 \87\ that EIA uses to prepare its Annual Energy Outlook. The FFC 
factors incorporate losses in production and delivery in the case of 
natural gas (including fugitive emissions) and additional energy used 
to produce and deliver the various fuels used by power plants. The 
approach used, for deriving FFC measures of energy use and emissions, 
is described in appendix 10A of the final rule TSD.
---------------------------------------------------------------------------

    \87\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2009, DOE/EIA-0581(2009), October 2009. 
Available at www.eia.gov/forecasts/aeo/index.cfm.
---------------------------------------------------------------------------

3. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are (1) total annual installed cost, (2) total 
annual operating costs (energy costs and repair and maintenance costs), 
and (3) a discount factor to calculate the present value of costs and 
savings. DOE calculates net savings each year as the difference between 
the no-new-standards case and each standards case in terms of total 
savings in operating costs versus total increases in installed costs. 
DOE calculates operating cost savings over the lifetime of each product 
shipped during the projection period.
    As discussed in section IV.F.1 of this document, DOE does not find 
a firm basis to project a trend in air compressor prices, so DOE used 
constant real prices as the default. To evaluate the effect of 
uncertainty regarding the price trend estimates, DOE investigated the 
impact of different product price projections on the consumer NPV for 
the considered TSLs for air compressors. In addition to the default 
price trend, DOE considered two equipment price sensitivity cases: (1) 
A high price decline case based on Air and Gas Compressor Manufacturer 
historical Producer Price Index (``PPI'') series \88\ and (2) a low 
price decline case based on AEO 2016 industrial equipment price trend. 
The derivation of these price trends and the results of these 
sensitivity cases are described in appendix 10C of the final rule TSD.
---------------------------------------------------------------------------

    \88\ U.S. Department of Labor, Bureau of Labor Statistics, Air & 
gas compressors, ex. compressors for ice making, refrigeration, or 
a/c equipment, Series ID: PCU33391233391211Z.
---------------------------------------------------------------------------

    The operating cost savings are energy cost savings, which are 
calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the average regional energy 
prices by a projection of annual national-average commercial and 
industrial energy price changes consistent with the cases described on 
page E-8 in AEO 2016,\89\ 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 variants of the AEO 2016 case that have 
lower and higher economic growth. Those cases have lower and higher 
energy price trends and the NIA results based on these cases are 
presented in appendix 10C of the final rule TSD.
---------------------------------------------------------------------------

    \89\ U.S. Department of Energy--Energy Information 
Administration. Annual Energy Outlook 2016 with Projections to 2040. 
Washington, DC. Available at www.eia.gov/forecasts/aeo/.
    The standards finalized in this rulemaking will take effect 
before the requirements of the Clean Power Plan (CPP) as modeled in 
the AEO 2016 Reference case, putting downward pressure on 
electricity prices relative to that case. Consequently, DOE used the 
more conservative price projections found in the AEO 2016 No-CPP 
case.
---------------------------------------------------------------------------

    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.\90\ The discount rates for the determination of 
NPV are in contrast to the discount rates used in the LCC analysis, 
which are designed to reflect a consumer's perspective. The 7-percent 
real value is an estimate of the average before-tax rate of return to 
private capital in the U.S. economy. The 3-percent real value 
represents the ``social rate of time preference,'' which is the rate at 
which society discounts future consumption flows to their present 
value.
---------------------------------------------------------------------------

    \90\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. 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 of the 
new or amended standard on identifiable subgroups of consumers that may 
be disproportionately affected. 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 small business consumers. DOE used the 
LCC and PBP spreadsheet model to estimate the impacts of the considered 
efficiency levels on this subgroup. Chapter 11 in the final rule TSD 
describes the consumer subgroup analysis.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of new 
energy conservation standards on manufacturers of compressors and to 
estimate the potential impacts of such standards on employment and 
manufacturing capacity. The MIA has both quantitative and qualitative 
aspects and includes analyses of projected industry cash flows, the 
INPV, investments in research and development (``R&D'') and 
manufacturing capital, and domestic manufacturing employment. 
Additionally, the MIA seeks to

[[Page 1558]]

determine how new energy conservation standards might affect 
manufacturing employment, capacity, and competition, as well as how 
standards contribute to overall regulatory burden. Finally, the MIA 
serves to identify any disproportionate impacts on manufacturer 
subgroups, including small business manufacturers.
    The quantitative part of the MIA primarily relies on the GRIM, an 
industry cash-flow model with inputs specific to this rulemaking. The 
key GRIM inputs include data on the industry cost structure, unit 
production costs, unit shipments, manufacturer markups, and investments 
in research and development (R&D) and manufacturing capital required to 
produce compliant products. The key GRIM outputs are the INPV, which is 
the sum of industry annual cash flows over the analysis period, 
discounted using the industry-weighted average cost of capital, and the 
impact to domestic manufacturing employment. The model uses standard 
accounting principles to estimate the impacts of more-stringent energy 
conservation standards on a given industry by comparing changes in INPV 
and domestic manufacturing employment between a no-new-standards case 
and the various standards cases (TSLs). To capture the uncertainty 
relating to manufacturer pricing strategies following new standards, 
the GRIM estimates a range of possible impacts under different markup 
scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as a potential standard's impact on manufacturing capacity, 
competition within the industry, the cumulative impact of other DOE and 
non-DOE regulations, and impacts on manufacturer subgroups. The 
complete MIA is outlined in chapter 12 of the final rule TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the compressor manufacturing 
industry based on the market and technology assessment, preliminary 
manufacturer interviews, and publicly available information. This 
included a top-down analysis of compressor manufacturers that DOE used 
to derive preliminary financial inputs for the GRIM (e.g., revenues; 
materials, labor, overhead, and depreciation expenses; selling, 
general, and administrative expenses (``SG&A''); and R&D expenses). DOE 
also used public sources of information to further calibrate its 
initial characterization of the compressor manufacturing industry, 
including company filings of form 10-K from the SEC,\91\ corporate 
annual reports, the U.S. Census Bureau's ``Economic Census'' \92\ and 
Hoover's reports to conduct this analysis.\93\
---------------------------------------------------------------------------

    \91\ U.S. Securities and Exchange Commission, Annual 10-K 
Reports (Various Years) (Available at: www.sec.gov/edgar/searchedgar/companysearch.html).
    \92\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2014) 
(Available at: http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t).
    \93\ Hoovers Inc. Company Profiles, Various Companies (Available 
at: www.hoovers.com).
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared a framework industry cash-flow 
analysis to quantify the potential impacts of new energy conservation 
standards on compressors. The GRIM uses several factors to determine a 
series of annual cash flows starting with the announcement of the 
standard and extending over a 30-year period following the compliance 
date of the standard. These factors include annual expected revenues, 
costs of sales, SG&A and R&D expenses, taxes, and capital expenditures. 
In general, energy conservation standards can affect manufacturer cash 
flow in three distinct ways: (1) Creating a need for increased 
investment, (2) raising production costs per unit, and (3) altering 
revenue due to higher per-unit prices and changes in sales volumes.
    In addition, during Phase 2, DOE developed interview guides to 
distribute to manufacturers of compressors in order to develop other 
key GRIM inputs, including product and capital conversion costs, and to 
gather additional information on the anticipated effects of energy 
conservation standards on revenues, direct employment, capital assets, 
industry competitiveness, and subgroup impacts.
    In Phase 3 of the MIA, DOE evaluated subgroups of manufacturers 
that may be disproportionately impacted by energy conservation 
standards or that may not be represented accurately by the average cost 
assumptions used to develop the industry cash-flow analysis. For 
example, small manufacturers, niche players, or manufacturers 
exhibiting a cost structure that greatly differs from the industry 
average could be more negatively affected. DOE identified one subgroup 
for a separate impact analysis: Small business manufacturers. The small 
business subgroup is discussed in section VII.B of this document, 
``Review Under the Regulatory Flexibility Act'' and in chapter 12 of 
the final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flow due to new 
standards that result in a higher or lower industry value. The GRIM 
uses a standard, annual discounted cash-flow analysis that incorporates 
manufacturer costs, markups, shipments, and industry financial 
information as inputs. The GRIM models changes in costs, distribution 
of shipments, investments, and manufacturer margins that could result 
from a new energy conservation standard. The GRIM spreadsheet uses the 
inputs to arrive at a series of annual cash flows, beginning in 2016 
(the reference year of the analysis) and continuing to 2051 (the end of 
the analysis period). DOE calculated INPVs by summing the stream of 
annual discounted cash flows during this period. For manufacturers of 
compressors, DOE used a real discount rate of 8.7-percent, which was 
derived from industry financials and then modified according to 
feedback received during manufacturer interviews.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the no-new-standards case and each 
standards case. The difference in INPV between the no-new-standards 
case and a standards case represents the financial impact of the new 
energy conservation standard on manufacturers. As discussed previously, 
DOE developed critical GRIM inputs using a number of sources, including 
publicly available data, results of the engineering analysis, and 
information gathered from industry stakeholders during the course of 
manufacturer interviews. The GRIM results are presented in section 
V.B.2 of this document. Additional details about the GRIM, the discount 
rate, and other financial parameters can be found in chapter 12 of the 
final rule TSD.
a. Manufacturer Production Costs
    Manufacturing higher-efficiency equipment is typically more 
expensive than manufacturing baseline equipment due to the use of more 
complex components, which are typically costlier than baseline 
components. The changes in the manufacturer production cost (``MPC'') 
of the analyzed equipment can affect the revenues, gross margins, and 
cash flow of the industry, making the equipment cost data key GRIM 
inputs for DOE's analysis.
    Costs associated with the MPC includes raw materials and purchased 
components, production labor, factory overhead, and production 
equipment depreciation. In the MIA, DOE used the

[[Page 1559]]

MPCs for each efficiency level calculated in the engineering analysis, 
as described in section IV.C.7 and further detailed in chapter 5 of the 
final rule TSD.
b. Shipments Projections
    The GRIM estimates manufacturer revenues based on total unit 
shipment projects and the distribution of those shipments by efficiency 
level. Changes in sales volumes and efficiency mix over time can 
significantly affect manufacturer finances. For this analysis, the GRIM 
uses the NIA's annual shipment projections derived from the shipments 
analysis from 2016 to 2051. The shipments model divides the shipments 
of compressors into specific market segments. The model starts from a 
historical reference year and calculates retirements and shipments by 
market segment for each year of the analysis period. This approach 
produces an estimate of the total product stock, broken down by age or 
vintage, in each year of the analysis period. In addition, the product 
stock efficiency distribution is calculated for the no-new-standards 
case and for each standards case for each equipment class. The NIA 
shipments forecasts are, in part, based on a roll-up scenario. The 
forecast assumes that a product in the no-new-standards case that does 
not meet the standard under consideration would ``roll up'' to meet the 
new standard beginning in the compliance year of 2022. See section IV.G 
of this document and chapter 9 of the final rule TSD for additional 
details.
c. Product and Capital Conversion Costs
    New energy conservation standards for compressors could cause 
manufacturers to incur conversion costs to bring their production 
facilities and equipment designs into compliance. DOE evaluated the 
level of conversion-related expenditures that would be needed to comply 
with each considered efficiency level in each product class. For the 
MIA, DOE classified these conversion costs into two major groups: (1) 
Product conversion costs; and (2) capital conversion costs. Product 
conversion costs are investments in research, development, testing, 
marketing, and other non-capitalized costs necessary to make product 
designs comply with new energy conservation standards. Capital 
conversion costs are investments in property, plant, and equipment 
necessary to adapt or change existing production facilities such that 
new compliant product designs can be fabricated and assembled. To 
evaluate the level of capital conversion costs manufacturers would 
likely incur to comply with new energy conservation standards, DOE used 
manufacturer interviews to gather data on the anticipated level of 
capital investment that would be required at each efficiency level. 
Based on equipment listings, provided by the engineering analysis, DOE 
developed industry average capital expenditure by weighting 
manufacturer feedback based on model offerings as a proxy for market-
share. DOE supplemented manufacturer comments and tailored its analyses 
with information obtained during engineering analysis described in 
chapter 5 of the final rule TSD.
    DOE assessed the product conversion costs at each considered 
efficiency level by integrating data from quantitative and qualitative 
sources. DOE received feedback regarding the potential costs of each 
efficiency level from multiple manufacturers to estimate product 
conversion costs (e.g., R&D expenditures, certification costs). DOE 
combined this information with product listings to estimate how much 
manufacturers would have to spend on product development and product 
testing at each efficiency level. Manufacturer data were aggregated to 
better reflect the industry as a whole and to protect confidential 
information.
    Ultimately, for the MIA, DOE modeled two standards-case conversion 
cost scenarios to represent uncertainty regarding the potential impacts 
on manufacturers following the implementation of energy conservation 
standards. These scenarios and figures used in the GRIM are further 
discussed in chapter 12 of the final rule TSD.
d. Markup Scenarios
    As discussed previously, MSPs include direct manufacturing 
production costs (i.e., labor, materials, and overhead estimated in 
DOE's MPCs) and all non-production costs (i.e., SG&A, R&D, and 
interest), along with profit. To calculate the MSPs in the GRIM, DOE 
applied a baseline manufacturer markup to the MPCs estimated in the 
engineering analysis for each product class and efficiency level in 
both the no-new-standards case and the standards case.
    With a baseline markup, DOE applied a uniform ``gross margin 
percentage'' for each equipment class, across all efficiency levels. 
This assumes that manufacturers would be able to maintain the same 
amount of profit as a percentage of revenues at all efficiency levels 
within an equipment class. As production costs increase with 
efficiency, the absolute dollar markup will increase as well. As 
discussed in section V.B.2.a, DOE estimated the average non-production 
cost baseline markup--which includes SG&A expenses, R&D expenses, 
interest, and profit--to be 1.35 for lubricated rotary compressors. For 
the purpose of this final rule analysis, the GRIM only analyzed 
lubricated, rotary compressors. All results in the MIA are presented 
for lubricated rotary compressors only. Additional details on markups 
can be found in chapter 12 of the final rule TSD.
3. Discussion of Comments
    During the notice of proposed rulemaking public meeting, interested 
parties commented on the assumptions and results of the analyses. 
Verbal and written comments addressed several topics, including 
concerns regarding EU harmonization, testing impacts, impacts on 
packagers, and small business impacts.
a. EU Harmonization
    Several stakeholders commented that DOE should consider the 
cumulative regulatory burden of simultaneous energy conservation 
standards that the industry is currently facing, particularly with the 
European Union's standards. In a joint comment, stakeholders stated 
that DOE should refine its analysis to include the cost effectiveness 
of full harmonization with the pending EU Compressor energy efficiency 
standards. Some manufacturers have already begun preparations for the 
proposed EU standard. Additionally, stakeholders commented that DOE 
should analyze the returns from the increased scale of production and a 
shared learning curve with international standards harmonization to 
consider the differential cost of development for products designed to 
comply. If U.S. and EU standards are not harmonized, these 
manufacturers noted they would either have to carry a greater number of 
equipment lines to comply with efficiency standards in both domestic 
and European markets, or sell a single set of high efficiency equipment 
in both markets. Either option will be cumbersome for manufacturers. 
(ASAP; ACEEE; NEEA; NRDC; NEEP; ASE, No. 60 at p. 3)
    On the other hand, Sullivan-Palatek commented that some 
manufacturers only have U.S. operations and cannot take advantage of 
harmonizing with EU standards. Therefore, it would not be beneficial 
for all manufacturers to harmonize with EU standards. (Sullivan-
Palatek, Public Meeting Transcript No. 44 at p. 127)
    In response, DOE acknowledges that harmonization with EU standards 
would reduce cumulative regulatory

[[Page 1560]]

burden for some manufacturers. In the test procedure final rule, DOE 
excluded non-lubricated rotary compressors from the scope of test 
procedures in part to help manufacturers harmonize with the EU's 
standards. In this final rule, DOE modeled a low conversion cost 
scenario that accounts for potential synergies with the potential EU 
standard. In this scenario, industry has lower total conversion costs 
based synergies with the EU Standards, as proposed in EU's ``Lot 31'' 
analysis, which set air compressor standards for both reciprocating and 
rotary air compressors. As such, EU standards were considered as a 
factor in DOE's analysis. Further, to account for feedback that 
harmonization with EU standards would not be beneficial to industry, 
DOE modeled a high conversion cost scenario that reflects higher level 
of investments by manufacturers.
b. Testing Impacts
    Sullivan-Palatek and Castair stated that a complex sampling and 
compliance program is a burden to such a low-volume specialty industry, 
particularly due to the staff, software and testing facilities 
required. These commenters were concerned that the test procedure, even 
with AEDMs, do not align with current testing methods used by the 
industry over the past 10 years. (Sullivan-Palatek, Public Meeting 
Transcript No. 0044 at p. 154-155; Castair, No. 45 at pp. 1-2) To 
address comments raised in both the test procedure rulemaking and the 
standards rulemaking, DOE amended the compressor test procedure to 
align as closely as possible to ISO 1217:2009 in order to reduce 
manufacturer burden. With these modifications, the test methods 
established in the final rule are intended to produce results 
equivalent to those produced historically under ISO 1217:2009. 
Consequently, if historical test data is consistent with values that 
will be generated when testing with the test methods established in 
this final rule, then manufacturers may use this data for the purposes 
of representing any metrics subject to representations requirements. 
(DOE, Public Meeting Transcript, No. 0016 at p. 136)
    Jenny Products and Compressed Air Systems commented that the high 
cost to comply with the test procedure and standard would place a 
significant burden on small manufacturers. (Jenny Products, No. 58 at 
p. 5; Compressed Air Systems, No. 61 at p. 4) Additionally, Jenny and 
CAGI raised concerns that the testing process would require technical 
resources that would come at the expense of other priorities, such as 
customer service. (Jenny Products, No. 58 at p. 5; CAGI, No. 52 at p. 
3)
    Compressed Air Systems noted that testing four to five units based 
on the NOPR test procedure could cost up to $125,000 for a 
manufacturer. Most domestic small air compressor manufacturers produce 
small quantities of each model offered, which is a heavy cost burden to 
smaller companies with limited access to capital. (Compressed Air 
Systems, No. 61 at p. 4)
    DOE understands the commenter's concerns about the scope of the 
test procedure as defined in the test procedure NOPR, which included 
many low-shipment volume or custom compressor models. In the test 
procedure final rule, DOE takes two key steps to address commenters' 
concerns and to reduce the burden of testing, especially for low-volume 
equipment. First, DOE significantly limits the scope of the test 
procedure final rule, as compared to the scope proposed in the test 
procedure NOPR. Second, DOE adopts provisions allowing the use of an 
alternative efficiency determination method (AEDM), in lieu of testing.
    The revised scope aligns with the scope recommended by CAGI and 
other manufacturers. Further, the 10 to 200 hp scope established in the 
test procedure final rule falls within the scope of the CAGI 
Performance Verification Program for rotary compressors. A complete 
discussion can be found in the test procedure final rule.
    In addition, the test procedure final rule adopts provisions 
allowing for the use of AEDMs. AEDMs are mathematical calculations or 
models that manufacturers may use to predict the energy efficiency or 
energy consumption characteristics of a basic model. The use of AEDMs 
are intended to reduce the need for physical testing and to reduce the 
overall testing burden for manufacturers.
c. Impacts on Packagers
    During the NOPR public meeting, Sullivan-Palatek and Compressed Air 
Systems stated that packagers would incur engineering expenses as a 
result of the standard. They requested DOE incorporate cost estimates 
for packagers to comply with the standard in the revised analysis. 
(Compressed Air Systems; Sullivan-Palatek, Public Meeting Transcript 
No. 44 at p. 138-140) In written comments, Jenny Products stated that 
DOE should include in its cost estimate engineering redesign and 
certification costs for packagers. Jenny Products stated that the 
redesign of air ends by OEMs will only partially help packagers meet 
the standard. (Jenny Products, No. 58 at p. 4) In written comments, 
Sullivan-Palatek estimated packagers could have engineering redesign 
costs that exceed $1 million per company, depending on the number of 
models they offer. (Sullivan-Palatek, No. 51 at p. 1-2) Additionally, 
Castair requested that American air compressor packagers be exempt from 
this regulation (Castair, No. 18 at p. 2). (CAGI, No. 52 at p. 3) 
(Sullivan-Palatek, No. 51 at p. 2)
    Sullivan-Palatek commented that contrary to DOE's assumption, this 
standard will result in significant production redesign costs for 
compressor packagers. They argue that the cost to packagers could in 
fact exceed $1 million per company because many of the energy gains 
required by this standard come not only from air end redesign, but also 
from packaging. (Sullivan-Palatek, No. 51 at p. 1-2) Additionally, 
Castair requested that American air compressor packagers be exempt from 
this regulation (Castair, No. 18 at p. 2). (CAGI, No. 52 at p. 3)
    Although DOE is not exempting packagers from the analysis, DOE has 
revised its analysis to calculate and include costs associated with 
packagers in its final rule analysis. DOE estimates that packagers will 
incur between $10.5 and $15.2 million in total engineering redesign 
costs to comply with the energy conservation standards of this final 
rule. As such, DOE has included this cost to packagers in total 
conversion costs estimated at TSL 2, which are between $98.1 million 
and $121.3 million for the industry. Details of the conversion cost 
methodology are described in chapter 12 of the final rule TSD.
d. Small Business Impacts
    Many manufacturers stated that small businesses will be negatively 
affected by the proposed regulation compared to their larger 
multinational counterparts. Sullivan-Palatek stated that it is 
difficult for small businesses to access capital compared to their 
larger competitors. (Sullivan-Palatek, Public Meeting Transcript No. 44 
at p. 141-143) A few manufacturers also noted that a stringent standard 
can cause a disproportionate cost burden to small business. This burden 
will likely cause many small businesses to exit the rotary compressor 
business or to be acquired by larger companies. (Sullivan-Palatek, No. 
51 at p. 2-9) (Castair, No. 52 at p. 3) (Compressed Air Systems, No. 61 
at p. 4) Often times, these small businesses, both manufacturers and 
packagers, employ specialized workers that may not be able to find a 
new job where they can use their skills.

[[Page 1561]]

(Sullivan-Palatek, No. 51 at p. 9; Castair, No. 45 at p. 1; CAGI, No. 
52 at p. 3)
    Consistent with the requirements of the Regulatory Flexibility Act 
(5 U.S.C. 601, et seq.), as amended, the Department analyzed the 
expected impacts of an energy conservation standard on small business 
compressor manufacturers directly regulated by DOE's standards. DOE 
understands that small manufacturers may be significantly affected by 
an energy conservation standard. These impacts are discussed in detail 
in section VII.B of this document. Furthermore, DOE analyzes the 
impacts of a compressors energy conservation standard on domestic 
direct employment in section V.B.2.b of this final rule.
    Additionally, Sullivan-Palatek questioned how a smaller firm, such 
as their own, with the same number of models requiring conversion as a 
large manufacturer, would have fewer conversion costs. The company 
requested an independent analysis by the Department of Justice. 
(Sullivan-Palatek, No. 51 at p. 8-9)
    In the NOPR, DOE reported an average conversion cost for small 
manufacturers. Depending on the number of models offered and equipment 
efficiencies, small manufacturers may find that their conversion costs 
fall either above or below the small business average. In the NOPR and 
final rule analyses, DOE identified two small OEMs. For those two small 
OEMs, DOE identified 23 failing models or models that do not comply 
with the standard. DOE notes that 21 of the 23 failing models are 
manufactured by one small business OEM, which is Sullivan-Palatek. 
Sullivan-Palatek has a significant portion of failing models is above 
the industry average failure rate. A more detailed analysis of small 
business impacts can be found in section VI.B of this document.
    During the notice of proposed rulemaking public meeting, DOE 
cautioned stakeholders that Small Business Administration (``SBA'') 
size standards may shift before the final rule is published. Sullair 
and CAGI commented that with an increased size standard, from 500 
employees to 1,000 employees, the number of OEMs identified would 
increase as well. (CAGI, Public Meeting Transcript No. 44 at p. 141; 
Sullair, Public Meeting Transcript No. 44 at p. 140)
    For the compressor manufacturing industry, the SBA sets size 
threshold, which defines those entities classified as small businesses 
for the purpose of this statue. Compressor manufacturers are classified 
under NAICS 333912, ``Air and Gas Compressor Manufacturing.'' During 
the NOPR stage, the SBA set a threshold of 500 employees or less for an 
entity to be considered as a small business in this industry. In 
February 2016, as codified in 13 CFR part 121, the SBA changed size 
standards for NAICS code 333912 to 1,000 employees or less. Therefore, 
for the purpose of this final rule, DOE has identified 22 small 
manufacturers that meet the employee threshold defined by the SBA. The 
manufacturer impact analysis and regulatory flexibility analysis have 
been updated in the final rule to reflect the changes in SBA size 
standards.
    Manufacturers stated that there are between 10-100 more small 
businesses affected by this rulemaking that were not previously 
identified by DOE during the NOPR stage. With a number of small 
businesses unidentified, many were not notified or contacted for 
feedback prior to the regulation. Jenny Products noted DOE did not 
contact them during the NOPR stage. (Sullivan-Palatek, No. 51 at p. 1-
2; Jenny Products, No. 58 at p. 4-5; Compressed Air Systems, No. 61 at 
p. 2; Castair, No. 45 at p. 2) In a written comment, Compressed Air 
Systems provided a list of sixteen potential small businesses that 
could be affected by this final rule. They also noted that while DOE's 
analysis shows that most units manufactured by small businesses can 
comply with the standards of this final rule, small businesses will 
still face high burdens testing each model. (Compressed Air Systems, 
No. 61 at p. 2-5) As such, Compressed Air Systems asked that DOE 
conduct a more thorough survey of domestic small businesses to 
understand how a stringent standard will lessen their ability to remain 
competitive in the market. (Compressed Air Systems, No. 61 at p. 2-5)
    DOE recognizes that small manufacturers may be substantially 
impacted by energy conservation standards. Again, DOE notes in the 
Regulatory Flexibility Act, section VI.B of this final rule, that small 
manufacturers are not expected to face significantly higher conversion 
costs than their larger competitors. In response to the list of 
manufacturers provided by Compressed Air Systems, DOE reviewed this 
list and identified two additional entities that produce covered 
equipment. Of these two entities, one was a large manufacturer and the 
other was a domestic small business that packages and assembles covered 
equipment. DOE has updated its manufacturer count and analyses to 
reflect these additions. During the NOPR stage, DOE attempted to 
contact all small manufacturers identified at the time, including Jenny 
Products. Only two small manufacturers chose to participate in 
interviews with DOE.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions to emissions of all species 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion. The associated emissions are referred 
to as upstream emissions.
    The analysis of power sector emissions uses marginal emissions 
factors that were derived from data in AEO 2016, as described in 
section IV.M of this document. 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.\94\ 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.
---------------------------------------------------------------------------

    \94\ 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.
    The AEO incorporates the projected impacts of existing air quality 
regulations on emissions. AEO 2016 generally represents current 
legislation and environmental regulations, including recent government 
actions, for which implementing regulations were available as of 
February 29, 2016. 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

[[Page 1562]]

nationwide and regional emissions cap-and-trade programs. Title IV of 
the Clean Air Act sets an annual emissions cap on SO2 for 
affected EGUs in the 48 contiguous States and the District of Columbia 
(DC). (42 U.S.C. 7651 et seq.) SO2 emissions from 28 eastern 
States and DC were also limited under the Clean Air Interstate Rule 
(``CAIR''). 70 FR 25162 (May 12, 2005). CAIR created an allowance-based 
trading program that operates along with the Title IV program. In 2008, 
CAIR was remanded to EPA by the U.S. Court of Appeals for the District 
of Columbia Circuit, but it remained in effect.\95\ 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,\96\ 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.\97\ On October 
23, 2014, the D.C. Circuit lifted the stay of CSAPR.\98\ Pursuant to 
this action, CSAPR went into effect (and CAIR ceased to be in effect) 
as of January 1, 2015.\99\ AEO 2016 incorporates implementation of 
CSAPR.
---------------------------------------------------------------------------

    \95\ See North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), 
modified on rehearing, 550 F.3d 1176 (D.C. Cir. 2008).
    \96\ See EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 
(D.C. Cir. 2012).
    \97\ See EPA v. EME Homer City Generation, L.P. 134 S. Ct. 1584 
(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.
    \98\ See EME Homer City Generation, L.P. v. EPA, Order (D.C. 
Cir. filed October 23, 2014) (No. 11-1302).
    \99\ On July 28, 2015, the D.C. Circuit issued its opinion 
regarding the remaining issues raised with respect to CSAPR that 
were remanded by the Supreme Court. The D.C. Circuit largely upheld 
CSAPR but remanded to EPA without vacatur certain States' emission 
budgets for reconsideration. EME Homer City Generation, LP v. EPA, 
795 F.3d 118 (D.C. Cir. 2015).
---------------------------------------------------------------------------

    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 
emission 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 years, 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 final 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 
2016 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 CSPAR, so it is 
unlikely that excess SO2 emissions allowances resulting from 
the lower electricity demand will be needed or used to permit 
offsetting increases in SO2 emissions by any regulated 
EGU.\100\ Because reduced electricity demand (and therefore reduced 
SO2 emissions) will no longer be used to offset increases in 
SO2 emissions elsewhere, DOE believes that energy 
conservation standards that decrease electricity generation will 
generally reduce SO2 emissions in 2016 and beyond.
---------------------------------------------------------------------------

    \100\ DOE notes that on June 29, 2015, the U.S. Supreme Court 
ruled that the EPA erred when the agency concluded that cost did not 
need to be considered in the finding that regulation of hazardous 
air pollutants from coal- and oil-fired electric utility steam 
generating units (``EGUs'') is appropriate and necessary under 
section 112 of the Clean Air Act (``CAA''). Michigan v. EPA, 135 S. 
Ct. 2699 (2015). The Supreme Court did not vacate the MATS rule, and 
DOE has tentatively determined that the Court's decision on the MATS 
rule does not change the assumptions regarding the impact of energy 
conservation standards on SO2 emissions. Further, the 
Court's decision does not change the impact of the energy 
conservation standards on mercury emissions. The EPA, in response to 
the U.S. Supreme Court's direction, has now considered cost in 
evaluating whether it is appropriate and necessary to regulate coal- 
and oil-fired EGUs under the CAA. EPA concluded in its final 
supplemental finding that a consideration of cost does not alter the 
EPA's previous determination that regulation of hazardous air 
pollutants, including mercury, from coal- and oil-fired EGUs, is 
appropriate and necessary. 79 FR 24420 (April 25, 2016). The MATS 
rule remains in effect, but litigation is pending in the D.C. 
Circuit Court of Appeals over EPA's final supplemental finding MATS 
rule.
---------------------------------------------------------------------------

    CSAPR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia. Energy conservation standards are 
expected to have little effect on NOX emissions in those 
States covered by CSAPR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NOX emissions from other 
facilities. However, standards would be expected to reduce 
NOX emissions in the States not affected by the caps, so DOE 
estimated NOX emissions reductions from the standards 
considered in this final rule for these States.
    The MATS limit mercury (Hg) 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 2016, 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, CH4, N2O and NOX that 
are expected to result from each of the TSLs considered. In order to 
make this calculation analogous to the calculation of the NPV of 
consumer benefit, DOE considered the reduced emissions expected to 
result over the lifetime of products shipped in the projection period 
for each TSL. This section summarizes the basis for the values used for 
monetizing the emissions benefits and presents the values considered in 
this final rule.
1. Social Cost of Carbon
    The Social Cost of Carbon (``SC-CO2'') 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 SC-CO2 
are provided in dollars per metric ton of CO2. A domestic 
SC-CO2 value is meant to reflect the value of damages in the 
United States resulting from a unit change in CO2 emissions, 
while a global SC-CO2 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

[[Page 1563]]

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 SC-CO2 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 SC-
CO2 estimates, technical experts from numerous agencies met 
on a regular basis to consider public comments, explore the technical 
literature in relevant fields, and to discuss key model inputs and 
assumptions. The main objective of this process was to develop a range 
of SC-CO2 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 SC-CO2 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 \101\ 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.
---------------------------------------------------------------------------

    \101\ 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, SC-
CO2 estimates can be useful in estimating the social 
benefits of reducing CO2 emissions. Although any numerical 
estimate of the benefits of reducing carbon dioxide emissions is 
subject to some uncertainty, that does not relieve DOE of its 
obligation to attempt to factor those benefits into its cost-benefit 
analysis. Moreover, the Interagency Working Group (``IWG'') SC-
CO2 estimates are supported by the existing scientific and 
economic literature. As a result, DOE has relied on the IWG SC-
CO2 estimates in quantifying the social benefits of reducing 
CO2 emissions. DOE estimates the benefits from reduced (or 
costs from increased) emissions in any future year by multiplying the 
change in emissions in that year by the SC-CO2 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 current SC-CO2 
values reflect the IWG's best assessment, based on current data, of the 
societal effect of CO2 emissions. The IWG 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.
    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 SC-
CO2 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 that represented the first sustained 
interagency effort within the U.S. government to develop an SC-
CO2 estimate for use in regulatory analysis. The results of 
this preliminary effort were presented in several proposed and final 
rules issued by DOE and other agencies.
b. Current Approach and Key Assumptions
    After the release of the interim values, the IWG reconvened on a 
regular basis to generate improved SC-CO2 estimates. 
Specifically, the IWG considered public comments and further explored 
the technical literature in relevant fields. It relied on three 
integrated assessment models (``IAM'') commonly used to estimate the 
SC-CO2: 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 SC-CO2 
values that were developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models, while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the IWG 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 IWG selected four sets of SC-CO2 values for 
use in regulatory analyses. Three sets of values are based on the 
average SC-CO2 from the three integrated assessment models, 
at discount rates of 2.5-, 3-, and 5-percent. The fourth set, which 
represents the 95th percentile SC-CO2 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 SC-CO2 distribution. The values grow in real 
terms over time. Additionally, the IWG determined that a range of 
values from 7-percent to 23-percent should be used to adjust the global 
SC-CO2 to calculate domestic effects,\102\ although 
preference is given to consideration of the global benefits of reducing 
CO2

[[Page 1564]]

emissions. Table IV-23 presents the values in the 2010 IWG report.\103\
---------------------------------------------------------------------------

    \102\ 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.
    \103\ 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. 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

                               Table IV-23--Annual SCC Values From 2010 IWG Report
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                    Discount rate and statistic
                                                 ---------------------------------------------------------------
                                                        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
----------------------------------------------------------------------------------------------------------------

    In 2013 the IWG released an update (which was revised in July 2015) 
that contained SC-CO2 values that were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\104\ DOE used 
these values for this final rule. Table IV-24 shows the four sets of 
SC-CO2 estimates from the 2013 interagency update (revised 
July 2015) in 5-year increments from 2010 through 2050. The full set of 
annual SC-CO2 estimates from 2010 through 2050 is reported 
in appendix 14A of the final rule TSD. The central value that emerges 
is the average SC-CO2 across models at the 3-percent 
discount rate. However, for purposes of capturing the uncertainties 
involved in regulatory impact analysis, the IWG emphasizes the 
importance of including all four sets of SC-CO2 values.
---------------------------------------------------------------------------

    \104\ 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. 
www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.

                   Table IV-24--Annual SC-CO2 Values From 2013 IWG Update (Revised July 2015)
                                           [2007$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                    Discount rate and statistic
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              10              31              50              86
2015............................................              11              36              56             105
2020............................................              12              42              62             123
2025............................................              14              46              68             138
2030............................................              16              50              73             152
2035............................................              18              55              78             168
2040............................................              21              60              84             183
2045............................................              23              64              89             197
2050............................................              26              69              95             212
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SC-CO2 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 SC-
CO2. 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.
    DOE converted the values from the 2013 interagency report (revised 
July 2015) 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 SC-CO2 cases, the values for 
emissions in 2020 are $13.5, $47.4, $69.9, and $139 per metric ton 
avoided (values expressed in 2015$). DOE derived values after 2050 
based on the trend in 2010-2050 in each of the four cases in the 
interagency update.

[[Page 1565]]

    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SC-CO2 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 SC-
CO2 values in each case.
    DOE received several comments on the development of and the use of 
the SCC values in its analyses. A group of trade associations led by 
the U.S. Chamber of Commerce objected to DOE's continued use of the SCC 
in the cost-benefit analysis and stated that the SCC calculation should 
not be used in any rulemaking until it undergoes a more rigorous 
notice, review, and comment process. (U.S. Chamber of Commerce, No. 
0050 at p. 4) The Cato Institute stated that the current SCC estimates 
are discordant with the best scientific literature on the equilibrium 
climate sensitivity and the fertilization effect of carbon dioxide, and 
are based upon the output of integrated assessment models that have 
little utility because of their great uncertainties. The Cato Institute 
stated that until the SCC values are corrected, the SCC should be 
barred from use in this and all other Federal rulemakings. (Cato 
Institute, No. 0043 at pp. 1-2) IECA stated that before DOE applies any 
SCC estimate in its rulemaking, DOE must correct the methodological 
flaws that commenters have raised about the IWG's SCC estimate. IECA 
referenced a U.S. Government Accountability Office report that 
highlights severe uncertainties in SCC values. (IECA, No. 0048 at p. 2)
    In contrast, the Joint Advocates stated that only a partial 
accounting of the costs of climate change (those most easily monetized) 
can be provided, which inevitably involves incorporating elements of 
uncertainty. The Joint Advocates commented that accounting for the 
economic harms caused by climate change is a critical component of 
sound benefit-cost analyses of regulations that directly or indirectly 
limit greenhouse gases. The Joint Advocates stated that several 
Executive Orders direct Federal agencies to consider non-economic costs 
and benefits, such as environmental and public health impacts. (Joint 
Advocates, No. 0047 at pp. 2-3) Furthermore, the Joint Advocates argued 
that without an SCC estimate, regulators would by default be using a 
value of zero for the benefits of reducing carbon pollution, thereby 
implying that carbon pollution has no costs. The Joint Advocates stated 
that it would be arbitrary for a Federal agency to weigh the societal 
benefits and costs of a rule with significant carbon pollution effects 
but to assign no value at all to the considerable benefits of reducing 
carbon pollution. (Joint Advocates, No. 0047 at p. 3)
    The Joint Advocates stated that assessment and use of the 
integrated assessment models (IAM) in developing the SCC values has 
been transparent. The Joint Advocates further noted that repeated 
opportunities for public comment demonstrate that the IWG's SCC 
estimates were developed and are being used transparently. (Joint 
Advocates, No. 0047 at p. 4) The Joint Advocates stated that (1) the 
IAMs used reflect the best available, peer-reviewed science to quantify 
the benefits of carbon emission reductions; (2) uncertainty is not a 
valid reason for rejecting the SCC analysis, and (3) the IWG was 
rigorous in addressing uncertainty inherent in estimating the economic 
cost of pollution. (Joint Advocates, No. 0047 at pp. 5, 17-18, 18-19) 
The Joint Advocates added that the increase in the SCC estimate in the 
2013 update reflects the growing scientific and economic research on 
the risks and costs of climate change, but is still very likely an 
underestimate of the SCC. (Joint Advocates, No. 0047 at p. 4)
    In response to the comments on the SCC, in conducting the 
interagency process that developed the SCC values, technical experts 
from numerous agencies met on a regular basis to consider public 
comments, explore the technical literature in relevant fields, and 
discuss key model inputs and assumptions. Key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates. These uncertainties and model differences are discussed in 
the IWG's reports, as are the major assumptions. Specifically, 
uncertainties in the assumptions regarding climate sensitivity, as well 
as other model inputs such as economic growth and emissions 
trajectories, are discussed and the reasons for the specific input 
assumptions chosen are explained. However, the three integrated 
assessment models used to estimate the SCC are frequently cited in the 
peer-reviewed literature and were used in the last assessment of the 
IPCC. In addition, new versions of the models that were used in 2013 to 
estimate revised SCC values were published in the peer-reviewed 
literature. The GAO report mentioned by IECA noted that the working 
group's processes and methods used consensus-based decision making, 
relied on existing academic literature and models, and took steps to 
disclose limitations and incorporate new information.\105\ Although 
uncertainties remain, the revised SCC values are based on the best 
available scientific information on the impacts of climate change. The 
current estimates of the SCC have been developed over many years, using 
the best science available, and with input from the public.\106\ DOE 
notes that not using SCC estimates because of uncertainty would be 
tantamount to assuming that the benefits of reduced carbon emissions 
are zero, which is inappropriate. Furthermore, the commenters have not 
offered alternative estimates of the SCC that they believe are more 
accurate.
---------------------------------------------------------------------------

    \105\ www.gao.gov/products/GAO-14-663. (Last accessed Sept. 22, 
2016)
    \106\ In November 2013, OMB announced a new opportunity for 
public comment on the interagency technical support document 
underlying the revised SCC estimates. In July 2015, OMB published a 
detailed summary and formal response to the many comments that were 
received. See www.whitehouse.gov/blog/2015/07/02/estimating-benefits-carbon-dioxide-emissions-reductions. OMB also stated its 
intention to seek independent expert advice on opportunities to 
improve the estimates, including many of the approaches suggested by 
commenters.
---------------------------------------------------------------------------

    IECA stated that the social cost of carbon places U.S. 
manufacturing at a distinct competitive disadvantage. IECA added that 
the higher SCC cost drives manufacturing companies offshore and 
increases imports of more carbon-intensive manufactured goods. (IECA, 
No. 0048 at pp. 1-2) The SCC is not a cost imposed on any 
manufacturers. It is simply a metric that Federal agencies use to 
estimate the societal benefits of policy actions that reduce 
CO2 emissions.
    IECA stated that the SCC estimates must be made consistent with OMB 
Circular A-4, and noted that it uses a lower discount rate than 
recommended by OMB Circular A-4 and values global benefits rather than 
solely U.S. domestic benefits. (IECA, No. 0048 at p. 5) The Cato 
Institute also stated that the SCC approach is at odds with existing 
OMB guidelines for preparing regulatory analyses. (Cato Institute, No. 
0043 at p. 1)
    OMB Circular A-4 provides two suggested discount rates for use in 
regulatory analysis: 3-percent and 7-percent. Circular A-4 states that 
the 3 percent discount rate is appropriate for ``regulation [that] 
primarily and directly affects private consumption (e.g., through 
higher consumer prices for goods and services).'' The interagency 
working group that developed the SCC values for use by Federal agencies 
examined the economics literature and concluded that the consumption 
rate of interest is the correct concept to use in evaluating the net 
social costs of a

[[Page 1566]]

marginal change in CO2 emissions, as the impacts of climate 
change are measured in consumption-equivalent units in the three models 
used to estimate the SCC. The interagency working group chose to use 
three discount rates to span a plausible range of constant discount 
rates: 2.5-, 3-, and 5-percent per year. The central value, 3-percent, 
is consistent with estimates provided in the economics literature and 
OMB's Circular A-4 guidance for the consumption rate of interest.
    Regarding the use of global SCC values, DOE's analysis estimates 
both global and domestic benefits of CO2 emissions 
reductions. Following the recommendation of the IWG, DOE places more 
focus on a global measure of SCC. The climate change problem is highly 
unusual in at least two respects. First, it involves a global 
externality: Emissions of most greenhouse gases contribute to damages 
around the world even when they are emitted in the United States. 
Consequently, to address the global nature of the problem, the SCC must 
incorporate the full (global) damages caused by GHG emissions. Second, 
climate change presents a problem that the United States alone cannot 
solve. Even if the United States were to reduce its greenhouse gas 
emissions to zero, that step would be far from enough to avoid 
substantial climate change. Other countries would also need to take 
action to reduce emissions if significant changes in the global climate 
are to be avoided. Emphasizing the need for a global solution to a 
global problem, the United States has been actively involved in seeking 
international agreements to reduce emissions and in encouraging other 
nations, including emerging major economies, to take significant steps 
to reduce emissions. When these considerations are taken as a whole, 
the interagency group concluded that a global measure of the benefits 
from reducing U.S. emissions is preferable. DOE's approach is not in 
contradiction of the requirement to weigh the need for national energy 
conservation, as one of the main reasons for national energy 
conservation is to contribute to efforts to mitigate the effects of 
global climate change.
    IECA stated that the social cost of carbon value is unrealistically 
high in comparison to carbon market prices. (IECA, No. 0048 at p. 3) 
The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year, whereas 
carbon trading prices in existing markets are simply a function of the 
demand and supply of tradable permits in those markets. Such prices 
depend on the arrangements in specific carbon markets, and bear no 
necessary relation to the damages associated with an incremental 
increase in carbon emissions.
2. Social Cost of Methane and Nitrous Oxide
    The Joint Advocates stated that EPA and other agencies have begun 
using a methodology developed to specifically measure the social cost 
of methane in recent proposed rulemakings, and recommended that DOE 
should use the social cost of methane metric to more accurately reflect 
the true benefits of energy conservation standards. They stated that 
the methodology in the study used to develop the social cost of methane 
provides reasonable estimates that reflect updated evidence and provide 
consistency with the Government's accepted methodology for estimating 
the SCC. (Joint Advocates, No. 0047 at pp. 19-20)
    While carbon dioxide is the most prevalent greenhouse gas emitted 
into the atmosphere, other GHGs are also important contributors. These 
include methane and nitrous oxide. Global warming potential values 
(``GWPs'') are often used to convert emissions of non-CO2 
GHGs to CO2-equivalents to facilitate comparison of policies 
and inventories involving different GHGs. While GWPs allow for some 
useful comparisons across gases on a physical basis, using the social 
cost of carbon to value the damages associated with changes in 
CO2-equivalent emissions is not optimal. This is because 
non-CO2 GHGs differ not just in their potential to absorb 
infrared radiation over a given time frame, but also in the temporal 
pathway of their impact on radiative forcing, which is relevant for 
estimating their social cost but not reflected in the GWP. Physical 
impacts other than temperature change also vary across gases in ways 
that are not captured by GWP.
    In light of these limitations and the paucity of peer-reviewed 
estimates of the social cost of non-CO2 gases in the 
literature, the 2010 SCC Technical Support Document did not include an 
estimate of the social cost of non-CO2 GHGs and did not 
endorse the use of GWP to approximate the value of non-CO2 
emission changes in regulatory analysis. Instead, the IWG noted that 
more work was needed to link non-CO2 GHG emission changes to 
economic impacts.
    Since that time, new estimates of the social cost of non-
CO2 GHG emissions have been developed in the scientific 
literature, and a recent study by Marten et al. (2015) provided the 
first set of published estimates for the social cost of CH4 
and N2O emissions that are consistent with the methodology 
and modeling assumptions underlying the IWG SC-CO2 
estimates.\107\ Specifically, Marten et al. used the same set of three 
integrated assessment models, five socioeconomic and emissions 
scenarios, equilibrium climate sensitivity distribution, three constant 
discount rates, and the aggregation approach used by the IWG to develop 
the SC-CO2 estimates. An addendum to the IWG's Technical 
Support Document on Social Cost of Carbon for Regulatory Impact 
Analysis under Executive Order 12866 summarizes the Marten et al. 
methodology and presents the SC-CH4 and SC-N2O 
estimates from that study as a way for agencies to incorporate the 
social benefits of reducing CH4 and N2O emissions 
into benefit-cost analyses of regulatory actions that have small, or 
``marginal,'' impacts on cumulative global emissions.\108\
---------------------------------------------------------------------------

    \107\ Marten, A.L., Kopits, E.A., Griffiths, C.W., Newbold, 
S.C., and A. Wolverton. 2015. Incremental CH4 and 
N2O Mitigation Benefits Consistent with the U.S. 
Government's SC-CO2 Estimates. Climate Policy. 15(2): 
272-298 (published online, 2014).
    \108\ United States Government--Interagency Working Group on 
Social Cost of Greenhouse Gases. Addendum to Technical Support 
Document on Social Cost of Carbon for Regulatory Impact Analysis 
under Executive Order 12866: Application of the Methodology to 
Estimate the Social Cost of Methane and the Social Cost of Nitrous 
Oxide. August 2016. www.whitehouse.gov/sites/default/files/omb/inforeg/august_2016_sc_ch4_sc_n2o_addendum_final_8_26_16.pdf.
---------------------------------------------------------------------------

    The methodology and estimates described in the addendum have 
undergone multiple stages of peer review and their use in regulatory 
analysis has been subject to public comment. The estimates are 
presented with an acknowledgement of the limitations and 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, just as the IWG has committed to do for the SC-
CO2. The OMB has determined that the use of the Marten et 
al. estimates in regulatory analysis is consistent with the 
requirements of OMB's Information Quality Guidelines Bulletin for Peer 
Review and OMB Circular A-4.
    The SC-CH4 and SC-N2O estimates are presented 
in Table IV-25. Following the same approach as with the SC-
CO2, values for 2010, 2020, 2030, 2040, and 2050 are 
calculated by combining all outputs from all scenarios and models for a 
given discount rate. Values for the years in between are calculated 
using linear interpolation. The full set of annual SC-CH4 
and SC-N2O estimates between 2010 and 2050 is reported in

[[Page 1567]]

appendix 14-A of the final rule TSD. DOE derived values after 2050 
based on the trend in 2010-2050 in each of the four cases in the IWG 
addendum.

                                         Table IV-25--Annual SC-CH4 and SC-N2O Estimates From 2016 IWG Addendum
                                                                 [2007$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        SC-CH4                                              SC-N2O
                                                 -------------------------------------------------------------------------------------------------------
                                                              Discount rate and statistic                         Discount rate and statistic
                                                 -------------------------------------------------------------------------------------------------------
                      Year                             5%           3%          2.5%          3%           5%           3%          2.5%          3%
                                                 -------------------------------------------------------------------------------------------------------
                                                                                             95th                                                95th
                                                    Average      Average      Average     percentile    Average      Average      Average     percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010............................................          370          870        1,200        2,400        3,400       12,000       18,000       31,000
2015............................................          450        1,000        1,400        2,800        4,000       13,000       20,000       35,000
2020............................................          540        1,200        1,600        3,200        4,700       15,000       22,000       39,000
2025............................................          650        1,400        1,800        3,700        5,500       17,000       24,000       44,000
2030............................................          760        1,600        2,000        4,200        6,300       19,000       27,000       49,000
2035............................................          900        1,800        2,300        4,900        7,400       21,000       29,000       55,000
2040............................................        1,000        2,000        2,600        5,500        8,400       23,000       32,000       60,000
2045............................................        1,200        2,300        2,800        6,100        9,500       25,000       34,000       66,000
2050............................................        1,300        2,500        3,100        6,700       11,000       27,000       37,000       72,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates 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 SC-CH4 and 
SC-N2O estimates in each case.
3. Social Cost of Other Air Pollutants
    As noted previously, DOE estimated how the considered energy 
conservation standards would reduce power sector NOX 
emissions in those 22 States not affected by CSAPR.
    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.\109\ 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 14B of the final rule TSD. DOE primarily relied on the low 
estimates to be conservative.\110\ The national average low values for 
2020 (in 2015$) are $3,187/ton at 3-percent discount rate and $2,869/
ton at 7-percent discount rate. DOE developed values specific to the 
sector for compressors using a method described in appendix 14B of the 
final rule TSD. For this analysis DOE used linear interpolation to 
define values for the years between 2020 and 2025 and between 2025 and 
2030; for years beyond 2030 the value is held constant.
---------------------------------------------------------------------------

    \109\ 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.
    \110\ For the monetized NOX benefits associated with 
PM2.5, the related benefits are primarily based on an 
estimate of premature mortality used by EPA. If the benefit-per-ton 
estimates were based on the high-end estimates, the values would be 
nearly two-and-a-half times larger. Using the lower value is more 
conservative when making the policy decision concerning whether a 
particular standard level is economically justified. If the benefit-
per-ton estimates were based on the Six Cities study (Lepuele et al. 
2012), the values would be nearly two-and-a-half times larger. (See 
chapter 14 of the 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 reduction in other 
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 2016. 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. For 
the current analysis, impacts are quantified by comparing the levels of 
electricity sector generation, installed capacity, fuel consumption and 
emissions consistent with the projections described on page E-8 of AEO 
2016 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

[[Page 1568]]

caused by the purchase and operation of more-efficient appliances. 
Indirect employment impacts 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 consumers on 
energy, (2) reduced spending on new energy supply by the utility 
industry, (3) increased consumer spending on the products to which the 
new standards apply and other goods and services, 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 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 indicates 
that capital expenditures in the utility sector generally create fewer 
jobs (both directly and indirectly) than expenditures in other sectors 
of the economy.\111\ 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 suggests that net national employment may increase due to shifts 
in economic activity resulting from energy conservation standards.
---------------------------------------------------------------------------

    \111\ 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 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 4 
(``ImSET'').\112\ 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.
---------------------------------------------------------------------------

    \112\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. 
Schultz (2015). ImSET 4.0: Impact of Sector Energy Technologies 
Model Description and User's Guide. Pacific Northwest National 
Laboratory. PNNL-24563.
---------------------------------------------------------------------------

    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 used ImSET only 
to generate results for near-term timeframes (2027), 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 
compressors. It addresses the TSLs examined by DOE, the projected 
impacts of each of these levels if adopted as energy conservation 
standards for compressors, and the standards levels that DOE is 
adopting in this final rule. Additional details regarding DOE's 
analyses are contained in the final rule TSD supporting this document.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of six TSLs for compressors. 
These TSLs were developed by combining specific efficiency levels for 
each of the equipment classes analyzed by DOE. 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 compressors. TSL 6 represents the maximum technologically feasible 
(``max-tech'') energy efficiency for all product classes. TSLs increase 
directly with the analyzed ELs, from EL 1 through max-tech (EL 6). TSL 
3 is of significance because it represents a combination of efficiency 
levels that is equivalent to the draft EU second tier minimum energy 
efficiency requirement for rotary lubricated air compressors.\113\
---------------------------------------------------------------------------

    \113\ For more information regarding the draft regulation see: 
www.eup-network.de/product-groups/overview-ecodesign/.

                           Table V.1--Trial Standard Level to Efficiency Level Mapping
----------------------------------------------------------------------------------------------------------------
                                                              Efficiency level (EL)
      Trial standard level      --------------------------------------------------------------------------------
                                     RP_FS_L_AC          RP_FS_L_WC          RP_VS_L_AC          RP_VS_L_WC
----------------------------------------------------------------------------------------------------------------
TSL 1..........................  EL 1..............  EL 1..............  EL 1.............  EL 1.
TSL 2..........................  EL 2..............  EL 2..............  EL 2.............  EL 2.
TSL 3..........................  EL 3..............  EL 3..............  EL 3.............  EL 3.
TSL 4..........................  EL 4..............  EL 4..............  EL 4.............  EL 4.
TSL 5..........................  EL 5..............  EL 5..............  EL 5.............  EL 5.
TLS 6..........................  EL 6..............  EL 6..............  EL 6.............  EL 6.
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on compressors consumers by 
looking at the effects potential standards at each TSL would have on 
the LCC and PBP. DOE also examined the impacts of potential standards 
on selected 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

[[Page 1569]]

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.
    The following tables show the LCC and PBP results for the TSLs 
considered for compressors. 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. 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 the baseline product 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 for RP_FS_L_AC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............          21,698          12,793         105,575         127,273  ..............            12.9
1.................................  1...................          21,989          12,645         104,358         126,347             2.0            12.9
2.................................  2...................          22,602          12,420         102,511         125,113             2.4            12.9
3.................................  3...................          23,782          12,081          99,730         123,512             2.9            12.9
4.................................  4...................          24,342          11,945          98,604         122,947             3.1            12.9
5.................................  5...................          25,380          11,715          96,714         122,094             3.4            12.9
6.................................  6...................          28,232          11,189          92,379         120,611             4.1            12.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency level. The PBP is measured relative to the
  baseline product.


               Table V.3--Average LCC Savings Relative to the No-New-Standards Case for RP_FS_L_AC
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                    TSL                                Efficiency level             Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                      (2015$)          cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1..................................           7,882               0
2..........................................  2..................................           8,002               1
3..........................................  3..................................           7,377               3
4..........................................  4..................................           7,192               4
5..........................................  5..................................           7,849               7
6..........................................  6..................................           8,604              14
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                  Table V.4--Average LCC and PBP Results for RP_FS_L_WC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............          37,548          24,433         204,247         241,795  ..............            13.4
1.................................  1...................          38,047          24,215         202,410         240,457             2.3            13.4
2.................................  2...................          39,262          23,792         198,860         238,122             2.7            13.4
3.................................  3...................          41,078          23,279         194,542         235,620             3.1            13.4
4.................................  4...................          42,014          23,047         192,604         234,618             3.2            13.4
5.................................  5...................          43,725          22,658         189,352         233,077             3.5            13.4
6.................................  6...................          48,328          21,764         181,888         230,216             4.0            13.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


[[Page 1570]]


               Table V.5--Average LCC Savings Relative to the No-New-Standards Case for RP_FS_L_WC
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                    TSL                                Efficiency level             Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                      (2015$)          cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1..................................          11,644               0
2..........................................  2..................................          10,559               1
3..........................................  3..................................          14,398               2
4..........................................  4..................................          11,615               5
5..........................................  5..................................          12,907               7
6..........................................  6..................................          14,684              12
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                  Table V.6--Average LCC and PBP Results for RP_VS_L_AC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............          37,068          11,363          93,018         130,086  ..............            13.2
1.................................  1...................          37,379          11,289          92,436         129,815             4.2            13.2
2.................................  2...................          38,176          11,135          91,195         129,371             4.9            13.2
3.................................  3...................          39,786          10,878          89,121         128,907             5.6            13.2
4.................................  4...................          40,852          10,730          87,923         128,775             6.0            13.2
5.................................  5...................          43,353          10,427          85,462         128,815             6.7            13.2
6.................................  6...................          49,259           9,862          80,859         130,119             8.1            13.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that 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 for RP_VS_L_AC
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                    TSL                                Efficiency level             Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                      (2015$)          cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1..................................           2,343               2
2..........................................  2..................................           2,618               6
3..........................................  3..................................           2,248              17
4..........................................  4..................................           2,130              23
5..........................................  5..................................           1,885              31
6..........................................  6..................................             -41              48
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


                                                  Table V.8--Average LCC and PBP Results for RP_VS_L_WC
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2015$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Baseline............          58,996          19,522         161,662         220,658  ..............            13.5
1.................................  1...................          59,644          19,361         160,316         219,959             4.0            13.5
2.................................  2...................          61,546          18,996         157,279         218,825             4.9            13.5
3.................................  3...................          64,746          18,513         153,269         218,015             5.7            13.5
4.................................  4...................          66,394          18,298         151,492         217,886             6.0            13.5
5.................................  5...................          70,200          17,855         147,820         218,020             6.7            13.5
6.................................  6...................          79,660          16,960         140,401         220,061             8.1            13.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.


[[Page 1571]]


               Table V.9--Average LCC Savings Relative to the No-New-Standards Case for RP_VS_L_WC
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                                    Percent of
                    TSL                                Efficiency level             Average LCC   consumers that
                                                                                     savings *    experience net
                                                                                      (2015$)          cost
----------------------------------------------------------------------------------------------------------------
1..........................................  1..................................           6,199               1
2..........................................  2..................................           5,145               8
3..........................................  3..................................           6,118              14
4..........................................  4..................................           4,496              25
5..........................................  5..................................           3,918              32
6..........................................  6..................................             754              48
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on small businesses that purchase compressors. Table 
V.10 compares the average LCC savings and PBP at each efficiency level 
for the consumer subgroups, along with the average LCC savings for the 
entire consumer sample. In most cases, the average LCC savings and PBP 
small businesses that purchase compressors at the considered efficiency 
levels are not substantially different from the average for all 
consumers. Chapter 11 of the final rule TSD presents the complete LCC 
and PBP results for the subgroups.

                                 Table V.10--Comparison of LCC Savings and PBP for Consumer Subgroups and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
          Equipment class              Consumer group          TSL 1           TSL 2           TSL 3           TSL 4           TSL 5           TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Average Life-Cycle Cost Savings (2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC........................  All Consumers.......           7,882           8,002           7,377           7,192           7,849           8,604
                                    Small Businesses....           6,284           6,423           5,885           5,709           6,143           6,451
RP_FS_L_WC........................  All Consumers.......          11,644          10,559          14,398          11,615          12,907          14,684
                                    Small Businesses....           9,904           8,593          11,413           9,130           9,999          10,972
RP_VS_L_AC........................  All Consumers.......           2,343           2,618           2,248           2,130           1,885             -41
                                    Small Businesses....           1,860           1,910           1,424           1,200             602          -1,850
RP_VS_L_WC........................  All Consumers.......           6,199           5,145           6,118           4,496           3,918             754
                                    Small Businesses....           4,422           3,468           3,539           2,312           1,206          -2,781
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Simple Payback Period (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC........................  All Consumers.......             2.0             2.4             2.9             3.1             3.4             4.1
                                    Small Businesses....             2.0             2.5             3.0             3.2             3.5             4.1
RP_FS_L_WC........................  All Consumers.......             2.3             2.7             3.1             3.2             3.5             4.0
                                    Small Businesses....             2.3             2.7             3.1             3.3             3.6             4.1
RP_VS_L_AC........................  All Consumers.......             4.2             4.9             5.6             6.0             6.7             8.1
                                    Small Businesses....             4.2             4.9             5.7             6.1             6.8             8.2
RP_VS_L_WC........................  All Consumers.......             4.1             4.9             5.8             6.1             6.8             8.2
                                    Small Businesses....             4.1             4.9             5.8             6.1             6.8             8.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed in section III.H.2, 42 U.S.C. 6295(o)(2)(B)(iii) 
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 procedure for 
compressors. In contrast, the PBPs presented previously were calculated 
using distributions that reflect the range of energy use in the field.
    Table V.11 presents the rebuttable-presumption payback periods for 
the considered TSLs for compressors. 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 definitively the 
economic justification for a potential standard level, thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification.

[[Page 1572]]



                                                   Table V.11--Rebuttable-Presumption Payback Periods
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                     Equipment class                     -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC..............................................             1.9             2.4             2.9             3.0             3.3             4.0
RP_FS_L_WC..............................................             2.2             2.6             3.0             3.2             3.4             4.0
RP_VS_L_AC..............................................             4.7             5.5             5.9             6.7             7.6             9.1
RP_VS_L_WC..............................................             4.6             5.4             5.5             6.8             7.6             9.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new energy 
conservation standards on manufacturers of compressors. The next 
section describes the expected impacts on manufacturers at each 
considered TSL. Chapter 12 of the final rule TSD explains the analysis 
in further detail.
a. Industry Cash Flow Analysis Results
    In this section, DOE provides GRIM results from the analysis, which 
examines changes in the industry that would result from a standard. 
Table V.12 and Table V.13 illustrates the estimated financial impacts 
(represented by changes in INPV) of new energy conservation standards 
on manufacturers of compressors, as well as the conversion costs that 
DOE estimates manufacturers of compressors would incur at each TSL. DOE 
notes that the GRIM and resulting industry cash flow analysis 
considered only lubricated rotary equipment classes, as DOE is not 
establishing standards for reciprocating equipment or lubricant-free 
rotary equipment. For further discussion on DOE's proposal for 
reciprocating compressors, see section V.C.
    As discussed in section IV.J.2, DOE modeled two different 
conversion cost scenarios to evaluate the range of cash flow impacts on 
the compressor industry: (1) A low conversion cost scenario; and (2) a 
high conversion cost scenario.
    Specifically, the two scenarios explore uncertainty in conversion 
costs, as they relate to the draft EU minimum energy efficiency 
standards for air compressors. During confidential interviews, multiple 
manufactures indicated that they sell similar equipment in the U.S. and 
the EU. They also indicated that if the EU adopted the draft standard 
for air compressors, the efficiency of some equipment sold in the U.S. 
would be improved by windfall. As such, when the EU standard takes 
effect, which would be phased in from 2018 to 2020, a significant 
amount of globally marketed equipment would already exhibit improved 
efficiency, regardless of a DOE standard. However, because the EU 
standard is not yet adopted, DOE chose to use a scenario analysis to 
evaluate its potential impacts on conversion costs.
    The low conversion cost scenario assumes that manufacturers active 
in the EU market will not face additional product conversion costs to 
adapt to a U.S. standard that is at or below the draft EU level (EL 3 
and TSL 3). If the U.S. standard is above the EU level, these 
manufacturers would still incur full redesign costs. In the high 
conversion cost scenario, all manufacturers face full product 
conversion costs, regardless of an EU regulation. DOE notes that 
manufacturers that are not active in the EU market will face the same 
conversion costs, regardless of the scenario.
    To evaluate the magnitude of each product and capital conversion 
cost scenario, DOE relied on cost estimates provided by representative 
manufacturers as well as estimates and appraisals provided by 
consultants familiar with air compressor and general industrial 
manufacturing.
    Additional details on the conversion cost scenarios can be found in 
chapter 12 of this final rule TSD.
    In the following discussion, the INPV results refer to the 
difference in industry value between the no-new-standards case 
``business as usual'' and each standards case resulting from the sum of 
discounted cash flows from 2016 to 2051. To provide perspective on the 
short-run cash flow impact, DOE includes in the discussion of results a 
comparison of free cash flow between the no-new-standards case and the 
standards case at each TSL in the year before standards would take 
effect. This figure provides an understanding of the magnitude of 
required conversion costs related to cash flows generated by the 
industry in the no-new-standards case. Table V.12 and Table V.13 
present INPV results under the low and high conversion cost scenarios. 
The low conversion cost scenario represents the least severe set of 
impacts while the high conversion cost scenario represents the most 
severe set of impacts. Markups do not vary with conversion cost 
scenarios.

                             Table V.12--Manufacturer Impact Analysis Results for Compressors: Low Conversion Cost Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Trial standard level *
                                                      Units                 No new     -----------------------------------------------------------------
                                                                         standard case      1          2          3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................  2015$M......................           409.7      389.0      367.8      262.0      149.2       98.4       70.0
Change in INPV..........................  2015$M......................  ..............     (20.7)     (42.0)    (147.8)    (260.5)    (311.3)    (339.8)
                                          %...........................  ..............      (5.1)     (10.2)     (36.1)     (63.6)     (76.0)     (82.9)
Product Conversion Costs................  2015$M......................  ..............       41.2       74.4      206.7      355.5      426.5      496.1
Capital Conversion Costs................  2015$M......................  ..............        6.1       23.7       73.8       98.0      119.1      140.4
Total Conversion Costs..................  2015$M......................  ..............       47.3       98.1      280.5      453.5      545.6      636.4
Free Cash Flow..........................  2015$M......................            25.2        8.8     (10.1)     (89.9)    (166.4)    (207.2)    (247.4)
                                          % Change....................  ..............     (65.1)    (140.0)    (456.8)    (760.6)    (922.6)   (1082.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


[[Page 1573]]


                             Table V.13--Manufacturer Impact Analysis Results for Compressors: High Conversion Cost Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Trial standard level *
                                                      Units                 No new     -----------------------------------------------------------------
                                                                         standard case      1          2          3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV....................................  2015$M......................           409.7      384.8      354.6      204.6      136.6       83.2       52.0
Change in INPV..........................  2015$M......................  ..............     (25.0)     (55.1)    (205.2)    (273.1)    (326.6)    (357.7)
                                          %...........................  ..............      (6.1)     (13.5)     (50.1)     (66.7)     (79.7)     (87.3)
Product Conversion Costs................  2015$M......................  ..............       49.3       97.6      289.9      373.6      448.5      521.9
Capital Conversion Costs................  2015$M......................  ..............        6.1       23.7       73.8       98.0      119.1      140.4
Total Conversion Costs..................  2015$M......................  ..............       55.4      121.3      363.7      471.6      567.6      662.3
Free Cash Flow..........................  2015$M......................            25.2        6.1     (19.2)    (126.6)    (174.4)    (216.9)    (258.8)
                                          % Change....................  ..............     (75.7)    (176.3)    (602.4)    (792.3)    (961.1)   (1127.6)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    TSL 1 represents EL 1 for lubricated rotary compressors. At TSL 1, 
DOE estimates the impacts on INPV to range from -$25.0 million to -
$20.7 million, or a change of -6.1-percent to -5.1-percent. Industry 
free cash flow is estimated to change by -$19.1 million to -$16.4 
million, or a change of -75.7-percent to -65.1-percent compared to the 
no-new-standards case value of $25.2 million in the year before the 
compliance date (2021). DOE estimates industry conversion costs of as 
high as $55.4 million to $47.3 million at TSL 1.
    TSL 2 represents EL 2 lubricated rotary compressors. At TSL 2, DOE 
estimates impacts on INPV to range from -$55.1 million to -$42.0 
million, or a change in INPV of -13.5-percent to -10.2-percent. At this 
level, industry free cash flow is estimated to change by -$44.4 million 
to -$35.3 million, or a change of -176.3-percent to -140.0-percent 
compared to the no-new-standards case value of $25.2 million in the 
year before the compliance date (2021). DOE estimates industry 
conversion costs of as high as $121.3 million to $98.1 million at TSL 
2.
    TSL 3 represents EL 3 for lubricated rotary compressors. At TSL 3, 
DOE estimates impacts on INPV of -$205.2 million to -$147.8 million, or 
a change in INPV of -50.1-percent to -36.1-percent. At this level, 
industry free cash flow is estimated to change by -$151.7 million to -
$115.1 million, or a change of -602.4-percent to -456.8-percent 
compared to the no-new-standards case value of $25.2 million in the 
year before the compliance date (2021). DOE estimates industry 
conversion costs of as high as $363.7 million to $280.5 million at TSL 
3.
    TSL 4 represents EL 4 for lubricated rotary compressors. At TSL 4, 
DOE estimates impacts on INPV of -$273.1 million to -$260.5, or a 
change in INPV of -66.7-percent to -63.6-percent. At this level, 
industry free cash flow is estimated to change by -$199.6 million to -
$191.6 million, or a change of -792.3-percent to -760.6-percent 
compared to the no-new-standards case value of $25.2 million in the 
year before the compliance date (2021). DOE estimates industry 
conversion costs of as high as $471.6 million to $453.5 million at TSL 
4.
    TSL 5 represents EL 5 for lubricated rotary compressors. At TSL 5, 
DOE estimates impacts on INPV of -$326.6 million to -$311.3, or a 
change in INPV of -79.7-percent to -76.0-percent. Industry free cash 
flow is estimated to change by -$242.1 million to -$232.4 million or a 
change of -961.1-percent to -922.6-percent compared to the no-new-
standards case value of $25.2 million in the year before the compliance 
date (2021). DOE estimates industry conversion costs of as high as 
$567.6 million to $545.6 million at TSL 5.
    TSL 6 represents EL 6 for lubricated rotary compressors. At TSL 6, 
DOE estimates impacts on INPV of -$357.7 to -$339.8 million, or a 
change in INPV of -87.3-percent to -82.9-percent. Industry free cash 
flow is estimated to change by -$284.0 million to -$272.6 million, or a 
change of -1,127.6-percent to -1,082.4-percent compared to the no-new-
standards case value of $25.2 million in the year before the compliance 
date (2021). DOE estimates industry conversion costs of as high as 
$662.3 to $636.4 million at TSL 6.
b. Direct Impacts on Employment
    To quantitatively assess the potential impacts of new energy 
conservation standards on direct employment in the compressor industry, 
DOE used the GRIM to estimate the domestic labor expenditures and 
number of direct employees in the no-new-standards case and in each of 
the standards cases during the analysis period. DOE used statistical 
data from the U.S. Census Bureau's 2014 ASM, the results of the 
engineering analysis, and interviews with manufacturers to determine 
the inputs necessary to calculate industry-wide labor expenditures and 
domestic employment levels. Labor expenditures related to manufacturing 
of the equipment are a function of the labor intensity of the product, 
the sales volume, and an assumption that wages remain fixed in real 
terms over time. The total labor expenditures in each year are 
calculated by multiplying the MPCs by the labor percentage of MPCs.
    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours multiplied by the labor rate found in the U.S. Census 
Bureau's 2014 Annual Survey of Manufacturers (``ASM'')). The production 
worker estimates in this section only cover workers up to the line-
supervisor level who are directly involved in fabricating and 
assembling equipment within an OEM facility. Workers performing 
services that are closely associated with production operations, such 
as materials handling tasks using forklifts, are also included as 
production labor.
    To calculate non-production workers, the GRIM assumes non-
production workers account for 42-percent of direct employment, which 
is a ratio derived from 2014 ASM data. The direct employment impacts 
calculated in the GRIM are the sum of the changes in the number of 
domestic production and non-production workers resulting from the new 
energy conservation standards for compressors, as compared to the no-
new-standards case. In general, more-efficiency compressors are complex 
and more labor intensive. Per-unit labor requirements and production 
time requirements increase with higher energy conversation standards.
    To estimate an upper bound to employment change, DOE assumes all 
domestic manufacturers would choose to continue producing equipment in 
the U.S. and would not move production to foreign countries. To 
estimate a lower bound to employment, DOE considers the case where all 
manufacturers choose

[[Page 1574]]

to relocate production of failing rotary compressors with a compressor 
motor nominal horsepower under 50 hp overseas rather than make the 
necessary conversions at domestic production facilities. A complete 
description of the assumptions used to generate these upper and lower 
bounds can be found in chapter 12 of the NOPR TSD.
    In the absence of energy conservation standards, DOE estimates that 
the rotary air compressors industry would employ 1,313 domestic 
production workers and 962 domestic non-production workers in 2022, the 
year of compliance. Table V.14 shows the range of impacts of potential 
energy conservation standards on U.S. production workers of air 
compressors.
    At the NOPR stage, DOE estimated 1,417 production workers in the 
no-new-standards case for the compressor industry in 2022. For the 
final rule, DOE updated its analysis based on 2014 U.S. Census data, 
the updated engineering analysis, and the updated shipments analysis. 
DOE's revised final rule analysis forecasts that the industry will 
employ 2,275 production and non-production workers in the compressor 
industry in 2022 in the absence of new energy conservation standards. 
DOE estimates that approximately 50-percent of rotary air compressors 
sold in the United States are manufactured domestically. The final rule 
analysis presents an updated set of direct employment impacts that 
range from a net loss of 1,256 to a gain of 42 jobs at the standard 
level. Therefore, DOE's analysis agrees with the statements from the 
industry that there is a risk of decreasing the number of manufacturing 
jobs related to the covered equipment. Table V.14 shows the range of 
impacts of new energy conservation standards of this final rule on U.S. 
production workers of compressors.

                                       Table V.14--Potential Changes in the Compressors Direct Employment in 2022
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level *
                              --------------------------------------------------------------------------------------------------------------------------
                                    No-new-
                                standards case           1                 2                 3                4                5                6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Domestic Production  1,313...........  1,225 to 1,343..  1,059 to 1,391..  654 to 1,468....  434 to 1,507...  219 to 1,580...  28 to 1,776.
 Workers.
Change in Domestic Production  ................  (88) to 30......  (254) to 78.....  (659) to 155....  (878) to 194...  (1,094) to 267.  (1,285) to 463.
 Workers.
Domestic Direct Employment **  2,275...........  2,123 to 2,327..  1,835 to 2,410..  1,133 to 2,544..  753 to 2,611...  379 to 2,738...  49 to 3,078.
Potential Changes in Direct    ................  (152) to 52.....  (439) to 135....  (1,142) to 269..  (1,522) to 336.  (1,896) to 463.  (2,226) to 803.
 Employment.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.
** This field presents impacts on domestic direct employment, which aggregates production and non-production workers. Based on ASM census data, DOE
  assumed the ratio of production to non-production employees stays consistent across all analyzed TSLs, which is 42 percent non-production workers.

    At the upper end of the range, all examined TSLs show positive 
impacts on domestic employment levels. Producing more-efficient 
compressors tends to require more labor, and DOE estimates that if 
compressor manufacturers chose to keep their current production in the 
U.S., domestic employment could increase at each TSL.
    The lower end of the range represents the maximum decrease in the 
number of U.S. production workers that could result from an energy 
conservation standard. In interviews, manufacturers stated that the 
domestic compressor industry has seen limited migration to foreign 
production facilities. While many compressors are currently 
manufactured in foreign production facilities, this is more often the 
result of the global operations of many manufacturers, rather than off-
shoring of former U.S. production. However, manufacturers that 
currently produce in the U.S. have indicated they could potentially 
shift some production of some covered equipment to foreign facilities 
in order to take advantage of lower labor costs and/or global economies 
of scale, if standards erode the economic benefits of manufacturing 
domestically. Manufacturers also stated that smaller, lower compressor 
motor nominal horsepower compressors, rather than larger, higher 
nominal horsepower compressors, are more likely to shift to foreign 
production. Given the uncertainty surrounding potential off-shoring 
decisions, manufacturers were unable to pinpoint a specific nominal 
horsepower cutoff for ``lower horsepower compressors.'' However, based 
on qualitative discussions with manufacturers, DOE estimates that 50 
nominal hp is an appropriate cutoff to represent ``lower horsepower 
compressors.'' As a result, the lower bound of direct employment 
impacts assumes manufacturers choose to relocate production of failing 
rotary compressors under 50 nominal hp overseas rather than make the 
necessary conversions at domestic production facilities.
    DOE notes that the employment impacts discussed here are 
independent of the indirect employment impacts to the broader U.S. 
economy, which are documented in chapter 15 of the final rule TSD.
c. Impacts on Manufacturing Capacity
    In interviews, manufacturers of compressors did not indicate that 
new energy conservation standards would significantly constrain 
manufacturing production capacity. However, as discussed in section 
IV.J of the NOPR, manufacturers expressed concern that they may face a 
bottleneck in the redesign process. In other words, manufacturers felt 
that if they could complete their redesigns within the compliance 
period, then they would not have a problem obtaining sufficient floor 
space, equipment, and manufacturing labor to meet the shipment demands 
of the market, following an energy conservation standard.
    Manufacturers indicated that most experienced compressor design 
engineers are already employed within the industry, which limits their 
ability to rapidly expand their research and development teams if faced 
with a high volume of required compressor redesigns. Consequently, 
manufacturers typically commented that standard levels at or above the 
equivalent of TSL 3 could cause engineering constraints which might 
create time delays in complying with new standards. DOE notes that 
manufacturers typically discussed this constraint with respect to a 
three-year compliance period. In this final rule, however, DOE is 
establishing a standard level at TSL 2, in conjunction with a five-year 
compliance period.
d. Impacts on Subgroups of Manufacturers
    As discussed previously, using average cost assumptions to develop 
an

[[Page 1575]]

industry cash flow estimate is not adequate for assessing differential 
impacts among subgroups of manufacturers. The rule could affect small 
manufacturers, niche players, or manufacturers exhibiting a cost 
structure that differs largely from the industry average, differently. 
DOE used the results of the industry characterization to group 
manufacturers exhibiting similar characteristics. Specifically, DOE 
identified small business manufacturers as a subgroup for a separate 
impact analysis.
    For the small business subgroup analysis, DOE applied the small 
business size standards published by the Small Business Administration 
(SBA) to determine whether a company is considered a small business. 
(65 FR 30840, 30849 (May 15, 2000), as amended at 65 FR 53533, 53544 
(September 5, 2000), and codified at 13 CFR part 121.) To be 
categorized as a small business manufacturer of compressors under North 
American Industry Classification System (``NAICS'') code 333912, ``Air 
and Gas Compressor Manufacturing,'' a compressor manufacturer and its 
affiliates may employ a maximum of 1,000 employees. The 1,000-employee 
threshold includes all employees in a business's parent company and any 
other subsidiaries. Based on this classification, DOE identified 15 
manufacturers of rotary air compressors. The small business subgroup 
analysis is discussed in section VII.B of this document and in chapter 
12 of the NOPR TSD.
e. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden involves looking at the 
cumulative impact of multiple DOE standards and at the regulatory 
actions of other Federal agencies and States that affect the 
manufacturers of a covered product or equipment. While any one 
regulation may not impose a significant burden on manufacturers, the 
combined effects of several existing or impending regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Multiple regulations affecting the same 
manufacturer can strain profits and lead companies to abandon product 
lines or markets with lower expected future returns than competing 
products. For these reasons, DOE conducts an analysis of cumulative 
regulatory burden as part of its rulemakings pertaining to appliance 
efficiency.
    For the cumulative regulatory burden analysis, DOE looks at other 
regulations that could affect compressor manufacturers during the 
compliance period, from 2016 to 2022, or those that will take effect 
approximately three years after the 2022 compliance date of new energy 
conservation standards for this equipment. The compliance years and 
expected industry conversion costs of relevant energy conservation 
standards are indicated in Table V.15. Included in the table are 
Federal regulations that have compliance dates beyond the range of 
DOE's analysis.

        Table V.15--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting Compressor Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Number of
                                                         manufacturers
 Federal energy conservation standard     Number of      affected from    Approx. standards year      Industry conversion     Industry conversion costs/
                                       manufacturers *  this final rule                               costs (millions $)             revenue ***
                                                               **
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Refrigeration Equipment,                 54                1  2017....................  184.0 (2012$)...........  1.5%.
 79 FR 17725 (March 28, 2014).
Commercial Packaged Air Conditioners                13                1  2018 and 2023...........  520.8 (2014$)...........  4.4%.
 and Heat Pumps (Air-Cooled), 81 FR
 2420 (January 15, 2016).
Automatic Commercial Ice Makers, 80                 16                1  2018....................  25.1 (2013$)............  2.3%.
 FR 4645 (January 28, 2015).
External Power Supplies and Battery                 30                2  2018....................  19.5 (2013$)............  Less than 1%.
 Chargers, 81 FR 38266 (June 13,
 2016).
Uninterruptible Power                               48                1  2019....................  20.0 (2015$)............  Less than 1%.
 Supplies,[dagger] 81 FR 52196
 (August 5, 2016).
Residential Furnace Fans, 79 FR 38129               38                1  2019....................  40.6 (2014$)............  1.6%.
 (July 3, 2014).
Commercial Packaged Boilers,[dagger]                45                1  2022....................  27.5 (2014$)............  2.3%.
 81 FR 15836 (March 24, 2016).
Residential Furnaces,[dagger] 80 FR                 13                1  2022....................  54.7 (2015$)............  1%.
 13120 (September 2, 2016).
Central Air Conditioners and Heat                   30                1  2023....................  342.6 (2015$)...........  Less than 1%.
 Pumps,[dagger] 80 FR 52206 (August
 25, 2015).
Commercial Warm Air Furnaces, 81 FR                 14                1  2023....................  7.5 to 22.2 (2014$)       1.7% to 5.2%.[Dagger]
 2420 (January 15, 2016).                                                                           [Dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This column presents the total number of manufacturers identified in the energy conservation standard rule contributing to cumulative regulatory
  burden.
** This column presents the number of manufacturers producing compressor equipment that are also listed as manufacturers in the listed energy
  conservation standard contributing to cumulative regulatory burden.
*** This column presents conversion costs as a percentage of cumulative revenue for the industry during the conversion period. The conversion period is
  the timeframe over which manufacturers must make conversion costs investments and lasts from the announcement year of the final rule to the standards
  year of the final rule. This period typically ranges from 3 to 5 years, depending on the energy conservation standard.
[dagger] The final rule for this energy conservation standard has not been published. The compliance date and analysis of conversion costs have not been
  finalized at this time. (If a value is provided for total industry conversion expense, this value represents an estimate from the NOPR.)
[Dagger] Low and high conversion cost scenarios were analyzed as part of this Direct Final Rule. The range of estimated conversion expenses presented
  here reflects those two scenarios.

    DOE also identified other regulatory burdens that will affect 
manufacturers of compressors, such as international energy conservation 
standards and EPA Tier IV emission regulation.
International Energy Conservation Standards
    Compressor manufacturers that sell equipment outside of the United 
States are subject to several international energy conservation 
standards. In 2015, the European Union introduced energy efficiency 
regulation for compressors, which included standards for reciprocating 
and rotary air compressors. Several stakeholders cited concerns 
regarding DOE's less stringent standard for rotary compressors compared 
to the EU's current standard. For the test procedure final rule, DOE 
excludes lubricated compressors from the scope of test procedures in 
part to help manufacturers harmonize with the EU's regulatory standards 
for compressors.
EPA Tier IV Emission Regulation
    In 2014, the EPA adopted multiple tiers of emissions standards, 
including Tier IV regulation, which falls under a comprehensive 
national program to reduce emissions from non-road diesel engines by 
integrating engine and fuel controls as a system to gain the greatest 
emission reductions. To meet Tier IV emission standards, engine

[[Page 1576]]

manufacturers will be required to produce new engines with advanced 
emission control technologies. DOE received comments from Sullivan-
Palatek stating concerns resulting from Tier IV regulation. Due to the 
EPA emission standards, many product voids have resulted that may take 
years to repair since manufacturers are still bearing the cost of this 
regulation. Sullivan-Palatek also stated that the destruction of 
product demand caused by the Tier IV regulation due to substantially 
higher costs and complex maintenance for end customers has been 
burdensome for the industry. Because customers have the option to 
operate and repair at least two decades of used compressors rather than 
purchasing new machines, the US market for the Tier IV portable 
compressors has declined by about 70%. (Sullivan-Palatek, No. 51 at p. 
8)
    In response, DOE does not include rulemakings in its cumulative 
regulatory analysis that take effect more than three years before or 
after the effective date of this final rule standard. Therefore, there 
may be other standards required of manufacturers that were excluded 
from the cumulative regulatory burden analysis. As outlined in appendix 
A to 10 CFR part 430, subpart C, DOE considers other significant 
product-specific regulations that will take effect within three years 
of the effective date of the standard under consideration and will 
affect significantly the same manufacturers. (Section 10(g)(2), 10 CFR 
part 430, subpart C, appendix A.)
3. National Impact Analysis
    This section presents DOE's estimates of the national energy 
savings and the NPV of consumer benefits that would result from each of 
the TSLs considered as potential new standards.
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for compressors, 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 year of anticipated 
compliance with new standards (2022-2051). Table V.16 presents DOE's 
projections of the national energy savings for each TSL considered for 
compressors. The savings were calculated using the approach described 
in section IV.H of this document.

                                  Table V.16--Cumulative National Energy Savings for Compressors; 30 Years of Shipments
                                                                       [2022-2051]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy..........................................            0.03            0.15            0.43            0.59            0.87            1.59
FFC energy..............................................            0.03            0.16            0.45            0.61            0.91            1.66
--------------------------------------------------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \114\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9 years, rather than 30 
years of product shipments. The choice of a 9-year period is a proxy 
for the timeline in 42 U.S.C. 6295(m) and 42 U.S.C. 6316(a)) for the 
review of certain energy conservation standards and potential revision 
of and compliance with such revised standards.\115\ The review 
timeframe established in 42 U.S.C. 6295(m) and 42 U.S.C. 6316(a)) is 
generally not synchronized with the product lifetime, product 
manufacturing cycles, or other factors specific to compressors. Thus, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology. The NES 
sensitivity analysis results based on a 9-year analytical period are 
presented in Table V.17. The impacts are counted over the lifetime of 
compressors purchased in 2022-2030.
---------------------------------------------------------------------------

    \114\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. www.whitehouse.gov/omb/circulars_a004_a-4/.
    \115\ 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.17--Cumulative National Energy Savings for Compressors; 9 Years of Shipments
                                                                       [2022-2030]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary energy..........................................            0.01            0.04            0.11            0.15            0.22            0.40
FFC energy..............................................            0.01            0.04            0.11            0.15            0.23            0.41
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 1577]]

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for compressors. 
In accordance with OMB's guidelines on regulatory analysis,\116\ DOE 
calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V.18 shows the consumer NPV results with impacts counted 
over the lifetime of products purchased in 2022-2051.
---------------------------------------------------------------------------

    \116\ 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.18--Cumulative Net Present Value of Consumer Benefits for Compressors; 30 Years of Shipments
                                                                       [2022-2051]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level (billion 2015$)
                      Discount rate                      -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent...............................................             0.1             0.4             1.2             1.5             2.1             3.3
7 percent...............................................             0.0             0.2             0.4             0.5             0.7             1.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.19. The impacts are counted over the 
lifetime of products purchased in 2022-2030. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

                           Table V.19--Cumulative Net Present Value of Consumer Benefits for Compressors; 9 Years of Shipments
                                                                       [2022-2030]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level  (billion 2015$)
                      Discount rate                      -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 percent...............................................             0.0             0.2             0.4             0.5             0.7             1.1
7 percent...............................................             0.0             0.1             0.2             0.2             0.3             0.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a default constant trend to 
estimate the change in price for compressors over the analysis period 
(see section IV.F.1 of this document). DOE also conducted a sensitivity 
analysis that considered one scenario with a lower rate of price 
decline than the reference case and one scenario with a higher rate of 
price decline than the reference case. The results of these alternative 
cases are presented in appendix 10B of the final rule TSD. In the high-
price-decline case, the NPV of consumer benefits is higher than in the 
default case. In the low-price-decline case, the NPV of consumer 
benefits is lower than in the default case.
c. Indirect Impacts on Employment
    DOE expects that energy conservation standards for compressors will 
reduce energy expenditures 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. 
DOE understands that there are uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Therefore, DOE generated results for near-term timeframes 
(2022-2027), where these uncertainties are reduced.
    The results suggest that the 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
    As discussed in section III.H.1.d of this document, DOE has 
concludes that the standards adopted in this final rule will not lessen 
the utility or performance of the compressors 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.H.1.e 
of this document, EPCA directs 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 DOJ with copies of the NOPR 
and the TSD for review. In its assessment letter responding to DOE, DOJ 
concludes that the proposed energy conservation standards for 
compressors 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.

[[Page 1578]]

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 energy conservation standards 
for compressors is expected to yield environmental benefits in the form 
of reduced emissions of certain air pollutants and greenhouse gases. 
Table V.20 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 method discussed in section IV.K of 
this document. DOE reports annual emissions reductions for each TSL in 
chapter 13 of the final rule TSD.

                                     Table V.20--Cumulative Emissions Reduction for Compressors Shipped in 2022-2051
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Trial standard level
                                                         -----------------------------------------------------------------------------------------------
                                                                 1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Power Sector Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................             1.5             7.8            21.9            29.8            44.1            80.5
SO2 (thousand tons).....................................             1.3             6.5            18.2            24.8            36.7            67.0
NOX (thousand tons).....................................             0.9             4.5            12.7            17.3            25.6            46.8
Hg (tons)...............................................            0.00            0.02            0.06            0.08            0.12            0.22
CH4 (thousand tons).....................................             0.2             0.8             2.4             3.2             4.8             8.7
N2O (thousand tons).....................................             0.0             0.1             0.3             0.5             0.7             1.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Upstream Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................             0.1             0.4             1.2             1.7             2.5             4.6
SO2 (thousand tons).....................................             0.0             0.1             0.1             0.2             0.3             0.5
NOX (thousand tons).....................................             1.3             6.5            18.3            24.8            36.8            67.2
Hg (tons)...............................................            0.00            0.00            0.00            0.00            0.00            0.00
CH4 (thousand tons).....................................             7.9            39.9           112.8           153.3           227.3           414.7
N2O (thousand tons).....................................             0.0             0.0             0.0             0.0             0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Total FFC Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............................             1.6             8.2            23.1            31.4            46.6            85.1
SO2 (thousand tons).....................................             1.3             6.5            18.4            25.0            37.0            67.6
NOX (thousand tons).....................................             2.2            11.0            31.0            42.1            62.5           114.0
Hg (tons)...............................................            0.00            0.02            0.06            0.08            0.12            0.22
CH4 (thousand tons).....................................             8.1            40.8           115.2           156.5           232.0           423.5
N2O (thousand tons).....................................             0.0             0.1             0.3             0.5             0.7             1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As part of the analysis for this rule, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
for each of the considered TSLs for compressors. As discussed in 
section IV.L of this document, DOE used the most recent values for the 
SC-CO2 developed by the interagency working group. The four 
sets of SC-CO2 values correspond to the average values from 
distributions that use a 5-percent discount rate, a 3-percent discount 
rate, and a 2.5-percent discount rate, and the 95th-percentile values 
from a distribution that uses a 3-percent discount rate. The actual SC-
CO2 values used for emissions in each year are presented in 
appendix 14A of the final rule TSD.
    Table V.21 presents the global value of the CO2 
emissions reduction at each TSL. 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.21--Present Value of GHG Emissions Reduction for Compressors Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CO2 case
                                                 ---------------------------------------------------------------
              Trial standard level                                                                  3% Discount
                                                    5% Discount     3% Discount    2.5% Discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                          (million 2015$)
                                                 ---------------------------------------------------------------
1...............................................            10.5            49.5            79.2           150.9
2...............................................            52.8           250.0           400.4           762.2
3...............................................           149.2           706.1         1,131.2         2,153.2
4...............................................           202.7           959.4         1,536.8         2,925.4
5...............................................           300.6         1,422.4         2,278.6         4,337.3

[[Page 1579]]

 
6...............................................           548.5         2,595.7         4,158.1         7,915.0
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2020 is $13.5, $47.4, $63.2, and $118
  per metric ton (2015$). The values are for CO2 only (i.e., not CO2eq of other greenhouse gases).

    As discussed in section IV.L.2, DOE estimated monetary benefits 
likely to result from the reduced emissions of methane and 
N2O that DOE estimated for each of the considered TSLs for 
compressors. DOE used the recent values for the SC-CH4 and 
SC-N2O developed by the interagency working group. Table V-
22 presents the value of the CH4 emissions reduction at each 
TSL, and Table V-23 presents the value of the N2O emissions 
reduction at each TSL.

          Table V.22--Present Value of Methane Emissions Reduction for Compressors Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                                            SC-CH4 case
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% Discount
                                                    5% Discount     3% Discount    2.5% Discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                          (million 2015$)
                                                 ---------------------------------------------------------------
1...............................................             2.3             7.8            11.2            20.9
2...............................................            11.8            39.4            56.5           105.4
3...............................................            33.4           111.4           159.7           297.6
4...............................................            45.4           151.3           217.0           404.3
5...............................................            67.3           224.3           321.7           599.5
6...............................................           122.9           409.3           587.0         1,094.0
----------------------------------------------------------------------------------------------------------------


       Table V.23--Present Value of Nitrous Oxide Emissions Reduction for Compressors Shipped in 2022-2051
----------------------------------------------------------------------------------------------------------------
                                                                            SC-N2O case
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% Discount
                                                    5% Discount     3% Discount    2.5% Discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                          (million 2015$)
                                                 ---------------------------------------------------------------
1...............................................             0.1             0.3             0.4             0.7
2...............................................             0.3             1.3             2.1             3.5
3...............................................             0.8             3.7             5.9             9.9
4...............................................             1.1             5.0             8.0            13.4
5...............................................             1.7             7.4            11.9            19.9
6...............................................             3.1            13.6            21.7            36.2
----------------------------------------------------------------------------------------------------------------

    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 GHG 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. 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 resulting 
from the interagency review process. DOE notes, however, that the 
adopted standards would be economically justified even without 
inclusion of monetized benefits of reduced GHG emissions.
    DOE also estimated the monetary value of the economic benefits 
associated with NOX emissions reductions anticipated to 
result from the considered TSLs for compressors. The dollar-per-ton 
values that DOE used are discussed in section IV.L of this document. 
Table V.24 presents the present value for NOX emissions 
reduction for each TSL calculated using 7-percent and 3-percent 
discount rates. This table presents results that use the low benefit-
per-ton values, which reflect DOE's primary estimate.

[[Page 1580]]



  Table V.24--Estimates of Present Value of NOX Emissions Reduction for
                   Compressors Shipped in 2022-2051 *
------------------------------------------------------------------------
                                            3% Discount     7% Discount
                   TSL                         rate            rate
------------------------------------------------------------------------
                                                  (million 2015$)
                                         -------------------------------
1.......................................             3.3             1.2
2.......................................            16.8             6.1
3.......................................            47.4            17.4
4.......................................            64.4            23.6
5.......................................            95.5            35.0
6.......................................           174.3            63.8
------------------------------------------------------------------------
* 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) and 42 
U.S.C. 6316(a)) No other factors were considered in this analysis.
8. Summary of National Economic Impacts
    Table V.25 presents the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced GHG 
and NOX emissions to the NPV of consumer savings calculated 
for each TSL considered in this rulemaking.

           Table V.25--Consumer NPV Combined With Present Value of Benefits From Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                Consumer NPV and low NOX values at 3% discount rate added with:
 
                                             -------------------------------------------------------------------
                     TSL                                                                              GHG 3%
                                                   GHG 5%           GHG 3%          GHG 2.5%      discount rate,
                                               discount rate,   discount rate,   discount rate,  95th percentile
                                                average case     average case     average case         case
----------------------------------------------------------------------------------------------------------------
                                                                        (billion 2015$)
                                             -------------------------------------------------------------------
1...........................................             0.11             0.16             0.19             0.27
2...........................................             0.53             0.75             0.92             1.33
3...........................................             1.38             2.02             2.50             3.66
4...........................................             1.82             2.68             3.33             4.91
5...........................................             2.55             3.83             4.79             7.13
6...........................................             4.11             6.46             8.20            12.48
----------------------------------------------------------------------------------------------------------------


 
                                                Consumer NPV and low NOX values at 7% discount rate added with:
 
                                             -------------------------------------------------------------------
                     TSL                                                                              GHG 3%
                                                   GHG 5%           GHG 3%           GHG 3%       discount rate,
                                               discount rate,   discount rate,   discount rate,  95th percentile
                                                average case     average case     average case         case
----------------------------------------------------------------------------------------------------------------
                                                                        (billion 2015$)
                                             -------------------------------------------------------------------
1...........................................             0.05             0.09             0.13             0.21
2...........................................             0.23             0.46             0.63             1.04
3...........................................             0.60             1.24             1.71             2.88
4...........................................             0.78             1.65             2.30             3.88
5...........................................             1.09             2.37             3.33             5.67
6...........................................             1.72             4.06             5.81            10.09
----------------------------------------------------------------------------------------------------------------
Note: The GHG benefits include the estimated benefits for reductions in CO2, CH4, and N2O emissions using the
  four sets of SC-CO2, SC-CH4, and SC-N2O values developed by the interagency working group.

    The national operating cost savings are domestic U.S. monetary 
savings that occur as a result of purchasing the covered compressors, 
and are measured for the lifetime of products shipped in 2022-2051. The 
benefits associated with reduced GHG emissions achieved as a result of 
the adopted standards are also calculated based on the lifetime of 
compressors shipped in 2022-2051. However, the GHG reduction is a 
benefit that accrues globally. Because CO2 emissions have a 
very long residence time in the atmosphere, the SC-CO2 
values for future emissions reflect climate-related impacts that 
continue through 2300.

C. Conclusion

    When considering new or amended energy conservation standards, the 
standards that DOE adopts for any type (or class) of covered product 
must be designed to achieve the maximum improvement in energy 
efficiency that the Secretary determines is technologically feasible 
and economically justified. (42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 
6316(a)) In determining whether a standard is economically justified, 
the Secretary must determine whether the benefits of the standard 
exceed its burdens by, to the greatest extent practicable,

[[Page 1581]]

considering the seven statutory factors discussed previously. (42 
U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(a)) The new or amended 
standard must also result in significant conservation of energy. (42 
U.S.C. 6295(o)(3)(B) and 42 U.S.C. 6316(a))
    For this final rule, DOE considered the impacts of standards for 
compressors at each TSL, beginning with the maximum technologically 
feasible level, to determine whether that level was economically 
justified. Where the max-tech level was not justified, DOE then 
considered the next most efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each TSL, tables in this section present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results presented in the tables, DOE also considers other 
burdens and benefits that affect economic justification. These include 
the impacts on identifiable subgroups of consumers who may be 
disproportionately affected by a national standard and impacts on 
employment.
1. Benefits and Burdens of TSLs Considered for Compressors Standards
    Table V.26 and Table V.27 summarize the quantitative impacts 
estimated for each TSL for compressors. The national impacts are 
measured over the lifetime of compressors purchased in the 30-year 
period that begins in the anticipated year of compliance with new 
standards (2022-2051). The energy savings, emissions reductions, and 
value of emissions reductions refer to full-fuel-cycle results. The 
efficiency levels contained in each TSL are described in section V.A of 
this document.

                                    Table V.26--Summary of Analytical Results for Compressors TSLs: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                   TSL 1                TSL 2                TSL 3                TSL 4               TSL 5               TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Cumulative FFC National Energy Savings (quads)
--------------------------------------------------------------------------------------------------------------------------------------------------------
quads........................  0.03...............  0.16...............  0.45...............  0.61..............  0.91..............  1.66.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   NPV of Consumer Costs and Benefits (billion 2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate.............  0.10...............  0.45...............  1.15...............  1.50..............  2.08..............  3.26.
7% discount rate.............  0.04...............  0.16...............  0.40...............  0.51..............  0.68..............  0.98.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Cumulative FFC Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)....  1.6................  8.2................  23.1...............  31.4..............  46.6..............  85.1.
SO2 (thousand tons)..........  1.3................  6.5................  18.4...............  25.0..............  37.0..............  67.6.
NOX (thousand tons)..........  2.2................  11.0...............  31.0...............  42.1..............  62.5..............  114.0.
Hg (tons)....................  0.00...............  0.02...............  0.06...............  0.08..............  0.12..............  0.22.
CH4 (thousand tons)..........  8.1................  40.8...............  115.2..............  156.5.............  232.0.............  423.5.
N2O (thousand tons)..........  0.0................  0.1................  0.3................  0.5...............  0.7...............  1.3.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (billion 2015$) *........  0.01 to 0.15.......  0.05 to 0.76.......  0.15 to 2.15.......  0.20 to 2.93......  0.30 to 4.34......  0.55 to 7.91.
--------------------------------------------------------------------------------------------------------------------------------------------------------
CH4 (billion 2015$)..........  0.00 to 0.02.......  0.01 to 0.11.......  0.03 to 0.30.......  0.05 to 0.40......  0.07 to 0.60......  0.12 to 1.09.
N2O (billion 2015$)..........  0.000 to 0.001.....  0.000 to 0.003.....  0.001 to 0.010.....  0.001 to 0.013....  0.002 to 0.020....  0.003 to 0.036.
NOX--3% discount rate          3.3 to 7.5.........  16.8 to 37.9.......  47.4 to 107.1......  64.4 to 145.5.....  95.5 to 215.7.....  174.3 to 393.6.
 (million 2015$).
NOX--7% discount rate          1.2 to 2.8.........  6.1 to 13.9........  17.4 to 39.3.......  23.6 to 53.4......  35.0 to 79.1......  63.8 to 144.3.
 (million 2015$).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.


                            Table V.27--Summary of Analytical Results for Compressors TSLs: Manufacturer and Consumer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                   TSL 1                TSL 2                TSL 3                TSL 4               TSL 5               TSL 6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (million 2015$)   384.8 to 389.0.....  354.6 to 367.8.....  204.6 to 262.0.....  136.6 to 149.2....  83.2 to 98.4......  52.0 to 70.0.
 (No-new-standards case INPV
 = 409.7).
Industry NPV (% change)......  (6.1) to (5.1).....  (13.5) to (10.2)...  (50.1) to (36.1)...  (66.7) to (63.6)..  (79.7) to (76.0)..  (87.3) to (82.9).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Consumer Average LCC Savings (2015$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC...................  7,882..............  8,002..............  7,377..............  7,192.............  7,849.............  8,604.
RP_FS_L_WC...................  11,644.............  10,559.............  14,398.............  11,615............  12,907............  14,684.
RP_VS_L_AC...................  2,343..............  2,618..............  2,248..............  2,130.............  1,885.............  (41).
RP_VS_L_WC...................  6,199..............  5,145..............  6,118..............  4,496.............  3,918.............  754.
Shipment-Weighted Average *..  8,172..............  8,086..............  8,225..............  7,599.............  8,293.............  9,011.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Consumer Simple PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC...................  2.0................  2.4................  2.9................  3.1...............  3.4...............  4.1.
RP_FS_L_WC...................  2.3................  2.7................  3.1................  3.2...............  3.5...............  4.1.

[[Page 1582]]

 
RP_VS_L_AC...................  4.2................  4.9................  5.6................  6.0...............  6.7...............  8.1.
RP_VS_L_WC...................  4.0................  4.9................  5.7................  6.0...............  6.7...............  8.1.
Shipment-Weighted Average *..  2.2................  2.6................  3.1................  3.3...............  3.6...............  4.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Percent of Consumers that Experience a Net Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
RP_FS_L_AC...................  0..................  1..................  3..................  4.................  7.................  14.
RP_FS_L_WC...................  0..................  1..................  2..................  5.................  7.................  12.
RP_VS_L_AC...................  2..................  6..................  17.................  23................  31................  48.
RP_VS_L_WC...................  1..................  8..................  14.................  25................  32................  48.
Shipment-Weighted Average *..  0..................  1..................  4..................  5.................  9.................  16.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Weighted by shares of each equipment class in total projected shipments in 2022.

    DOE first considered TSL 6, which represents the max-tech 
efficiency level. TSL 6 would save 1.66 quads of energy, an amount DOE 
considers significant. Under TSL 6, the NPV of consumer benefit would 
be 0.98 billion using a discount rate of 7-percent, and 3.26 billion 
using a discount rate of 3-percent.
    The cumulative emissions reductions at TSL 6 are 85.1 Mt of 
CO2, 67.6 thousand tons of SO2, 114.0 thousand 
tons of NOX, 0.22 ton of Hg, 423.5 thousand tons of 
CH4, and 1.3 thousand tons of N2O. The estimated 
monetary value of the GHG emissions reduction at TSL 6 ranges from $548 
million to $7,915 million for CO2, from $123 million to 
$1,094 million for CH4, and from $3.1 million to $36.2 
million for N2O. The estimated monetary value of the 
NOX emissions reduction at TSL 6 is $64 million using a 7-
percent discount rate and $174 million using a 3-percent discount rate.
    At TSL 6, the average LCC impact is a savings of $8,604 for 
RP_FS_L_AC, $14,684 for RP_FS_L_WC, -$41 for RP_VS_L_AC, and $4754 for 
RP_VS_L_WC.\117\ The simple payback period is 4.1 years for RP_FS_L_AC 
and RP_FS_L_WC, and 8.1 years for RP_VS_L_AC, and RP_VS_L_WC. The 
fraction of consumers experiencing a net LCC cost is 14-percent for 
RP_FS_L_AC, 12-percent for RP_FS_L_WC, 48-percent for RP_VS_L_AC, and 
RP_VS_L_WC.
---------------------------------------------------------------------------

    \117\ For the definition of each product class code, see Table 
I.2.
---------------------------------------------------------------------------

    At TSL 6, the projected change in INPV is a decrease of $357.7 
million to $339.8 million. This corresponds to a net loss of 87.3-
percent to 82.9-percent in INPV for manufacturers.
    The Secretary concludes that at TSL 6 for compressors, the benefits 
of energy savings, emission reductions, and the estimated monetary 
value of the emissions reductions are outweighed by the negative NPV of 
consumer benefits, the economic burden on some consumers, and the 
significant burden on the industry, including the conversion costs and 
profit margin impacts that could result in a large reduction in INPV. 
Consequently, the Secretary has concluded that TSL 6 is not 
economically justified.
    DOE then considered TSL 5, which would save 0.91 quad of energy, an 
amount DOE considers significant. Under TSL 5, the NPV of consumer 
benefit would be $0.68 billion using a discount rate of 7-percent, and 
$2.08 billion using a discount rate of 3-percent.
    The cumulative emissions reductions at TSL 5 are 46.6 Mt of 
CO2, 37.0 thousand tons of SO2, 62.5 thousand 
tons of NOX, 0.12 ton of Hg, 232.0 thousand tons of 
CH4, and 0.7 thousand tons of N2O. The estimated 
monetary value of the GHG emissions reduction at TSL 5 ranges from $301 
million to $4,337 million for CO2, from $67 million to $599 
million for CH4, and from $1.7 million to $19.9 million for 
N2O. The estimated monetary value of the NOX 
emissions reduction at TSL 5 is $35 million using a 7-percent discount 
rate and $95 million using a 3-percent discount rate.
    At TSL 5, the average LCC impact is a savings of $7,849 for 
RP_FS_L_AC, $12,907 for RP_FS_L_WC, $1,885 for RP_VS_L_AC, and $3,918 
for RP_VS_L_WC. The simple payback period is 3.4 years for RP_FS_L_AC, 
3.5 years for RP_FS_L_WC, and 6.7 years for RP_VS_L_AC, and RP_VS_L_WC. 
The fraction of consumers experiencing a net LCC cost is 7-percent for 
RP_FS_L_AC and RP_FS_L_WC, 31-percent for RP_VS_L_AC, and 32-percent 
for RP_VS_L_WC.
    At TSL 5, the projected change in INPV is a decrease of $326.6 
million to $311.3 million. This corresponds to a net loss of 79.7-
percent to 76.0-percent in INPV for manufacturers.
    Based on this analysis, DOE 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 are outweighed by the economic burden on some consumers, and 
significant burden on the industry, including the conversion costs and 
profit margin impacts that could result in a large reduction in INPV. 
Consequently, DOE has concluded that TSL 5 is not economically 
justified.
    DOE then considered TSL 4, which would save an estimated 0.61 quad 
of energy, an amount DOE considers significant. Under TSL 4, the NPV of 
consumer benefit would be $1.50 billion using a discount rate of 7-
percent, and $0.51 billion using a discount rate of 3-percent.
    The cumulative emissions reductions at TSL 4 are 31.4 Mt of 
CO2, 25.0 thousand tons of SO2, 42.1 thousand 
tons of NOX, 0.08 ton of Hg, 156.5 thousand tons of 
CH4, and 0.3 thousand tons of N2O. The estimated 
monetary value of the GHG emissions reduction at TSL 4 ranges from $203 
million to $2,925 million for CO2, from $45 million to $404 
million for CH4, and from $1.1 million to $13.4 million for 
N2O. The estimated monetary value of the NOX 
emissions reduction at TSL 4 is $24 million using a 7-percent discount 
rate and $64 million using a 3-percent discount rate.
    At TSL 4, the average LCC impact is a savings of $7,192 for 
RP_FS_L_AC, $11,615 for RP_FS_L_WC, $2,130 for RP_VS_L_AC, and $4,496 
for RP_VS_L_WC. The simple payback period is 3.1 years for RP_FS_L_AC, 
3.2 for RP_FS_L_WC, 6.0 years for RP_VS_L_AC, and RP_VS_L_WC. The 
fraction of consumers experiencing a net LCC cost is 4-percent for 
RP_FS_L_AC, 5-percent for RP_FS_L_WC, 23 percent for RP_VS_L_AC, and 25 
percent for RP_VS_L_WC.

[[Page 1583]]

    At TSL 4, the projected change in INPV ranges from a decrease of 
$273.1 million to 260.5 million. This correspond to a net loss in INPV 
of 66.7-percent to 63.6-percent for manufacturers.
    The Secretary concludes that at TSL 4 for compressors, the benefits 
of energy savings, positive NPV of consumer benefits, emission 
reductions, and the estimated monetary value of the emissions 
reductions are outweighed by the economic burden on some consumers, and 
the impacts on manufacturers, including the conversion costs and profit 
margin impacts that could result in a large reduction in INPV. 
Consequently, the Secretary has concluded that TSL 4 is not 
economically justified.
    DOE then considered TSL 3, which would save an estimated 0.45 quads 
of energy, an amount DOE considers significant. Under TSL 3, the NPV of 
consumer benefit would be $1.15 billion using a discount rate of 7-
percent, and $0.40 billion using a discount rate of 3-percent.
    The cumulative emissions reductions at TSL 3 are 23.1 Mt of 
CO2, 18.4 thousand tons of SO2, 31.0 thousand 
tons of NOX, 0.06 ton of Hg, 115.2 thousand tons of 
CH4, and 0.3 thousand tons of N2O. The estimated 
monetary value of the GHG emissions reduction at TSL 3 ranges from $149 
million to $2, 153 million for CO2, from $33 million to $298 
million for CH4, and from $0.8 million to $9.9 million for 
N2O. The estimated monetary value of the NOX 
emissions reduction at TSL 4 is $17 million using a 7-percent discount 
rate and $47 million using a 3-percent discount rate.
    At TSL 3, the average LCC impact is a savings of $7,377 for 
RP_FS_L_AC, $14,398 for RP_FS_L_WC, $2,248 for RP_VS_L_AC, and $6,118 
for RP_VS_L_WC. The simple payback period is 2.9 years for RP_FS_L_AC, 
3.1 for RP_FS_L_WC, 5.6 years for RP_VS_L_AC, and 5.7 years for 
RP_VS_L_WC. The fraction of consumers experiencing a net LCC cost is 3-
percent for RP_FS_L_AC, 2 percent for RP_FS_L_WC, 17-percent for 
RP_VS_L_AC, and 14-percent for RP_VS_L_WC.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$205.2 million to a decrease of $147.8 million. This corresponds to a 
net loss of INPV of 50.1-percent and 36.1-percent, respectively.
    The Secretary concludes that at TSL 3 for compressors, the benefits 
of energy savings, positive NPV of consumer benefits, emission 
reductions, and the estimated monetary value of the emissions 
reductions are outweighed by the economic burden on some consumers, and 
the impacts on manufacturers, including the conversion costs and profit 
margin impacts that could result in a large reduction in INPV. 
Consequently, the Secretary has concluded that TSL 3 is not 
economically justified.
    DOE then considered TSL 2, which would save an estimated 0.16 quad 
of energy, an amount DOE considers significant. Under TSL 2, the NPV of 
consumer benefit would be $0.45 billion using a discount rate of 7-
percent, and $0.16 billion using a discount rate of 3-percent.
    The cumulative emissions reductions at TSL 2 are 8.2 Mt of 
CO2, 6.5 thousand tons of SO2, 11.0 thousand tons 
of NOX, 0.02 tons of Hg, 40.8 thousand tons of 
CH4, and 0.1 thousand tons of N2O. The estimated 
monetary value of the GHG emissions reduction at TSL 2 ranges from $53 
million to $762 million for CO2, from $25 million to $220 
million for CH4, and from $0.3 million to $3.5 million for 
N2O. The estimated monetary value of the NOX 
emissions reduction at TSL 2 is $6 million using a 7-percent discount 
rate and $17 million using a 3-percent discount rate.
    At TSL 2, the average LCC impact is a savings of $8,002 for 
RP_FS_L_AC, $10,559 for RP_FS_L_WC, $2,618 for RP_VS_L_AC, and $5,145 
for RP_VS_L_WC. The simple payback period is 2.4 years for RP_FS_L_AC, 
2.7 for RP_FS_L_WC, and 4.9 years for RP_VS_L_AC and RP_VS_L_WC. The 
fraction of consumers experiencing a net LCC cost is 1 percent for 
RP_FS_L_AC and RP_FS_L_WC, 6-percent for RP_VS_L_AC, and 8-percent for 
RP_VS_L_WC.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$55.1 million to a decrease of $42.0 million. This corresponds to a net 
loss of INPV of 13.5-percent and 10.2-percent, respectively.
    After considering the analysis and weighing the benefits and 
burdens, the Secretary has concluded that at TSL 2 for compressors, the 
benefits of energy savings, positive NPV of consumer benefits, emission 
reductions, the estimated monetary value of the emissions reductions, 
and positive average LCC savings outweigh the negative impacts on some 
consumers and on manufacturers, including the conversion costs that 
could result in a reduction in INPV for manufacturers. Accordingly, the 
Secretary has concluded that TSL 2 would offer the maximum improvement 
in efficiency that is technologically feasible and economically 
justified, and would result in the significant conservation of energy.
    Therefore, based on the above considerations, DOE adopts the energy 
conservation standards for compressors at TSL 2. The new energy 
conservation standards for compressors, which are expressed as package 
isentropic efficiency, are shown in Table V.28.

                            Table V.28--Energy Conservation Standards for Compressors
----------------------------------------------------------------------------------------------------------------
                                                                          [eta]Regr (package       d (percentage
             Equipment class                Standard level (package      isentropic efficiency         loss
                                            isentropic efficiency)         reference curve)         reduction)
----------------------------------------------------------------------------------------------------------------
Rotary, lubricated, air-cooled, fixed-    [eta]Regr + (1- [eta]Regr)  -0.00928 * ln\2\(.4719 *               -15
 speed.                                    * (d/100).                  V1) + 0.13911 * ln(.4719
                                                                       * V1) + 0.27110.
Rotary, lubricated, air-cooled, variable- [eta]Regr + (1- [eta]Regr)  -0.01549 * ln\2\(.4719 *               -10
 speed.                                    * (d/100).                  V1) + 0.21573 * ln(.4719
                                                                       * V1) + 0.00905.
Rotary, lubricated, liquid-cooled, fixed- .02349 + [eta]Regr + (1-    -0.00928 * ln\2\(.4719 *               -15
 speed.                                    [eta]Regr) * (d/100).       V1) + 0.13911 * ln(.4719
                                                                       * V1) + 0.27110.
Rotary, lubricated, liquid-cooled,        .02349 + [eta]Regr + (1-    -0.01549 * ln\2\(.4719 *               -15
 variable-speed.                           [eta]Regr) * (d/100).       V1) + 0.21573 * ln(.4719
                                                                       * V1) + 0.00905.
----------------------------------------------------------------------------------------------------------------


[[Page 1584]]

2. 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 
(1) the annualized national economic value (expressed in 2015$) of the 
benefits from operating products that meet the adopted standards 
(consisting primarily of operating cost savings from using less 
energy), minus increases in product purchase costs, plus (2) the 
annualized monetary value of the benefits of GHG and NOX 
emission reductions.
    Table V.29 shows the annualized values for compressors under TSL 2, 
expressed in 2015$. The results under the primary estimate are as 
follows.
    Using a 7-percent discount rate for benefits and costs other than 
GHG reduction (for which DOE used average social costs with a 3-percent 
discount rate),\118\ the estimated cost of the standards in this rule 
is $9.9 million per year in increased equipment costs, while the 
estimated annual benefits are $28.1 million in reduced equipment 
operating costs, $17.2 million in GHG reductions, and $0.7 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $36 million per year. Using a 3-percent discount rate for all 
benefits and costs, the estimated cost of the standards is $10.4 
million per year in increased equipment costs, while the estimated 
annual benefits are $36.8 million in reduced operating costs, $17.2 
million in GHG reductions, and $1.0 million in reduced NOX 
emissions. In this case, the net benefit amounts to $45 million per 
year.

                                    Table V.29--Annualized Benefits and Costs of Adopted Standards for Compressors *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Low-net- benefits        High-net- benefits
                                            Discount rate (percent)             Primary estimate              estimate                  estimate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         million 2015$/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings....  7....................................  28.1....................  24.8....................  35.1.
                                     3....................................  36.8....................  32.2....................  46.6.
GHG Reduction (using avg. social     5....................................  5.4.....................  4.7.....................  6.6.
 costs at 5% discount rate) **.
GHG Reduction (using avg. social     3....................................  17.2....................  14.8....................  21.2.
 costs at 3% discount rate) **.
GHG Reduction (using avg. social     2.5..................................  24.8....................  21.4....................  30.6.
 costs at 2.5% discount rate) **.
GHG Reduction (using 95th            3....................................  51.5....................  44.4....................  63.4.
 percentile social costs at 3%
 discount rate) **.
NOX Reduction [dagger].............  7....................................  0.7.....................  0.6.....................  1.9.
                                     3....................................  1.0.....................  0.9.....................  2.8.
Total Benefits [Dagger]............  7 plus CO2 range.....................  34 to 80................  30 to 70................  44 to 100.
                                     7....................................  46......................  40......................  58.
                                     3 plus CO2 range.....................  43 to 89................  38 to 77................  56 to 113.
                                     3....................................  55......................  48......................  71.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment       7....................................  9.9.....................  8.8.....................  11.4.
 Costs [Dagger].
                                     3....................................  10.4....................  9.3.....................  12.0.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger][dagger].............  7 plus CO2 range.....................  24 to 70................  21 to 61................  32 to 89.
                                     7....................................  36......................  31......................  47.
                                     3 plus CO2 range.....................  33 to 79................  28 to 68................  44 to 101.
                                     3....................................  45......................  39......................  59.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with the considered compressors shipped in 2022-2051. These results include benefits
  to consumers which accrue after 2051 from the compressors purchased from 2022-2051. The incremental installed costs include incremental equipment cost
  as well as installation costs. The results account for the incremental variable and fixed costs incurred by manufacturers due to the adopted
  standards, some of which may be incurred in preparation for the rule. The GHG reduction benefits are global benefits due to actions that occur
  nationally. The Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the AEO 2016 Economic Growth
  cases. In addition, incremental product costs reflect constant prices in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a
  high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. Note that the
  Benefits and Costs may not sum to the Net Benefits due to rounding.
** The interagency group selected four sets of SC-CO2 SC-CH4, and SC-N2O values for use in regulatory analyses. Three sets of values are based on the
  average social costs from the integrated assessment models, at discount rates of 5-percent, 3-percent, and 2.5-percent. The fourth set, which
  represents the 95th percentile of the social cost distributions calculated using a 3-percent discount rate, is included to represent higher-than-
  expected impacts from climate change further out in the tails of the social cost distributions. The social cost values are emission year specific. The
  GHG reduction benefits are global benefits due to actions that occur nationally. See section IV.L 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.3 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 used by EPA. 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 American Cancer Society (``ACS'') study.
[Dagger] Total Benefits for both the 3-percent and 7-percent cases are presented using the average social costs with 3-percent discount rate. In the
  rows labeled ``7% plus GHG range'' and ``3% plus GHG range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and
  those values are added to the full range of social cost values.
[dagger][dagger] The incremental installed costs include incremental equipment cost as well as installation costs. The results account for the
  incremental variable and fixed costs incurred by manufacturers due to the proposed standards, some of which may be incurred in preparation for the
  rule.

VI. Certification Requirements

    In the energy conservation standards NOPR, DOE proposed to adopt 
reporting requirements in a new Sec.  429.63(b) within subpart B of 10 
CFR part 429. Consistent with other types of covered products and 
equipment, the proposed section (10 CFR 429.63(b)) would specify that 
the general certification reporting requirements contained in 10 CFR 
429.12 apply to compressors. The additional requirements proposed in 10 
CFR 429.63 would require manufacturers to include the following

[[Page 1585]]

data (to be made public) in the certification reports:
---------------------------------------------------------------------------

    \118\ DOE used average social costs with a 3-percent discount 
rate because these values are considered as the ``central'' 
estimates by the interagency group.
---------------------------------------------------------------------------

     Full-load package isentropic efficiency or part-load 
package isentropic efficiency, as applicable (dimensionless);
     full-load actual volume flow rate (in cubic feet per 
minute);
     compressor motor nominal horsepower (in horsepower);
     full-load operating pressure (in pounds per square inch, 
gauge);
     maximum full-flow operating pressure (in pounds per square 
inch, gauge); and
     pressure ratio (dimensionless). 81 FR 31680, 31757-31758 
(May 19, 2016).
    The Code of Federal Regulations, under 10 CFR 429.12(b), already 
requires reporting of manufacturer name, model number(s), and equipment 
class for all covered products and equipment.
    With respect to reporting model number(s), in the NOPR DOE proposed 
that a certification report must include a basic model number and the 
manufacturer's (individual) model number(s). DOE went on to explain 
that a manufacturer's model number (individual model number) is the 
identifier used by a manufacturer to uniquely identify what is commonly 
considered a ``model'' in industry--all units of a particular design. 
The manufacturer's (individual) model number typically appears on the 
product nameplate, in product catalogs and in other product advertising 
literature. In contrast, the basic model number is a number used by the 
manufacturer to indicate to DOE how the manufacturer has grouped its 
individual models for the purposes of testing and rating. Many 
manufacturers choose to use a model number that is similar to the 
individual model numbers in the basic model, but that is not required. 
The manufacturer's individual model number(s) in each basic model must 
reference not only the bare compressor, but also any motor and controls 
with which the compressor is being rated. 81 FR 31680, 31758 (May 19, 
2016).
    DOE received no comments in response to its proposal for 
certification requirements. However, requirements in the test procedure 
final rule regarding compressor configuration during testing 
necessitate the addition of two certification requirements to this 
final rule.
    The test procedure final rule included two lists of ancillary 
equipment. The first list, presented in Table IV.2, contains ancillary 
equipment that must be included on a compressor package during testing, 
regardless of whether that ancillary equipment is distributed in 
commerce with the basic model under test. The second list, presented in 
Table IV.3, contains ancillary equipment that is required to be 
included for testing only if the ancillary equipment is distributed in 
commerce with the basic model under test. The test procedure final rule 
requires that if a compressor is distributed in commerce without an 
item from Table IV.2, the compressor's manufacturer must provide an 
appropriate item to be installed for compliance testing. Additionally, 
the test procedure specifies that ancillary equipment (other than that 
listed in Table IV.2 and Table IV.3) may be installed for the test if 
it is distributed in commerce with the compressor, but this additional 
ancillary equipment is not required.
    To support these testing provisions, in this final rule, DOE is 
requiring manufacturers to report information regarding any pieces of 
ancillary equipment that manufacturers install for testing,\119\ but 
that are not part of the compressor package, as distributed in 
commerce. The reporting of this information will allow DOE to 
replicate, for any possible compliance and enforcement testing, the 
testing configuration used by manufacturers during their certification 
testing. DOE believes this to be important, as the specified additional 
ancillary equipment installed for test may significantly affect the 
energy consumption of the tested unit.
---------------------------------------------------------------------------

    \119\ I.e., in order to comply with the requirement that a 
tested compressor package include all ancillary equipment listed in 
Table IV.2.
---------------------------------------------------------------------------

    As a result, the total of data required to be included in the 
certification reports is now as follows:

 Full-load package isentropic efficiency or part-load package 
isentropic efficiency, as applicable (dimensionless)
 full-load actual volume flow rate (in cubic feet per minute)
 compressor motor nominal horsepower (in horsepower)
 full-load operating pressure (in pounds per square inch, 
gauge)
 maximum full-flow operating pressure (in pounds per square 
inch, gauge)
 pressure ratio at full-load operating pressure (dimensionless)
 For any ancillary equipment that is installed for testing, but 
that is not part of the compressor package, as distributed in commerce 
(per the requirements of 10 CFR part 431, subpart T, appendix A, 
section I(B)(4)), the following must be reported:
    [cir] A general description of the ancillary equipment, based on 
the list provided in the first column of Table 1 of 10 CFR part 431, 
subpart T, appendix A, section I(B)(4)
    [cir] The manufacturer of the ancillary equipment
    [cir] The brand of the ancillary equipment (if different from the 
manufacturer)
    [cir] The model number of the ancillary equipment
    [cir] The serial number of the ancillary equipment (if applicable)
    [cir] The following electrical characteristics, if applicable:
[ssquf] Input Voltage
    [ssquf] Number of Phases
    [ssquf] Input Frequency
    [cir] The following mechanical characteristics, if applicable:
    [ssquf] Size of any connections
    [ssquf] Type of any connections
    [cir] Installation instructions for the ancillary equipment, 
accompanied by photos that clearly illustrate the ancillary equipment, 
as installed on compresssor package. Instructions and photo(s) to be 
provided in portable document format (i.e., a PDF file).

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that the adopted standards for compressors 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 occurs when a building contractor or building 
owner makes the purchasing decision but does not pay the energy costs.
    (3) There are external benefits resulting from improved energy 
efficiency of products or equipment that are not captured by the users 
of such equipment. These benefits include externalities related to 
public health,

[[Page 1586]]

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 not a significant regulatory action under section 
(3)(f) of Executive Order 12866. Section 6(a)(3)(A) of the Executive 
Order states that absent a material change in the development of the 
planned regulatory action, regulatory action not designated as 
significant will not be subject to review under section 6(a)(3) unless, 
within 10 working days of receipt of DOE's list of planned regulatory 
actions, the Administrator of OIRA notifies the agency that OIRA has 
determined that a planned regulation is a significant regulatory action 
within the meaning of the Executive order. Accordingly, DOE has not 
submitted this final rule for review by OIRA. 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.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). E.O. 
13563 is supplemental to and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, agencies are 
required by Executive Order 13563 to (1) propose or adopt a regulation 
only upon a reasoned determination that its benefits justify its costs 
(recognizing that some benefits and costs are difficult to quantify); 
(2) tailor regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, taking into account, 
among other things, and to the extent practicable, the costs of 
cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, OIRA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that this final rule is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
and a final regulatory flexibility analysis (``FRFA'') for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (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.
    For manufacturers of compressors, 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 the North American Industry Classification System (NAICS) 
code and industry description and are available at www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Manufacturing of 
compressors is classified under NAICS 333912, ``Air and Gas Compressor 
Manufacturing.'' The SBA sets a threshold of 1,000 employees or fewer 
for an entity to be considered as a small business for this category.
1. Need for, Objectives of, and Legal Basis, for Rule
    As described in section II.A above, Title III of the Energy Policy 
and Conservation Act of 1975 (``EPCA'' or ``the Act'') sets forth a 
variety of provisions designed to improve energy efficiency. (42 U.S.C. 
6291, et seq.) Part C of Title III, which for editorial reasons was re-
designated as Part A-1 upon incorporation into the U.S. Code (42 U.S.C. 
6311-6317), establishes the ``Energy Conservation Program for Certain 
Industrial Equipment.'' EPCA provides that DOE may include a type of 
industrial equipment, including compressors, as covered equipment if it 
determines that to do so is necessary to carry out the purposes of Part 
A-1. (42 U.S. 6311(2)(B)(i) and 42 U.S.C. 6312(b)). The purpose of Part 
A-1 is to improve the efficiency of electric motors and pumps and 
certain other industrial equipment in order to conserve the energy 
resources of the Nation. (42 U.S.C 6312(a)). DOE determined that 
compressors meet the statutory criteria for classifying industrial 
equipment as covered, as Compressors are a type of industrial equipment 
(1) which in operation consumes, or is designed to consume, energy; (2) 
are to a significant extent distributed in commerce for industrial or 
commercial use; and (3) are not covered under 42 U.S.C. 6291(a)(2).
2. Significant Issues Raised in Response to the IRFA
    Many manufacturers stated that small businesses would be negatively 
affected by the proposed regulation compared to their larger 
multinational counterparts. Sullivan-Palatek stated it is difficult for 
their small business, and other small businesses, to access capital 
compared to their larger competitors. (Sullivan-Palatek, Public Meeting 
Transcript No. 44 at p. 141-143) A few manufacturers also noted that a 
stringent standard can cause a heavy cost burden that will likely cause 
many small businesses to exit the rotary compressor business or become 
acquired by larger companies. (Sullivan-Palatek, No. 51 at p. 2-9;

[[Page 1587]]

Castair, No. 52 at p. 3; Compressed Air Systems, No. 61 at p. 4) Often 
times, these small businesses, both manufacturers and packagers, employ 
specialized workers that may not be able to find a new job where they 
can use their skills. (Sullivan-Palatek, No. 51 at p. 9; Castair, No. 
45 at p. 1; CAGI, No. 52 at p. 3)
    Further, Compressed Air Systems noted that testing four to five 
units based on the NOPR test procedure could cost up to $125,000 for a 
manufacturer. Most domestic small air compressor manufacturers produce 
small quantities of each model offered, which is a heavy cost burden to 
smaller companies with limited access to capital. (Compressed Air 
Systems, No. 61 at p. 4)
    Consistent with the requirements of the Regulatory Flexibility Act 
(5 U.S.C. 601, et seq.), as amended, the Department analyzes the 
expected impacts of an energy conservation standard on small business 
compressor manufacturers directly regulated by DOE's standards. DOE 
understands that some small manufacturers may be disproportionately 
affected by an energy conservation standard, and these impacts are 
discussed in detail in section VII.B.4. DOE agrees that small 
businesses may not have the same access to capital compared to their 
larger competitors. Furthermore, DOE analyzes the impacts of a 
compressors energy conservation standard on domestic direct employment 
in section V.B.2.b. Further, DOE acknowledges the commenter's concerns 
about the scope of the test procedure as defined in the test procedure 
NOPR, which included many low-shipment volume or custom compressor 
models. DOE took two key steps to address commenters' concerns and 
reduce the burden of testing, especially for low-volume equipment, in 
the test procedure final rule: (1) DOE is significantly limiting the 
scope of the test procedure final rule, as compared to the scope 
proposed in the test procedure NOPR, and (2) DOE adopted provisions 
allowing the use of an AEDM, in lieu of testing.
    Additionally, Sullivan-Palatek recalls that in the NOPR, DOE 
identified two small business OEMs and 13 large OEMs. Sullivan-Palatek 
also stated that DOE's NOPR analysis concluded that, on average, small 
businesses will incur $3.95 million to $5.15 million in conversion 
costs per company. Meanwhile, large businesses will incur, on average, 
$6.02 million to $7.85 million in conversion costs per company. 
Sullivan-Palatek questioned why DOE assumes a smaller firm, such as 
their own, with the same number of models requiring conversion will 
incur a lesser cost than a large business. As such, they requested an 
independent analysis by the Department of Justice. (Sullivan-Palatek, 
No. 51 at p. 8-9)
    DOE understands that small manufacturers will have varying degrees 
of burden when complying with a compressors energy conservation 
standard. Depending on the number of models offered and equipment 
efficiency offerings, small manufacturers may find that their 
conversion costs either fall above or below the small business average. 
Typically, larger manufacturers have broader equipment offerings than 
their smaller competitors, which means they are likely to incur higher 
redesign costs to bring more products into compliance. However, DOE 
notes that one small business OEM had a higher percentage of failing 
models at TSL 2. This small business OEM may incur disproportionate 
impacts relative to the industry because their percentage of failing 
models is above the industry average.
    During the notice of proposed rulemaking public meeting, DOE 
cautioned stakeholders that SBA size standards may shift before the 
final rule is published. Sullair and CAGI commented that with an 
increased size standard, from 500 employees to 1,000 employees, the 
number of OEMs identified would increase as well. (CAGI, Public Meeting 
Transcript No. 44 at p. 141; Sullair, Public Meeting Transcript No. 44 
at p. 140)
    For the compressor manufacturing industry, the Small Business 
Administration (SBA) sets size threshold, which defines those entities 
classified as small businesses for the purpose of this statue. 
Compressor manufacturers are classified under NAICS 333912, ``Air and 
Gas Compressor Manufacturing.'' During the NOPR stage, the SBA set a 
threshold of 500 employees or less for an entity to be considered as a 
small business in this industry. In February 2016, as codified in 13 
CFR part 121, the SBA changed size standards for NAICS code 333912 to 
1,000 employees or less. Therefore, for the purpose of this final rule, 
DOE has identified 22 small manufacturers that meet the employee 
threshold defined by the SBA. The manufacturer impact analysis and 
regulatory flexibility analysis have been updated in the final rule to 
reflect the changes in SBA size standards.
    Manufacturers stated that there are between 10-100 more small 
businesses affected by this rulemaking that were not previously 
identified by DOE during the NOPR stage. With a number of small 
businesses unidentified, many were not notified or contacted for 
feedback prior to the regulation. Further, Jenny Products and 
Compressed Air Systems commented that the high cost to comply with the 
test procedure and standard would place a significant burden on small 
manufacturers. (Sullivan-Palatek, No. 51 at p. 1-2; Jenny Products, No. 
58 at p. 4-5; Compressed Air Systems, No. 61 at p. 2-4; Castair, No. 45 
at p. 2) In a written comment, Compressed Air Systems provided a list 
of sixteen potential small businesses that could be affected by this 
final rule standard. It also noted that while DOE's analysis shows that 
most units manufactured by small businesses can comply with this final 
rule, small businesses will still face high burdens testing each model. 
(Compressed Air Systems, No. 61 at p. 2-5) However, Jenny Products 
confirmed that their company will not be able to comply with this final 
rule standard. (Jenny Products, No. 58 at p. 6) As a result, Compressed 
Air Systems asked that DOE conduct a more thorough survey of domestic 
small businesses to understand how a stringent standard will lessen 
their ability to remain competitive in the market. (Compressed Air 
Systems, No. 61 at p. 2-5)
    DOE recognizes that small manufacturers may be substantially 
impacted by energy conservation standards. Again, DOE notes in the 
Regulatory Flexibility Act, section VI.B of this final rule, that small 
manufacturers are not expected to face significantly higher conversion 
costs than their larger competitors. In response to the list of 
manufacturers provided by Compressed Air Systems, DOE reviewed this 
list and identified two additional entities that produce covered 
equipment. Of these two entities, one was a large manufacturer and the 
other was a domestic small business that packages and assembles covered 
equipment. DOE has updated its manufacturer count and analyses to 
reflect these additions.
3. Description on Estimated Number of Small Entities Affected
    For manufacturers of compressors, the Small Business Administration 
(SBA) has set a size threshold, which defines those entities classified 
as ``small businesses'' for the purposes of the statute. DOE used the 
SBA's small business size standards to determine whether any small 
entities would be subject to the requirements of the rule. (See 13 CFR 
part 121.) The size standards are listed by North American Industry 
Classification System (NAICS) code and industry description and are 
available at www.sba.gov/sites/default/

[[Page 1588]]

files/files/Size_Standards_Table.pdf. Manufacturing of compressors is 
classified under NAICS 333912, ``Air and Gas Compressor 
Manufacturing.'' The SBA sets a threshold of 1,000 employees or fewer 
for an entity to be considered as a small business for this category.
    To identify and estimate the number of small business manufacturers 
of equipment within the scope of this rulemaking, DOE conducted a 
market survey using available public information. DOE's research 
involved industry trade association membership directories (including 
CAGI), individual company and online retailer websites, and market 
research tools (e.g., Hoovers reports) to create a list of companies 
that manufacture equipment covered by this rulemaking. DOE presented 
its list to manufacturers in MIA interviews and asked industry 
representatives if they were aware of any other small manufacturers 
during manufacturer interviews and at DOE public meetings. DOE reviewed 
publicly-available data and contacted select companies on its list, as 
necessary, to determine whether they met the SBA's definition of a 
small business manufacturer. DOE screened out companies that do not 
offer equipment within the scope of this rulemaking, do not meet the 
definition of a ``small business,'' or are foreign-owned and operated.
    DOE identified 22 manufacturers of lubricated rotary compressor 
equipment sold in the United States and within the scope of this 
rulemaking. Seven of these manufacturers were under the 1,000-employee 
threshold defined by the SBA to qualify as a small business and are 
domestic companies.
    Within the compressor industry, manufacturers are classified into 
two categories; original equipment manufacturers (``OEMs'') and 
compressor packagers. OEMs manufacture their own air-ends and assemble 
them with other components to create complete package compressors. 
Packagers assemble motors and other accessories with air-ends purchased 
from other companies, resulting in a complete compressor.
    Within the rotary air compressor industry, DOE identified 22 
manufacturers; 15 are OEMs and seven are packagers of compressors. Of 
the 22 total manufacturers, seven large OEMs supply approximately 80 
percent of shipments and revenues. Of the seven domestic small 
businesses identified, DOE's research indicates that two are OEMs and 
five are packagers.
4. Description and Estimate of Compliance Requirements Including 
Differences in Cost, if Any, for Different Groups of Small Entities
    Because DOE proposes to establish standards for only lubricated 
rotary equipment, this section will only focus on the estimated impacts 
to the seven domestic small manufacturers of rotary compressors.
    Of the seven domestic small rotary compressor manufacturers 
identified, DOE's research indicates that two are OEMs and five are 
packagers. Whereas OEMs would be expected to incur significant redesign 
and capital conversion costs in order to comply with new standards, 
packagers would not. Unlike OEMs, packagers would not face significant 
capital conversion costs, as the processes they use to assemble 
completed packages from purchased air-ends and components is not 
expected to change. Packagers are also not expected to face significant 
product redesign costs, as the burden of engineering and redesigning 
the air-end and other key components would reside with OEMs. However, 
as manufacturers OEMs and packagers are both expected to incur new 
compliance and testing costs, as any new energy conservation standard 
would require their equipment to be tested and certified to the 
standard, using a DOE test procedure.
    As a result of these efforts, the following discussion of domestic 
small business impacts considers capital, redesign, and compliance cost 
impacts facing rotary OEMs, while only considering redesign and 
compliance cost impacts for rotary packagers.
    DOE identified two small business OEMs producing lubricated rotary 
compressors. Based on equipment listings data in the CAGI database, 
small business OEMs comprise approximately three percent of industry 
listings. Excluding testing costs, DOE estimates that the average 
failing compressor model will cost between $0.29 million and $0.38 
million in product and capital conversion costs. Using the CAGI 
database and manufacturer websites, DOE identified 23 failing models 
manufactured by small business OEMs. Therefore, DOE estimates that 
product and capital conversion costs, excluding testing costs, for 
small businesses to range from $6.6 million to $8.7 million. DOE notes 
that 21 of the 23 failing models are manufactured by one small business 
OEM. This small business OEM may incur disproportionate impacts 
relative to the industry because their percentage of failing models is 
above the industry average.
    DOE identified five small business packagers producing lubricated 
rotary compressors. DOE estimates that the average packager will incur 
between $1.5 million and $2.2 million in engineering redesign costs at 
TSL 2. DOE was unable to obtain equipment performance data for 
packagers. During the NOPR stage, DOE estimated the total number of 
rotary models in the industry by scaling the model counts in the CAGI 
database by CAGI's estimated market share; 85 percent. In the final 
rule analysis, DOE updated the CAGI database with additional 
manufacturers and models. The CAGI database model count increased by 
approximately five percent and therefore, for the purposes of the final 
rule analysis, DOE estimates that packagers represent approximately 10 
percent of industry models. Therefore, DOE calculated the industry 
testing cost to packagers at approximately $2.3 million. Further, using 
publicly available information, DOE calculated the average annual 
revenue of a small business packager at $14.5 million. With a 
conversion period of five years, 2017 to 2021, the average small 
business packager would have to commit between 2.5 percent and 3.5 
percent of their conversion period revenue to cover the estimated 
engineering redesign and testing costs at TSL 2.
    DOE's conversion cost estimates were derived from total industry 
conversion costs discussed previously in section IV.J.2.c of this 
document. DOE notes that the ranges shown here relate to the two 
conversion cost scenarios investigated in section IV.J.2.c of this 
document.
    However, as noted in section V.B.2, the GRIM free cash flow results 
in 2021 indicated that some manufacturers may need to access the 
capital markets in order to fund conversion costs directly related to 
the proposed standard. Given that small manufacturers may have greater 
difficulty securing outside capital \120\ and that the necessary 
conversion costs are not insignificant to the size of a small business, 
it is possible the domestic small OEMs may be forced to retire a 
greater portion of product models than large competitors. In addition, 
smaller companies often have a higher cost of borrowing due to higher 
risk on the part of investors, largely attributed to lower cash flows 
and lower per unit profitability. In these cases, small manufacturers 
may observe

[[Page 1589]]

higher costs of debt than larger manufacturers.
---------------------------------------------------------------------------

    \120\ Simon, Ruth, and Angus Loten, ``Small-Business Lending Is 
Slow to Recover,'' Wall Street Journal, August 14, 2014. Accessed 
August 2014, available at http://online.wsj.com/articles/small-business-lending-is-slow-to-recover-1408329562.
---------------------------------------------------------------------------

5. Significant Alternatives to the Rule
    The discussion in the previous section analyzes impacts on small 
businesses that would result from the adopted standards, represented by 
TSL 2. In reviewing alternatives to the adopted standards, DOE examined 
energy conservation standards set at lower efficiency levels. While TSL 
1 would reduce the impacts on small business manufacturers, it would 
come at the expense of a reduction in energy savings. TSL 1 achieves 81 
percent less energy savings compared to the energy savings at TSL 2.
    DOE believes that establishing standards at TSL 2 balances the 
benefits of the energy savings at TSL 2 with the potential burdens 
placed on compressors manufacturers, including small business 
manufacturers. Accordingly, DOE is not adopting one of the other TSLs 
considered in the analysis, or the other policy alternatives examined 
as part of the regulatory impact analysis and included in chapter 17 of 
the final rule TSD.
    Additional compliance flexibilities may be available through other 
means. 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 compressors 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 compressors, 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 compressors. 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); 10 CFR 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. DOE has applied Categorical Exclusion B5.1--
Actions to conserve energy or water, as the final determination for 
this rulemaking and, therefore, DOE does not need to prepare an 
Environmental Assessment or Environmental Impact Statement for this 
rule. DOE's CX determination for this rule is available at http://energy.gov/nepa/categorical-exclusion-cx-determinations-cx.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (Aug. 10, 1999) 
imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. DOE has examined this 
rule and has determined that it would not have a substantial direct 
effect on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government. EPCA governs 
and prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of this final rule. 
States can petition DOE for exemption from such preemption to the 
extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) 
Therefore, no further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    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). 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.

[[Page 1590]]

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.
    This rule does not contain a Federal intergovernmental mandate, nor 
is it expected to require expenditures of $100 million or more in any 
one year by the private sector. As a result, the analytical 
requirements of UMRA do not apply.

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

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

I. Review Under Executive Order 12630

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

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

    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 new 
energy conservation standards for compressors, 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 70 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 website: 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).

VIII. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 429

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

10 CFR Part 431

    Administrative practice and procedure, Confidential business

[[Page 1591]]

information, Energy conservation, Household appliances, Imports, 
Incorporation by reference, Intergovernmental relations, Small 
businesses.

    Issued in Washington, DC, on December 5, 2016.
David J. Friedman,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

    Note: DOE is publishing this document concerning industrial air 
compressors to comply with an order from the U.S. District Court for 
the Northern District of California in the consolidated cases of 
Natural Resources Defense Council, et al. v. Perry and People of the 
State of California et al. v. Perry, Case No. 17-cv-03404-VC, as 
affirmed by the U.S. Court of Appeals for the Ninth Circuit in the 
consolidated cases Nos. 18-15380 and 18-15475. DOE reaffirmed the 
original signature and date in the Energy Conservation Standards 
implementation of the court order published elsewhere in this issue 
of the Federal Register. This document is substantively identical to 
the signed document DOE had previously posted to its website but has 
been edited and formatted in conformance with the publication 
requirements for the Federal Register and CFR to ensure the document 
can be given legal effect.


    Editorial Note: This document was received for publication by 
the Office of the Federal Register on December 3, 2019.
    For the reasons set forth in the preamble, DOE amends parts 429 and 
431 of chapter II, subchapter D, of title 10 of the Code of Federal 
Regulations, as set forth below:

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

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

    Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.


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


Sec.  429.12  General requirements applicable to certification reports.

* * * * *
    (b) * * *
    (13) Product specific information listed in Sec. Sec.  429.14 
through 429.63 of this chapter.
* * * * *

0
3. Section 429.63 is amended by adding paragraph (b) to read as 
follows:


Sec.  429.63  Compressors.

* * * * *
    (b) Certification reports. (1) The requirements of Sec.  429.12 are 
applicable to compressors; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report will 
include the following public product-specific information:
    (i) Full-load package isentropic efficiency or part-load package 
isentropic efficiency, as applicable (dimensionless).
    (ii) Full-load actual volume flow rate (in cubic feet per minute).
    (iii) Compressor motor nominal horsepower (in horsepower).
    (iv) Full-load operating pressure (in pounds per square inch, 
gauge).
    (v) Maximum full-flow operating pressure (in pounds per square 
inch, gauge).
    (vi) Pressure ratio at full-load operating pressure 
(dimensionless).
    (vii) For any ancillary equipment that is installed for test, but 
is not part of the compressor package as distributed in commerce (per 
the requirements of 10 CFR part 431, subpart T, appendix A, section 
I(B)(4)), the following must be reported:
    (A) A general description of the ancillary equipment, based on the 
list provided in the first column of Table 1 of 10 CFR part 431, 
subpart T, appendix A, section I(B)(4).
    (B) The manufacturer of the ancillary equipment.
    (C) The brand of the ancillary equipment (if different from the 
manufacturer).
    (D) The model number of the ancillary equipment.
    (E) The serial number of the ancillary equipment (if applicable).
    (F) The following electrical characteristics, if applicable:
    (1) Input Voltage.
    (2) Number of Phases.
    (3) Input Frequency.
    (G) The following mechanical characteristics, if applicable:
    (1) Size of any connections.
    (2) Type of any connections.
    (H) Installation instructions for the ancillary equipment, 
accompanied by photos that clearly illustrate the ancillary equipment, 
as installed on compresssor package. Instructions and photo(s) to be 
provided in portable document format (i.e., a PDF file).

0
4. Section 429.71 is amended by adding paragraph (e) to read as 
follows:


Sec.  429.71   Maintenance of records.

* * * * *
    (e) When considering if a compressor is subject to energy 
conservation standards under part 431, DOE may need to determine if a 
compressors was designed and tested to the requirements set forth in 
the American Petroleum Institute standard 619, ``Rotary-Type Positive-
Displacement Compressors for Petroleum, Petrochemical, and Natural Gas 
Industries'' (API 619). In this case, DOE may request that a 
manufacturer provide DOE with copies of the original requirements and 
test data that were submitted to the purchaser of the compressor, in 
accordance with API 619.

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

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

    Authority: 42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.


0
6. Section 431.342 is amended by adding, in alphabetical order, 
definitions for ``Air-cooled compressor'', ``Liquid-cooled compressor'' 
and ``Water-injected lubricated compressor'' to read as follows:


Sec.  431.342   Definitions concerning compressors.

* * * * *
    Air-cooled compressor means a compressor that utilizes air to cool 
both the compressed air and, if present, any auxiliary substance used 
to facilitate compression, and that is not a liquid-cooled compressor.
* * * * *
    Liquid-cooled compressor means a compressor that utilizes liquid 
coolant provided by an external system to cool both the compressed air 
and, if present, any auxiliary substance used to facilitate 
compression.
* * * * *
    Water-injected lubricated compressor means a lubricated compressor 
that uses injected water as an auxiliary substance.

0
7. Section 431.345 is added to read as follows:


Sec.  431.345  Energy conservation standards and effective dates.

    (a) Each compressor that is manufactured starting on January 10, 
2025 and that:
    (1) Is an air compressor,
    (2) Is a rotary compressor,
    (3) Is not a liquid ring compressor,
    (4) Is driven by a brushless electric motor,
    (5) Is a lubricated compressor,
    (6) Has a full-load operating pressure greater than or equal to 75 
pounds per square inch gauge (psig) and less than or equal to 200 psig,
    (7) Is not designed and tested to the requirements of The American

[[Page 1592]]

Petroleum Institute standard 619, ``Rotary-Type Positive-Displacement 
Compressors for Petroleum, Petrochemical, and Natural Gas Industries,''
    (8) Has full-load actual volume flow rate greater than or equal to 
35 cubic feet per minute (cfm), or is distributed in commerce with a 
compressor motor nominal horsepower greater than or equal to 10 
horsepower (hp),
    (9) Has a full-load actual volume flow rate less than or equal to 
1,250 cfm, or is distributed in commerce with a compressor motor 
nominal horsepower less than or equal to 200 hp,
    (10) Is driven by a three-phase electric motor,
    (11) Is manufactured alone or as a component of another piece of 
equipment; and
    (12) Is in one of the equipment classes listed in the Table 1, must 
have a full-load package isentropic efficiency or part-load package 
isentropic efficiency that is not less than the appropriate ``Minimum 
Package Isentropic Efficiency'' value listed in Table 1 of this 
section.

                         Table 1--Energy Conservation Standards for Certain Compressors
----------------------------------------------------------------------------------------------------------------
                                                                          [eta]Regr (package       d (percentage
             Equipment class              Minimum package isentropic     isentropic efficiency         loss
                                                  efficiency               reference curve)         reduction)
----------------------------------------------------------------------------------------------------------------
Rotary, lubricated, air-cooled, fixed-    [eta]Regr + (1 -            -0.00928 * ln\2\(.4719 *               -15
 speed compressor.                         [eta]Regr) * (d/100).       V1) + 0.13911 * ln(.4719
                                                                       * V1) + 0.27110.
Rotary, lubricated, air-cooled, variable- [eta]Regr + (1 -            -0.01549 * ln\2\(.4719 *               -10
 speed compressor.                         [eta]Regr) * (d/100).       V1) + 0.21573 * ln(.4719
                                                                       * V1) + 0.00905.
Rotary, lubricated, liquid-cooled, fixed- .02349 + [eta]Regr + (1 -   -0.00928 * ln\2\(.4719 *               -15
 speed compressor.                         [eta]Regr) * (d/100).       V1) + 0.13911 * ln(.4719
                                                                       * V1) + 0.27110.
Rotary, lubricated, liquid-cooled,        .02349 + [eta]Regr + (1 -   -0.01549 * ln\2\(.4719 *               -15
 variable-speed compressor.                [eta]Regr) * (d/100).       V1) + 0.21573 * ln(.4719
                                                                       * V1) + 0.00905.
----------------------------------------------------------------------------------------------------------------

    (b) Instructions for the use of Table 1 of this section:
    (1) To determine the standard level a compressor must meet, the 
correct equipment class must be identified. The descriptions are in the 
first column (``Equipment Class''); definitions for these descriptions 
are found in Sec.  431.342.
    (2) The second column (``Minimum Package Isentropic Efficiency'') 
contains the applicable energy conservation standard level, provided in 
terms of package isentropic efficiency.
    (3) For ``Fixed-speed compressor'' equipment classes, the relevant 
Package Isentropic Efficiency is Full-load Package Isentropic 
Efficiency. For ``Variable-speed compressor'' equipment classes, the 
relevant Package Isentropic Efficiency is Part-load Package Isentropic 
Efficiency. Both Full- and Part-load Package Isentropic Efficiency are 
determined in accordance with the test procedure in Sec.  431.344.
    (4) The second column (``Minimum Package Isentropic Efficiency'') 
references the third column (``[eta]Regr''), also a function 
of full-load actual volume flow rate, and the fourth column (``d''). 
The equations are provided separately to maintain consistency with the 
language of the preamble and analysis.
    (5) The second and third columns contain the term V1, 
which denotes compressor full-load actual volume flow rate, given in 
terms of cubic feet per minute (``cfm'') and determined in accordance 
with the test procedure in Sec.  431.344.

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


U.S. Department of Justice, Antitrust Division.
Renata B. Hesse,
Acting Assistant Attorney General.
Main Justice Building, 950 Pennsylvania Avenue NW, Washington, DC 
20530-0001, (202) 514-2401/(202) 616-2645 (Fax)

July 18, 2016

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

Re: Energy Conservation Standards for Compressors; Doc. No. EERE-
2013-BT-STD-0040

Dear Deputy General Counsel Harkavy:

    I am responding to your May 19, 2016, letter seeking the views 
of the Attorney General about the potential impact on competition of 
proposed energy conservation standards for compressors. Your request 
was submitted under Section 325(o)(2)(B)(i)(V) of the Energy Policy 
and Conservation Act, as amended (ECPA), 42 U.S.C. 
6295(o)(2)(B)(i)(V), which requires the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. 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 head of 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 manufacturers and consumers.
    We have reviewed the proposed standards contained in the Notice 
of Proposed Rulemaking (81 FR 31680, May 19, 2016) and the related 
technical support documents. 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 June 20, 2016, and conducted interviews 
with industry members.
    Based on the information currently available, we do not believe 
that the proposed energy conservation standards for compressors are 
likely to have a significant adverse impact on competition.

Sincerely,

Renata B. Hesse

[FR Doc. 2019-26355 Filed 1-9-20; 8:45 am]
 BILLING CODE 6450-01-P