International Trade Administration
National Institute of Standards and Technology
National Oceanic and Atmospheric Administration
Federal Energy Regulatory Commission
Centers for Disease Control and Prevention
Food and Drug Administration
National Institutes of Health
Fish and Wildlife Service
Land Management Bureau
National Park Service
Antitrust Division
Federal Council on the Arts and the Humanities
Federal Aviation Administration
Federal Railroad Administration
Comptroller of the Currency
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Federal Aviation Administration (FAA), DOT.
Final rule.
This action modifies Class E airspace designated as an extension to a Class D or Class E surface area, and Class E airspace extending upward from 700 feet above the surface at Redding Municipal Airport, Redding CA. This action also removes Class E airspace extending upward from 1,200 feet above the surface; this airspace is wholly contained within the Rogue Valley en route airspace and duplication is not necessary. Additionally, this action updates the geographic coordinates of the airport to match the FAA's database. Lastly, this action removes references to the Redding VOR/DME and Lassen NDB from the airspace legal description, as well as the airspace extensions associated with the navigational aids.
Effective 0901 UTC, March 26, 2020. The Director of the Federal Register approves this incorporation by reference action under Title 1 Code of Federal Regulations part 51, subject to the annual revision of FAA Order 7400.11 and publication of conforming amendments.
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Matthew Van Der Wal, Federal Aviation Administration, Western Service Center, Operations Support Group, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-3695.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace at Redding Municipal Airport, Redding, CA, to ensure safety and management of Instrument Flight Rules (IFR) operations at the airport.
The FAA published a notice of proposed rulemaking in the
Class E airspace designations are published in paragraph 6004 and 6005 of FAA Order 7400.11D, dated August 8, 2018, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 modifies Class E airspace designated as an extension to a Class D or Class E surface area within 2.3 miles west and 2.5 miles east of the 193° bearing from the airport, extending from the 4.3-mile radius of the airport to 7.3 miles south of the Redding Municipal Airport.
This action also modifies the Class E airspace extending upward from 700 feet above the surface within a 6.8-mile radius of the airport, and within 1.1 miles west and 1 mile east of the 360° bearing from the airport, extending from the 6.8-mile radius to 12.5 miles north of the airport, and within 8.1 miles west and 4 miles east of the 193° bearing extending from the airport to 16 miles south of the Redding Municipal Airport.
Additionally, this action removes Class E airspace extending upward from 1,200 feet above the surface as this airspace is wholly contained within the Rogue Valley en route airspace and duplication is not necessary.
Lastly, this action removes the Redding VOR/DME, the Lassen NDB from the airspace legal description and the airspace extensions associated with the navigational aids.
Class E airspace designations are published in paragraphs 6004 and 6005 of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from the surface within 2.3 miles west and 2.5 miles east of the 193° bearing from the airport, extending from the 4.3-mile radius of airport to 7.3 miles south of the Redding Municipal Airport. This Class E airspace area is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Chart Supplement.
That airspace extending upward from 700 feet above the surface within a 6.8-mile radius of the airport and within 1.1 miles west and 1 mile east of the 360° bearing from the airport, extending from the 6.8-mile radius to 12.5 miles north of the airport and within 8.1 miles west and 4 miles east of the 193° bearing extending from the airport to 16 miles south of the Redding Municipal Airport.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action amends the Class E airspace extending upward from 700 feet above the surface at Charles Cole Memorial Hospital Heliport, Coudersport, PA, and revokes the Class E airspace extending upward from 700 feet above the surface at Cherry Springs Airport, Galeton, PA. This action is due to an airspace review caused by the closure of the Cherry Spring Airport. The geographic coordinates of Charles Cole Memorial Hospital Heliport would also be updated to coincide with the FAA's aeronautical database. Airspace redesign is necessary for the safety and management of instrument flight rules (IFR) operations at Charles Cole Memorial Hospital Heliport.
Effective 0901 UTC, March 26, 2020. The Director of the Federal Register approves this incorporation by reference action under Title 1 Code of Federal Regulations part 51, subject to the annual revision of FAA Order 7400.11 and publication of conforming amendments.
FAA Order 7400.11D, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Jeffrey Claypool, Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5711.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends the Class E airspace extending upward from 700 feet above the surface at Charles Cole Memorial Hospital Heliport, Coudersport, PA, and revokes the Class E airspace extending upward from 700 feet above the surface at Cherry Springs
The FAA published a notice of proposed rulemaking in the
Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the
This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71:
Amends the Class E airspace extending upward from 700 feet above the surface to within a 6.3-mile radius (increased from an 6-mile radius) of Charles Cole Memorial Hospital Heliport, Coudersport, PA; removes the exclusionary language from the airspace legal description as it is no longer required; and updates the geographic coordinates of Charles Cole Memorial Hospital Heliport to coincide with the FAA's aeronautical database;
And removes the Class E airspace extending upward from 700 feet above the surface at Cherry Springs Airport, Galeton, PA, due to the closure of the airport.
This action is the result of an airspace review caused by the closure of the Cherry Springs Airport, Galeton, PA.
FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.3-mile radius of the Charles Cole Memorial Hospital Heliport.
Environmental Protection Agency (EPA).
Notification of final approval.
Pursuant to the Resource Conservation and Recovery Act (RCRA or Act), the Environmental Protection Agency (EPA) is approving the Georgia Environmental Protection Division's partial Coal Combustion Residuals (CCR) state permit program, which will now operate in lieu of the Federal CCR program, with the exception of certain provisions for which the State did not seek approval. EPA has determined that Georgia's partial CCR permit program meets the standard for approval under RCRA. Facilities operating under the State's program requirements and resulting permit provisions are also subject to EPA's information gathering and inspection and enforcement authorities under RCRA and other applicable statutory and regulatory provisions.
The final approval of Georgia's partial CCR state permit program is effective on February 10, 2020.
Michelle Long, Office of Resource Conservation and Recovery, Materials Recovery and Waste Management Division, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW, MC 5304P, Washington, DC 20460; telephone number: (703) 347-8953; email address:
Throughout this document “we,” “us,” and “our” means the EPA.
EPA is approving in part the Georgia CCR permit program, pursuant to RCRA section 4005(d)(1)(B). 42 U.S.C. 6945(d)(1)(B). Georgia's CCR permit program authorizes the Georgia Environmental Protection Division (GA EPD) to enforce State rules related to CCR activities as well as to handle permit applications and to enforce permit violations. Georgia's CCR permit program will operate in lieu of the Federal CCR program, (40 CFR part 257, subpart D) with the exception of the provisions for which the State did not seek approval, as further explained in Unit II of this
There are no federally-recognized tribes within the State of Georgia, nor any federally-recognized tribal lands/reservations adjacent to Georgia's boundaries within neighboring states. Thus, EPA did not consult with any federally-recognized tribes in connection with this action.
CCR are generated from the combustion of coal, including solid fuels classified as anthracite, bituminous, subbituminous, and lignite, for the purpose of generating steam to power a generator to produce electricity or electricity and other thermal energy by electric utilities and independent power producers. CCR, commonly known as coal ash, include fly ash, bottom ash, boiler slag, and flue gas desulfurization materials. CCR can be sent offsite for disposal, or beneficial use, or disposed in on-site landfills or surface impoundments.
On April 17, 2015, EPA published a final rule, creating regulations at 40 CFR part 257, subpart D, that established a comprehensive set of minimum Federal requirements for the disposal of CCR in landfills and surface impoundments (80 FR 21302) (“Federal CCR regulations”). The Federal CCR regulations created a self-implementing program that regulates the location, design, operating criteria, and groundwater monitoring and corrective action for CCR disposal, as well as the closure and post-closure care of CCR units. They also include recordkeeping and notification requirements for owners and operators of CCR units. The Federal CCR regulations do not apply to activities that meet the definition of “beneficial use” of CCR, as that term is defined in § 257.53.
EPA is taking this action under the authority of RCRA sections 4005(d) and 7004(b)(1)
Once a program is approved, the Administrator must review the approved CCR state permit program at least once every 12 years, as well as no later than three years after a revision to an applicable section of 40 CFR part 257, subpart D, or one year after any unauthorized significant release from a CCR unit located in the state occurs.
In a state with an approved CCR state permit program, EPA may commence administrative or judicial enforcement actions under section 3008 of RCRA, 42 U.S.C. 6928, if the state requests assistance or if EPA determines that an EPA enforcement action is likely to be necessary to ensure that a CCR unit is operating in accordance with the criteria of the state's CCR state permit program.
On April 13, 2018, GA EPD submitted its initial CCR permit program application to EPA Region 4 (“2018 application”). After receiving comments from EPA, GA EPD revised and submitted an updated application on March 6, 2019, containing a revised cover letter signed February 27, 2019, which requested approval of a part of its CCR permit program. GA EPD provided additional revisions to its 2018 application on May 23, 2019. Georgia's 2018 application, as revised by its March 6, 2019 and May 23, 2019 submittals, constitutes its final CCR permit program application (hereinafter “CCR State Permit Program Application” or “Georgia's Application”).
As noted, Georgia has requested a partial program approval of its CCR permit program. Georgia's CCR regulations are found at Ga. Comp. R. and Regs. 391-3-4-.10 (“Georgia CCR regulations”), where the State adopted by reference nearly all of the Federal regulations in 40 CFR part 257, subpart D.
The Georgia CCR regulations do not adopt by reference 40 CFR 257.52(b), which requires compliance with the protections for Threatened and Endangered Species identified in 40 CFR 257.3-2, nor did they adopt by reference 40 CFR 257.50(e), which exempted from regulation inactive impoundments at inactive facilities. 40 CFR 257.50(e) and two other Federal regulations that the Georgia CCR regulations do adopt by reference have since been vacated by the U.S. Court of Appeals in
1. Requirements relevant to Threatened and Endangered Species in 40 CFR 257.3-2;
2. Requirements for inactive impoundments at inactive facilities, for which Federal criteria do not yet exist following the vacatur of 40 CFR 257.50(e);
3. 40 CFR 257.101(a), which allows unlined impoundments to continue receiving coal ash unless they leak (one of the vacated provisions); and
4. 40 CFR 257.71(a)(1)(i), which classifies “clay-lined” impoundments as lined (one of the vacated provisions).
Georgia's CCR permit program covers a broader universe of CCR units than are covered under the Federal CCR regulations. While the “Applicability” section of Georgia's CCR permit program regulations mirrors that of the Federal CCR regulations (
Under Georgia's CCR permit program, owners and operators of new CCR units are required to submit to the director a complete permit application prior to the initial receipt of CCR, and owners of existing CCR units (existing landfills, active surface impoundments, and inactive surface impoundments at operating power plants) were required to submit permit applications within two years of the effective date of Georgia's CCR regulations, which was November 22, 2016. Accordingly, owners and operators of these existing units submitted permit applications to GA EPD in November 2018. The permits that will be issued by the State are considered new permits and, thus, Georgia will follow its public participation procedures for draft CCR permits, as discussed in more detail in Unit III.A.1. Georgia CCR units are issued permits for the life of the unit, with a required review every five years.
As discussed in Unit I.C. of this document, RCRA section 4005(d) requires EPA to evaluate two components of a CCR state permit program to determine whether it meets the standard for approval. First, EPA is to evaluate the adequacy of the CCR state permit program itself (or other system of prior approval and conditions).
On that basis, EPA conducted an analysis of Georgia's CCR permit program as described in its CCR State Permit Program Application, including a thorough analysis of the Georgia CCR regulations and their adoption by reference of portions of 40 CFR part 257, subpart D. As noted, Georgia has
Based on this analysis, EPA has determined that the portions of Georgia's CCR permit program that have been submitted for approval meet the standard in sections 4005(d)(1)(A) and (B) of RCRA. Georgia's CCR permit program includes all the elements of an adequate CCR state permit program as discussed in more detail in Unit III.A. It also contains all of the technical criteria in 40 CFR part 257, except for the provisions specifically discussed in Unit II. Consequently, EPA approves Georgia's CCR permit program “in part.” 42 U.S.C. 6945(d)(1)(B). EPA's analysis and findings are discussed in greater detail in Unit III.B and in the Technical Support Document, which is available in the docket supporting this action.
RCRA section 4005(d)(1)(A) requires a state seeking program approval to submit to EPA an application with “evidence of a permit program or other system of prior approval and conditions under state law for regulation by the state of coal combustion residuals units that are located in the State.” RCRA section 4005(d) does not require EPA to promulgate regulations for determining the adequacy of state programs. EPA therefore evaluated the adequacy of Georgia's CCR permit program against the standard in RCRA section 4005(d)(1)(A) by reference to the existing regulations in 40 CFR part 239 (Requirements for State Permit Program Determination of Adequacy) for Municipal Solid Waste Landfills (MSWLFs) and the statutory requirements for public participation in RCRA section 7004(b). The Agency's general experience in reviewing and approving state programs also informed EPA's evaluation.
In order to aid states in developing their programs and to provide a clear statement of how, in EPA's judgment, the existing regulations and statutory requirements in sections 4005(d) and 7004(b) apply to state CCR programs, EPA developed the
RCRA section 7004(b) applies to all RCRA programs, directing that “public participation in the development, revision, implementation, and enforcement of any . . . program under this chapter shall be provided for, encouraged, and assisted by the Administrator and the States.” 42 U.S.C. 6974(b)(1). Although 40 CFR part 239 applies to approval of state MSWLF programs under RCRA 4005(c)(1), rather than EPA's evaluation of CCR permit programs under RCRA 4005(d), the specific criteria outlined in part 239 provide a helpful framework to more broadly examine the various aspects of Georgia's CCR permit program. States are familiar with these criteria through the MSWLF permit program (all states with approved MSWLF permit programs have been approved pursuant to these regulations) and the regulations are generally regarded as protective and appropriate. In general, EPA considers that a state CCR permit program that is consistent with the part 239 provisions would meet the section 7004(b)(1) directive regarding public participation. As part of analyzing Georgia's application, EPA reviewed the four categories of criteria outlined in 40 CFR part 239 as guidelines for permitting requirements, requirements for compliance monitoring authority, requirements for enforcement authority, and requirements for intervention in civil enforcement proceedings.
To complete its evaluation, EPA relied on the information contained in Georgia's Application, as well as all materials submitted during the public comment period and at the public hearing. The findings are also based on additional information submitted by Georgia on November 4, 2019, in a document titled
Based on section 7004 of RCRA, 42 U.S.C. 6974, and the part 239 regulations, it is EPA's judgment that an adequate state CCR permit program will ensure that: (1) Documents for permit determinations are made available for public review and comment; (2) final determinations on permit applications are made known to the public; and (3) public comments on permit determinations are considered. To meet these requirements, Georgia has adopted a policy governing the procedure for public comment on draft CCR permits, which is memorialized in its “CCR Draft Permit Public Comment Process” Memorandum (the “Cown-Dunn Memorandum”), signed by the Director of GA EPD on April 13, 2018. Under this procedure, GA EPD will post all draft CCR permits online and concurrently notify anyone who has signed up to receive email for coal ash-related announcements of the posting. Draft permits and all information submitted as part of CCR permit applications will be available for review in person at GA EPD's Tradeport Office in Atlanta. Draft permits will be available for public comment for 30 days, and the Director of GA EPD may extend this comment period if deemed necessary. GA EPD will accept comments via email or regular mail. After the comment period ends, GA EPD will review all comments received and make any necessary changes before making a final permit decision. When issuing a final permit, GA EPD will release a response to comments on the draft permit and will notify the public in the same manner as when it provided notice of the draft permit. The final permit and response to comments will be available for review online. The Cown-Dunn Memorandum, a sample transmittal letter to the CCR facility owner, and a sample “Notice of the Opportunity for Public Comment” are included in Appendix D to Georgia's Application, and are available in the docket supporting this final approval. EPA has determined that this approach provides adequate opportunity for public participation in the permitting process sufficient to meet the standard for program approval. Georgia's public participation policy is discussed more in Unit III.D.2.
Based on the 40 CFR part 239 regulations, it is EPA's judgment that an adequate CCR state permit program should provide the state with the authority to gather information about compliance, perform inspections, and ensure that the information it gathers is suitable for enforcement. GA EPD has compliance monitoring authority under Official Code of Georgia Annotated (O.C.G.A.) sections 12-8-23.1(a)(4), 12-8-29.1, and 12-8-23.1(a)(20).
Based on the 40 CFR part 239 regulations, it is EPA's judgment that an adequate CCR state permit program should provide the state with adequate enforcement authority to administer its CCR state permit program, including the authority to: (1) Restrain any person from engaging in activity which may damage human health or the environment, (2) sue to enjoin prohibited activity, and (3) sue to recover civil penalties for prohibited activity. GA EPD has adequate enforcement authority for its existing programs under O.C.G.A. section 12-8-23.1(a)(9), 12-8-30, 12-8-30.1, 12-8-30.4, and 12-8-30.6, and these authorities extend to Georgia's CCR permit program. For example, O.C.G.A. section 12-8-23.1(a)(9) provides the State with authority to bring an administrative or civil proceeding to enforce the Georgia Comprehensive Solid Waste Management Act and its implementing regulations. O.C.G.A. section 12-8-30 provides the State with the authority to issue orders requiring corrective action to remedy violations. Under O.C.G.A. section 12-8-30.4, the State may sue in superior court for injunctions, restraining orders, and other relief for activities that violate the State program. Finally, under O.C.G.A. section 12-8-30.6, the State has the authority to bring an administrative action to assess civil penalties for violations of the State's program. EPA has determined that this aspect of Georgia's CCR permit program meets the standard for program approval.
Based on section 7004 of RCRA and the 40 CFR part 239 regulations, it is EPA's judgment that an adequate CCR state permit program should provide adequate opportunity for citizen intervention in civil enforcement proceedings. Specifically, a state must either: (a) Provide for citizen intervention as a matter of right or (b) have in place a process to (1) provide notice and opportunity for public involvement in civil enforcement actions, (2) investigate and provide responses to citizen complaints about violations, and (3) not oppose citizen intervention when permissive intervention is allowed by statute, rule, or regulation. In Georgia, citizen intervention is possible in the State civil enforcement process as a matter of right for interested parties who are aggrieved or adversely affected. Pursuant to O.C.G.A. section 12-8-30.2, all hearings/reviews of enforcement actions on orders shall be conducted in accordance with O.C.G.A. section 12-2-2(c), which provides that “any person who is aggrieved or adversely affected” by an action of the Director shall have a right to a hearing before an administrative law judge, which shall be conducted in accordance with the Georgia Administrative Procedures Act, which provides for intervention by citizens in contested cases.
EPA has determined that the technical portions of Georgia's CCR permit program that were submitted for approval meet the standard for partial program approval under RCRA section 4005(d)(1)(B)(i), 42 U.S.C. 6945(d)(1)(B)(i). To make this determination, EPA compared the technical requirements in Georgia's CCR regulations submitted for approval to their analogs in 40 CFR part 257 to determine whether they differed from the Federal requirements, and if so, whether those differences met the standard in RCRA sections 4005(d)(1)(B)(ii) and (C), 42 U.S.C. 6945(d)(1)(B)(ii) and (C). Georgia's CCR regulations are contained in Ga. Comp. R. and Regs. 391-3-4-.10, where Georgia adopts by reference portions of 40 CFR part 257, subpart D, and also spells out certain provisions. Specifically, in addition to what is required by 40 CFR part 257, the Georgia CCR regulations contain additional State-specific requirements for new and lateral expansions of CCR landfills in Ga. Comp. R. and Regs. 391-3-4-.10(3)(c)-(e); operating criteria in Ga. Comp. R. and Regs. 391-3-4-.10(5)(c); groundwater monitoring and corrective action in Ga. Comp. R. and Regs. 391-3-4-.10(6)(b)-(g); closure and post-closure care in Ga. Comp. R. and Regs. 391-3-4-.10(7)(c)-(g); and recordkeeping, notification, and posting of information to the internet in Ga. Comp. R. and Regs. 391-3-4-.10(8)(a)1.
As discussed in Unit II, Georgia did not adopt by reference 40 CFR 257.52(b), which requires compliance with the requirements relevant to Threatened and Endangered Species in 40 CFR 257.3-2. Additionally, Georgia did not seek approval of its adoption by reference of 40 CFR 257.101(a), which allowed unlined impoundments to continue receiving coal ash unless they leak, or 40 CFR 257.71(a)(1)(i), which classified “clay-lined” impoundments as lined, since both of the Federal 40 CFR 257.101 provisions were vacated by the D.C. Circuit in
EPA has therefore determined that the technical criteria in Georgia's partial CCR permit program submitted for approval meet the standard for partial program approval under RCRA section 4005(d)(1)(B)(i), 42 U.S.C. 6945(d)(1)(B)(i).
EPA announced its proposal to approve Georgia's CCR permit program, in part, and a 60-day public comment period on June 28, 2019 (84 FR 30977) (FRL-9995-82-OLEM). EPA also held a public hearing on August 6, 2019 in Atlanta, Georgia. The public hearing provided interested persons the opportunity to present information, views or arguments concerning EPA's proposal. Oral comments received during the public hearing are documented in the transcript of the hearing, which, along with the written comments received during the public comment period, is included in the docket for this action.
EPA received 1,462 written public comments during the comment period, including 1,110 comments submitted as part of multiple mass mail comment campaigns. The major comments received by EPA focused on seven primary topics: 1. Georgia's staffing and funding, 2. Public participation, 3. Compliance with Federal CCR regulations, 4. Location of CCR units, 5. Groundwater monitoring and corrective action issues, 6. Closure issues and unlined CCR units, and 7.
Here, the GA EPD Supplemental Information document describes in detail the staff resources, expertise, and funding that the State has available for implementing its CCR permit program. Specifically, the GA EPD Supplemental Information document describes the staff that Georgia has dedicated to administrative reviews of permit applications, technical reviews of permit applications, and technical reviews of documents submitted either to the State or posted on a facility's publicly accessible CCR website in accordance with § 257.107 and the State regulations at Ga. Comp. R. and Regs. 391-3-4-.10(8)(a). The GA EPD Supplemental Information document provides additional information on the qualifications of the staff who are implementing Georgia's CCR permit program. The Georgia State Legislature provides funding for GA EPD's CCR permit program positions. Funding is provided through general State appropriations. If these measures subsequently prove to be inadequate or change as part of Georgia's subsequent implementation of its CCR permit program, it will be addressed in future State program reviews, as required by RCRA section 4005(d)(1)(D)(i). See Unit I.C of this document for additional detail on EPA's authority to review approved state CCR permit programs.
EPA also disagrees with comments suggesting that GA EPD's failure to yet issue any final CCR permits in Georgia is evidence of insufficient resources or a reason to make a determination of program inadequacy. EPA generally considers this issue to be beyond the scope of this action. As noted above, EPA reviews a state's CCR permit program based on the four corners of the application and does not attempt to speculate on Georgia's subsequent implementation of its CCR permit program, as this will be addressed in future State program reviews, as required by RCRA section 4005(d)(1)(D)(i).
Moreover, based the information Georgia has submitted, EPA considers these aspects of Georgia's program to be sufficient. Owners and operators of CCR units in existence at the time of the effective date of Georgia's CCR regulations were required to submit their CCR permit applications by November 2018.
EPA received other comments on the length of time that draft CCR permits will be available for public comment. Commenters said 30 days is an unrealistic timeframe for the draft permit comment period, and some requested that Georgia allow at least 120 days as a comment period, with the Director of GA EPD able to extend that time if deemed necessary. Several commenters were concerned about Georgia's process providing adequate notice and opportunity for comment by citizens who live in rural Georgia, where internet access can be challenging.
As explained in Unit III.A.1, the State of Georgia has adopted a public participation policy, in the form of a memorandum, the “Cown-Dunn Memorandum,” that describes the steps the State will follow to provide for public participation in the CCR permitting process. The Cown-Dunn Memorandum was signed by the GA EPD Director on April 13, 2018, and, and the State has committed to follow it. In addition to what is described in Georgia's CCR State Permit Program Application, the GA EPD Supplemental Information document describes opportunities for public participation in Georgia's CCR permit program. This information indicates that Georgia's program will ensure the elements (1) through (3) described above.
Georgia has adopted procedures to ensure documents for permit determinations are made known and available to the public. When permit applications are received, GA EPD will conduct an administrative review within ten days of receipt to ensure that a complete application has been submitted. Once this determination is made, GA EPD will publish a public advisory on its web page noting that the application was submitted and provide a contact for additional inquiries. Moreover, the permit application is available for public review from the time of its receipt by GA EPD.
Subsequently, according to the Cown-Dunn Memorandum, GA EPD will provide notice of draft permits to anyone who has signed up to receive emails for coal ash-related announcements. GA EPD will post the draft permit on its website and make a hard copy available (as well as all other information submitted as part of the CCR permit application) for review in its Tradeport Office in Atlanta. Public notice will be published on its Public Announcement web page and the draft permit will be available for public comment for 30 days. If additional time is requested to extend the review time, the Director of GA EPD has the authority to extend the comment period. Georgia has also made provisions to consider public comments. The Cown-Dunn Memorandum indicates that GA EPD will accept written comments by email or regular mail. GA EPD will review all comments received and make any necessary changes to the permit.
Finally, notice of final permit determinations will be provide to the public. When issuing the final permit, the State will notify the public via email and publish a response to comments on its website. Additionally, in accordance with Ga Comp. R. & Regs. 391-3-4-.03(5), the Director of GA EPD will notify the legal organ and the chief elected official of the host local government in which the facility is located or is proposed to be located. The legal organ can choose to publish notice of the final permit if it so chooses. Within 30 days of the final permit decision, any person who is aggrieved or adversely affected may appeal the permit by filing a petition with the Director.
Under Ga Comp. R. & Regs. 391-3-4-.02(1)(d), CCR permits will be subject to review every five years. Permit renewals are classified as either minor or major modifications. Any major modification will be publicly noticed as a CCR draft permit and will follow the public comment process utilized for CCR draft permits required by the Cown-Dunn Memorandum.
For members of the public who have trouble accessing the internet, GA EPD will make hard copies of the draft CCR permits and application documents available for review at GA EPD's Tradeport Office in Atlanta and will accept written comments by regular mail.
Accordingly, EPA has determined that the Georgia CCR permit program provides for adequate public participation, thereby satisfying the requirements of RCRA section 7004.
EPA is not making any determinations regarding the compliance status of individual facilities or CCR units based on the public comment process for this final Action. However, some commenters raised concerns about compliance issues in the broader context of program approval and questioned whether Georgia has the ability and inclination to fully implement an approved program. EPA has reviewed all significant comments on this issue and has identified evidence of actions taken by GA EPD
Additionally, since owners and operators of CCR facilities submitted CCR permit applications to GA EPD in November 2018, GA EPD staff has been reviewing groundwater monitoring reports, issuing comments on alternative source demonstrations (ASD), issuing comments on Assessment of Corrective Measures, issuing comment letters imposing regulatory deadlines for the submittal of an ASD or initiating assessment monitoring, and conducting inspections of groundwater monitoring networks at numerous facilities. GA EPD plans to continue to conduct such actions as necessary, as well as to conduct inspections for the construction and operation of CCR facilities as its normal matter of practice.
EPA does not view instances of non-compliance as a reason to deny approval of a CCR state permit program. Implementation and enforcement of Georgia's CCR requirements in the State are expected to continue, and enforcement of those provisions may be initiated not only by GA EPD, but also by EPA or by citizens, as appropriate. Georgia's implementation of its approved CCR permit program will be addressed in future State program reviews, as required by RCRA section 4005(d)(1)(D)(i). See Unit I.C for additional detail on EPA's authority to review approved state CCR permit programs.
Location restrictions for placement above the uppermost aquifer, in wetlands, in fault areas, in seismic impact zones, and in unstable areas are included in the Federal CCR regulations found at §§ 257.60 through 257.64. GA EPD has adopted these Federal CCR
The “significant groundwater recharge area” restrictions for Georgia's MSWLFs, mentioned by some commenters, are not relevant to EPA's approval of Georgia's CCR permit program. RCRA section 4005(d) requires EPA to evaluate two components of a state program to determine whether it meets the standard for approval; (1) the adequacy of the CCR state permit program itself,
Similarly, there are no criteria in the Federal CCR regulations in part 257 restricting CCR disposal near populated areas, so such restrictions are also not necessary for Georgia's CCR permit program to meet the RCRA section 4005(d)(1)(B) standard.
An analysis of the overall risks associated with the management of CCR is specifically addressed at 80 FR 21433, in the April 2015 final rule establishing the Federal CCR regulations and is not being reopened here.
Commenters also identified specific closure plans for CCR units that have been submitted to GA EPD and argued that those closure plans do not, and cannot, satisfy the closure in place requirements at § 257.102(d) or the equivalent State closure regulations. The commenters suggested that these would be reasons to not approve Georgia's CCR permit program.
Some comments raised concerns about CCR disposal units with waste left in place that commenters believed must be monitored and remediated forever to prevent water pollution. These comments also raised concerns that Georgia's CCR permit program contemplates only a 30-year post-closure care period.
EPA's action in this document is on the adequacy of Georgia's CCR permit program, and EPA is not making any determinations regarding the compliance status of individual facilities or CCR units in this action. The comments addressing particular facilities' compliance with regulatory requirements are therefore beyond the scope of this action.
Moreover, GA EPD is in the process of reviewing closure plans submitted to the State, along with permit applications from the CCR facilities, and has as yet made no determinations that EPA could review. EPA will not attempt to speculate on Georgia's subsequent implementation of its CCR permit program, as this will be addressed in future State program reviews, as required by RCRA section 4005(d)(1)(D)(i).
An analysis of overall risks associated with management of CCR is specifically addressed in the April 17, 2015 Federal CCR final rule at 80 FR 21433 but is beyond the scope of this action approving Georgia's CCR permit program and is not being reopened here.
1. Requirements for inactive impoundments at inactive facilities, which EPA has yet to establish following the vacatur of 40 CFR 257.50(e);
2. Its adoption by reference of 40 CFR 257.101(a), which allows unlined impoundments to continue receiving CCR unless they leak; and
3. Its adoption by reference of 40 CFR 257.71(a)(1)(i), which classifies “clay-lined” impoundments as lined.
Upon signature of this document, Georgia's CCR permit program, as described in its Application and Unit II, is approved. Because this is a partial program approval, only the State requirements that have been approved will operate in lieu of the analogous Federal requirements. Accordingly, owners and operators of CCR units in Georgia will remain responsible for compliance with all applicable requirements in 40 CFR part 257 for which Georgia did not seek approval, specifically, 40 CFR 257.3-2 (requirements relevant to Threatened and Endangered Species) and any Federal requirements that are promulgated in response to the D.C. Circuit's vacatur of 40 CFR 257.50(e), 257.101(a), and 257.71(a)(1)(i). EPA will implement such provisions under the Federal CCR program, until and unless Georgia submits a revised CCR permit program application and receives approval for these provisions. A permit issued by a state is not a shield for noncompliance with these part 257 provisions. For any CCR units that have received permits under Ga. Comp. R. and Regs. 391-3-4-.10, such permits will be in effect in lieu of the Federal 40 CFR part 257, subpart D, CCR regulations, except for those provisions noted above for which Georgia did not seek approval. For those CCR units that are not yet permitted, the Federal regulations at part 257 will remain in effect until such time that GA EPD issues permits under its approved CCR permit program for those units.
The WIIN Act specifies that EPA will review a state CCR permit program:
• From time to time, as the Administrator determines necessary, but not less frequently than once every 12 years;
• Not later than 3 years after the date on which the Administrator revises the applicable criteria for CCR units under part 257 of title 40, CFR (or successor regulations promulgated pursuant to RCRA sections 1008(a)(3) and 4004(a));
• Not later than 1 year after the date of a significant release (as defined by the Administrator), that was not authorized at the time the release occurred, from a CCR unit located in the state; and
• In request of any other state that asserts that the soil, groundwater, or surface water of the state is or is likely to be adversely affected by a release or potential release from a CCR unit located in the state for which the program was approved.
The WIIN Act also provides that in a state with an approved CCR permitting program, the Administrator may commence an administrative or judicial enforcement action under section 3008 if:
• The state requests that the Administrator provide assistance in the performance of an enforcement action; or
• After consideration of any other administrative or judicial enforcement action involving the CCR unit, the Administrator determines that an enforcement action is likely to be necessary to ensure that the CCR unit is operating in accordance with the criteria established under the state's permit program.
In accordance with 42 U.S.C. 6945(d), EPA is approving Georgia's partial CCR state permit program.
Environmental Protection Agency (EPA).
Direct final rule.
Pursuant to the Resource Conservation and Recovery Act (RCRA or Act), the Environmental Protection Agency (EPA) is taking direct final action to approve revisions to the State of Idaho's Underground Storage Tank (UST) program submitted by the State. The EPA has determined that these revisions satisfy all requirements needed for program approval. This action also codifies the EPA's approval of Idaho's state program and incorporates by reference those provisions of the State's regulations that we have determined meet the requirements for approval. The State's federally-authorized and codified UST program, as revised pursuant to this action, will remain subject to the EPA's inspection and enforcement authorities under sections 9005 and 9006 of RCRA subtitle I and other applicable statutory and regulatory provisions.
This rule is effective March 10, 2020, unless the EPA receives adverse comment by February 10, 2020. If EPA receives adverse comment, it will publish a timely withdrawal in the
Submit your comments by one of the following methods:
1.
2.
3.
4.
You can view and copy the documents that form the basis for this action and associated publicly available materials from 8:30 a.m. to 4:00 p.m. Monday through Friday at the following location: EPA Region 10, 1200 6th Avenue, Suite 155, Seattle, Washington 98101-3123, phone number (206) 553-6693. Interested persons wanting to examine these documents should make an appointment with the office at least 2 days in advance.
Scott Wilder, (206) 553-6693,
States which have received final approval from the EPA under RCRA section 9004(b) of RCRA, 42 U.S.C. 6991c(b), must maintain an underground storage tank program that is equivalent to, consistent with, and no less stringent than the Federal underground storage tank program. When the EPA makes revisions to the regulations that govern the UST program, states must revise their programs to comply with the updated regulations and submit these revisions to the EPA for approval. Most commonly, states must change their programs because of changes to the EPA's regulations in 40 Code of Federal Regulations (CFR) part 280. States can also initiate changes on their own to their underground storage tank program and these changes must then be approved by the EPA.
On September 19, 2018, in accordance with 40 CFR 281.51(a), Idaho submitted a complete program revision application seeking the EPA approval for its UST program revisions (State Application). Idaho's revisions correspond to the EPA final rule published on July 15, 2015 (80 FR 41566), which revised the 1988 UST regulations and the 1988 state program approval (SPA) regulations (2015 Federal Revisions). As required by 40 CFR 281.20, the State Application contains the following: A transmittal letter from the Governor requesting program approval, a description of the program and operating procedures, a demonstration of the State's procedures to ensure adequate enforcement, a Memorandum of Agreement outlining the roles and responsibilities of the EPA and the implementing agency, a statement of certification from the Attorney General, and copies of all applicable state statutes and regulations. We have reviewed the State Application and determined that the revisions to Idaho's UST program are equivalent to, consistent with, and no less stringent than the corresponding Federal requirements in subpart C of 40 CFR part 281, and that the Idaho program provides for adequate enforcement of compliance (40 CFR 281.11(b)). Therefore, the EPA grants Idaho final approval to operate its UST program with the changes described in the program revision application, and as outlined below in Section I.G of this document.
This action does not impose additional requirements on the regulated community because the regulations being approved by this rule are already in effect in the State of Idaho, and are not changed by this action. This action merely approves the existing state regulations as meeting the Federal requirements and renders them federally enforceable.
The EPA is publishing this direct final rule without a prior proposed rule because we view this as a noncontroversial action and we anticipate no adverse comment. Idaho did not receive substantial comments during its comment period when the rules and regulations being considered in this direct final rule were proposed at the state level.
Along with this direct final rule, the EPA is publishing a separate document in the “Proposed Rules” section of this
On February 28, 2012, the EPA finalized a rule approving the UST program that Idaho proposed to administer in lieu of the Federal UST program.
In order to be approved, each state program application must meet the general requirements in 40 CFR 281.11, and specific requirements in 40 CFR part 281, subpart B (Components of a Program Application); subpart C (Criteria for No Less Stringent); and subpart D (Adequate Enforcement of Compliance). This also is true for proposed revisions to approved state programs.
As more fully described below, the State has made the changes to its approved UST program to reflect the 2015 Federal Revisions. The EPA is approving the State's changes because they are equivalent to, consistent with, and no less stringent than the Federal UST program and because the EPA has confirmed that the Idaho UST program will continue to provide for adequate enforcement of compliance as described
The Idaho Department of Environmental Quality (DEQ) is the lead implementing agency for the UST program in Idaho, except in Indian country.
The DEQ continues to have broad statutory authority to regulate the installation, operation, maintenance, and closure of USTs, as well as UST releases under Idaho Code, Title 39, Chapter 88, Idaho Underground Storage Tank Act, Sections 39-8801 through 39-8813. The Idaho UST Program gets its enforcement authority from the powers and duties of the DEQ Director (Director) found in Title 39, Chapter 1, Section 39-108. Under Title 39, Chapter 1, Sections 39-108 and Chapter 88, Section 39-8805, the Director is authorized to require an owner to furnish records, conduct monitoring or testing, and provide access to tanks. Penalties for non-compliance with Idaho's Underground Storage Tank Act may be assessed under Title 39, Chapter 1, Sections 39-108(5) and 39-8811. Under Idaho Administrative Code (IDAPA) 58.01.07.500, a delivery prohibition tag may be placed on a tank for failure to install required spill prevention, overfill protection, leak detection, or corrosion protection equipment.
Specific authorities to regulate the installation, operation, maintenance, and closure of USTs, as well as UST releases are found in IDAPA 58.01.07, Rules Regulating Underground Storage Tank Systems, as amended effective March 24, 2017, and Rules of Administrative Procedure Before the Board of Environmental Quality are found under IDAPA 58.01.23. Compliance monitoring authorities are found under IDAPA 58.01.07.400, as amended March 24, 2017. The aforementioned statutory sections and regulations satisfy the requirements of 40 CFR 281.40 and 281.41. Idaho has met the public participation requirements found in 40 CFR 281.42 by allowing intervention in the state enforcement process as provided in the Idaho Rules of Civil Procedure Rule 24(a).
To qualify for final approval, revisions to a state's program must be “equivalent to, consistent with, and no less stringent” than the 2015 Federal Revisions. In the 2015 Federal Revisions the EPA addressed UST systems deferred in the 1988 UST regulations, and added, among other things, new operation and maintenance requirements; secondary containment requirements for new and replaced tanks and piping; operator training requirements; and a requirement to ensure UST system compatibility before storing certain biofuel blends. In addition, the EPA removed past deferrals for emergency generator tanks, field constructed tanks, and airport hydrant systems. The EPA analyzes revisions to approved state programs pursuant to the criteria found in 40 CFR 281.30 through 281.39.
The DEQ has revised its regulations to help ensure that the State's UST program revisions are equivalent to, consistent with, and no less stringent than the 2015 Federal Revisions. IDAPA 58.01.07.004 incorporates by reference the requirements of 40 CFR part 280, including the requirements added by the 2015 Federal Revisions, excepting 40 CFR part 280, subpart J (Operator Training), and provisions such as the definitions of “Replaced” and “Under-dispenser containment,” recordkeeping requirements for operator training, and certain limiting date ranges. The State, therefore, has ensured that the criteria found in 40 CFR 281.30 through 281.38 are met.
Title 40 CFR 281.39 describes the state operator training requirements that must be met in order to be considered no less stringent than Federal requirements. Idaho did not incorporate by reference Federal requirements for operator training, and has promulgated and is implementing its own operator training provisions under IDAPA 58.01.07.300. After a thorough review, the EPA has determined that Idaho's operator training requirements are equivalent to, consistent with, and no less stringent than Federal requirements.
As part of the State Application the Idaho Attorney General certified that the State revisions meet the “no less stringent” criteria in 40 CFR 281.30 through 281.39. The EPA is relying on this certification in addition to the analysis submitted by the State in making its determination.
Where an approved state program has a greater scope of coverage than required by Federal law, the additional coverage is not part of the federally-approved program and is not federally enforceable (40 CFR 281.12(a)(3)(ii)). The following statutory and regulatory requirements are considered broader in coverage than the Federal program as these state-only regulations are not required by Federal regulation and are implemented by the State in addition to the federally-approved program: IDAPA 58.01.07.100 requires secondary containment and monitoring of any UST system, including tanks, pipes, and dispensers, installed or replaced after February 23, 2007, that is within 1,000 feet of a potable drinking water source. IDAPA 58.01.07.010.16 requires secondary containment and monitoring of replaced piping if 100% of the piping, excluding connectors, connected to a single UST is replaced in accordance with section 9003(i)(1) of the Solid Waste Disposal. IDAPA 58.01.07.100 requires owners and/or operators to provide written notice to the DEQ 30 days prior to installing a new piping system or a new or replacement UST and provide 24-hour notice to the DEQ prior to installing a replacement piping system. IDAPA 58.01.07.600 requires the DEQ to maintain a public database providing details on the status of all USTs subject to regulation in Idaho. IDAPA 58.01.07.601 requires all regulated USTs to pay annual fees. IDAPA 58.01.07.200 requires owners or operators to report the source and cause of a release to the DEQ.
Where an approved state program includes requirements that are considered more stringent than required by Federal law, the more stringent requirements become part of the federally-approved program (40 CFR 281.12(a)(3)). IDAPA 58.01.07.004.04 specifies that the State's rules “shall be no more stringent than federal law or regulations governing underground storage tank systems.”
The EPA's approval of Idaho's Program does not extend to Indian country as defined in 18 U.S.C. 1151. Indian country generally includes lands within the exterior boundaries of the following Indian reservations located within Idaho: Coeur D'Alene Tribe, Kootenai Tribe of Idaho, Nez Perce Tribe, Shoshone-Bannock Tribes of the Fort Hall Reservation; any land held in trust by the United States for an Indian tribe; and any other areas that are “Indian country” within the meaning of 18 U.S.C. 1151. Any lands removed from an Indian reservation status by Federal court action are not considered reservation lands even if located within the exterior boundaries of an Indian reservation. The EPA will retain responsibilities under RCRA for underground storage tanks in Indian country. Therefore, this action has no effect in Indian country. 40 CFR 281.12(a)(2).
Codification is the process of placing a state's statutes and regulations that comprise the state's approved UST program into the CFR. Section 9004(b) of RCRA, as amended, allows the EPA to approve State UST programs to operate in lieu of the Federal program. The EPA codifies its authorization of state programs in 40 CFR part 282 and incorporates by reference state regulations that the EPA will enforce under sections 9005 and 9006 of RCRA and any other applicable statutory provisions. The incorporation by reference of state authorized programs in the CFR should substantially enhance the public's ability to discern the current status of the approved state program and state requirements that can be federally enforced. This effort provides clear notice to the public of the scope of the approved program in each state.
In this rule, we are finalizing the Federal regulatory text that incorporates by reference the federally-authorized Idaho UST Program. In accordance with the requirements of 1 CFR 51.5, we are finalizing the incorporation by reference of the Idaho rules described in the amendments to 40 CFR part 282 set forth below. The EPA has made, and will continue to make, these documents generally available through
One purpose of this
The EPA is incorporating by reference the Idaho approved UST program in 40 CFR 282.62. Section 282.62(d)(1)(ii)(B) incorporates by reference for enforcement purposes the State's relevant statutes and regulations. Section 282.62 also references the Attorney General's Statement, Demonstration of Adequate Enforcement Procedures, the Program Description, and the Memorandum of Agreement, which are approved as part of the UST program under subtitle I of RCRA.
The EPA retains the authority under sections 9003(h), 9005 and 9006 of subtitle I of RCRA, 42 U.S.C. 6991b(h), 6991d and 6991e, and other applicable statutory and regulatory provisions to undertake corrective action, inspections, and enforcement actions, and to issue orders in approved States. If the EPA determines it will take such actions in Idaho, the EPA will rely on Federal sanctions, Federal inspection authorities, and other Federal procedures rather than the State analogs. Therefore, though the EPA has approved the State procedures listed in 40 CFR 282.62(d)(1)(ii), the EPA is not incorporating by reference Idaho's procedural and enforcement authorities.
The public also needs to be aware that some provisions of the State's UST program are not part of the federally-approved State program. Such provisions are not part of the RCRA subtitle I program because they are “broader in coverage” than subtitle I of RCRA. Title 40 CFR 281.12(a)(3)(ii) states that where a state operates an approved program with a greater scope of coverage than the Federal program, those provisions creating greater coverage are not a part of the federally-approved program. As a result, State provisions which are “broader in coverage” than the Federal program are not incorporated by reference for purposes of enforcement in part 282. Title 40 CFR 282.62(d)(1)(iii) lists for reference and clarity the Idaho statutory and regulatory provisions which are “broader in coverage” than the Federal program and which are not, therefore, part of the approved program being codified in this rule. Provisions that are “broader in coverage” cannot be enforced by EPA; the State, however, will continue to implement and enforce such provisions under State law.
This action only applies to Idaho's UST Program requirements pursuant to RCRA Section 9004 and imposes no requirements other than those imposed by State law. It complies with applicable EOs and statutory provisions as follows:
The Office of Management and Budget (OMB) has exempted this action from the requirements of Executive Order 12866 (58 FR 51735, Oct. 4, 1993) and 13563 (76 FR 3821, Jan. 21, 2011). This action approves and codifies state requirements for the purpose of RCRA section 9004 and imposes no additional requirements beyond those imposed by state law. Therefore, this action is not subject to review by OMB.
This action is not an Executive Order 13771 (82 FR 9339, February 3, 2017) regulatory action because actions such as this final approval of Idaho's revised underground storage tank program under RCRA are exempted under Executive Order 12866. Accordingly, I certify that this action will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
Because this action approves and codifies pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538). For the same reason, this action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
This action will not have substantial direct effects 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, as specified in Executive Order 13132 (64 FR 43255, Aug. 10, 1999), because it merely approves and codifies state requirements as part of the State RCRA
This action also is not subject to Executive Order 13045 (62 FR 19885, Apr. 23, 1997), because it is not economically significant, as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children.
This rule is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a “significant regulatory action” as defined under Executive Order 12866.
Under RCRA section 9004(b), the EPA grants a state's application for approval as long as the state meets the criteria required by RCRA. It would thus be inconsistent with applicable law for the EPA, when it reviews a state approval application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.
As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, the EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct.
The EPA has complied with Executive Order 12630 (53 FR 8859, Mar. 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order.
This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Executive Order 12898 (59 FR 7629, Feb. 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. Because this rule approves pre-existing state rules which are at least equivalent to, consistent with, and no less stringent than existing Federal requirements, and imposes no additional requirements beyond those imposed by state law, and there are no anticipated significant adverse human health or environmental effects, the rule is not subject to Executive Order 12898.
The Congressional Review Act, 5 U.S.C. 801-808, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this document and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication in the
This rule is issued under the authority of Sections 2002(a), 7004(b), and 9004, 9005 and 9006 of the Solid Waste Disposal Act, as amended, 42 U.S.C. 6912(a), 6974(b), and 6991c, 6991d, and 6991e.
Environmental protection, Administrative practice and procedure, Hazardous substances, Incorporation by reference, State program approval, Underground storage tanks.
For the reasons set forth in the preamble, EPA is amending 40 CFR part 282 as follows:
42 U.S.C. 6912, 6991c, 6991d, and 6991e.
(a)
(b)
(c)
(d)
(1)
(A) Idaho Statutory Requirements Applicable to the Underground Storage Tank Program, September 2018.
(B) Idaho Regulatory Requirements Applicable to the Underground Storage Tank Program, September 2018.
(ii)
(A) The statutory provisions include:
(
(
(B) The regulatory provisions include:
(
(
(3)
(iii)
(A) Idaho Administrative Code 58 (April 1, 2018), Title 01, Chapter 07, “Rules Regulating Underground Storage Tank Systems,” Sections 010.16, 100.01 and .03, 200, 600, and 601.
(B) [Reserved]
(2)
(3)
(4)
(5)
(a) The statutory provisions include:
(1)
(2)
(b) The regulatory provisions include:
(1)
Section 004 Incorporation by Reference;
Section 010 Definitions (except 010.16, defining “Replace”);
Section 100 Additional Measures to Protect Ground Water from Contamination (except 100.01-.03);
Section 101 Alternative Periodic Testing of Containment Sumps Used for Interstitial Monitoring of Piping;
Section 300 Training Requirements.
(2)
(c) Copies of the Idaho provisions that are incorporated by reference are available from Idaho's Office of Administrative Rules Coordinator, P.O. Box 83720, Boise, ID 83720; Phone number: 208-332-1820; website:
Bureau of Safety and Environmental Enforcement, Interior.
Final rule.
The Department of the Interior is issuing a final rule to amend its regulations to exempt certain records
This final rule is effective January 10, 2020.
Rowena Dufford, Associate Privacy Officer, Bureau of Safety and Environmental Enforcement, 45600 Woodland Road, Mail Stop VAE-MSD, Sterling, VA 20166,
The Department of the Interior (DOI) published a notice of proposed rulemaking in the
Comments were invited on the CMS system of records notice and the notice of proposed rulemaking. DOI received no comments on the system of records notice, but received two comments on the notice of proposed rulemaking. One commenter did not address the specific exemption but expressed concern that access to the records should be preserved and not taken away. The other commenter suggested the proposed rule contravenes the intent of the Privacy Act by creating a “blanket [exemption]” on disclosures of all types of agency records. The commenter further stated that by amending the rule, the Bureau of Safety and Environmental Enforcement indicates that all information in CMS is intended for law enforcement purposes and that there is concern that the release of this information could lead to witness tampering. As stated in the proposed rule and consistent with the Privacy Act, the exemptions from one or more provisions of the Privacy Act may be waived on a case-by-case basis where a release would not interfere with or adversely affect investigations or enforcement activities. These comments on the notice of proposed rulemaking require no revisions, therefore, DOI will implement the rulemaking as proposed.
Executive Order 12866 provides that the Office of Information and Regulatory Affairs in the Office of Management and Budget will review all significant rules. The Office of Information and Regulatory Affairs has determined that this rule is not significant.
Executive Order 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. DOI developed this rule in a manner consistent with these requirements.
DOI certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601,
This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:
(a) Does not have an annual effect on the economy of $100 million or more.
(b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.
(c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises.
This rule does not impose an unfunded mandate on State, local, or tribal governments in the aggregate, or on the private sector, of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or tribal governments or the private sector. This rule makes only minor changes to 43 CFR part 2. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531
In accordance with Executive Order 12630, the rule does not have significant takings implications. The rule is not a governmental action capable of interference with constitutionally protected property rights. This rule makes only minor changes to 43 CFR part 2. A takings implication assessment is not required.
In accordance with Executive Order 13132, this rule does not have any federalism implications to warrant the preparation of a Federalism Assessment. The rule is not associated with, nor will it have substantial direct effects 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. A Federalism Assessment is not required.
This rule complies with the requirements of Executive Order 12988. Specifically, this rule:
(a) Does not unduly burden the judicial system.
(b) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and
(c) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
In accordance with Executive Order 13175, the Department of the Interior has evaluated this rule and determined that it would have no substantial effects on federally recognized Indian Tribes.
This rule does not require an information collection from 10 or more parties and a submission under the
This rule does not constitute a major Federal Action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 (NEPA) is not required because the rule is covered by a categorical exclusion. This rule meets the criteria set forth in 43 CFR 46.210(i), 516 Departmental Manual 15.4C(1), and the BSEE Interim NEPA Policy Document 2013-09, for a categorical exclusion. The rule's administrative effects are to exempt CMS from certain provisions of the Privacy Act pursuant to 5 U.S.C. 552a(k)(2) because of civil and administrative law enforcement requirements and therefore would not have any environmental impacts. BSEE also analyzed this rule to determine if it involves any of the extraordinary circumstances set forth in 43 CFR 46.215 that would require an environmental assessment or an environmental impact statement for actions otherwise eligible for a categorical exclusion. BSEE concluded that this rule does not meet any of the criteria for extraordinary circumstances.
In developing this rule, there was no need to conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554).
This rule is not a significant energy action under the definition in Executive Order 13211, and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. A Statement of Energy Effects is not required.
We are required by Executive Order 12866 and 12988, the Plain Writing Act of 2010 (H.R. 946), and the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means each rule we publish must:
Administrative practice and procedure, Confidential information, Courts, Freedom of Information Act, Privacy Act.
For the reasons stated in the preamble, the Department of the Interior amends 43 CFR part 2 as follows:
5 U.S.C. 301, 552, 552a, 553; 31 U.S.C. 3717; 43 U.S.C. 1460, 1461.
(b) * * *
(18) Investigations Case Management System (CMS), BSEE-01.
Federal Communications Commission.
Correcting amendments.
The Federal Communications Commission (FCC or Commission) is correcting final rules that appeared in the
Effective January 10, 2020.
John Schauble of the Wireless Telecommunications Bureau, Broadband Division, at (202) 418-0797 or
For the reason stated in the summary, the Commission removes 47 CFR 27.14(v) and 27.1204(f), which were erroneously added in final rules published on October 25, 2019 (84 FR 57343).
Communications common carriers, Communications equipment.
Accordingly, 47 CFR part 27 is corrected by making the following correcting amendments:
47 U.S.C. 154, 301, 302a, 303, 307, 309, 332, 336, 337, 1403, 1404, 1451, and 1452, unless otherwise noted.
Office of the Comptroller of the Currency (OCC), Treasury.
Request for information.
On January 9, 2020, the OCC and the Federal Deposit Insurance Corporation (the agencies) published a notice of proposed rulemaking that would amend their regulations implementing the Community Reinvestment Act (CRA). The OCC seeks public input with this request for information to assist in determining how the proposed rule might be revised to ensure that the final rule better achieves the statute's purpose of encouraging banks to help serve their communities by making the framework more objective, transparent, consistent, and easy to understand. Specifically, this request for information seeks bank-specific data and information to supplement currently-available data and to inform potential revisions to modernize and strengthen the CRA regulatory framework.
Comments should be submitted by March 10, 2020.
You may submit comments to the OCC by any of the methods set forth below. Commenters are encouraged to submit comments through the Federal eRulemaking Portal or email, if possible. Please use the title “Community Reinvestment Act; Request for Information” to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods:
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• Click on the “Help” tab on the
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In general, the OCC will enter all comments received into the docket and publish the comments on the
Respondents may designate information as confidential or request confidential treatment. The OCC will treat confidential commercial information submitted to the agency in accordance with 12 CFR 4.16 consistent with
You may review comments and other related materials that pertain to this rulemaking action by any of the following methods:
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• Click on the “Help” tab on the
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Ioan Voicu, Director, Compliance Risk Analysis Division, at (202) 649-5550; or Daniel Sufranski, Attorney, or Jean Xiao, Attorney, Chief Counsel's Office, (202) 649-5490; Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219. For persons who are deaf or hearing impaired, TTY users may contact (202) 649-5597.
On January 9, 2020, the agencies issued a notice of proposed rulemaking that would make comprehensive changes to the CRA regulatory framework to ensure that the CRA remains a relevant and powerful tool for encouraging banks to serve the needs of their communities, particularly low- or moderate-income (LMI) neighborhoods, consistent with the banks' safe and sound operations. As the proposed rule describes, there is broad recognition that the CRA regulations should be improved both in design and in application. Accordingly, the agencies proposed to modernize and strengthen the CRA regulatory framework to better achieve the underlying statutory purpose of encouraging banks to help serve their communities by making the framework more objective, transparent, consistent, and easy to understand. To accomplish these goals, the proposed rule seeks to strengthen the CRA regulations in four key areas by (1) clarifying which activities qualify for CRA credit; (2) updating where activities count for CRA credit; (3) creating a more transparent and objective method for measuring CRA
The OCC gives notice that it seeks public input to assist in determining how the proposed rule should be revised to ensure that the final rule better achieves the statute's purpose of encouraging banks to help serve their communities by making the framework more objective, consistent, and transparent. As discussed in the proposed rule, the agencies analyzed currently-available historical data to determine the empirical benchmarks and thresholds that would be used in the general performance standards in § 25.12 of the proposed rule. Specifically, the agencies reviewed the available Home Mortgage Disclosure Act (HMDA) data on home mortgages to LMI borrowers, Call Report data on the on-balance sheet value of home mortgages, consumer loans, small business and small farm loans, and credit bureau data on the outstanding balances of consumer loans. The agencies analyzed these sources together, collected additional information about community development investments from historical performance evaluations, and made some assumptions to estimate what banks' average CRA evaluation measures would have been from 2011-2017 under the proposed rule's framework.
This request for information seeks bank-specific data and information to supplement the agencies' analyses and currently-available data. Specifically, it requests four types of bank data or information: (1) Retail domestic deposit activities; (2) qualifying activity data; (3) data on retail loans originated and sold within 90 days; and (4) other retail loan data. This data should reflect the past three years. Responses to this request are informed by a review of the proposed rule.
Respondents may answer all or some of the requests for information below. All information should be in a comma delimited file, and dollar values should be in 1,000s. Standard Federal Information Processing Standards (FIPS) codes should be used for geographic data, and the following codes should be used, unless otherwise instructed:
The OCC is particularly interested in receiving information and supporting data on the following topics and questions:
As discussed in the proposed rule, a bank's main office and deposit-taking facility locations and retail domestic deposit data would be required to determine its assessment area delineations, its ratings, and the benchmarks associated with ratings in §§ 25.08 and 25.11 of the proposed rule. The following data will supplement existing data and assist the OCC in, among other things, making potential revisions to the proposed thresholds in § 25.12.
1. What are the bank's total amount of retail domestic deposits received, by county for each quarter-end? As discussed in § 25.03 of the proposed rule, retail domestic deposits would include deposits by individuals, partnerships, and corporations, as reported on Schedule RC-E, item 1, of the Call Report other than a deposit that is obtained, directly or indirectly, from or through the mediation or assistance of a deposit broker as that term is defined in section 29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f(g)). The county should be assigned based on the accountholder's physical address, not the location of the branch that accepted the deposit.
2. Assign and provide a unique numerical identification (ID) to each facility-based assessment area, as defined in the proposed rule. As discussed in § 25.08 of the proposed rule, a bank's main office, branches, and non-branch deposit-taking facilities, as well as the surrounding geographies in which the bank has originated or purchased a substantial portion of its loans, would be included in the facility-based assessment area. Facility based assessment areas would be comprised of one of the following that include one or more of the bank's main office, branches, and non-branch deposit-taking facilities: (1) A whole metropolitan statistical area (MSA); (2) the whole nonmetropolitan area of a state; (3) one or more whole, contiguous metropolitan divisions (MD) in a single MSA; or (4) one or more whole, contiguous counties or county equivalents in a single MSA or nonmetropolitan area.
3. For the data above, provide county, MD/MSA, and State standard FIPS Codes.
4. Are there burdens associated with collecting or reporting the data described in this section?
As discussed in the proposed rule and this request for information, the dollar value of a bank's qualifying activities would be required to determine a bank's ratings and to set the benchmarks associated with ratings in § 25.12. The following data will supplement existing data and assist the OCC in, among other things, making potential revisions to the appropriate thresholds in the proposed rule.
5. Calculate and report the sum, at the county level, of all quarter-end balances for each type of qualifying loan or community development (CD) investment held on the balance sheet. Calculate and report the sum of the associated dollar value, at the county level, for other CD investments (
6. Are there burdens associated with collecting or reporting the data described in this section?
As discussed in the proposed rule, the value of a bank's qualifying activities would be required to determine a bank's ratings and to set the benchmarks associated with ratings in § 25.12. Retail loans originated and sold within 90 days that are qualifying activities would be valued at 25 percent of their origination value under § 25.06(d)(2). The following data will supplement existing data and assist the OCC in, among other things, making potential revisions to the appropriate thresholds in proposed rule.
7. Report all retail loans that are qualifying activities under § 25.04 and that are originated and sold within 90 days of origination.
8. Report the balance at origination of all retail loans reported in request 7.
9. Report the origination date of each retail loan reported in request 7.
10. Report the sell date of each retail loan reported in 7.
11. Instead of reporting the information in questions 7 through 10, report the aggregate balance at origination of all retail loans that are qualifying activities under § 25.04 and
12. What are the burdens associated with collecting or reporting the data described in this section? How do the burdens differ if the data is collected at the loan level versus the aggregate level?
As discussed in the proposed rule and this request for information, banks would be evaluated under retail lending distribution tests described in § 25.11 of the proposed rule. The following data will supplement existing data relevant to the proposed retail lending distribution tests.
12. Calculate the total number and dollar volume, at the census tract level, of all new retail loans originated for each of the bank's retail loan product lines. Retail lending product line would be defined in § 25.03 to include home mortgage loans, small loans to businesses, small loans to farms, automobile loans, credit card loans, other revolving credit lines, and other consumer loans (as those terms would be defined in under the proposed rule).
13. For product lines other than small loans to businesses and small loans to farms, calculate the total number, at the census tract level, of all new retail loans originated for each retail loan product line to LMI individuals or families. For the small loans to businesses and small loans to farms product lines, as defined in § 25.04, calculate, at the census tract level, the number of small loans originated to small businesses and to small farms, respectively.
14. Using the same set of unique assessment area IDs as in Table 1, identify each facility-based assessment area.
15. Report the Census Tract, County, MSA/MD, State.
16. Are there burdens associated with collecting or reporting the data described in this section?
U.S. Small Business Administration.
Proposed rule; extension of comment period.
The U.S. Small Business Administration (SBA) is extending the comment period for the proposed rule published in the
The comment period for the proposed rule published on November 8, 2019 (84 FR 60846) is extended to February 7, 2020.
You may submit comments, identified by RIN 3245-AG94 by any of the following methods:
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SBA will post all comments on
Brenda Fernandez, U.S. Small Business Administration, Office of Policy, Planning and Liaison, 409 Third Street SW, Washington, DC 20416; (202) 205-7337;
In the rule published on November 8, 2019 (84 FR 60846), SBA proposed revisions to its regulations to remove duplicative functions within SBA, reduce unnecessary or excessive burdens on 8(a) Participants, and clarify SBA's intent in other related regulatory provisions to eliminate confusion among small businesses and procuring activities. Specifically, the rule would merge the 8(a) Business Development (BD) Mentor-Protégé Program and the All Small Mentor-Protégé Program. This rule would also eliminate the requirement that 8(a) Participants seeking to be awarded an 8(a) contract as a joint venture submit the joint venture agreement to SBA for review and approval prior to contract award. In addition, except for orders and Blanket Purchase Agreements issued under the General Services Administration's Federal Supply Schedule Program, the rule would require a business concern to recertify its size and/or socioeconomic status for all set-aside orders under unrestricted multiple award contracts (MACs). The rule would also require a business concern to recertify its socioeconomic status for all set-aside orders where the required socioeconomic status for the order differs from that of the underlying set-aside MAC contract (
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for all The Boeing Company Model 737-900ER series airplanes. This proposed AD was prompted by reports of significant corrosion of electrical connectors located in the main landing gear (MLG) wheel well. This proposed AD would require repetitive records checks to determine exposure to certain deicing fluids or repetitive inspections for corrosion of the electrical connectors, and corrective actions if necessary. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by February 24, 2020.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; internet
You may examine the AD docket on the internet at
Julio C. Alvarez, Aerospace Engineer, Systems and Equipment Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des Moines, WA 98198; phone and fax: 206-231-3657; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments we receive, without change, to
The FAA has received reports indicating the presence of significant corrosion of electrical connectors located in the MLG wheel well of airplanes that land on runways treated with deicing fluids containing potassium formate or potassium acetate. Corrosion and subsequent moisture ingress may lead to electrical shorting of the connectors. This condition, if not addressed, can cause incorrect function of critical systems necessary for safe flight and landing.
AD 2005-18-23, Amendment 39-14264 (70 FR 54253, September 14, 2005) (“AD 2005-18-23”), applies to Boeing Model 737-600, -700, -700C, -800, and -900 series airplanes, and addresses the same unsafe condition identified in this NPRM. Model 737-900ER series airplanes were not type certificated at the time AD 2005-18-23 was issued. The FAA has therefore determined that this NPRM is necessary to mandate the same requirements on Model 737-900ER series airplanes.
This proposed AD would require Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003, which the Director of the Federal Register approved for incorporation by reference as of October 19, 2005 (70 FR 54253, September 14, 2005). This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require repetitive records checks to determine exposure to certain deicing fluids or repetitive inspections for corrosion of electrical connectors, and applicable corrective actions.
The phrase “corrective actions” is used in this proposed AD. Corrective actions correct or address any condition found. Corrective actions in an AD could include, for example, repairs.
The effectivity of Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003, does not specifically identify Model 737-900ER series airplanes; that airplane model was not type certificated at the time the service information was issued. The service information does, however, identify the line numbers for Model 737-900ER series airplanes, all of which are in Group 3, so the actions of that service bulletin are appropriate and can be accomplished on those airplanes.
Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003, differs from this proposed AD in the cumulative areas of backshell corrosion that need corrective action,
Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003, specifies that airplanes exposed to affected runway deicing fluids be inspected for corroded electrical connectors within 12 months. AD 2005-18-23 instead requires initially determining the airplane's exposure to affected runway deicing fluids within 12 months, and allows an additional 90 days to inspect for corrosion. For AD 2005-18-23, the FAA had determined that the additional 90 days for the inspection represented an acceptable interval of time for affected airplanes to operate without jeopardizing safety. Therefore, since the unsafe condition and airplane design are the same in AD 2005-18-23 and this NPRM, the FAA has determined that 90 days is an appropriate compliance time for the initial inspection in this proposed AD.
Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003, and AD 2005-18-23 specify repeating the inspection at 12-month intervals. However, the FAA determined that a longer interval would provide an acceptable level of safety. The FAA therefore issued alternative methods of compliance (AMOCs) for AD 2005-18-23 allowing this inspection interval to be increased to 24 months. Therefore, this proposed AD specifies a repetitive inspection interval of 24 months.
The FAA estimates that this proposed AD affects 346 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the following costs to do any necessary repairs or replacements that would be required based on the results of the proposed inspection. The FAA has no way of determining the number of aircraft that might need these repairs or replacements:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD 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.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by February 24, 2020.
None.
This AD applies to all The Boeing Company Model 737-900ER series airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 24, Electrical power.
This AD was prompted by reports of significant corrosion of electrical connectors located in the main landing gear (MLG) wheel well. The FAA is issuing this AD to address corrosion and subsequent moisture ingress that may lead to electrical shorting of the connectors and incorrect functioning of critical systems necessary for safe flight and landing.
Comply with this AD within the compliance times specified, unless already done.
Within 12 months after the effective date of this AD: Do the actions required by paragraph (g)(1) or (2) of this AD.
(1) Determine airplane exposure to runway deicing fluids containing potassium formate or potassium acetate by reviewing airport data on the types of components in the deicing fluid used at airports that support airplane operations.
(i) If the airplane has not been exposed: Repeat the requirements specified in paragraph (g)(1) of this AD thereafter at intervals not to exceed 24 months.
(ii) If the airplane has been exposed: Within 90 days after that determination is made, do the inspection required by paragraph (g)(2) of this AD. Repeat the inspection thereafter at intervals not to exceed 24 months.
(2) Do a detailed inspection of the electrical connectors, including the contacts and backshells of the line replaceable unit (LRU) in the wheel well of the MLG, for corrosion in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003. Perform applicable corrective actions at the applicable times, as specified in paragraphs (g)(2)(i) through (iii) of this AD, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-24A1148, Revision 1, dated July 10, 2003. Repeat the inspection thereafter at intervals not to exceed 24 months. For the purposes of this AD, a detailed inspection is defined as an intensive visual examination of a specific structural area, system, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at intensity deemed appropriate by the inspector. Inspection aids such as mirror, magnifying lenses, etc., may be used. Surface cleaning and elaborate access procedures may be required.
(i) If the total backshell surface area corrosion is 10 percent or less, clean the backshell(s) before further flight.
(ii) If the total backshell surface area corrosion is greater than 10 percent but less than 20 percent, replace the connectors and backshells within 30 days after the detailed inspection.
(iii) If the total backshell surface area corrosion is 20 percent or more, replace the connectors and backshells before further flight.
(1) The Manager, Seattle ACO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (i)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by The Boeing Company Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO Branch, FAA, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(4) AMOCs approved previously for AD 2005-18-23, Amendment 39-14264 (70 FR 54253, September 14, 2005) (“AD 2005-18-23”), are approved as AMOCs for the corresponding provisions of this AD.
(1) For more information about this AD, contact Julio C. Alvarez, Aerospace Engineer, Systems and Equipment Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des Moines, WA 98198; phone and fax: 206-231-3657; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; internet
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for all General Electric Company (GE) CF34-8C1, CF34-8C5, CF34-8C5A1, CF34-8C5B1, CF34-8C5A2, CF34-8C5A3, CF34-8E2, CF34-8E2A1, CF34-8E5, CF34-8E5A1, CF34-8E5A2, CF34-8E6, and CF34-8E6A1 turbofan engine models with a certain outer shell combustion liner (combustion outer liner shell) installed. This proposed AD was prompted by two in-flight engine shutdowns (IFSDs) that occurred as a result of failures of the combustion outer liner shell. This proposed AD would require a borescope inspection (BSI) or visual inspection of the combustion outer liner shell and, depending on the results of the inspection, possible replacement of the combustion outer liner shell. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by February 24, 2020.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this NPRM, contact General Electric Company, GE Aviation, Room 285, 1 Neumann Way, Cincinnati, OH 45215; phone: 513-552-3272; email:
You may examine the AD docket on the internet at
Michael Richardson-Bach, Aerospace Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7747; fax: 781-238-7199; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
The FAA received reports of two IFSDs on GE CF34-8C and -8E turbofan engine models. These IFSDs were due to the cracking and collapsing of the combustion outer liner shell, which resulted in thermal distress of the high-pressure turbine and low-pressure turbine (LPT) including burn-through of the LPT case. This condition, if not addressed, could result in burn-through of the LPT case, engine fire, and damage to the airplane.
The FAA reviewed GE Alert Service Bulletin (ASB) CF34-8C-AL S/B 72-A0335, dated June 27, 2019, and GE ASB CF34-8E-AL S/B 72-A0221, dated June 27, 2019. The ASBs, differentiated by GE CF34-8 turbofan engine model, describe procedures for performing a BSI of the combustion outer liner shell. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA is proposing this AD because it evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require a BSI or visual inspection of the combustion outer liner shell and, depending on the results of the inspection, possible replacement of the combustion outer liner shell.
The FAA estimates that this proposed AD affects 1,535 engines installed on airplanes of U.S. registry.
The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. The FAA has no way of determining the number of engines that might need this replacement:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to engines, propellers, and associated appliances to the Manager, Engine and Propeller Standards Branch, Policy and Innovation Division.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD 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.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by February 24, 2020.
None.
This AD applies to General Electric Company (GE) CF34-8C1, CF34-8C5, CF34-8C5A1, CF34-8C5B1, CF34-8C5A2, CF34-8C5A3, CF34-8E2, CF34-8E2A1, CF34-8E5, CF34-8E5A1, CF34-8E5A2, CF34-8E6, and CF34-8E6A1 turbofan engine models with an outer shell combustion liner (combustion outer liner shell) part number (P/N) 4124T04G04, P/N 4124T04G05, or P/N 5159T35G02, installed.
Joint Aircraft System Component (JASC) Code 7240, Turbine Engine Combustion Section.
This AD was prompted by two in-flight engine shutdowns (IFSDs) that occurred as a result of failures of the combustion outer liner shell. The FAA is issuing this AD to prevent failure of the combustion outer liner shell. The unsafe condition, if not addressed, could result in burn-through of the low-pressure turbine case, engine fire, and damage to the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) For an affected engine with a combustion outer liner shell that on the effective date of this AD has accumulated 17,500 flight hours (FHs) or greater time since new (TSN), or time since repair (TSR), perform an initial borescope inspection (BSI) or visual inspection of the combustion outer liner shell within 500 engine flight hours (FHs) after the effective date of this AD.
(i) For GE CF34-8C engines, inspect using the Accomplishment Instructions, paragraphs 3.A.(4) and 3.A.(5), of GE Alert Service Bulletin (ASB) CF34-8C-AL S/B 72-A0335, dated June 27, 2019.
(ii) For GE CF34-8E engines, inspect using the Accomplishment Instructions, paragraphs 3.A.(4) and 3.A.(5), of GE ASB CF34-8E-AL S/B 72-A0221, dated June 27, 2019.
(2) For an affected engine with a combustion outer liner shell that on the effective date of this AD has accumulated 17,499 FHs or fewer TSN or TSR, within 500 engine FHs after the combustion outer liner shell has accumulated 17,500 FHs TSN or TSR, perform an initial BSI or visual inspection on the combustion outer liner shell.
(i) For GE CF34-8C engines, inspect using the Accomplishment Instructions, paragraphs 3.A.(4) and 3.A.(5), of GE ASB CF34-8C-AL S/B 72-A0335, dated June 27, 2019.
(ii) For GE CF34-8E engines, inspect using accomplishment instructions 3.A.(4) and 3.A.(5) of GE ASB CF34-8E-AL S/B 72-A0221, dated June 27, 2019.
(3) For an affected engine with a combustion outer liner shell for which it is not possible to determine the TSN or TSR, use the engine FHs since new to determine when to perform the BSI or visual inspection.
(4) After the effective date of this AD, and after the initial inspection required by paragraph (g)(1) or (2) of this AD, re-inspect the combustion outer liner shell using inspection criteria as follows:
(i) For GE CF34-8C engines, use Table 1 of GE ASB CF34-8C-AL S/B 72-A0335, dated June 27, 2019.
(ii) For GE CF34-8E engines, use Table 1 of GE ASB CF34-8E-AL S/B 72-A0221, dated June 27, 2019.
After the effective date of this AD, do not install a combustion outer liner shell with greater than 17,500 FHs TSN or TSR without first inspecting it in accordance with paragraph (g)(1) of this AD.
For the purpose of this AD, “time since repair (TSR)” is the amount of FHs accumulated on the combustion outer liner shell since performing GEK 105091 or GEK 112031, 72-44-06, REPAIR 023.
(1) The Manager, ECO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (k)(1) of this AD. You may email your request to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Michael Richardson-Bach, Aerospace Engineer, ECO Branch, FAA, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7747; fax: 781-238-7199; email:
(2) For service information identified in this AD, contact General Electric Company, GE Aviation, Room 285, 1 Neumann Way, Cincinnati, OH 45215; phone: 513-552-3272; email:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 787-8 and 787-9 airplanes. This proposed AD was prompted by reports that the cabin air compressor (CAC) outlet check valve failed due to fatigue of the aluminum flappers, and exposed the Y-duct to temperatures above its design limit. This proposed AD would require installing new inboard and outboard CAC outlet check valves on the left-side and right-side cabin air conditioning and temperature control system (CACTCS) packs. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by February 24, 2020.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; internet
You may examine the AD docket on the internet at
Allie Buss, Aerospace Engineer, Cabin Safety and Environmental Systems Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des Moines, WA 98198; phone and fax: 206-231-3564; email:
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
The FAA has received reports that the CAC outlet check valve failed due to fatigue of the aluminum flappers, and exposed the Y-duct to temperatures above its design limit. Operators have reported failures of the CAC outlet check valve caused by fatigue of the aluminum flappers due to increasing open/close cycles, induced by CAC surge. This can cause reverse flow through the broken check valve from the operational CAC. The reverse flow is recirculated through the operational CAC inlet ducting and reheating CAC air, leading to exposure of the Y-duct to temperatures above its design limit. This condition, if not addressed, could expose the flight deck and passenger cabin to smoke and fumes, and lead to reduced crew performance or produce passenger discomfort. Off gassed compounds could cause respiratory distress and could cause serious injury for an individual with a compromised respiratory system. The new check valve has an improved design with a stronger Corrosion Resistant Steel (CRES) housing and flappers, and an increased stopper contact area for better distribution of the flapper load.
The FAA reviewed Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019. The service information describes procedures for installing new inboard and outboard CAC outlet check valves on the left-side and right-side CACTCS packs. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA is proposing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishment of the actions identified as “RC” (required for compliance) in the Accomplishment Instructions of Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019, described previously.
For information on the procedures and compliance times, see this service information at
The FAA estimates that this proposed AD affects 90 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
According to the manufacturer, some or all of the costs of this proposed AD may be covered under warranty by UTC Aerospace Systems, thereby reducing the cost impact on affected individuals. The FAA does not control warranty coverage for affected individuals. As a result, the FAA has included all known costs in the cost estimate.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This proposed AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.
The FAA has determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD 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.
For the reasons discussed above, I certify that the proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments on this AD action by February 24, 2020.
None.
This AD applies to The Boeing Company Model 787-8 and 787-9 airplanes, certificated in any category, as identified in Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019.
Air Transport Association (ATA) of America Code 21, Air conditioning.
This AD was prompted by reports that the cabin air compressor (CAC) outlet check valve failed due to fatigue of the aluminum flappers, and exposed the Y-duct to temperatures above its design limit. The FAA is issuing this AD to address this condition, which could expose the flight deck and passenger cabin to smoke and fumes, and lead to reduced crew performance or produce passenger discomfort. Off gassed compounds could cause respiratory distress and could cause serious injury for an individual with a compromised respiratory system.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: At the applicable times specified in paragraph 5., “Compliance,” of Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019, do all applicable actions identified as “RC” (required for compliance) in, and in accordance with, the Accomplishment Instructions of Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019.
Where Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019, uses the phrase “the Issue 002 date of this service bulletin,” this AD requires using “the effective date of this AD.”
As of the effective date of this AD, no person may install a CAC outlet check valve, with a part number listed in paragraph 1.B, “Spares Affected” of Boeing Service Bulletin B787-81205-SB210108-00, Issue 002, dated October 15, 2019, on any airplane.
This paragraph provides credit for the actions specified in paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Boeing Service Bulletin B787-81205-SB210108-00, Issue 001, dated May 25, 2018.
(1) The Manager, Seattle ACO Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the certification office, send it to the attention of the person identified in paragraph (l)(1) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by The Boeing Company Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO Branch, FAA, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(4) For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (k)(4)(i) and (ii) of this AD apply.
(i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. If a step or substep is labeled “RC Exempt,” then the RC requirement is removed from that step or substep. An AMOC is required for any deviations to RC steps, including substeps and identified figures.
(ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.
(1) For more information about this AD, contact Allie Buss, Aerospace Engineer, Cabin Safety and Environmental Systems Section, FAA, Seattle ACO Branch, 2200 South 216th St., Des Moines, WA 98198; phone and fax: 206-231-3564; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110 SK57, Seal Beach, CA 90740 5600; telephone 562-797-1717; internet
Environmental Protection Agency (EPA).
Proposed rule.
Pursuant to the Resource Conservation and Recovery Act (RCRA or Act), the Environmental Protection Agency (EPA) is proposing to approve revisions to the State of Idaho's Underground Storage Tank (UST) program submitted by the State. This action is based on EPA's determination that the State's revisions satisfy all requirements for UST program approval. This action also proposes to codify Idaho's State program as revised by Idaho and approved by the EPA and to incorporate by reference the State regulations that we have determined meet the requirements for approval. The State's federally-authorized and codified UST program, as revised pursuant to this action, will remain subject to the EPA's inspection and enforcement authorities under sections 9005 and 9006 of RCRA Subtitle I and other applicable statutory and regulatory provisions.
Send written comments by February 10, 2020.
Submit your comments by one of the following methods:
1.
2.
3.
4.
You can view and copy the documents that form the basis for this action and associated publicly available materials from 8:30 a.m. to 4:00 p.m. Monday through Friday at the following location: EPA Region 10, 1200 Sixth Avenue, Seattle, Washington 98101, phone number (206) 553-6693. Interested persons wanting to examine these documents should make an appointment with the office at least 2 days in advance.
Scott Wilder, (206) 553-6693, Region 10, Enforcement and Compliance Assurance Agreement, EPA Region 10, 1200 Sixth Avenue, Seattle, Washington, 98101, email address:
For additional information, see the direct final rule published in the “Rules and Regulations” section of this
U.S. Commission on Civil Rights.
Announcement of meeting.
Notice is hereby given, pursuant to the provisions of the rules and regulations of the U.S. Commission on Civil Rights (Commission) and the Federal Advisory Committee Act (FACA) that the meeting of the Utah Advisory Committee (Committee) to the Commission will be held at 12:00 p.m. (Mountain Time) Friday, January 31, 2020. The purpose of this meeting is for the Committee to discuss report outline and report writing assignments on the Gender Wage Gap.
The meeting will be held on Friday, January 31, 2020 at 12:00 p.m. MT.
Ana Victoria Fortes (DFO) at
This meeting is available to the public through the following toll-free call-in number: 800-367-2403, conference ID number: 6600696. Any interested member of the public may call this number and listen to the meeting. Callers can expect to incur charges for calls they initiate over wireless lines, and the Commission will not refund any incurred charges. Callers will incur no charge for calls they initiate over land-line connections to the toll-free telephone number. Persons with hearing impairments may also follow the proceedings by first calling the Federal Relay Service at 1-800-877-8339 and providing the Service with the conference call number and conference ID number.
Members of the public are entitled to make comments during the open period at the end of the meeting. Members of the public may also submit written comments; the comments must be received in the Regional Programs Unit within 30 days following the meeting. Written comments may be mailed to the Western Regional Office, U.S. Commission on Civil Rights, 300 North Los Angeles Street, Suite 2010, Los Angeles, CA 90012. They may be faxed to the Commission at (213) 894-0508, or emailed Ana Victoria Fortes at
Records and documents discussed during the meeting will be available for public viewing prior to and after the meetings at
Please click on the “Committee Meetings” tab. Records generated from these meetings may also be inspected and reproduced at the Regional Programs Unit, as they become available, both before and after the meetings. Persons interested in the work of this Committee are directed to the Commission's website,
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Based on affirmative final determinations by the Department of Commerce (Commerce) and the International Trade Commission (ITC), Commerce is issuing antidumping duty orders on polyester textured yarn from India and the People's Republic of China (China). In addition, Commerce is amending its final affirmative determination with respect to India.
Applicable January 10, 2020.
Kate Johnson (India) or Irene Gorelik (China), AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone (202) 482-4929 or (202) 482-6905, respectively.
On November 19, 2019, Commerce published its affirmative final determinations in the less-than-fair-value (LTFV) investigations of polyester textured yarn from India and China.
The product covered by these orders is polyester textured yarn from India and China. For a complete description of the scope of these orders,
A ministerial error is defined as an error in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error which the Secretary considers ministerial.
Pursuant to section 735(e) of the Act and 19 CFR 351.224(e) and (f), Commerce is amending the final determinations in the LTFV investigation of polyester textured yarn from India (
On January 3, 2020, in accordance with section 735(d) of the Act, the ITC notified Commerce of its final determinations in these investigations, in which it found that an industry in the United States is materially injured by reason of imports of polyester textured yarn from India and China.
Therefore, in accordance with section 736(a)(1) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to assess, upon further instruction by Commerce, antidumping duties equal to the amount by which the normal value of the merchandise exceeds the export price (or constructed export price) of the merchandise, for all relevant entries of polyester textured yarn from India and China. With the exception of entries occurring after the expiration of the provisional measures period and before publication of the ITC's final affirmative injury determinations, as further described below, antidumping duties will be assessed on unliquidated entries of polyester textured yarn from India and China entered, or withdrawn from warehouse, for consumption, on or after July 1, 2019, the date of publication of the preliminary determinations.
Except as noted in the “Provisional Measures” section of this notice, in accordance with section 735(c)(1)(B) of the Act, Commerce will instruct CBP to continue to suspend liquidation on all relevant entries of polyester textured yarn from India and China. These instructions suspending liquidation will remain in effect until further notice.
Commerce will also instruct CBP to require cash deposits equal to the estimated weighted-average dumping margins indicated in the tables below, adjusted by the export subsidy offset. Given that the provisional measures period has expired, as explained below, effective on the date of publication in the
Section 733(d) of the Act states that suspension of liquidation pursuant to an affirmative preliminary determination may not remain in effect for more than four months, except where exporters representing a significant proportion of exports of the subject merchandise request that Commerce extend the four-month period to no more than six months. At the request of exporters that account for a significant proportion of polyester textured yarn from India and China, Commerce extended the four-month period to six months in each of these investigations. Commerce published the preliminary determinations in these investigations on July 1, 2019.
The extended provisional measures period, beginning on the date of publication of the preliminary determinations, ended on December 27, 2019. Therefore, in accordance with section 733(d) of the Act and our practice,
With regard to the ITC's negative critical circumstances determination on imports of polyester textured yarn from China discussed above, we will instruct CBP to lift suspension and to refund any cash deposits made to secure the payment of estimated antidumping duties with respect to entries of polyester textured yarn from China, entered or withdrawn from warehouse, for consumption on or after April 2, 2019 (
The estimated weighted-average antidumping duty margin percentages are as follows:
This
This amended final determination and antidumping duty orders are published in accordance with sections 735(e) and 736(a) of the Act and 19 CFR 351.224(e) and 19 CFR 351.211(b).
The merchandise covered by these orders, polyester textured yarn, is synthetic multifilament yarn that is manufactured from polyester (polyethylene terephthalate). Polyester textured yarn is produced through a texturing process, which imparts special properties to the filaments of the yarn, including stretch, bulk, strength, moisture absorption, insulation, and the appearance of a natural fiber. This scope includes all forms of polyester textured yarn, regardless of surface texture or appearance, yarn density and thickness (as measured in denier), number of filaments, number of plies, finish (luster), cross section, color, dye method, texturing method, or packing method (such as spindles, tubes, or beams).
Excluded from the scope of these orders is bulk continuous filament yarn that: (a) is polyester synthetic multifilament yarn; (b) has denier size ranges of 900 and above; (c) has turns per meter of 40 and above; and (d) has a maximum shrinkage of 2.5 percent.
The merchandise subject to these orders is properly classified under subheadings 5402.33.3000 and 5402.33.6000 of the Harmonized Tariff Schedule of the United States (HTSUS). Merchandise subject to these orders may also enter under HTSUS subheading 5402.52.00.
Enforcement and Compliance, International Trade Administration, Department of Commerce
Applicable January 10, 2020.
Lauren Caserta, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4737.
On November 12, 2019, the Department of Commerce (Commerce) initiated the countervailing duty (CVD) investigation of forged steel fittings from India.
Section 703(b)(1) of the Tariff Act of 1930, as amended (the Act), requires Commerce to issue the preliminary determination in a CVD investigation within 65 days after the date on which Commerce initiated the investigation. However, section 703(c)(1)(A) of the Act permits Commerce to postpone the preliminary determination until no later than 130 days after the date on which Commerce initiated the investigation if a petitioner makes a timely request for a postponement. Under 19 CFR 351.205(e), a petitioner must submit a request for postponement 25 days or more before the scheduled date of the preliminary determination and must state the reason for the request. Commerce will grant the request unless it finds compelling reasons to deny the request.
On November 27, 2019, Bonney Forge Corporation and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (collectively, petitioners) submitted a timely request pursuant to section 703(c)(1)(A) of the Act and 19 CFR 351.205(e) to postpone fully the preliminary determination. The petitioners stated that the purpose of their request was to provide Commerce with sufficient time to select appropriate respondents and conduct a full investigation in light of the complex nature of the basket categories in which subject imports are classified.
In accordance with 19 CFR 351.205(e), the reason for requesting a postponement of the preliminary determination and the record does not present any compelling reasons to deny the request. Therefore, in accordance with section 703(c)(1)(A) of the Act, Commerce is postponing the deadline for the preliminary determination to March 23, 2020.
This notice is issued and published pursuant to section 703(c)(2) of the Act and 19 CFR 351.205(f)(l).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Based on affirmative final determinations by the Department of Commerce (Commerce) and the International Trade Commission (ITC), Commerce is issuing countervailing duty orders on polyester textured yarn from the People's Republic of China (China) and India.
Applicable January 10, 2020.
Janae Martin (India) or Joseph Dowling (China), AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone (202) 482-0238 or (202) 482-1646, respectively.
On November 19, 2019, Commerce published its final determinations in the countervailing duty investigations of polyester textured yarn from China and India.
On January 3, 2020, the ITC notified Commerce of its final affirmative determinations pursuant to sections 705(b)(1)(A)(i) and 705(d) of the Act that an industry in the United States is materially injured by reason of subsidized imports of polyester textured yarn from China and India, and of its determination that critical circumstances do not exist with respect to imports of polyester textured yarn from China.
The product covered by these orders is polyester textured yarn from China and India. For a complete description of the scope of these orders,
On January 3, 2020, in accordance with sections 705(b)(1)(A)(i) and 705(d) of the Act, the ITC notified Commerce of its final determinations in these investigations, in which it found that an industry in the United States is materially injured by reason of subsidized imports of polyester textured yarn from China and India. In accordance with section 705(c)(2) Act, we are publishing these countervailing duty orders.
Therefore, in accordance with section 706(a) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to assess, upon further instruction by Commerce, countervailing duties on unliquidated entries of polyester textured yarn from China and India entered, or withdrawn from warehouse, for consumption on or after May 3, 2019, the date on which Commerce published its preliminary countervailing duty determinations in the
With regards to the ITC's negative critical circumstances determination on imports of polyester textured yarn from China discussed above, we will instruct CBP to lift suspension and to refund any cash deposits made to secure the payment of estimated countervailing duties with respect to entries of polyester textured yarn from China, entered or withdrawn from warehouse, for consumption on or after February 2, 2019 (
In accordance with section 706 of the Act, Commerce will direct CBP to reinstitute the suspension of liquidation of polyester textured yarn from China and India, effective the date of publication of the ITC's notice of final determinations in the
Section
In accordance with section 733(d) of the Act, Commerce instructed CBP to terminate the suspension of liquidation and to liquidate, without regard to CVD duties, unliquidated entries of polyester textured yarn from China and India entered, or withdrawn from warehouse, for consumption on or after August 31, 2019, the date on which the provisional CVD measures expired, through the day preceding the date of publication of the ITC final injury determinations in the
This notice constitutes the countervailing duty orders with respect to polyester textured yarn from China and India pursuant to section 706(a) of the Act. Interested parties can find a list of countervailing duty orders currently in effect at
These orders are issued and published in accordance with section 706(a) of the Act and 19 CFR 351.211(b).
The merchandise covered by these orders, polyester textured yarn, is synthetic multifilament yarn that is manufactured from polyester (polyethylene terephthalate). Polyester textured yarn is produced through a texturing process, which imparts special properties to the filaments of the yarn, including stretch, bulk, strength, moisture absorption, insulation, and the appearance of a natural fiber. This scope includes all forms of polyester textured yarn, regardless of surface texture or appearance, yarn density and thickness (as measured in denier), number of filaments, number of plies, finish (luster), cross section, color, dye method, texturing method, or packing method (such as spindles, tubes, or beams).
Excluded from the scope of these orders is bulk continuous filament yarn that: (a) Is polyester synthetic multifilament yarn; (b) has denier size ranges of 900 and above; (c) has turns per meter of 40 and above; and (d) has a maximum shrinkage of 2.5 percent.
The merchandise subject to these orders is properly classified under subheadings 5402.33.3000 and 5402.33.6000 of the Harmonized Tariff Schedule of the United States (HTSUS). Merchandise subject to these orders may also enter under HTSUS subheading 5402.52.00.
National Institute of Standards and Technology, Commerce.
Notice.
The Interim Meeting of the National Conference on Weights and Measures (NCWM) will be held in Riverside, CA, from Sunday, January 26, 2020, through Wednesday, January 29, 2020. This notice contains information about significant items on the NCWM Committee agendas but does not include all agenda items. As a result, the items are not consecutively numbered.
The meeting will be held from Sunday, January 26, 2020, through Wednesday, January 29, 2020. The meeting schedule will be available on the NCWM website at
This meeting will be held at The Mission Inn & Spa, 3649 Mission Inn Avenue Riverside, CA 92501.
Dr. Douglas Olson, NIST, Office of Weights and Measures, 100 Bureau Drive, Stop 2600, Gaithersburg, MD 20899-2600. You may also contact Dr. Olson at (301) 975-2956 or by email at
Publication of this notice on the NCWM's behalf is undertaken as a public service and does not itself constitute an endorsement by the National Institute of Standards and Technology (NIST) of the content of the notice. NIST participates in the NCWM as an NCWM member and pursuant to 15 U.S.C. 272(b)(10) and (c)(4) and in accordance with Federal policy (
The NCWM is an organization of weights and measures officials of the states, counties, and cities of the United States, and representatives from the private sector and federal agencies. These meetings bring together government officials and representatives of business, industry, trade associations, and consumer organizations on subjects related to the field of weights and measures technology, administration, and enforcement. NIST participates to encourage cooperation between federal agencies and the states in the development of legal metrology requirements. NIST also promotes uniformity in state laws, regulations, and testing procedures used in the regulatory control of commercial weighing and measuring devices, packaged goods, and for other trade and commerce issues.
The NCWM has established multiple committees, task groups, and other working bodies to address legal metrology issues of interest to regulatory officials, industry, consumers, and others. The following are brief descriptions of some of the significant agenda items that will be considered by some of the NCWM Committees at the NCWM Interim Meeting. Comments will be taken on these and other issues during several public comment sessions. At this stage, the items are proposals. This meeting also includes work sessions in which the Committees may also accept comments, and where recommendations will be developed for consideration and possible adoption at the NCWM 2020 Annual Meeting. The Committees may withdraw or carryover items that need additional development.
These notices are intended to make interested parties aware of these development projects and to make them aware that reports on the status of the project will be given at the Interim Meeting. The notices are also presented to invite the participation of manufacturers, experts, consumers, users, and others who may be interested in these efforts.
The Specifications and Tolerances Committee (S&T Committee) will consider proposed amendments to NIST Handbook 44, “Specifications, Tolerances, and other Technical Requirements for Weighing and Measuring Devices” (NIST HB 44). Those items address weighing and measuring devices used in commercial applications, that is, devices that are used to buy from or sell to the public or used for determining the quantity of products or services sold among businesses. Issues on the agenda of the NCWM Laws and Regulations Committee (L&R Committee) relate to proposals to amend NIST Handbook 130, “Uniform Laws and Regulations in the Areas of Legal Metrology and Fuel Quality” and NIST Handbook 133, “Checking the Net Contents of Packaged Goods.”
The following items are proposals to amend NIST Handbook 44:
This item is a carry-over item from the 2019 NCWM Annual Meeting that has been on the S&T Committee's Agenda since 2017. The S&T Committee will consider a proposal requiring additional sales information to be recorded by cash registers interfaced with a weighing element for items that are weighed at a checkout stand. This item was assigned for further development by a Task Group in July 2018. The Task Group has provided two different versions of the proposal to the S&T Committee. One version is retroactive and the other is a nonretroactive version. The version that will be adopted is expected to be part of the NCWMs 2020 voting process. The retroactive version would be enforceable on all systems, and the nonretroactive version will be enforceable on only those systems manufactured and placed in service on or after the effective date specified. These systems are currently required to record the net weight, unit price, total price, and the product class, or in a system equipped with price look-up capability, the product name or code number. The change proposed would add “tare weight” to the list of sales information currently required.
This item is another carry-over item originally appearing on the S&T's agenda in 2016. The S&T Committee will consider a proposal drafted by the NCWM's Weigh-In-Motion (WIM) Task Group (TG) to amend various sections of NIST HB 44, Scales Code to address WIM vehicle scale systems used for commercial applications. The TG is made up of representatives of WIM equipment manufacturers, the U.S. Department of Transportation Federal Highway Administration, NIST Office of Weights and Measures, truck weight enforcement agencies, state weights and measures agencies, and others.
The WIM TG was first formed in February 2016 to consider a proposal to expand NIST HB 44, Weigh-In-Motion Systems Used for Vehicle Enforcement Screening—Tentative Code to also apply to legal-for-trade (commercial) and law enforcement applications.
The focus of the TG since July 2016 has been to concentrate on the development of test procedures that can be used to verify the accuracy of a WIM vehicle scale system given the different axle and tandem axle configurations of vehicles that will typically be weighed by a system and a proposed maintenance and acceptance tolerance of 0.2 percent on gross (total) vehicle weight. Members of the TG, to date, have been unsuccessful in agreeing on test procedures, and, as a result, the TG recently developed a “White Paper” during the summer of 2017, which it distributed to the different regional weights and measures associations requesting feedback from their fall 2017 conferences on some different draft test procedures being considered and some other concerns. The TG is awaiting evidence that will substantiate the submitter's claims that these types of WIM systems are capable of meeting NIST HB 44 Scales Code Class III L tolerances.
This new item to be considered by the S&T Committee is similar to the previous SCL-16.1 item in that it proposes to add WIM systems for motor vehicles to the NIST HB 44 Scales Code. This new proposal differs from SCL-16.1 however, since it would not apply to axle-load type scales but instead, would apply to a full-length vehicle scale used for WIM.
The S&T Committee will consider a new proposal to replace two current requirements (S.1.2.2.2. and S.1.2.2.3.) with a new, amended version of S.1.2.2.2. “Class III and IIII Scales.” This item is also related to two other items (individual item SCL-20.11 and SCL-20.2 that is included as part of Block 2 on the agenda) on the S&T Agenda in 2020 in that all three items address the value of “e” and “d” in precision scales. In 2017, the NCWM adopted a proposal adding a new paragraph (S.1.2.2.2.) requiring the value of the scale division (d) and verification scale interval (e) to be equal on Class I and Class II scales installed into commercial service as of January 1, 2020, when used in a direct sale application (
The S&T Committee will consider a new proposal to permit the use of an electronic log in lieu of a printed copy of a Category 3 sealing method on liquid measuring devices. Current NIST HB 44 LMD requirements specify that a printed copy of an event logger must be available and only state that an electronic version of this log can be additionally provided. This new proposal would amend the language in Table S.2.2. “Categories of Device and Methods of Sealing” to permit either form (printed or electronic) of the event logger to be made available.
The S&T Committee will again consider this carry-over item that proposes to provide specifications and user requirements for manifold flush systems designed to eliminate product contamination on VTMs used for multiple products. This proposal would add specifications on the design of VTMs under S.3.1.1., “Means for Clearing the Discharge Hose,” and add a new user requirement UR.2.6., “Clearing the Discharge Hose.” During open hearings at previous NCWM meetings, comments were heard about the design of any system to clear the discharge hose of a product prior to the delivery of a subsequent product which could provide opportunities to fraudulently use this type of system.
The S&T Committee will consider a new proposal that would specify the maximum value of the indicated and/or recorded electrical energy unit used in an EVSE (Electric Vehicle Supply Equipment). This proposal would reduce (by a factor of 10) the current specified values of these units. The current maximum values of 0.005 MJ and 0.001 kWh would be changed to 0.0005 MJ and 0.0001 kWh respectively. The submitters contend that testing of these systems would be expedited through these changes and reduce the amount of time necessary to complete official tests.
The S&T Committee will consider a proposal that would reduce the tolerances for the air oven reference method. The proposed new tolerances would apply to all types of grains and oil seeds. This item is a carry-over proposal from 2019 and would replace the contents of Table T.2.1. with new criteria. Additional inspection data will be collected and reviewed to assess whether the proposed change to the tolerances are appropriate.
The S&T Committee will consider changes included in this block affecting the NIST HB 44 Taximeters Code (Section 5.54.) and the Transportation Network Measurement Systems (TNMS) Code (Section 5.60.) that would amend the value of tolerances allowed for distance tests. The changes proposed in this item would change the Taximeters Code requirement T.1.1. “On Distance Tests” by increasing that tolerance to 2.5% when the test exceeds one mile. The change to the TNMS Code affects requirement T.1.1. “Distance Tests” by reducing the tolerance allowed on overregistration under T.1.1.(a) from the current 2.5% to 1% when the test does not exceed one mile and would increase the tolerance for underregistration in T.1.1.(b) from 2.5% to 4%. These changes if adopted would align the tolerances values for distance tests allowed for taximeters and TNMS.
The following items are proposals to amend NIST Handbooks 130 and 133:
NIST Handbook 133, “Checking the Net Contents of Packaged Goods,” and NIST Handbook 130, Uniform Packaging and Labeling Regulation (UPLR), Section 2.8. Multiunit Package.
The L&R Committee will consider a proposal to add a test procedure in NIST Handbook 133 for addressing the total quantity declaration on multiunit or variety packages. In addition, in NIST Handbook 130, it will clarify the definition of Section 2.8. Multiunit package.
The L&R Committee will consider a proposed method of sale for adoption to clarify the labeling requirements for packaged inkjet and toner cartridges to ensure that consumers are informed about the net quantity of contents of these products, value comparisons can be made, and quantities can be verified to ensure equity between buyer and seller and fair competition between sellers, including original equipment manufacturers. Page verification would
The L&R Committee will consider a proposal under Item NET 20.2. to consider changes to the equipment that is used to test the thickness of polyethylene sheeting, bags, and liners. This modification would allow for electronic instruments to be used for thickness measurements. In addition, changes to the test procedure would need to be modified for the use of electronic instruments.
Under Item ODR NEW, the L&R Committee will consider a recommended proposal to remove the Open Dating Regulation in its entirety from NIST Handbook 130.
National Institute of Standards and Technology, Department of Commerce.
Notice of open meeting.
National Institute of Standards and Technology (NIST)'s Visiting Committee on Advanced Technology (VCAT or Committee) will meet on Wednesday, February 12, 2020, from 8:30 a.m. to 5:00 p.m. Eastern Time, and Thursday, February 13, 2020, from 8:30 a.m. to 12:00 p.m. Eastern Time.
The VCAT will meet on Wednesday, February 12, 2020, from 8:30 a.m. to 5:00 p.m. and Thursday, February 13, 2020, from 8:30 a.m. to 12:00 p.m. Eastern Time.
The meeting will be held in the Portrait Room, Administration Building, at NIST, 100 Bureau Drive, Gaithersburg, Maryland 20899, with an option to participate via webinar. Please note admittance instructions under the
Stephanie Shaw, VCAT, NIST, 100 Bureau Drive, Mail Stop 1060, Gaithersburg, Maryland 20899-1060, telephone number 301-975-2667. Ms. Shaw's email address is
Pursuant to the Federal Advisory Committee Act, as amended, 5 U.S.C. App., notice is hereby given that the VCAT will meet on Wednesday, February 12, 2020, from 8:30 a.m. to 5:00 p.m. Eastern Time, and Thursday, February 13, 2020, from 8:30 a.m. to 12:00 p.m. Eastern Time. The meeting will be open to the public. The VCAT is composed of not fewer than 9 members appointed by the NIST Director, eminent in such fields as business, research, new product development, engineering, labor, education, management consulting, environment, and international relations. The primary purpose of this meeting is for the VCAT to review and make recommendations regarding general policy for NIST, its organization, its budget, and its programs within the framework of applicable national policies as set forth by the President and the Congress. The agenda will include an update on major programs at NIST. The Committee also will present its initial observations, findings, and recommendations for the 2019 VCAT Annual Report. The agenda may change to accommodate Committee business. The final agenda will be posted on the NIST website at
Individuals and representatives of organizations who would like to offer comments and suggestions related to the Committee's business are invited to request a place on the agenda. Approximately one-half hour will be reserved for public comments and speaking times will be assigned on a first-come, first-serve basis. The amount of time per speaker will be determined by the number of requests received but, is likely to be about 3 minutes each. The exact time for public comments will be included in the final agenda that will be posted on the NIST website at
All visitors to the NIST site are required to pre-register to be admitted. Please submit your name, time of arrival, email address, and phone number to Stephanie Shaw by 5:00 p.m. Eastern Time, Wednesday, February 5, 2020. Non-U.S. citizens must submit additional information; please contact Ms. Shaw. Ms. Shaw's email address is
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The New England Fishery Management Council (Council, NEFMC) will hold a three-day meeting to consider actions affecting New England fisheries in the exclusive economic zone (EEZ).
The meeting will be held on Tuesday, Wednesday, and Thursday, January 28, 29, and 30, 2020, beginning at 9 a.m. on January 28 and 8:30 a.m. on January 29 and 30.
The meeting will be held at the Portsmouth Harbor Events and Conference Center, 100 Deer Street at 22
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492, ext. 113.
After introductions and brief announcements, the meeting will begin with reports from the Council Chairman and Executive Director, NMFS's Regional Administrator for the Greater Atlantic Regional Fisheries Office (GARFO), liaisons from the Northeast Fisheries Science Center (NEFSC) and Mid-Atlantic Fishery Management Council, staff from the Atlantic States Marine Fisheries Commission (ASMFC), and representatives from NOAA General Counsel, NOAA's Office of Law Enforcement, and the U.S. Coast Guard. The Council then will receive two updates on offshore energy projects in the Northeast—one from the Bureau of Ocean Energy Management and the other from the Habitat Committee. The Council also will receive other habitat updates and develop comments on a Great South Channel-related Exempted Fishing Permit (EFP) if the notice is available prior to the meeting. Next, representatives from the Northeast Regional Ocean Council and the Responsible Offshore Development Alliance will provide an overview of upcoming work on the Northeast Ocean Data Portal using industry input.
Following the lunch break, the Council will hear from Dr. Michael Rubino, senior advisor for seafood strategy at NOAA Fisheries, about his role within the agency, as well as seafood market development options. The Council then will view a video highlighting the U.S. scallop delegation's June 2019 visit to Hokkaido, Japan to learn about seed-sowing practices used in Japanese scallop aquaculture. The delegation included representatives from the scallop industry, NMFS, academia, and Council staff. Next, the Council will discuss and take final action on a Commercial eVTR Omnibus Framework, which was developed jointly with the Mid-Atlantic Fishery Management Council. The framework proposes to require that vessel trip reports (VTRs) be submitted electronically as eVTRs instead of on paper for all commercial species managed by both Councils. Next, the Council will receive an overview of new South Atlantic electronic vessel reporting requirements for for-hire charter and headboat vessels with South Atlantic permits. The Council will close out the day with a report on the November 2019 annual meeting of the International Commission for the Conservation of Atlantic Tunas (ICCAT). The Council also will hear comments from the Advisory Committee to the U.S. Section to ICCAT.
The Council will begin the day with a presentation from MIT Sea Grant on the use of sociocultural information in the NEFMC process and discuss recent findings. Next, the Scientific and Statistical Committee (SSC) will provide the Council with acceptable biological catch (ABC) recommendations for four groundfish stocks that were remanded for further review as a result of the Council's December 2019 meeting. The ABC recommendations will be for American plaice, Gulf of Maine haddock, Georges Bank haddock, and Atlantic pollock for fishing years 2020-22. Following the SSC report, members of the public will have the opportunity to speak during an open comment period on issues that relate to Council business but are not included on the published agenda for this meeting. The Council asks the public to limit remarks to 3-5 minutes. After that, the Groundfish Committee will begin its report, which will run for the remainder of the day with a lunch break scheduled partway through. The report will cover two items. First, the Council will develop recommendations for submission to GARFO on fishing year 2020 recreational measures for Gulf of Maine cod and Gulf of Maine haddock. Second, the Council will review, discuss, and approve the Draft Environmental Impact Statement (DEIS) for Monitoring Amendment 23 and select preliminary preferred alternatives. The DEIS will contain the full range of alternatives for upcoming public hearings. At the conclusion of this discussion, the Council will adjourn for the day.
The third day of the meeting will begin with a closed session during which the Council will consult on SSC appointments for 2020-22 and review personnel issues. The meeting then will be open to the public and begin with a presentation on the final NEFSC/GARFO Regional Strategic Plan for 2020-23, followed by an overview of the accompanying annual implementation plan. The Northeast Fisheries Science Center then will provide a presentation on its annual planning process and explain how the center uses the New England Fishery Management Council's research priorities. Next, the Council will receive an update on Congressional activities and discuss any pending legislation. The Small-Mesh Multispecies (Whiting) Committee report will follow. The Council will approve the range of alternatives for an action that is under development to rebuild southern red hake.
Following the lunch break, the Council will discuss Atlantic herring issues. The Council will initiate Framework Adjustment 8 to the Atlantic Herring Fishery Management Plan, which will contain fishing year 2021-23 specifications and consider adjusting herring measures that potentially inhibit the Atlantic mackerel fishery from achieving optimum yield. Next, the Council will receive an update from NMFS on the Omnibus Industry-Funded Monitoring (IFM) Amendment and its associated herring measures. Finally, the Council will close out the meeting with “other business.”
Although non-emergency issues not contained on this agenda may come before the Council for discussion, those issues may not be the subject of formal action during this meeting. Council action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take final action to address the emergency. The public also should be aware that the meeting will be recorded. Consistent with 16 U.S.C. 1852, a copy of the recording is available upon request.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies (see
16 U.S.C. 1801
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed deletions from the Procurement List.
The Committee is proposing to delete services previously furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S Clark Street, Suite 715, Arlington, Virginia 22202-4149.
For further information or to submit comments contact: Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
The following services are proposed for deletion from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Addition to and deletions from the Procurement List.
This action add service to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and deletes services from the Procurement List previously furnished by such agencies.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S Clark Street, Suite 715, Arlington, Virginia 22202-4149.
Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
On 11/22/2019, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed additions to the Procurement List. This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51-2.3.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organizations that will furnish the service to the Government.
2. The action will result in authorizing small entities to furnish the service to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the service proposed for addition to the Procurement List.
Accordingly, the following service is added to the Procurement List:
On 12/6/2019, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed deletions from the Procurement List.
After consideration of the relevant matter presented, the Committee has determined that the services listed below are no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities.
1. The action will not result in additional reporting, recordkeeping or other compliance requirements for small entities.
2. The action may result in authorizing small entities to furnish the services to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the services deleted from the Procurement List.
Accordingly, the following services are deleted from the Procurement List:
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on December 19, 2019, Texas Eastern Transmission, LP (Texas Eastern), 5400 Westheimer Court, Houston, Texas 77056, filed, pursuant to section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission's regulations, an amendment to its application in Docket No. CP19-509-000 which requested authorization to construct and operate the Marshall County Mine Panels 19E Project located in Marshall County, West Virginia.
Texas Eastern is proposing to excavate, elevate, and replace certain small segments of four different pipelines (Lines 10, 15, 25, and 30) and appurtenances in order to maintain operation of its facilities for the duration of longwall mining activities planned by Marshall Coal in the area beneath Texas Eastern's pipelines. The amendment to its application requests to (1) include construction activities related to segments of its four pipelines that traverse the Marshall County Coal Company's Mine Panels 19E and 20E; (2) modify the timing for completion of Project activities from October 2021 to October 2022; and (3) request a Commission order by April 30, 2020. The construction activities proposed in the amendment replace in their entirety the construction activities proposed in the application. The total length of pipeline segments to be excavated increased to 4.39 miles from 2.26 miles. The estimated cost of the project increased to approximately $77 million from approximately $38 million, all as more fully described in its application which is on file with the Commission and open to public inspection.
The filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's website web at
Any questions concerning this application may be directed to Lisa A. Connolly, Director, Rates and Certificates, Texas Eastern Transmission, LP, P.O. Box 1642 Houston, Texas 77251-1642, by telephone at (713) 627-4102, or by email
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 3 copies of filings made in the proceeding with the Commission and must provide a copy to the applicant and to every other party. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list and will be notified of any meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission and will not have the right to seek court review of the Commission's final order.
As of the February 27, 2018 date of the Commission's order in Docket No. CP16-4-001, the Commission will apply its revised practice concerning out-of-time motions to intervene in any new Natural Gas Act section 3 or section 7 proceeding.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on December 26, 2019, Williams Companies Inc filed a Request for Waiver of Corporate Officer Certification Requirement for FERC Form 6 and 6Q for the Fourth Quarter 2013 through the First Quarter 2019.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
On December 19, 2019, Texas Eastern Transmission, LP (Texas Eastern), 5400 Westheimer Court, Houston, Texas 77056-5310, filed an application pursuant to section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Federal Energy Regulatory Commission's (Commission) regulations for its proposed Middlesex Extension Project (Project). Specifically, Texas Eastern requests: (1) Authorization under NGA Section 7(c) to construct, install, own, operate and maintain 1.55 miles of 20-inch-diameter pipeline, a new metering and regulating station, 0.20 miles of 16-inch-diameter interconnecting piping, and related appurtenances and ancillary facilities to provide natural gas transportation to interconnects with Transcontinental Gas Pipe Line Company, LLC's (Transco) Mainline system and Transco's existing Woodbridge Lateral for ultimate delivery to the 725-Megawatt natural gas-fueled combined-cycle Woodbridge Energy Center owned by CPV Shore Holdings, LLC and located in Woodbridge Township, New Jersey; (2) authority to establish initial incremental recourse rates for firm and interruptible transportation service on the Middlesex Extension; and (3) any waivers, authority, and further relief as may be necessary to implement the proposal contain in its application, all as more fully set forth in the application, which is open to the public for inspection. The filing may also be viewed on the web at
Any questions regarding Texas Eastern's application should be directed to Berk Donaldson, Director, Rates and Certificates, Texas Eastern Transmission, LP, P.O. Box 1642, Houston, Texas 77251-1642, or phone (713) 627-4488, or fax (713) 627-5947, or by email
Pursuant to Section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding, or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 7 copies of filings made in the proceeding with the Commission and must mail a copy to the applicant and to every other party. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commentors will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commentors will not be required to serve copies of filed documents on all other parties. However, the non-party commentors will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified date(s). Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
EIS No. 20190274, Revised Draft, BIA, OK, Osage County Oil and Gas Draft Environmental Impact Statement,
January 15, 2020; 10:00 a.m.
800 N Capitol Street NW, First Floor Hearing Room, Washington, DC.
Parts of this meeting will be open to the public and will be streamed live at
Rachel Dickon, Secretary, (202) 523-5725.
National Institute for Occupational Safety and Health (NIOSH), Centers for Disease Control and Prevention, (CDC), Department of Health and Human Services (HHS).
Request for pilot study participants.
The National Institute for Occupational Safety and Health (NIOSH), within the Centers for Disease Control and Prevention (CDC), is initiating a research study to evaluate workplace hazards to landscapers, groundskeepers, hardscapers and arborists and to develop appropriate controls to minimize or eliminate those hazards. NIOSH is seeking up to nine firms in the landscaping and grounds management fields to participate in the pilot study that will evaluate how outdoor power tools can create hazards that may result in occupational health impacts. NIOSH will use this information to design effective solutions, such as engineering controls for power tools. The findings and controls information will be shared with participating workers and companies.
Submit letters of interest to participate in this research program prior to October 16, 2020.
Interested employers and/or workers should submit a letter of interest with information about their work activities and location to: NIOSH, Division of Field Studies and Engineering, Attn: Barbara Alexander, 1090 Tusculum Ave., MS R-5, Cincinnati, Ohio 45226, Email address:
Barbara Alexander, 1090 Tusculum Ave., MS R-5, Cincinnati, Ohio 45226, Phone: 513-841-4581, Email address:
The landscaping industry is composed primarily of small companies and is one of the most hazardous industries in the services sector with a fatality rate of 16.9 per 100,000 workers, compared to 3.5 per 100,000 workers for all industries in 2017.
The study will consist of two parts. In the first part of the study, NIOSH will conduct site visits at work locations in accordance with the requirements of NIOSH regulations in 42 CFR part 85a. NIOSH investigators will collect data through small sampling devices that workers will wear while conducting normal working activities. This information will establish a baseline for exposures to potential hazards from the use of outdoor power equipment. In the second part of the study, NIOSH will test worker exposures while using tools which are designed to reduce exposures to noise, CO, dust, and silica. The reduced-exposure tools will be provided by NIOSH through the employer, and training in their correct use will be provided. The study is a unique opportunity to try new equipment on the market with low-emission and low-noise properties.
This pilot project will add to our understanding of hazards in this industry and will promote the implementation of effective controls. Participants selected for the study will receive a site visit report for their particular site, workers, and processes, as well as a consolidated report of overall findings and recommendations. A research report from this study will be prepared and made publicly available at the end of the research. Company and participant names will not be included in the report.
Notice is hereby given of a change in the meeting of the Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP)—RFA-IP20-003, Network of Modeling Centers to Improve Evidence Base for Seasonal and Pandemic Influenza Prevention and Control; February 25-26, 2020, 10:00 a.m.-5:00 p.m., (EDT).
Teleconference, Centers for Disease Control and Prevention, Room 1080, 8 Corporate Square Boulevard, Atlanta, GA 30329-4027 which was published in the
The meeting is being amended to change the meeting date to February 25, 2020. The meeting is closed to the public.
Gregory Anderson, M.S., M.P.H., Scientific Review Officer, CDC, 1600 Clifton Road NE, Mailstop US8-1, Atlanta, Georgia 30329-4027; (404) 718-8833;
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended, and the Determination of the Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, CDC, pursuant to Public Law 92-463. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice of meeting.
In accordance with the Federal Advisory Committee Act, the Centers for Disease Control and Prevention (CDC), announces the following meeting of the Advisory Committee on Immunization Practices (ACIP). This meeting is open to the public, limited only by room seating. The meeting room accommodates 216 for public seating. Room 245, adjacent to the meeting room, will be available once the meeting room reaches capacity, providing up to 18 additional seats. Time will be available for public comment. The meeting will be webcast live via the World Wide Web; for meeting registration and more information on ACIP please visit the ACIP website:
The meeting will be held on February 26, 2020, 8:00 a.m. to 5:00 p.m., EST, and February 27, 2020, 8:00 a.m. to 2:30 p.m. EST.
Written comments must be received on or before February 28, 2020.
You may submit comments, identified by Docket No. CDC-2020-0002 by any of the following methods:
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Stephanie Thomas, ACIP Committee Management Specialist, Centers for Disease Control and Prevention, National Center for Immunization and Respiratory Diseases, 1600 Clifton Road NE, Atlanta, GA 30329-4027; Telephone: 404-639-8367; Email:
Interested persons or organizations are invited to participate by submitting written views, recommendations, and data. Please note that comments received, including attachments and other supporting materials, are part of the public record and are subject to public disclosure. Comments will be posted on
If the number of persons requesting to speak is greater than can be reasonably accommodated during the scheduled time, CDC will conduct a lottery to determine the speakers for each scheduled public comment session. CDC staff will notify individuals regarding their request to speak by email by February 13, 2020. To accommodate the significant interest in participation in the oral public comment session of ACIP meetings, each speaker will be limited to 3 minutes, and each speaker may only speak once per meeting.
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended, and the Determination of the Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, CDC, pursuant to Public Law 92-463. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Food and Drug Administration, HHS.
Notice of public meeting; request for comments.
The Food and Drug Administration (FDA or we) is announcing a public meeting entitled “Testing Methods for Asbestos in Talc and Cosmetic Products Containing Talc.” The purpose of the public meeting is to discuss and obtain scientific information on topics related to testing methodologies, terminology, and criteria that can be applied to characterize and measure asbestos and other potentially harmful elongate mineral particles (EMPs) that may be present as contaminants in talc and cosmetic products manufactured using talc as an ingredient.
The public meeting will be held on February 4, 2020, from 8:30 a.m. to 5 p.m. Eastern Time, or until after the last public commenter has spoken, whichever occurs first. Submit requests to make oral presentations and comments at the public meeting by January 17, 2020. Electronic or written comments on this meeting will be accepted until March 4, 2020. See the
The public meeting will be held at the Food and Drug Administration, White Oak Campus, 10903 New Hampshire Ave., Building 31 Conference Center, The Great Room (Rm. 1503), Silver Spring, MD 20993. Entrance for the public meeting participants (non-FDA employees) is through Building 1, where routine security check procedures will be performed. For parking and security information, please refer to
FDA is establishing a docket for public comment on this meeting. The docket number is FDA-2020-N-0025. The docket will close on March 4, 2020. Submit either electronic or written comments on or before March 4, 2020. The electronic filing system will accept comments until 11:59 p.m. Eastern Time at the end of March 4, 2020. Comments received by mail/hand delivery/courier (for written/paper submissions) will be considered timely if they are postmarked or the delivery service acceptance receipt is on or before that date. Please note that late, untimely filed comments will not be considered.
Submit electronic comments in the following way:
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• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed below (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
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• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” We will review this copy, including the claimed confidential information, in our consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Denise Hodge, Food and Drug Administration, Center for Food Safety and Applied Nutrition, 5001 Campus Dr. (HFS-125), College Park, MD 20740,
Talc is used in a wide variety of consumer products, including cosmetics. Talc is mined as a naturally occurring hydrous magnesium silicate and may be contaminated with asbestos fibers due to the proximity of asbestos to talc deposits. Asbestos is a known human carcinogen, and its health risks are well documented. Inhalation of asbestos is a safety concern because it can cause the formation of scar-like tissue in the lung, resulting in asbestosis, or it may lead to the development of lung cancers and malignant mesothelioma.
In 1976, the cosmetics industry implemented voluntary asbestos testing of talc raw materials using the Cosmetic, Toiletry, and Fragrance Association (CTFA) J4-1 (Ref. 1) method in response to test results indicating asbestos to be present. Talc suppliers to the pharmaceutical industry use a similar method to certify that talc meets the United States Pharmacopeia's (USP's) requirement for “Absence of Asbestos” (Ref. 2). To date, both methods, which rely on the use of x ray diffraction (XRD) or infrared (IR) spectroscopy followed by polarized light microscopy (PLM) only if XRD or IR is positive for amphibole or serpentine minerals in talc, remain standard test methods despite long-recognized shortcomings in specificity and sensitivity compared with electron microscopy-based methods. In 2010, FDA asked the USP to consider revising the current tests for asbestos in talc to ensure adequate specificity, and, in 2014, the Talc USP expert panel recommended an update of the Talc USP monograph to require an electron microscopy method for the measurement of asbestos in talc (Refs. 3 and 4). Recent testing of cosmetics by private laboratories
FDA monitors for asbestos in talc-containing cosmetic products, including directing its sampling of products toward confirming reports from various laboratories that have reported asbestos using electron microscopy. For example, in 2010, shortly after reports of asbestos contaminated talc-containing products in Asia, FDA surveyed 34 cosmetic products,
Even when using the most sensitive electron microscopy methods, laboratories testing the same product may reach different conclusions about the presence of asbestos. These differences may be attributed to a lack of a uniform standard for testing which provides unambiguous guidelines for identifying and counting asbestos fibers. Thus, at FDA's request, on November 28, 2018, the Joint Institute for Food Safety and Applied Nutrition (JIFSAN) convened an “Asbestos in Talc” symposium to provide a forum for experts in asbestos mineral analysis, academicians, and government officials to share knowledge and experience.
During the fall of 2018, FDA formed an interagency working group on asbestos in consumer products (IWGACP). The IWGACP consists of 38 subject matter experts from the following U.S. federal agencies: FDA, National Institute for Occupational Safety and Health (NIOSH), National Institutes of Health/National Institute of Environmental Health Sciences, Occupational Safety and Health Administration, Environmental Protection Agency, Consumer Product Safety Commission, National Institute of Standards and Technology, and Department of Interior's U.S. Geological Survey. The IWGACP was asked to support the development of standardized testing methods for asbestos and other mineral particles of concern that could potentially affect consumer product safety. The IWGACP was tasked to address terminology and definitions of asbestos and other EMPs of health concern in talc and talc-containing consumer products, recommend methodological improvements for measuring asbestos in talc and talc-containing consumer products, and recommend laboratory reporting standards for testing talc and talc-containing consumer products. The IWGACP is also addressing issues regarding asbestos contamination in talc-containing cosmetic products, the presumptive source of asbestos, as well as scientific and technical information shared at the JIFSAN Symposium and how that information could be used by different government agencies. The IWGACP is comprised of three subgroups formed to address the following topics: (1) Terminology and definitions of asbestos and other EMPs of health concern in talc; (2) development of a robust analytical protocol for detecting asbestos and other EMPs of health concern in talc and consumer products containing talc; and (3) data reporting and analysis.
FDA is interested in obtaining information to further the development of standardized testing methods to improve sensitivity, consistency, and inter-laboratory concurrence of asbestos testing of talc used in cosmetic products and of talc-containing cosmetic products. Toward this end, at the public meeting, IWGACP members will present preliminary recommendations (summarized in section IV.C) on testing methods, including criteria to be used for asbestos fiber identification and counting. We will also seek additional information on these topics at the meeting. We do not intend for this meeting to produce any decisions or new positions on specific regulatory questions. However, we expect this meeting to be an important step in our continued efforts to gather information, including data to improve the consistency in terminology, analytical protocols, and data reporting for
We encourage public comments and presentations at the public meeting. In submitting information to the docket, please provide available references for the information.
As previously discussed, laboratories may reach different conclusions as to whether asbestos and other potentially harmful EMPs are present when testing consumer products. We are seeking scientific information on the following topics related to testing methodologies and criteria that can be applied to characterize and measure asbestos and other potentially harmful EMPs present as contaminants in talc and cosmetic products manufactured using talc as an ingredient. We invite comments on the following:
1. The sensitivity of PLM as a test method, including whether the test method can lead to a false negative result for asbestos particles.
2. The sensitivity of TEM as a test method, including the ability of the test method to identify asbestos particles in comparison to PLM.
3. Criteria for identification of the specified asbestos minerals, noting that different minerals with the same chemical composition can exist in samples.
The IWGACP identified the following as areas for directing efforts to promote reliability of the analytical methods for asbestos and other EMPs of health concern in talc and talc-containing consumer products. We invite such information to be presented during the public comment section of the meeting:
1. Validation of analytical methods (XRD, PLM, TEM) specific to talc and cosmetic products containing talc that minimize false positive and false negative results.
2. Research and validation of methods of sampling that maximize sample representativeness and minimize error and false positives and false negatives.
3. Research on methods for sample preparation, in particular treatment (
4. Development of talc-specific reference standards with known concentrations of specific EMPs that can be used to assess laboratory and analyst proficiency, increase inter-laboratory concurrence in method validation, minimize reporting errors, and potentially provide for improved reliability of quantitative analysis.
We invite comments related to the following preliminary recommendations from the IWGACP:
1. Adoption of the term EMP as
2. Testing laboratories should report all EMPs having length ≥0.5 micrometers (500 nanometers (nm)).
3. Test methods should specify reportable EMPs identified as amphibole or chrysotile particles as covered minerals.
4. Test methods should include the counting and reporting of covered EMPs as a function of sample mass. In counting, guidelines such as ISO 10312, “Ambient air—Determination of asbestos fibres—Direct transfer transmission electronic microscopy method” (Ref. 6), classify primary and secondary structures. Individual fibers in secondary structures can be counted recording the dimensions of each fiber.
5. Use of TEM at nominally 20,000 × magnification, in addition to PLM, to resolve the issues of sensitivity that cause reporting of false negatives for covered EMPs. Use of TEM with energy dispersive x ray spectroscopy and selected area electron diffraction analyses may reliably detect and identify chrysotile and asbestiform and non-asbestiform amphibole minerals, including EMPs whose narrowest width is <200 nm. Scanning electron microscopy might be useful as a complementary method, but has significant shortcomings for identification of chrysotile and visualization of the narrowest particles in the population that can only be overcome by using TEM.
6. “Mass percent”, a unit that is frequently used to express content of asbestos in commercial bulk materials, is not appropriate for measurement of EMPs in talc and consumer products containing talc because mass percent does not correlate with the number of fibers, and one large fiber could dominate the mass percent value.
The following references marked with an asterisk (*) are on display at the Dockets Management Staff (see
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of a meeting of the National Arthritis and Musculoskeletal and Skin Diseases Advisory Council.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Notice is hereby given of a change in the meeting of the National Diabetes and Digestive and Kidney Diseases Advisory Council, January 29, 2020, 8:30 a.m. to 4:30 p.m., National Institutes of Health, Building 31, C Wing 6th Floor, 31 Center Drive, Bethesda, MD 20892, which was published in the
The meeting notice is amended to change the meeting date and location from January 29, 2020, National Institutes of Health, Building 31, C Wing 6th Floor, 31 Center Drive, Bethesda, MD 20892, to January 30, 2020, National Institutes of Health, Natcher Building, Conference Rooms E1 & E2, 45 Center Drive, Bethesda, MD 20892. The meeting is partially Closed to the public.
Fish and Wildlife Service, Interior.
Notice of teleconference meeting.
We, the U.S. Fish and Wildlife Service, announce a teleconference meeting of the Sport Fishing and Boating Partnership Council (Council), in accordance with the Federal Advisory Committee Act. The Council's purpose is to advise the Secretary of the Interior, through the Director of the U.S. Fish and Wildlife Service, on aquatic conservation endeavors that benefit recreational resources and recreational boating and that encourage partnerships among industry, the public, and the government. The teleconference meeting is open to the public.
Linda Friar, Designated Federal Officer, by email at
We, the U.S. Fish and Wildlife Service (Service), announce a teleconference meeting of the Sport Fishing and Boating Partnership Council (Council), in accordance with the Federal Advisory Committee Act (5 U.S.C. Appendix). Established in 1993, the Council advises the Secretary of the Interior, through the Director of the U.S. Fish and Wildlife Service, on aquatic conservation endeavors that benefit recreational resources and recreational boating and that encourage partnerships among industry, the public, and the government.
The final agenda and other related meeting information will be posted on the Council's website at
Interested members of the public may submit relevant information for the Council to consider during the teleconference. Written statements must be received by the Council Designated Federal Officer no later than the date in Public Input so that the information may be made available to the Council for their consideration prior to the teleconference. Written statements must be supplied to the Council Designated Federal Officer via mail (for signed hard copies) or email (acceptable file formats are Adobe Acrobat PDF, MS Word, MS PowerPoint, or rich text file) (see
Depending on the number of people who want to comment, the amount of
The Service is committed to providing access to this teleconference to all participants. Please direct all requests for accommodations to the Council Designated Federal Officer (see
Before including an address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. You can ask us to withhold your personal identifying information from public review, but we cannot guarantee that we will be able to do so.
Federal Advisory Committee Act (5 U.S.C. Appendix).
Bureau of Land Management, Interior.
Notice of call for nominations.
The purpose of this notice is to request public nominations for 27 of the Bureau of Land Management's (BLM) statewide and regional Resource Advisory Councils (RAC) located in the West that have vacant positions and/or members whose terms are scheduled to expire. These RACs provide advice and recommendations to the BLM on land use planning and management of the National System of Public Lands within their geographic areas.
All nominations must be received no later than February 24, 2020.
Nominations and completed applications should be sent to the appropriate BLM offices listed in the
Carrie Richardson, BLM Communications, 1849 C Street NW, Room 5614, Washington, DC 20240, telephone: 202-501-2634, email:
The Federal Land Policy and Management Act (FLPMA) directs the Secretary of the Interior to involve the public in planning and issues related to management of lands administered by the BLM. Section 309 of FLPMA (43 U.S.C. 1739) directs the Secretary to establish 10- to 15-member citizen-based advisory councils that are consistent with the Federal Advisory Committee Act (FACA). As required by FACA, RAC membership must be balanced and representative of the various interests concerned with the management of the public lands. The rules governing RACs are found at 43 CFR subpart 1784. The RACs include the following three membership categories:
Individuals may nominate themselves or others. Nominees must be residents of the State in which the RAC has jurisdiction. The BLM will evaluate nominees based on their education, training, experience, and knowledge of the geographic area of the RAC. Nominees should demonstrate a commitment to collaborative resource decision-making.
The following must accompany all nominations:
Simultaneous with this notice, BLM State Offices will issue press releases providing additional information for submitting nominations.
Before including any address, phone number, email address, or other personal identifying information in the application, nominees should be aware this information may be made publicly available at any time. While the nominee can ask to withhold the personal identifying information from public review, the BLM cannot guarantee that it will be able to do so.
Nominations and completed applications for RACs should be sent to the appropriate BLM offices listed below:
Lesli J. Ellis-Wouters, BLM Alaska State Office, 222 West 7th Street, #13, Anchorage, AK 99513; Phone: 907-271-4418.
Amber Cargile, BLM Arizona State Office, One North Central Avenue, Suite
Serena Baker, BLM Mother Lode Field Office, 5152 Hillsdale Circle, El Dorado Hills, CA 95762; Phone: 916-941-3146.
Sarah Webster, BLM California State Office, 2800 Cottage Way, Suite W1623, Sacramento, CA 95825; Phone: 916-978-4622
Jeff Fontana, BLM Eagle Lake Field Office, 2550 Riverside Drive, Susanville, CA 96130; Phone: 530-252-5332.
Brant Porter, BLM Rocky Mountain District Office, 3028 East Main Street, Cañon City, CO 81212; Phone 719-269-8553.
David Boyd, BLM Northwest District Office, 2300 River Frontage Road, Silt, CO 81652; Phone: 970-876-9008.
Gloria Tibbetts, BLM Southwest District Office, 2465 South Townsend Avenue, Montrose, CO 81401; Phone 970-240-5430.
Michael Williamson, BLM Boise District Office, 3948 Development Avenue, Boise, ID 83705; Phone: 208-384-3393.
Suzanne Endsley, BLM Coeur d'Alene District Office, 3815 Schreiber Way, Coeur d'Alene, ID 83815; Phone: 208-769-5004.
Sarah Wheeler, BLM Idaho Falls District Office, 1405 Hollipark Drive, Idaho Falls, ID 83401; Phone: 208-524-7550.
Heather Tiel-Nelson, BLM Twin Falls District Office, 2878 Addison Avenue East, Twin Falls, ID 83301; Phone: 208-736-2352.
Ann Boucher, BLM Montana/Dakotas State Office, 5001 Southgate Drive, Billings, MT 59101; Phone: 406-896-5255.
Mark Jacobsen, BLM Eastern Montana/Dakotas District Office, 111 Garryowen Road, Miles City, MT 59301; Phone: 406-233-2831.
Mark Jacobsen, BLM Eastern Montana/Dakotas District Office, 111 Garryowen Road, Miles City, MT 59301; Phone: 406-233-2831.
David Abrams, BLM Western Montana District Office, 106 North Parkmont, Butte, MT 59701; Phone: 406-533-7617.
Deborah Stevens, BLM Las Cruces District Office, 1800 Marquess Street, Las Cruces, NM 88005; Phone: 575-525-4421.
Glen Garnand, BLM Pecos District Office, 2909 West Second Street, Roswell, NM 88201; Phone: 575-627-0209.
Kirsten Cannon, Southern Nevada District Office, 4701 North Torrey Pines Drive, Las Vegas, NV 89130; Phone: 702-515-5057.
Kyle Hendrix, Battle Mountain District Office, 50 Bastian Road, Battle Mountain, NV 89820; Phone: 775-635-4054.
Lisa Ross, Carson City District Office, 5665 Morgan Mill Road, Carson City, NV 89701; Phone 775-885-6107.
Jeff Clark, BLM Spokane District Office, 1103 North Fancher Road, Spokane, WA 99212; Phone: 509-536-1297.
Lisa Clark, BLM Prineville District Office, 3050 NE 3rd Street, Prineville, OR 97754; Phone: 541-416-6864.
Jennifer Velez, BLM Northwest Oregon District Office, 1717 Fabry Road SE, Salem, OR 97306; Phone: 541-222-9241.
Larisa Bogardus, BLM Vale District Office, 3100 H Street, Baker City, OR 97814; Phone 541-523-1407.
Christina Breslin, BLM Medford District Office, 3040 Biddle Road, Medford, OR 97504; Phone: 541-618-2371.
Emmet Pruss, BLM Wyoming State Office, 5353 Yellowstone Road, P.O. Box 1828, Cheyenne, WY 82009; Phone: 307-775-6266.
Bureau of Land Management, Interior.
Notice of call for nominations.
The purpose of this notice is to request public nominations for three Bureau of Land Management (BLM) citizens' advisory councils affiliated with specific sites on the BLM's National Conservation Lands. The three advisory councils provide advice and recommendations to the BLM on the development and implementation of management plans in accordance with the statutes under which the sites were established.
All nominations must be received no later than February 24, 2020.
Nominations and completed applications should be sent to the appropriate BLM offices listed in the
Carrie Richardson, BLM Office of Communications, 1849 C Street NW, Room 5614, Washington, DC 20240; Phone: 202-501-2634, email:
The Federal Land Policy and Management Act (FLPMA) directs the Secretary of the Interior to involve the public in planning and issues related to management of lands administered by the BLM. Section 309 of FLPMA (43 U.S.C. 1739) directs the Secretary to establish 10- to 15-member citizen-based advisory councils that are consistent with the Federal Advisory Committee Act. The rules governing advisory councils are found at 43 CFR subpart 1784.
Individuals may nominate themselves or others for appointment by the Secretary. Nominees must be residents of the State in which the advisory council has jurisdiction. The BLM will evaluate nominees based on their education, training, experience, and knowledge of the geographic area of the advisory council. Nominees should demonstrate a commitment to collaborative resource decision-making.
Simultaneous with this notice, BLM State Offices will issue press releases providing additional information for submitting nominations.
Before including any address, phone number, email address, or other personal identifying information in the application, nominees should be aware this information may be made publicly available at any time. While the nominee can ask to withhold the personal identifying information from public review, the BLM cannot guarantee that it will be able to do so.
Tara Thissell, BLM Burns District Office, 28910 Hwy. 20 West, Hines, OR 97738; Phone: 541-573-4519.
Kurt Pindel, BLM San Juan Islands National Monument, P.O. Box 3, 37 Washburn Avenue, Lopez Island, WA 98261; Phone: 509-536-1200.
Harry Barber, BLM Grand Staircase-Escalante National Monument, 669 South Highway 89A, Kanab, UT 84741; Phone: 435-644-1271.
Nominees should note the interest area(s) they are applying to represent on their application. All applications must be accompanied by letters of reference that describe the nominee's experience and qualifications to serve on the Grand Staircase-Escalante MAC from any represented interests or organizations, a completed MAC application, and any other information that speaks to the nominee's qualifications. The MAC consists of members that represent archaeology, paleontology, geology, botany, wildlife biology, history, social science, systems ecology, Garfield and Kane Counties, tribal government, education, environment, commercial recreation, and grazing.
National Park Service, Interior.
Meeting notice.
The National Park Service (NPS) is hereby giving notice that the Aniakchak National Monument Subsistence Resource Commission, Denali National Park Subsistence Resource Commission (SRC), the Cape Krusenstern National Monument SRC, the Lake Clark National Park SRC, the Kobuk Valley National Park SRC, the Wrangell-St. Elias National Park SRC, and the Gates of the Arctic National Park SRC will meet as indicated below.
The Aniakchak National Monument SRC will meet from 1:00 p.m. to 4:30 p.m. or until business is completed on Thursday, March 12, 2020. Should inclement weather prevent travel throughout the week, the meeting will be held by teleconference on Friday, March 13, 2020. Teleconference participants must call the King Salmon, AK at (907) 246-2154 or (907) 246-3305, by Monday, March 9, 2020, prior to the meeting to receive teleconference passcode information. For more detailed information regarding this meeting, or if you are interested in applying for SRC membership, contact Mark Sturm, Designated Federal Official and Superintendent, at (907) 246-2120, or email at
The Denali National Park SRC will meet from 10:00 a.m. to 5:00 p.m. or until business is completed on Wednesday, March 25, 2020. Teleconference participants must call the NPS office at (907) 644-3604 prior
The Cape Krusenstern National Monument SRC will meet from 1:00 p.m. to 5:00 p.m. or until business is completed on Tuesday, February 4, 2020, and from 9:00 a.m. to 12:00 p.m. on Wednesday, February 5, 2020. The alternate meeting dates are Tuesday, February 11, 2020, from 1:00 p.m. to 5:00 p.m., and Wednesday, February 12, 2020, from 9:00 a.m. to 12:00 p.m. at the same location. Teleconference participants must call the NPS office at (907) 442-8342 prior to the meeting to receive teleconference passcode information. For more detailed information regarding this meeting or if you are interested in applying for SRC membership, contact Designated Federal Official Maija Lukin, Superintendent, at (907) 442-8301, or via email at
The Lake Clark National Park SRC will meet from 1:00 p.m. to 4:00 p.m. or until business is completed on Wednesday, April 22, 2020. The alternate meeting date is Wednesday, April 29, 2020, at the same time and location. Teleconference participants must call the NPS office at (907) 644-3627 prior to the meeting to receive teleconference passcode information. For more detailed information regarding this meeting or if you are interested in applying for SRC membership, contact Designated Federal Official Susanne Green, Superintendent, at (907) 644-3627, or via email at
The Kobuk Valley National Park SRC will meet from 1:00 p.m. to 5:00 p.m. or until business is completed on Thursday, February 6, 2020, and from 9:00 a.m. to 12:00 p.m. on Friday, February 7, 2020. The alternate meeting dates are Thursday, February 13, 2020, from 1:00 p.m. to 5:00 p.m., and Friday, February 14, 2020, from 9:00 a.m. to 12:00 p.m. at the same location. Teleconference participants must call the NPS office at (907) 442-8342 prior to the meeting to receive teleconference passcode information. For more detailed information regarding this meeting or if you are interested in applying for SRC membership, contact Designated Federal Official Maija Lukin, Superintendent, at (907) 442-8301, or via email at
The Wrangell-St. Elias National Park SRC will meet from 9:00 a.m. to 5:00 p.m. on Thursday, February 13, 2020, and from 9:00 a.m. to 5:00 p.m. or until business is completed on Friday, February 14, 2020. If business is completed on February 13, 2020, the meeting will adjourn, and no meeting will take place on February 14, 2020. The alternate meeting dates are Tuesday, February 25, 2020, from 9:00 a.m. to 5:00 p.m., and Wednesday, February 26, 2020, from 9:00 a.m. to 5:00 p.m. or until business is completed at the same location. Teleconference access to the meeting may be requested by calling the NPS office at (907) 822-7236 no later than Wednesday, February 12, 2020. For more detailed information regarding these meetings, or if you are interested in applying for SRC membership, contact Designated Federal Official Ben Bobowski, Superintendent, (907) 822-5234, or via email at
The Gates of the Arctic National Park SRC will meet from 8:30 a.m. to 5:00 p.m. or until business is complete on both Wednesday, April 8, 2020, and Thursday, April 9, 2020. The alternate meeting dates are Wednesday, April 15, 2020, from 9:00 a.m. to 5:00 p.m., and Thursday, April 16, 2020, from 9:00 a.m. to 5:00 p.m. or until business is completed at the same location. Teleconference participants must call the NPS office at (907) 455-0639 prior to the meeting to receive teleconference passcode information. For more detailed information regarding this meeting or if you are interested in applying for SRC membership, contact Designated Federal Official Greg Dudgeon, Superintendent, at (907) 457-5752, or via email at
The Aniakchak National Monument SRC will meet at Katmai National Park, 1000 Silver Street, Bldg. 603, King Salmon, Alaska 99613. The Denali National Park SRC will meet at the MTNT Limited Tribal Village Corporation Office, 123 Takotna Avenue, McGrath, AK 99627. The alternate meeting location for the Denali National Park SRC will be at Pike's Waterfront Lodge, 1850 Hoselton Drive, Fairbanks, AK 99709. The Cape Krusenstern National Monument SRC will meet in the conference room at the Northwest Arctic Heritage Center, 171 3rd Avenue, Kotzebue, AK 99752. The Lake Clark National Park SRC will meet at the Newhalen School, 900 School Road, Newhalen, AK 99606. The Kobuk Valley National Park SRC will meet in the conference room at the Northwest Arctic Heritage Center, 171 3rd Avenue, Kotzebue, AK 99752. The Wrangell-St. Elias National Park SRC will meet at the NPS office in the Copper Center Visitor Center Complex, Wrangell-St. Elias National Park and Preserve, Mile 106.8 Richardson Highway, Copper Center, AK 99573. The Gates of the Arctic National Park SRC will meet at the Shungnak School, 6 West River Road, Shungnak, AK 99773.
The NPS is holding meetings pursuant to the Federal Advisory Committee Act (5 U.S.C. Appendix 1-16). The NPS SRC program is authorized under title VIII, section 808 of the Alaska National Interest Lands Conservation Act (16 U.S.C. 3118).
SRC meetings are open to the public and will have time allocated for public testimony. The public is welcome to present written or oral comments to the SRC. SRC meetings will be recorded and meeting minutes will be available upon request from the Superintendent for public inspection approximately six weeks after the meeting.
SRC meeting location and date may change based on inclement weather or exceptional circumstances. If the meeting date and location are changed, the Superintendent will issue a press release and use local newspapers and radio stations to announce the rescheduled meeting.
5 U.S.C. Appendix 2.
United States International Trade Commission.
Notice of publication on the Commission's website of petitions for duty suspensions and reductions and related disclosure forms, and notice of request for comments on those petitions and disclosure forms.
As required by section 3(b)(3) of the American Manufacturing Competitiveness Act of 2016, the Commission has published on its website at
All Commission offices are located in the United States International Trade Commission Building, 500 E Street SW, Washington, DC. The public file for this proceeding may be viewed on the Commission's Miscellaneous Tariff Bill Petition System (MTBPS) at
For general inquiries, contact
The media should contact Peg O'Laughlin, Public Affairs Officer (202-205-1819 or
Section 3(b)(3)(A) of the Act requires that the Commission, no later than 30 days after the expiration of the period for filing petitions, that is, by January 10, 2020, publish on its website the petitions that contain the information required by the Act. Section 3(b)(3)(B) of the Act requires that the Commission, at the same time, publish a notice requesting members of the public to submit comments to the Commission on the petitions published. Such comments must be submitted to the Commission during the 45-day period beginning on the date of publication of the notice—in this case, by February 24, 2020.
The Act requires the Commission to submit preliminary and final reports to the House Committee on Ways and Means and the Senate Committee on Finance (Committees) on the petitions received. The Commission will submit those reports in June and August 2020, respectively. The reports are to include the Commission's analysis and determinations regarding the petitions, including whether there is domestic production of the article, whether the duty suspension or reduction can likely be administered by the U.S. Customs and Border Protection (CBP), whether the estimated loss in revenues due to the duty suspension or reduction does not exceed $500,000, and whether the duty suspension or reduction will be available to any person importing the article. The Commission is required to classify the petitions into categories based on whether (1) the petition meets the requirements for inclusion in a miscellaneous tariff bill as submitted or with specified technical changes, changes in product scope, or adjustment in the amount of duty reduction; (2) the petition does not meet the petitioning requirements or the petitioner is not a likely beneficiary; and (3) the Commission otherwise recommends not including the petition in the bill. The Committees and the Congress will make the final decision regarding the imported articles to be included in a bill.
The Act also requires the U.S. Department of Commerce (Commerce), with input from CBP and other Federal agencies, to submit a report to the Commission and to the Committees. This report is to include information related to domestic production and technical changes that are necessary for purposes of administration when articles are presented for importation.
Petitioning parties may also submit comments. However, the Commission will not consider any comments that seek to amend a petition that the submitter previously filed.
Persons filing comments should be prepared to complete their entire comment when they enter the portal because the portal will not allow them to edit, amend, or complete the comment at a later time. Accordingly, a person filing a comment should have all required information in hand when they enter the portal to begin the formal filing process. A list of all the information required to complete a comment may be found in the Commission's Before You File a Comment guide, which is located on the the Commission's MTB information page at
Confidential business information submitted to the Commission in comments may be disclosed to or used by (1) the Commission in calculating the estimated revenue loss required under the Act, which may be based in whole or in part on the estimated values of imports submitted in comments, as well as by petitioners in their petitions; or (2) the Commission, its employees, and contract personnel (a) in processing petitions and comments and preparing reports under the Act or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission, including under 5 U.S.C. Appendix 3; or (3) Commerce, for use in preparing its report to the Commission and the Committees, and the U.S. Department of Agriculture and CBP, for use in providing information for that report; or (4) U.S. government employees and contract personnel, solely for cybersecurity purposes, subject to the requirement that all contract personnel will sign appropriate nondisclosure agreements.
By order of the Commission.
Advisory Committee on the Federal Rules of Appellate, Bankruptcy, and Civil Procedure, Judicial Conference of the United States.
Notice of cancellation of public hearing.
The following public hearing on proposed amendments to the Federal Rules of Appellate, Bankruptcy, and Civil Procedure has been canceled: Appellate, Bankruptcy, and Civil Rules Hearing on January 27, 2020, in Phoenix, AZ.
Rebecca A. Womeldorf, Rules Committee Secretary, Rules Committee Staff, Administrative Office of the United States Courts, Washington, DC 20544, telephone (202) 502-1820.
Announcements for this hearing were previously published in 84 FR 42951.
Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in
Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division's website at
Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division's website, filed with the Court, and, under certain circumstances, published in the
The United States of America, acting under the direction of the Attorney General of the United States, brings this civil antitrust action to obtain equitable relief against Defendant National Association for College Admission Counseling. The United States alleges as follows.
1. This action challenges under Section 1 of the Sherman Act, 15 U.S.C. 1, a number of rules that restrained competition between colleges and universities (“colleges”) for the recruitment of first-year and transfer students.
2. Defendant National Association for College Admission Counseling (“NACAC”) is the leading national trade association for college admissions. Defendant's members are divided roughly into two groups: Non-profit colleges and their admissions personnel, and high schools and their guidance counselors. NACAC's college members compete vigorously with each other for college students, both incoming freshmen and transfer students. These colleges compete in a variety of college services, including tuition cost, majors offered, ease and cost of application, campus amenities, quality of education, reputation of the institution, and prospects for employment following graduation.
3. One condition of membership in NACAC is adherence to NACAC's Code of Ethics and Professional Practices (“CEPP” or “Ethics Rules”), which sets forth mandatory rules for how member organizations engage in college admissions. These rules are drafted, voted on, and enforced by NACAC members.
4. As part of its CEPP, NACAC includes certain rules regarding the recruitment of students by colleges. Prior to September 2019, among these rules were ones that prevented, or severely limited, colleges from (1) directly recruiting transfer students from another college, (2) offering incentives of any kind to college applicants who applied via a process known as Early Decision, and (3) recruiting incoming college freshmen after May 1 (together, “Recruiting Rules”).
5. The Recruiting Rules were not reasonably necessary to any separate, legitimate procompetitive collaboration between NACAC members. As part of its CEPP, NACAC establishes many rules and regulations for its members' conduct throughout the college admissions process, including, among others, when applications may open and close, the definitions of Early Decision and Early Access, and the use of paid agents in recruiting students. Many of these rules appear to strengthen the market for college admissions. The Recruiting Rules, however, were not reasonably necessary to achieve the otherwise market-enhancing rules contained in the CEPP, and furthermore had the effect of unlawfully restraining competition among NACAC's college members, resulting in harm to college applicants and potential transfer students.
6. By establishing and enforcing the Recruiting Rules, NACAC substantially reduced competition among colleges for college applicants and potential transfer students and deprived these consumers of the benefits that result from colleges vigorously competing for students. These Recruiting Rules, which were horizontal agreements among the schools participating in NACAC, denied American college applicants and potential transfer students access to competitive financial aid packages and benefits and restricted their opportunities to move between colleges.
7. In September 2019, NACAC members voted to remove the Recruiting Rules from the CEPP. Removal of the Recruiting Rules became effective as of the time of the vote.
8. NACAC's Recruiting Rules were unlawful restraints of trade that violated Section 1 of the Sherman Act, 15 U.S.C. 1. The United States seeks an order prohibiting such agreements and other relief.
9. Defendant NACAC is located in, and represents members that do business in, the United States. The rules at issue affected primarily the provision of college services in the United States. The colleges that provide these college services charge significant prices to students, many of whom legally reside outside the state. The sale of college services, and the NACAC rules that affect the sale, are therefore in the flow
10. Defendants have consented to venue and personal jurisdiction in this district. Venue is proper in this district under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391.
11. Defendant NACAC is a trade association comprised of college admissions personnel and high school guidance counselors and their respective institutions. Although NACAC does have members around the world, its principal focus is on college admissions in the United States. NACAC currently has in excess of 15,000 members, representing several thousand colleges and high schools. In addition to maintaining and enforcing the CEPP, NACAC provides educational training to members, engages in lobbying and other public outreach, and holds dozens of popular college fairs that allow colleges to meet and recruit prospective students.
12. NACAC is the largest trade association focused on college admissions in the United States.
13. There is significant competition among colleges for college students, especially incoming freshmen. Colleges compete on a number of different dimensions of college services, including tuition cost, majors offered, ease and cost of application, campus amenities, quality of education, reputation of the institution, and prospects for employment following graduation. The focal point for that competition is the college admissions process.
14. Colleges employ a number of competitive tactics to encourage students to apply for admission to, and ultimately attend, their institutions. Colleges typically heavily advertise to prospective applicants, including by sending physical and electronic mailings, by participating in college fairs, and by direct solicitation on high school campuses. Competition, however, does not end there. If a prospective student is accepted by more than one college, there is typically a competitive negotiation between the student and each college over the financial aid package offered to the student. Additionally, if a college has not met its enrollment goals by the summer before school begins, it often will reach back out to prospective students to make a competitive pitch to entice the student to commit to enrolling at the college in the fall. Finally, even after classes begin, many colleges advertise college transfer programs that allow students to move from one college to another between semesters.
15. In competitive circumstances, colleges would compete vigorously for students to purchase their college services. This competition benefits students because it lowers the cost of attendance and increases the incentive that the colleges have to provide high quality or innovative services. Competition also improves an applicant's ability to negotiate for a better financial aid package with the college. Defendant's Recruiting Rules, however, blunted several avenues of competition for students and disrupted the normal competitive mechanisms that would otherwise apply.
16. For decades, NACAC has had a set of rules governing the college admissions process for its members. Historically, some of the rules were mandatory for all members, and others were voluntary “best practices.” In 2017, NACAC members voted to reformulate the mandatory rules into the 2017 CEPP. The CEPP rules are mandatory for all NACAC members, which includes most non-profit colleges and universities in the United States, and also for any non-member institutions that participate in NACAC's college fairs. Accordingly, agreeing to NACAC membership, or agreeing to participate in a NACAC college fair, is equivalent to agreeing with other members or college fair participants to execute on the restrictions in the CEPP. The 2017 CEPP governs many aspects of the college admissions process for its members, including, most relevant to this action, the recruitment of students.
17. The 2017 CEPP included several rules that unreasonably restricted some of the ways in which colleges recruited incoming freshmen and transfer students. The three Recruiting Rules at issue in this case are (1) the Transfer Student Recruiting Rule, (2) the Early Decision Incentives Rule, and (3) the First-Year Undergraduate Recruiting Rule. While the CEPP certainly included rules and regulations that were aimed at, and actually do, increase competitiveness between schools and ease the burden of students applying to college, these Recruiting Rules were not reasonably necessary to those procompetitive rules or any other separate, legitimate business transaction or collaboration between NACAC's members. Prior to the 2017 CEPP, virtually identical rules were voted on and included in earlier NACAC rules and have been in place for years.
18. The Transfer Student Recruiting Rule was codified at paragraph II.D.5 of the 2017 CEPP and instructed that, “[c]olleges must not solicit transfer applications from a previous year's applicant or prospect pool unless the students have themselves initiated a transfer inquiry or the college has verified prior to contacting the students that they are either enrolled at a college that allows transfer recruitment from other colleges or are not currently enrolled in a college.”
19. The Transfer Student Recruiting Rule acted as a ban on affirmatively recruiting transfer students, unduly restraining competition for transfer students amongst colleges.
20. Without this opportunity for colleges to compete, potential transfer students may be unaware of transfer opportunities that may provide them lower priced or higher quality college services.
21. Absent the Transfer Student Recruiting Rule, colleges can engage in significantly more recruitment of transfer students through direct solicitation or otherwise. Furthermore, colleges will likely seek to provide better experiences to their existing student base in order to retain them in the face of increased competition for transfers.
22. The Early Decision Incentives Rule was codified at paragraph II.A.3.a.vi of the 2017 CEPP and provided that “[c]olleges must not offer incentives exclusive to students applying or admitted under an Early Decision application plan. Examples of incentives include the promise of special housing, enhanced financial aid packages, and special scholarships for Early Decision admits.”
23. NACAC defined Early Decision in the 2017 CEPP as an application plan where “[s]tudents commit to a first-choice college and, if admitted, agree to enroll and withdraw their other college applications.” The Early Decision application plan is akin to an exclusive contract in any other industry. In this case, the student foregoes the opportunity to consider the competitive offers of other institutions in exchange for an early decision on acceptance. Colleges thus stand as direct competitors for Early Decision
24. The Early Decision Incentives Rule explicitly limited the scope of competition for Early Decision students by removing the ability of colleges to incent students financially or otherwise. At base, the only form of payment an institution may provide in exchange for the exclusive contract with an applicant is the early decision itself. The rule prohibited all other forms of competition specifically targeted at particular Early Decision applicants.
25. Absent the Early Decision Incentives Rule, colleges are free to use any number of competitive levers to more aggressively recruit students. Some institutions may prefer to offer only the early decision, while others might compete more aggressively, such as by offering scholarships, preferential housing, or early course registration for those admitted under Early Decision.
26. The First-Year Undergraduate Recruiting Rule was codified at paragraph II.B.5 of the 2017 CEPP and required that, among other things, “[c]olleges will not knowingly recruit or offer enrollment incentives to students who are already enrolled, registered, have declared their intent, or submitted contractual deposits to other institutions.” Furthermore, while the rule allowed colleges to “contact students who have neither deposited nor withdrawn their applications to let them know that they have not received a response from them,” it also commanded that schools could “neither offer nor imply additional financial aid or other incentives” were available unless the student had “affirmed that they [had] not deposited elsewhere and [were] still interested in discussing fall enrollment.”
27. The First-Year Undergraduate Recruiting Rule imposed significant restraints on a college's ability to recruit students. The rule created an arbitrary deadline of May 1 for all colleges to cease improving their recruitment offers to students, even though many students do not decide on a college until well after May 1 and many colleges therefore can reallocate resources to make better offers after May 1. Furthermore, the rule imposed significant hurdles before a college could improve its offer to a prospective student, requiring that the student first affirm both that they “[had] not deposited elsewhere” and were “still interested in discussing fall enrollment.” By directly limiting the ability of colleges to improve their offers to students, the First-Year Undergraduate Recruiting Rule operated as a significant restraint on competition.
28. The arbitrariness of the May 1 deadline was fully highlighted by the recognized exception to the rule “when students are admitted from a wait list.” Section II.C of the CEPP regulates institutions' use of wait lists and explicitly authorizes schools to accept students off of a wait list as late as August 1, even when those students have already committed to attend another school. NACAC thus allows for vigorous competition over a student already committed to another school when a change in circumstances frees up a spot for a student on the wait list. The change in circumstances that free up additional resources to make a better offer is not conceptually distinct, but the rules explicitly allowed the former and prohibited the latter, restricting an opportunity for students to benefit from the sorting process.
29. Absent the First-Year Undergraduate Recruiting Rule, institutions are free to continue to improve their offers to students after May 1, to the benefit of those students. If students have made up their minds about their school of choice, or are otherwise insensitive to the change in circumstances, they can simply reject any further offers received from other schools. For students who may change their minds due to a more beneficial offer, continued recruitment can only work to their benefit.
30. Defendant's college members are direct competitors in college services and compete vigorously for students. Defendant coordinated and enforced an anticompetitive agreement that restrained colleges from improving their offers or otherwise competing vigorously to be selected by students in the college admissions process.
31. Defendant's Recruiting Rules eliminated significant forms of competition to attract students. These rules, which were horizontal agreements between NACAC's college members, denied college applicants and potential transfer students access to potentially better financial aid packages and benefits and restricted their opportunities to move between colleges that offered superior services.
32. Accordingly, Defendant's Recruiting Rules constituted unreasonable restraints of trade in violation of Section 1 of the Sherman Act, 15 U.S.C. 1.
33. The United States requests that this Court:
(a) Adjudge and decree that Defendant's Recruiting Rules are unreasonable restraints of trade and interstate commerce in violation of Section 1 of the Sherman Act;
(b) enjoin and restrain Defendant from enforcing or adhering to any Recruiting Rules that unreasonably restrict competition for students;
(c) permanently enjoin and restrain Defendant from establishing similar rules in the future, except as prescribed by the Court;
(d) award the United States such other relief as the Court may deem just and proper to redress and prevent recurrence of the alleged violations and to dissipate the anticompetitive effects of the illegal agreements entered into by Defendant; and
(e) award the United States the costs of this action.
This Court has jurisdiction over the subject matter and each of the parties to this action. The Complaint states a claim upon which relief may be granted against the Defendant under Section 1 of the Sherman Act, as amended, 15 U.S.C. 1.
As used in this Final Judgment:
A. “NACAC” and “Defendant” mean the National Association for College Admission Counseling, a non-profit trade association with its headquarters in Arlington, Virginia, its successors and assigns, and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
B. “Agreement” means any agreement, understanding, pact, contract, or arrangement, formal or informal, oral or written, between two or more persons.
C. “Early Decision” means the college application plan as defined and used by the Ethics Rules.
D. “Early Decision Incentives Rule” means any Rule or Agreement, or part of a Rule or Agreement, including, but not limited to, Section II.A.3.a.vi of the Ethics Rules, that restrains any person from offering incentives to students applying under an Early Decision application plan that are not available to students applying under a different application plan.
E. “First-Year Undergraduate Recruiting Rule” means any Rule or Agreement, or part of a Rule or Agreement, including, but not limited to, Section II.B.5 of the Ethics Rules, that restrains any college or university from recruiting or offering enrollment incentives to first-year college applicants on the basis that (a) a particular date has passed; (b) the applicants have either declined admission or not affirmatively indicated that they are still interested in attending that institution; or (c) the applicants have already enrolled in, registered at, declared their intent to enroll in or register at, or submitted contractual deposits to other institutions.
F. “Transfer Student Recruiting Rule” means any Rule or Agreement, or part of a Rule or Agreement, including, but not limited to, Section II.D.5 of the Ethics Rules, that restrains any person from recruiting or offering enrollment incentives to transfer students.
G. “Ethics Rules” means NACAC's Code of Ethics and Professional Practices.
H. “Rule” means an enforceable regulation governing particular conduct or activities.
I. “Person” means any natural person, college or university, corporation, company, partnership, joint venture, firm, association, proprietorship, agency, board, authority, commission, office, or other business or legal entity, whether private or governmental.
J. “Management” means all officers, directors, committee chairs, and board members of NACAC, or any other person with management or supervisory responsibilities for NACAC's operations.
This Final Judgment applies to NACAC, and to all other persons in active concert or participation with NACAC who receive actual notice of this Final Judgment by personal service or otherwise.
Defendant shall not establish, attempt to establish, maintain, or enforce any Early Decision Incentives Rule, Transfer Student Recruiting Rule, or First-Year Undergraduate Recruiting Rule. To the extent such prohibited rules currently exist in the Ethics Rules, Defendant must promptly abolish them.
Nothing in Section IV shall prohibit Defendant from maintaining or enforcing any current provisions in the Ethics Rules other than those specifically enumerated in Paragraphs II.D, E, and F.
A. Within ten (10) days of entry of this Final Judgment, Defendant shall appoint an Antitrust Compliance Officer and identify to United States the Antitrust Compliance Officer's name, business address, and telephone number. Within forty-give (45) days of a vacancy in the Defendant's Antitrust Compliance Officer position, the Defendant shall appoint a replacement, and shall identify to the United States the replacement Antitrust Compliance Officer's name, business address, telephone number, and email address. The Defendant's initial or replacement appointment of an Antitrust Compliance Officer is subject to the approval of the United States in its sole discretion.
B. The Antitrust Compliance Officer shall:
1. Within sixty (60) days of entry of the Final Judgment, furnish to all of the Defendant's Management a copy of this Final Judgment, the Competitive Impact Statement, and a cover letter in a form attached as Exhibit 1;
2. within sixty (60) days of entry of the Final Judgment, in a manner to be devised by Defendant and approved by the United States, provide the Defendant's Management and employees reasonable notice of the meaning and requirements of this Final Judgment;
3. annually brief the Defendant's Management on the meaning and requirements of this Final Judgment and the antitrust laws;
4. brief any person who succeeds a person in any position identified in Paragraph II(J), within sixty (60) days of such succession;
5. obtain from each member of Management, within sixty (60) days of that person's receipt of the Final Judgment, a certification that he or she (i) has read and, to the best of his or her ability, understands and agrees to abide by the terms of this Final Judgment; (ii) is not aware of any violation of the Final Judgment that has not been reported to the Defendant; and (iii) understands that any person's failure to comply with this Final Judgment may result in an enforcement action for civil or criminal contempt of court against the Defendant and/or any person who violates this Final Judgment;
6. maintain a record of certifications received pursuant to this Section; and
7. annually communicate to the Defendant's Management and employees that they may disclose to the Antitrust Compliance Officer, without reprisal, information concerning any potential violation of this Final Judgment or the antitrust laws.
C. Within sixty (60) days of entry of the Final Judgment, Defendant shall furnish notice of this action to its members through (1) direct communication, in a form approved by the United States prior to communication and containing the text of Exhibit 2 and (2) the creation of website pages linked to the Defendant website, to be posted for no less than one (1) year after the date of entry of the Final Judgment, containing the text of Exhibit 2 and links to the Final Judgment, Competitive Impact Statement, and Complaint on the Antitrust Division's website.
D. Defendant shall:
1. Upon Management's or the Antitrust Compliance Officer's learning of any violation or potential violation of any of the terms and conditions contained in this Final Judgment, promptly take appropriate action to investigate, and in the event of a violation, terminate or modify the activity so as to comply with this Final Judgment and maintain all documents related to any violation or potential violation of this Final Judgment;
2. within sixty (60) days of Management's or the Antitrust Compliance Officer's learning of any violation or potential violation of any of the terms and conditions contained in this Final Judgment, file with the United States a statement describing any violation or potential violation, which shall include a description of any communications constituting the violation or potential violation, including the date and place of the communication, the persons involved, and the subject matter of the communication, and steps taken to remedy any violation; and
3. have its CEO or CFO, and its General Counsel, certify in writing to the United States annually on the anniversary date of the entry of this Final Judgment that the Defendant has complied with the provisions of this Final Judgment.
A. For the purposes of determining or securing compliance with this Final Judgment, or of determining whether the Final Judgment should be modified or vacated, and subject to any legally recognized privilege, from time to time authorized representatives of the United States, including agents retained by the United States, shall, upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, and on reasonable notice to Defendant be permitted:
1. Access during Defendant's office hours to inspect and copy, or at the option of the United States, to require Defendant to provide electronic or hard copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of NACAC, relating to any matters contained in this Final Judgment; and
2. to interview, either informally or on the record, Defendant's Management, officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews shall be subject to the reasonable convenience of the interviewee and without restraint or interference by Defendant.
B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, Defendant shall submit written reports or responses to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in this Section VII shall be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), or for the purpose of securing compliance with this Final Judgment, or for law enforcement purposes, or as otherwise required by law.
D. If at the time information or documents are furnished by Defendant to the United States, Defendant represents and identifies in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and Defendant marks each pertinent page of such material, “Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,” then the United States shall give Defendant ten (10) calendar days' notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding).
This Court retains jurisdiction to enable any party to this Final Judgment to apply to this Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions.
A. The United States retains and reserves all rights to enforce the provisions of this Final Judgment, including the right to seek an order of contempt from the Court. Defendant agrees that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of this Final Judgment, the United States may establish a violation of the Final Judgment and the appropriateness of any remedy therefor by a preponderance of the evidence, and Defendant waives any argument that a different standard of proof should apply.
B. This Final Judgment should be interpreted to give full effect to the procompetitive purposes of the antitrust laws and to restore all competition the United States alleged was harmed by the challenged conduct. Defendant agrees that it may be held in contempt of, and that the Court may enforce, any provision of this Final Judgment that, as interpreted by the Court in light of these procompetitive principles and applying ordinary tools of interpretation, is stated specifically and in reasonable detail, whether or not it is clear and unambiguous on its face. In any such interpretation, the terms of this Final Judgment should not be construed against either party as the drafter.
C. In any enforcement proceeding in which the Court finds that Defendant has violated this Final Judgment, the United States may apply to the Court for a one-time extension of this Final Judgment, together with other relief as may be appropriate. In connection with any successful effort by the United States to enforce this Final Judgment against Defendant, whether litigated or resolved before litigation, Defendant agrees to reimburse the United States for the fees and expenses of its attorneys, as well as any other costs, including experts' fees, incurred in connection with that enforcement effort, including in the investigation of the potential violation.
D. For a period of four (4) years following the expiration of the Final Judgment, if the United States has evidence that Defendant violated this Final Judgment before it expired, the United States may file an action against Defendant in this Court requesting that the Court order (1) Defendant to comply with the terms of this Final Judgment for an additional term of at least four
Unless this Court grants an extension, this Final Judgment shall expire seven (7) years from the date of its entry, except that after five (5) years from the date of its entry, this Final Judgment may be terminated upon notice by the United States to the Court and Defendant that the continuation of the Final Judgment no longer is necessary or in the public interest.
For purposes of this Final Judgment, any notice or other communication required to be provided to the United States shall be sent to the person at the address set forth below (or such other addresses as the United States may specify in writing to Defendant): Chief, Technology and Financial Services Section, U.S. Department of Justice, Antitrust Division, 450 Fifth Street NW, Suite 7100, Washington, DC 20530.
Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, and any comments thereon and the United States' responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and response to comments filed with the Court, entry of this Final Judgment is in the public interest.
I am providing you this notice regarding a judgment recently entered by a federal judge in Washington, DC affecting rulemaking practices. The judgment applies to our association and all of its employees, including you, so it is important that you understand the obligations it imposes on us. [CEO Name] has asked me to let each of you know that [s/he] expects you to take these obligations seriously and abide by them.
The judgment prohibits us from establishing rules that restrict the ability of colleges to recruit early decision applicants, incoming freshmen, and transfer students. There are limited exceptions to this restriction. You must consult me before determining whether a particular recruiting rule is subject to an exception under the judgment.
A copy of the court order is attached. Please read it carefully and familiarize yourself with its terms. The judgment, rather than the above description, is controlling. If you have any questions about the judgment or how it affects your activities, please contact me as soon as possible.
Thank you for your cooperation.
Please take notice that National Association for College Admission Counseling (“NACAC”) has entered into a settlement with the United States Department of Justice relating to its rulemaking practices.
On December 12th, 2019, the United States filed a federal civil antitrust Complaint alleging that NACAC established rules that restricted its members' ability to recruit college applicants and transfer students in violation of Section 1 of the Sherman Act, 15 U.S.C. 1. At the same time, the United States filed a proposed settlement that prohibits NACAC from entering into, maintaining, or enforcing such rules.
As part of its settlement with the United States, NACAC confirmed that it has withdrawn any offending rule already in place.
The Final Judgment, which was recently entered by a federal district court, is effective for seven years. Copies of the Complaint, Final Judgment, and Competitive Impact Statement are available at:
Plaintiff United States of America (“United States”), pursuant to Section 2(b) of the Antitrust Procedures and Penalties Act (“APPA” or “Tunney Act”), 15 U.S.C. 16(b)-(h), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding.
On December 12, 2019, the United States filed a civil antitrust Complaint alleging that Defendant National Association for College Admission Counseling (“NACAC”) enacted certain mandatory rules (collectively referred to as the “Recruiting Rules”) that unlawfully limited competition between its members in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
NACAC members include colleges and their admissions personnel and high schools and their guidance counselors. NACAC's college members compete with each other for college students, both college applicants and potential transfer students. Colleges compete on a number of different dimensions, including tuition cost, majors offered, ease and cost of application, campus amenities, quality of education, reputation of the institution, and prospects for employment following graduation. The Complaint, however, alleges that NACAC, through its rulemaking authority, established three mandatory rules that limited the manner in which its college members could compete for college applicants and potential transfer students.
The first rule, the Transfer Student Recruiting Rule, expressly prevented colleges from affirmatively recruiting potential transfer students from other schools. The second rule, the Early Decision Incentives Rule, forbade colleges from offering incentives, financial or otherwise, to Early Decision applicants. The third rule, the First-Year Undergraduate Recruiting Rule, limited the ability of colleges to recruit incoming first-year students after May 1. These three rules—collectively “the Recruiting Rules”—were not reasonably necessary to any separate, legitimate business transaction or collaboration among NACAC and its members. According to the Complaint, the Defendant's Recruiting Rules unlawfully restricted competition between NACAC's members and were unreasonable restraints of trade that violated Section 1 of the Sherman Act, 15 U.S.C. § 1.
At the same time the Complaint was filed, the United States filed a Stipulation and Order and proposed Final Judgment, which would remedy the violation by enjoining the Defendant from enacting, maintaining, or enforcing the Recruiting Rules, subject to limited exceptions.
NACAC members voted in September of 2019 to repeal the Recruiting Rules, effective as of that time, and the Final Judgment seeks to prevent NACAC from re-imposing those or any similar rules. The proposed Final Judgment also requires NACAC to take specific compliance measures and to cooperate in any investigation or litigation examining whether or alleging that NACAC enacted a Recruiting Rule or any similar rule in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1.
The United States and NACAC have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment would terminate this action, except that the Court would retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and to punish violations thereof.
NACAC is a nonstock corporation organized in the State of Delaware and headquartered in Arlington, Virginia. Beyond establishing ethics rules that govern its members, NACAC holds dozens of college fairs that allow prospective students to interact with a number of regional and national colleges.
The Complaint alleges that NACAC, through the version of its Code of Ethics and Professional Practices (“CEPP” or “Ethics Rules”) that was effective during and prior to 2018, established three rules that unreasonably restrained competition between its member colleges for college applicants and potential transfer students. These rules, described in more detail below, were voted on by NACAC's members and were mandatory not only for NACAC's members but also for any non-members that participated in NACAC's college fairs. Failure to abide by the rules embodied in the CEPP could have resulted in disciplinary actions by NACAC, including but not limited to exclusion from its college fairs or expulsion from NACAC.
The first rule at issue is the Transfer Student Recruiting Rule, originally embodied at Section II.D.5 of the CEPP. That rule provided that:
Colleges must not solicit transfer applications from a previous year's applicant or prospect pool unless the students have themselves initiated a transfer inquiry or the college has verified prior to contacting the students that they are either enrolled at a college that allows transfer recruitment from other colleges or are not currently enrolled in a college.
As described in the Complaint, this rule acted as a substantial impediment to competition between colleges for potential transfer students, and provided only limited exceptions that allowed for transfer recruitment. Absent this restriction, colleges will be free to recruit potential transfer students more aggressively, which will lead to colleges to making more attractive offers, like lower tuition costs or higher quality admissions packages.
The second rule at issue is the Early Decision Incentives Rule, which was at Section II.A.3.a.vi of the CEPP. This rule stated that:
Colleges must not offer incentives exclusive to students applying or admitted under an Early Decision application plan. Examples of incentives include the promise of special housing, enhanced financial aid packages, and special scholarships for Early Decision admits. Colleges may, however, disclose how admission rates for Early Decision differ from those for other admission plans.
This rule, as alleged in the Complaint, unreasonably limited the competition for Early Decision applicants. In the current admissions ecosystem, some colleges allow students to apply via Early Decision, which provides students with an accelerated decision on admission to that school but also requires from the student a binding commitment to attend if admitted. The Early Decision Incentives Rule forbade colleges from offering incentives (beyond the accelerated decision) to those students. This was an unreasonable restraint on competition. Absent this restriction, colleges will be free to offer a set of incentives for Early Decision applicants that best serves the college and its applicant base, including special scholarships, preferred housing, or other discounts on tuition. Over time, this will lead to more aggressive recruitment of students through more attractive offers of admission.
The final rule at issue is the First-Year Undergraduate Recruiting Rule, which was at Section II.B.5 of the CEPP. This rule required that:
Colleges will not knowingly recruit or offer enrollment incentives to students who are already enrolled, registered, have declared their intent, or submitted contractual deposits to other institutions. May 1 is the point at which commitments to enroll become final, and colleges must respect that. The recognized exceptions are when students are admitted from a wait list, students initiate inquiries themselves, or cooperation is sought by institutions that provide transfer programs. These statements capture the spirit and intent of this requirement:
a. Whether before or after May 1, colleges may at any time respond to a student- initiated request to reconsider an offer or reinstate an application.
b. Once students have declined an offer of admission, colleges may no longer offer them incentives to change or revisit their college decision. Before May 1, however, colleges may ask whether candidates would like a review of their financial aid package or other incentives before their admission is canceled, so long as the question is asked at the time that the admitted students first notify them of their intent to cancel their admission.
c. After May 1, colleges may contact students who have neither deposited nor withdrawn their applications to let them know that they have not received a response from them. Colleges may neither offer nor imply additional financial aid or other incentives unless students have affirmed that they have not deposited elsewhere and are still interested in discussing fall enrollment.
This rule imposed several limits on the ability of colleges to recruit incoming first-year students. First, it prevented colleges from recruiting students who the colleges knew had declared their intent, through making a deposit or otherwise, to attend another institution. Second, it prevented colleges from offering incentives to students who had declined an offer of admission (with the limited exception set forth in II.B.5.b. of the CEPP). Third, it limited the ability of colleges, after May 1, to recruit students who had neither made a deposit nor withdrawn their application.
The First-Year Undergraduate Recruiting Rule imposed significant restrictions on competition between colleges for first-year students. It limited the ability of colleges to continue to compete for students who had declined an offer of admission and significantly restricted the ability of colleges to compete for students after May 1. Absent these restrictions, colleges will be free to offer more aggressive financial aid packages or other inducements to students to entice them to enroll. Due to
Horizontal restraints that are not reasonably necessary to any separate, legitimate business transaction or collaboration are unlawful under Section 1 of the Sherman Act. Section 1 outlaws any “contract, combination . . . , or conspiracy, in restraint of trade or commerce.” 15 U.S.C. 1. Courts have long interpreted this language to prohibit only “unreasonable” restraints of trade.
The United States has historically challenged the actions of trade associations or other membership organizations where they advance unreasonable restraints among their memberships. In addition to the
As described in the Complaint, NACAC's Recruiting Rules were horizontal agreements restricting competition between colleges for college applicants and potential transfer students. The Recruiting Rules suppressed and eliminated competition to the detriment of college applicants and potential transfer students by restraining the ability of NACAC's college members to recruit them. They were not reasonably necessary to achieve the otherwise market-enhancing rules contained in the CEPP. Accordingly, they were unlawful agreements under Section 1 of the Sherman Act.
The proposed Final Judgment sets forth (1) conduct in which the Defendant may not engage; (2) certain actions the Defendant is required to take to ensure compliance with the terms of the proposed Final Judgment; (3) the Defendant's obligations to cooperate with the United States in its investigations of the promulgation of any future rules similar to the Recruiting Rules; and (4) oversight procedures the United States may use to ensure compliance with the proposed Final Judgment.
Section IV of the proposed Final Judgment prevents the Defendant from establishing, maintaining, or enforcing any “Transfer Student Recruiting Rule,” “Early Decision Incentives Rule,” or “First-Year Undergraduate Recruiting Rule” or any similar rules. The proposed Final Judgment defines each of those terms in Section II, and the definitions are intended to correspond with the rules described in Section II.B of this Competitive Impact Statement.
Furthermore, Section IV of the proposed Final Judgment requires that the Defendant abolish any “Transfer Student Recruiting Rule,” “Early Decision Incentives Rule,” or “First-Year Undergraduate Recruiting Rule” currently within its ethics rules.
Section VI of the proposed Final Judgment sets forth various mandatory procedures to ensure the Defendant's compliance with the proposed Final Judgment, including a requirement to provide officers, directors, and management with copies of the proposed Final Judgment and annual briefings about its terms. Additionally, Section VI requires the Defendant to provide notice to its members about this action that includes a description of the terms of the proposed Final Judgment, the Competitive Impact Statement, and the Complaint. Finally, Section VI requires the Defendant's Antitrust Compliance Officer to promptly notify the United States upon receipt of any complaint that the terms of the proposed Final Judgment have been violated.
To facilitate monitoring of the Defendant's compliance with the proposed Final Judgment, Section VII permits the United States, upon reasonable notice and a written request:
(1) Access during the Defendant's office hours to inspect and copy, or at the option of the United States, to require the Defendant to provide electronic or hard copies of, all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of the Defendant, relating to any matters contained in the proposed Final Judgment; and (2) to interview, either informally or on the record, the Defendant's officers, employees, or agents.
Additionally, Section VII requires the Defendant, upon written request of the United States, to submit written reports or responses to interrogatories relating to any of the matters contained in the proposed Final Judgment.
The proposed Final Judgment contains provisions designed to promote compliance and make the enforcement of the Final Judgment as effective as possible. Paragraph IX(A) provides that the United States retains and reserves all rights to enforce the provisions of the proposed Final Judgment, including its rights to seek an order of contempt from the Court. Under the terms of this paragraph, the Defendant has agreed that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of the Final Judgment, the United States may establish the violation and the appropriateness of any remedy by a preponderance of the evidence and that the Defendant has waived any argument that a different standard of proof should apply. This provision aligns the standard for compliance obligations
Paragraph IX(B) provides additional clarification regarding the interpretation of the provisions of the proposed Final Judgment. The proposed Final Judgment was drafted to restore the competition the United States alleged was harmed by the Defendant's challenged conduct. The Defendant agrees that it will abide by the proposed Final Judgment, and that it may be held in contempt of this Court for failing to comply with any provision of the proposed Final Judgment that is stated specifically and in reasonable detail, as interpreted in light of this procompetitive purpose.
Paragraph IX(C) of the proposed Final Judgment provides that if the Court finds in an enforcement proceeding that the Defendant has violated the Final Judgment, the United States may apply to the Court for a one-time extension of the Final Judgment, together with such other relief as may be appropriate. In addition, to compensate American taxpayers for any costs associated with investigating and enforcing violations of the proposed Final Judgment, Paragraph IX(C) provides that, in any successful effort by the United States to enforce the Final Judgment against the Defendant, whether litigated or resolved before litigation, that the Defendant will reimburse the United States for attorneys' fees, experts' fees, and other costs incurred in connection with any enforcement effort, including the investigation of the potential violation.
Paragraph IX(D) states that the United States may file an action against the Defendant for violating the Final Judgment for up to four years after the Final Judgment has expired or been terminated. This provision is meant to address circumstances such as when evidence that a violation of the Final Judgment occurred during the term of the Final Judgment is not discovered until after the Final Judgment has expired or been terminated or when there is not sufficient time for the United States to complete an investigation of an alleged violation until after the Final Judgment has expired or been terminated. This provision, therefore, makes clear that, for four years after the Final Judgment has expired or been terminated, the United States may still challenge a violation that occurred during the term of the Final Judgment.
Finally, Section X of the proposed Final Judgment provides that the Final Judgment will expire seven years from the date of its entry, except that after five years from the date of its entry, the Final Judgment may be terminated upon notice by the United States to the Court and the Defendant that the continuation of the Final Judgment is no longer necessary or in the public interest.
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys' fees. Entry of the proposed Final Judgment neither impairs nor assists the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against the Defendant.
The United States and the Defendant have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court's determination that the proposed Final Judgment is in the public interest.
The APPA provides a period of at least 60 days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within 60 days of the date of publication of this Competitive Impact Statement in the
Written comments should be submitted to: Chief, Technology and Financial Services Section Antitrust Division, United States Department of Justice, 450 Fifth Street NW, Suite 7100, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment.
The United States considered, as an alternative to the proposed Final Judgment, a full trial on the merits against NACAC. The United States could have continued the litigation and sought preliminary and permanent injunctions against NACAC. The United States is satisfied, however, that the requirements of the proposed Final Judgment will preserve competition among colleges for the provision of college services to college applicants and potential transfer students in the United States. Thus, the proposed Final Judgment achieves all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits of the Complaint.
The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a 60-day comment period, after which the Court shall determine whether entry of the proposed Final Judgment “is in the public interest.” 15 U.S.C. 16(e)(1). In making that determination, the Court, in accordance with the statute as amended in 2004, is required to consider:
(A) the competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, the Court's inquiry is necessarily a limited one as the government is entitled to
As the U.S. Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations in the government's complaint, whether the proposed Final Judgment is sufficiently clear, whether its enforcement mechanisms are sufficient, and whether it may positively harm third parties.
The United States' predictions about the efficacy of the remedy are to be afforded deference by the Court.
Moreover, the Court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, and does not authorize the Court to “construct [its] own hypothetical case and then evaluate the decree against that case.”
In its 2004 amendments to the APPA, Congress made clear its intent to preserve the practical benefits of using consent judgments proposed by the United States in antitrust enforcement, Public Law 108-237 § 221, and added the unambiguous instruction that “[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.” 15 U.S.C. 16(e)(2);
There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment.
On January 3, 2020, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the District of New Jersey in the lawsuit entitled
The United States filed this lawsuit under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The United States' complaint names Fisher Scientific Company, L.L.C. and Sandvik, Inc. as defendants. The complaint requests recovery of costs that the United States incurred and will incur responding to releases of hazardous substances at the Fair Law Well Field Superfund Site in Fair Lawn, New Jersey. The complaint also seeks injunctive relief. Both defendants signed the consent decree. They will perform the remedial action that EPA selected for the site and pay any response costs above the amount that the United States recovered from Eastman Kodak Company in a 2014 bankruptcy settlement. In return, the United States agrees not to sue the defendants under sections 106 and 107 of CERCLA with respect to the site. The publication of this notice opens a period for public comment on the consent decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the Consent Decree may be examined and downloaded at this Justice Department website:
Please enclose a check or money order for $88.50 (25 cents per page reproduction cost) payable to the United States Treasury. For a paper copy without the exhibits and signature pages, the cost is $9.50.
The Members of the National Council on Disability (NCD) will meet by phone Monday, January 27, 2020, 10:00 a.m.-12:00 p.m., ET.
Interested parties may join the meeting in listen-only capacity.
The Council conduct a business meeting, to include approving the budget for fiscal year 2020 and vote on policy priorities for the fiscal year. Following agency updates, Mary Lamielle, Executive Director National Center for Environmental Health Strategies, Inc. is invited to provide a presentation on environmental intolerances to protect the public health and improve the lives of people injured or disabled by chemical and environmental exposures.
Anne Sommers, NCD, 1331 F Street NW, Suite 850, Washington, DC 20004; 202-272-2004 (V), 202-272-2022 (Fax).
Federal Council on the Arts and the Humanities; National Foundation on the Arts and the Humanities.
Notice of Meeting.
Pursuant to the Federal Advisory Committee Act, notice is hereby given that the Federal Council on the Arts and the Humanities will hold a meeting of the Arts and Artifacts Domestic Indemnity Panel.
The meeting will be held on Tuesday, February 18, 2020, from 12:00 p.m. to 5:00 p.m.
The meeting will be held by teleconference originating at the National Endowment for the Arts, Washington, DC 20506.
Elizabeth Voyatzis, Committee Management Officer, 400 7th Street SW, Room 4060, Washington, DC 20506, (202) 606-8322;
The purpose of the meeting is for panel review, discussion, evaluation, and recommendation on applications for Certificates of Indemnity submitted to the Federal Council on the Arts and the Humanities, for exhibitions beginning on or after April 1, 2020. Because the meeting will consider proprietary financial and commercial data provided in confidence by indemnity applicants, and material that is likely to disclose trade secrets or other privileged or confidential information, and because it is important to keep the values of objects to be indemnified and the methods of transportation and security measures confidential, I have determined that that the meeting will be closed to the public pursuant to subsection (c)(4) of section 552b of Title 5, United States Code. I have made this
National Science Foundation.
Notice announcing updated penalty inflation adjustments for civil monetary penalties for 2020.
The National Science Foundation (NSF or Foundation) is providing notice of its adjusted maximum civil monetary penalties, effective January 15, 2020. These adjustments are required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act).
Bijan Gilanshah, Assistant General Counsel, Office of the General Counsel, National Science Foundation, 2415 Eisenhower Avenue, Alexandria, VA 22314. Telephone: 703-292-5055.
On June 27, 2016, NSF published an interim final rule amending its regulations to adjust, for inflation, the maximum civil monetary penalties that may be imposed for violations of the Antarctic Conservation Act of 1978 (ACA), as amended, 16 U.S.C. 2401
Nuclear Regulatory Commission.
License application; opportunity to request a hearing and petition for leave to intervene; order imposing procedures.
On October 8, 2019, the U.S. Nuclear Regulatory Commission (NRC) staff accepted and docketed an application submitted by SHINE Medical Technologies, LLC (SHINE), dated July 17, 2019, filed pursuant to the Atomic Energy Act of 1954, as amended, and the NRC's regulations, for an operating license for the SHINE Medical Isotope Production Facility. In accordance with the NRC's regulations, any persons whose interest may be affected by the issuance of an operating license to SHINE may file a request for a hearing and petition for leave to intervene with respect to the action. Because the license application contains Sensitive Unclassified Non-Safeguards Information (SUNSI) and Safeguards Information (SGI), an included Order imposes procedures to obtain access to SUNSI and SGI for contention preparation.
A request for a hearing must be filed by March 10, 2020. Any potential party as defined in § 2.4 of title 10 of the
Please refer to Docket Number 50-608 or Docket ID NRC-2019-0173 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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Steven T. Lynch, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, telephone: 301-415-1524; email:
By letter dated July 17, 2019 (ADAMS Accession No. ML19211C044) and supplemented by letter dated November 14, 2019 (ADAMS Accession No. ML19337A275), SHINE filed with the NRC, pursuant to Section 103 of the Atomic Energy Act and part 50, “Domestic Licensing of Production and Utilization Facilities,” of title 10 of the
SHINE has proposed to construct and operate a facility in Janesville, Wisconsin for the production of molybdenum-99 (Mo-99) through the irradiation and processing of a uranyl sulfate solution. As described in the operating license application, the proposed facility would comprise an irradiation facility and radioisotope production facility. The irradiation facility would consist of eight subcritical operating assemblies (or irradiation units), which would each be licensed as a utilization facility, as defined in 10 CFR 50.2, “Definitions,” and supporting structures, systems, and components (SSCs) for the irradiation of low enriched uranium. The radioisotope production facility would consist of hot cell structures, licensed collectively as a production facility, as defined in 10
In accordance with 10 CFR part 2, “Agency Rules of Practice and Procedure,” and part 50, the NRC staff performed an acceptance review of the SHINE operating license application and, by letter dated October 8, 2019 (ADAMS Accession No. ML19276D411), accepted the application for docketing under Docket Number 50-608.
Within 60 days after the date of publication of this notice, any persons (petitioner) whose interest may be affected by the issuance of an operating license to SHINE may file a request for a hearing and petition for leave to intervene (petition) with respect to the action. Petitions shall be filed in accordance with the Commission's “Agency Rules of Practice and Procedure” in 10 CFR part 2. Interested persons should consult a current copy of 10 CFR 2.309, “Hearing Requests, Petitions to Intervene, Requirements for Standing, and Contentions.” The NRC's regulations are accessible electronically from the NRC Library on the NRC's website at
As required by 10 CFR 2.309(d) the petition should specifically explain the reasons why intervention should be permitted with particular reference to the following general requirements for standing: (1) The name, address, and telephone number of the petitioner; (2) the nature of the petitioner's right to be made a party to the proceeding; (3) the nature and extent of the petitioner's property, financial, or other interest in the proceeding; and (4) the possible effect of any decision or order which may be entered in the proceeding on the petitioner's interest.
In accordance with 10 CFR 2.309(f), the petition must also set forth the specific contentions which the petitioner seeks to have litigated in the proceeding. Each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the petitioner must provide a brief explanation of the bases for the contention and a concise statement of the alleged facts or expert opinion which support the contention and on which the petitioner intends to rely in proving the contention at the hearing. The petitioner must also provide references to the specific sources and documents on which the petitioner intends to rely to support its position on the issue. The petition must include sufficient information to show that a genuine dispute exists with the applicant or licensee on a material issue of law or fact. Contentions must be limited to matters within the scope of the proceeding. The contention must be one which, if proven, would entitle the petitioner to relief. A petitioner who fails to satisfy the requirements at 10 CFR 2.309(f) with respect to at least one contention will not be permitted to participate as a party.
Those permitted to intervene become parties to the proceeding, subject to any limitations in the order granting leave to intervene. Parties have the opportunity to participate fully in the conduct of the hearing with respect to resolution of that party's admitted contentions, including the opportunity to present evidence, consistent with the NRC's regulations, policies, and procedures.
Petitions must be filed no later than 60 days from the date of publication of this notice. Petitions and motions for leave to file new or amended contentions that are filed after the deadline will not be entertained absent a determination by the presiding officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i) through (iii). The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document.
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h)(1). The petition should state the nature and extent of the petitioner's interest in the proceeding. The petition should be submitted to the Commission no later than 60 days from the date of publication of this notice. The petition must be filed in accordance with the filing instructions in the “Electronic Submissions (E-Filing)” section of this document, and should meet the requirements for petitions set forth in this section, except that under 10 CFR 2.309(h)(2) a State, local governmental body, or Federally-recognized Indian Tribe, or agency thereof does not need to address the standing requirements in 10 CFR 2.309(d) if the facility is located within its boundaries. Alternatively, a State, local governmental body, Federally-recognized Indian Tribe, or agency thereof may participate as a non-party under 10 CFR 2.315(c).
If a hearing is granted, any person who is not a party to the proceeding and is not affiliated with or represented by a party may, at the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or written statement of his or her position on the issues but may not otherwise participate in the proceeding. A limited appearance may be made at any session of the hearing or at any prehearing conference, subject to the limits and conditions as may be imposed by the presiding officer. Details regarding the opportunity to make a limited appearance will be provided by the presiding officer if such sessions are scheduled.
All documents filed in NRC adjudicatory proceedings, including a request for hearing and petition for leave to intervene (petition), any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities that request to participate under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007, as amended at 77 FR 46562; August 3, 2012). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Detailed guidance on making electronic submissions may be found in the Guidance for Electronic Submissions to the NRC and on the NRC website at
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public website at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC's Electronic Filing Help Desk through the “Contact Us” link located on the NRC's public website at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing stating why there is good cause for not filing electronically and requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing adjudicatory documents in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
A. This Order contains instructions regarding how potential parties to this proceeding may request access to documents containing sensitive unclassified information (including SUNSI and SGI). Requirements for access to SGI are primarily set forth in 10 CFR parts 2 and 73. Nothing in this Order is intended to conflict with the SGI regulations.
B. Within 10 days after publication of this notice of hearing and opportunity to petition for leave to intervene, any potential party who believes access to SUNSI or SGI is necessary to respond to this notice may request access to SUNSI or SGI. A “potential party” is any person who intends to participate as a party by demonstrating standing and filing an admissible contention under 10 CFR 2.309. Requests for access to SUNSI or SGI submitted later than 10 days after publication will not be considered absent a showing of good cause for the late filing, addressing why the request could not have been filed earlier.
C. The requestor shall submit a letter requesting permission to access SUNSI, SGI, or both to the Office of the Secretary, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemakings and Adjudications Staff, and provide a copy to the Deputy General Counsel for Hearings and Administration, Office of the General Counsel, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001. The expedited delivery or courier mail address for both offices is: U.S. Nuclear Regulatory Commission, 11555 Rockville Pike, Rockville, Maryland 20852. The email address for the Office of the Secretary and the Office of the General Counsel are
(1) A description of the licensing action with a citation to this
(2) The name and address of the potential party and a description of the potential party's particularized interest that could be harmed by the action identified in C.(1);
(3) If the request is for SUNSI, the identity of the individual or entity requesting access to SUNSI and the
(4) If the request is for SGI, the identity of each individual who would have access to SGI if the request is granted, including the identity of any expert, consultant, or assistant who will aid the requestor in evaluating the SGI. In addition, the request must contain the following information:
(a) A statement that explains each individual's “need to know” the SGI, as required by 10 CFR 73.2 and 10 CFR 73.22(b)(1). Consistent with the definition of “need to know” as stated in 10 CFR 73.2, the statement must explain:
(i) Specifically, why the requestor believes that the information is necessary to enable the requestor to proffer and/or adjudicate a specific contention in this proceeding;
(ii) The technical competence (demonstrable knowledge, skill, training or education) of the requestor to effectively utilize the requested SGI to provide the basis and specificity for a proffered contention. The technical competence of a potential party or its counsel may be shown by reliance on a qualified expert, consultant, or assistant who satisfies these criteria.
(b) A completed Form SF-85, “Questionnaire for Non-Sensitive Positions,” for each individual who would have access to SGI. The completed Form SF-85 will be used by the Office of Administration to conduct the background check required for access to SGI, as required by 10 CFR part 2, subpart C, and 10 CFR 73.22(b)(2), to determine the requestor's trustworthiness and reliability. For security reasons, Form SF-85 can only be submitted electronically through the Electronic Questionnaires for Investigations Processing website, a secure website that is owned and operated by the Office of Personnel Management. To obtain online access to the form, the requestor should contact the NRC's Office of Administration at 301-415-3710.
(c) A completed Form FD-258 (fingerprint card), signed in original ink, and submitted in accordance with 10 CFR 73.57(d). Copies of Form FD-258 may be obtained by writing the Office of Administrative Services, Mail Services Center, Mail Stop P1-37, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, or by email to
(d) A check or money order payable in the amount of $357.00
(e) If the requestor or any individual(s) who will have access to SGI believes they belong to one or more of the categories of individuals that are exempt from the criminal history records check and background check requirements in 10 CFR 73.59, the requestor should also provide a statement identifying which exemption the requestor is invoking and explaining the requestor's basis for believing that the exemption applies. While processing the request, the Office of Administration, Personnel Security Branch, will make a final determination whether the claimed exemption applies. Alternatively, the requestor may contact the Office of Administration for an evaluation of their exemption status prior to submitting their request. Persons who are exempt from the background check are not required to complete the SF-85 or Form FD-258; however, all other requirements for access to SGI, including the need to know, are still applicable.
These documents and materials should
D. To avoid delays in processing requests for access to SGI, the requestor should review all submitted materials for completeness and accuracy (including legibility) before submitting them to the NRC. The NRC will return incomplete packages to the sender without processing.
E. Based on an evaluation of the information submitted under paragraphs C.(3) or C.(4) above, as applicable, the NRC staff will determine within 10 days of receipt of the request whether:
(1) There is a reasonable basis to believe the petitioner is likely to establish standing to participate in this NRC proceeding; and
(2) The requestor has established a legitimate need for access to SUNSI or need to know the SGI requested.
F. For requests for access to SUNSI, if the NRC staff determines that the requestor satisfies both E.(1) and E.(2) above, the NRC staff will notify the requestor in writing that access to SUNSI has been granted. The written notification will contain instructions on how the requestor may obtain copies of the requested documents, and any other conditions that may apply to access to those documents. These conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement or Affidavit, or Protective Order setting forth terms and conditions to prevent the unauthorized or inadvertent disclosure of SUNSI by each individual who will be granted access to SUNSI.
G. For requests for access to SGI, if the NRC staff determines that the requestor has satisfied both E.(1) and E.(2) above, the Office of Administration will then determine, based upon completion of the background check, whether the proposed recipient is trustworthy and reliable, as required for access to SGI by 10 CFR 73.22(b). If the Office of Administration determines that the individual or individuals are trustworthy and reliable, the NRC will promptly notify the requestor in writing. The notification will provide the names of approved individuals as well as the conditions under which the SGI will be provided. Those conditions may include, but are not limited to, the signing of a Non-Disclosure Agreement
H. Release and Storage of SGI. Prior to providing SGI to the requestor, the NRC staff will conduct (as necessary) an inspection to confirm that the recipient's information protection system is sufficient to satisfy the requirements of 10 CFR 73.22. Alternatively, recipients may opt to view SGI at an approved SGI storage location rather than establish their own SGI protection program to meet SGI protection requirements.
I. Filing of Contentions. Any contentions in these proceedings that are based upon the information received as a result of the request made for SUNSI or SGI must be filed by the requestor no later than 25 days after receipt of (or access to) that information. However, if more than 25 days remain between the petitioner's receipt of (or access to) the information and the deadline for filing all other contentions (as established in the notice of hearing or opportunity for hearing), the petitioner may file its SUNSI or SGI contentions by that later deadline.
J. Review of Denials of Access.
(1) If the request for access to SUNSI or SGI is denied by the NRC staff either after a determination on standing and requisite need, or after a determination on trustworthiness and reliability, the NRC staff shall immediately notify the requestor in writing, briefly stating the reason or reasons for the denial.
(2) Before the Office of Administration makes a final adverse determination regarding the trustworthiness and reliability of the proposed recipient(s) for access to SGI, the Office of Administration, in accordance with 10 CFR 2.336(f)(1)(iii), must provide the proposed recipient(s) any records that were considered in the trustworthiness and reliability determination, including those required to be provided under 10 CFR 73.57(e)(1), so that the proposed recipient(s) have an opportunity to correct or explain the record.
(3) The requestor may challenge the NRC staff's adverse determination with respect to access to SUNSI or with respect to standing or need to know for SGI by filing a challenge within 5 days of receipt of that determination with: (a) The presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if he or she is unavailable, another administrative judge, or an Administrative Law Judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) if another officer has been designated to rule on information access issues, with that officer.
(4) The requestor may challenge the Office of Administration's final adverse determination with respect to trustworthiness and reliability for access to SGI by filing a request for review in accordance with 10 CFR 2.336(f)(1)(iv).
(5) Further appeals of decisions under this paragraph must be made pursuant to 10 CFR 2.311.
K. Review of Grants of Access. A party other than the requestor may challenge an NRC staff determination granting access to SUNSI whose release would harm that party's interest independent of the proceeding. Such a challenge must be filed within 5 days of the notification by the NRC staff of its grant of access and must be filed with: (a) The presiding officer designated in this proceeding; (b) if no presiding officer has been appointed, the Chief Administrative Judge, or if he or she is unavailable, another administrative judge, or an Administrative Law Judge with jurisdiction pursuant to 10 CFR 2.318(a); or (c) if another officer has been designated to rule on information access issues, with that officer.
If challenges to the NRC staff determinations are filed, these procedures give way to the normal process for litigating disputes concerning access to information. The availability of interlocutory review by the Commission of orders ruling on such NRC staff determinations (whether granting or denying access) is governed by 10 CFR 2.311.
L. The Commission expects that the NRC staff and presiding officers (and any other reviewing officers) will consider and resolve requests for access to SUNSI or SGI, and motions for protective orders, in a timely fashion in order to minimize any unnecessary delays in identifying those petitioners who have standing and who have propounded contentions meeting the specificity and basis requirements in 10 CFR part 2. The attachment to this Order summarizes the general target schedule for processing and resolving requests under these procedures.
For the Nuclear Regulatory Commission.
Pursuant to delegation by the Commission,
This Board is being established pursuant to a hearing request submitted by Leonard Sparks in response to a Confirmatory Order, EA-18-130 and EA-18-171, “In the Matter of Southern Nuclear Operating Company, Vogtle Electric Generating Plant, Units 3 and 4,” issued on November 20, 2019 by the NRC Office of Enforcement, and published in the
The Board is comprised of the following Administrative Judges:
All correspondence, documents, and other materials shall be filed in accordance with the NRC E-Filing rule.
Rockville, Maryland.
Weeks of January 13, 20, 27, February 3, 10, 17, 2020.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public.
There are no meetings scheduled for the week of January 13, 2020.
There are no meetings scheduled for the week of January 20, 2020.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of February 10, 2020.
There are no meetings scheduled for the week of February 17, 2020.
For more information or to verify the status of meetings, contact Denise McGovern at 301-415-0681 or via email at
The NRC Commission Meeting Schedule can be found on the internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301-415-1969), or by email at
The NRC is holding the meetings under the authority of the Government in the Sunshine Act, 5 U.S.C. 552b.
For the Nuclear Regulatory Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the “Fee Schedule”) to extend the waiver period for certain non-transaction fees applicable to Market Makers
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
On October 12, 2018, the Exchange received approval from the Commission to list and trade on the Exchange, options on the SPIKES® Index, a new index that measures expected 30-day volatility of the SPDR S&P 500 ETF Trust (commonly known and referred to by its ticker symbol, “SPY”).
On May 31, 2019, the Exchange filed a proposal with the Commission to amend the Fee Schedule to waive certain non-transaction fees applicable to Market Makers that trade solely in Proprietary Products (including options on the SPIKES Index) until September
On October 1, 2019, the Exchange filed a proposal with the Commission to extend the waiver period for the same non-transaction fees applicable to Market Makers that trade solely in Proprietary Products (including options on SPIKES) until December 31, 2019.
The Exchange now proposes to extend the waiver period for the same non-transaction fees applicable to Market Makers that trade solely in Proprietary Products (including options on SPIKES) until June 30, 2020. In particular, the Exchange proposes to waive Membership Application fees, monthly Market Maker Trading Permit fees, Member API Testing and Certification fees, and monthly MEI Port fees assessed to Market Makers that trade solely in Proprietary Products (including options on SPIKES) until June 30, 2020.
The Exchange currently assesses Membership fees for applications of potential Members. The Exchange assesses a one-time Membership Application fee on the earlier of (i) the date the applicant is certified in the membership system, or (ii) once an application for MIAX membership is finally denied. The one-time application fee is based upon the applicant's status as either a Market Maker or an Electronic Exchange Member (“EEM”).
The Exchange proposes that the waiver for the one-time Membership Application fee of $3,000.00 for Market Makers that trade solely in Proprietary Products (including options on SPIKES) will be extended from December 31, 2019 until June 30, 2020, which the Exchange proposes to state in the Fee Schedule. The purpose of this proposed change is to continue to provide an incentive for potential Market Makers to submit membership applications, which should result in increasing potential liquidity in Proprietary Products, including options on SPIKES. Even though the Exchange is proposing to extend the waiver of this particular fee for Market Makers who will trade solely in Proprietary Products from December 31, 2019 until June 30, 2020, the overall structure of the fee is outlined in the Fee Schedule so that there is general awareness that the Exchange intends to assess such a fee after June 30, 2020.
The Exchange issues Trading Permits that confer the ability to transact on the Exchange. MIAX Trading Permits are issued to Market Makers and EEMs. Members receiving Trading Permits during a particular calendar month are assessed monthly Trading Permit fees as set forth in the Fee Schedule. As it relates to Market Makers, MIAX currently assesses a monthly Trading Permit fee in any month the Market Maker is certified in the membership system, is credentialed to use one or more MIAX Express Interface Ports (“MEI Ports”)
MIAX proposes that the waiver for the monthly Trading Permit fee for Market Makers that trade solely in Proprietary Products (including options on SPIKES) will be extended from December 31, 2019 to June 30, 2020, which the Exchange proposes to state in the Fee Schedule. The purpose of this proposed change is to continue to provide an incentive for Market Makers to provide liquidity in Proprietary Products on the Exchange, which should result in increasing potential order flow and volume in Proprietary Products, including options on SPIKES. Even though the Exchange is proposing to extend the waiver of this particular fee for Market Makers trading solely in Proprietary Products from December 31, 2019 until June 30, 2020, the overall structure of the fee is outlined in the Fee Schedule so that there is general awareness by potential Members seeking a Trading Permit on the Exchange that the Exchange intends to assess such a fee after June 30, 2020.
The Exchange also proposes that Market Makers who trade Proprietary Products (including options on SPIKES) along with multi-listed classes will continue to not have Proprietary Products (including SPIKES) counted toward those Market Makers' class assignment count or percentage of total national average daily volume. This exclusion is noted with the symbol “Ω” following the table that shows the monthly Trading Permit Fees currently assessed for Market Makers in Section 3)b) of the Fee Schedule.
The Exchange assesses an API Testing and Certification fee to all Members depending upon the type of Member. An API makes it possible for Members' software to communicate with MIAX software applications, and is subject to Members testing with, and certification by, MIAX. The Exchange offers four types of interfaces: (i) The Financial Information Exchange Port (“FIX Port”),
API Testing and Certification fees for Market Makers are assessed (i) initially per API for CTD and MEI in the month the Market Maker has been credentialed to use one or more ports in the production environment for the tested API and the Market Maker has been assigned to quote in one or more classes, and (ii) each time a Market Maker initiates a change to its system that requires testing and certification. API Testing and Certification fees will not be assessed in situations where the Exchange initiates a mandatory change to the Exchange's system that requires testing and certification. The Exchange currently assesses a Market Maker an API Testing and Certification fee of $2,500.00. The API Testing and Certification fees represent costs incurred by the Exchange as it works with each Member for testing and certifying that the Member's software systems communicate properly with MIAX's interfaces.
MIAX proposes to extend the waiver of the API Testing and Certification fee for Market Makers that trade solely in Proprietary Products (including options on SPIKES) from December 31, 2019 until June 30, 2020, which the Exchange proposes to state in the Fee Schedule. The purpose of this proposed change is to continue to provide an incentive for potential Market Makers to develop software applications to trade in Proprietary Products, including options on SPIKES. Even though the Exchange is proposing to extend the waiver of this particular fee for Market Makers who trade solely in Proprietary Products from December 31, 2019 until June 30, 2020, the overall structure of the fee is outlined in the Fee Schedule so that there is general awareness that the Exchange intends to assess such a fee after June 30, 2020.
MIAX provides four (4) Port types, including (i) the FIX Port, which enables the FIX Port user (typically an EEM or a Market Maker) to submit simple and complex orders electronically to MIAX; (ii) the MEI Port, which enables Market Makers to submit simple and complex electronic quotes to MIAX; (iii) the CTD Port, which provides real-time trade clearing information to the participants to a trade on MIAX and to the participants' respective clearing firms; and (iv) the FXD Port, which provides a copy of real-time trade execution, correction and cancellation information through a FIX Port to any number of FIX Ports designated by an EEM to receive such messages.
MIAX assesses monthly MEI Port Fees to Market Makers in each month the Member has been credentialed to use the MEI Port in the production environment and has been assigned to quote in at least one class. The amount of the monthly MEI Port Fee is based upon the number of classes in which the Market Maker was assigned to quote on any given day within the calendar month, and upon the class volume percentages set forth in the above table. The class volume percentage is based on the total national average daily volume in classes listed on MIAX in the prior calendar quarter. Newly listed option classes are excluded from the calculation of the monthly MEI Port Fee until the calendar quarter following their listing, at which time the newly listed option classes will be included in both the per class count and the percentage of total national average daily volume. The Exchange assesses MIAX Market Makers the monthly MEI Port Fee based on the greatest number of classes listed on MIAX that the MIAX Market Maker was assigned to quote in on any given day within a calendar month and the applicable fee rate that is the lesser of either the per class basis or percentage of total national average daily volume measurement. MIAX assesses MEI Port Fees on Market Makers according to the following table:
MIAX proposes to extend the waiver of the monthly MEI Port Fee for Market Makers that trade solely in Proprietary Products (including options on SPIKES) from December 31, 2019 until June 30, 2020, which the Exchange proposes to state in the Fee Schedule. The purpose of this proposal is to continue to provide an incentive to Market Makers to connect to MIAX through the MEI Port such that they will be able to trade in MIAX Proprietary Products. Even though the Exchange is proposing to extend the waiver of this particular fee for Market Makers trading solely in Proprietary Products until June 30, 2020, the overall structure of the fee is outlined in the Fee Schedule so that there is general awareness that the Exchange intends to assess such a fee after June 30, 2020.
The Exchange notes that for the purposes of this proposed change, other Market Makers who trade MIAX Proprietary Products (including options on SPIKES) along with multi-listed classes will continue to not have Proprietary Products (including SPIKES) counted toward those Market Makers' class assignment count or percentage of total national average daily volume. This exclusion is noted by the symbol “Ω” following the table that shows the monthly MEI Port Fees currently assessed for Market Makers in Section 5)d)ii) of the Fee Schedule.
The proposed extension of the fee waivers are targeted at market participants, particularly market makers, who are not currently members of MIAX, who may be interested in being a Market Maker in Proprietary Products on the Exchange. The Exchange estimates that there are fewer than ten (10) such market participants that could benefit from the extension of these fee waivers. The proposed extension of the fee waivers does not apply differently to different sizes of market participants, however the fee waivers do only apply to Market Makers (and not EEMs).
Market Makers, unlike other market participants, take on a number of obligations, including quoting obligations that other market participants do not have. Further, Market Makers have added market making and regulatory requirements, which normally do not apply to other market participants. For example, Market Makers have obligations to maintain continuous markets, engage in a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and to not make bids or offers or enter into transactions that are inconsistent with a course of dealing. Accordingly, the Exchange believes it is reasonable and not unfairly discriminatory to continue to offer the fee waivers to Market Makers because the Exchange is seeking additional liquidity providers for Proprietary Products, in order to enhance liquidity and spreads in Proprietary Products, which is traditionally provided by Market Makers, as opposed to EEMs.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Exchange believes that the proposal to extend the fee waiver period for certain non-transaction fees for Market Makers in Proprietary Products is an equitable allocation of reasonable fees because the proposal continues to waive non-transaction fees for a limited period of time in order to enable the Exchange to improve its overall competitiveness and strengthen its market quality for all market participants in MIAX's Proprietary Products, including options on SPIKES. The Exchange believe the proposed extension of the fee waivers is fair and equitable and not unreasonably discriminatory because it applies to all market participants not currently registered as Market Makers at the Exchange. Any market participant may choose to satisfy the additional requirements and obligations of being a Market Maker and trade solely in Proprietary Products in order to qualify for the fee waivers.
The Exchange believes that the proposed extension of the fee waivers is equitable and not unfairly discriminatory for Market Makers as compared to EEMs because Market Makers, unlike other market participants, take on a number of obligations, including quoting obligations that other market participants do not have. Further, Market Makers have added market making and regulatory requirements, which normally do not apply to other market participants. For example, Market Makers have obligations to maintain continuous markets, engage in a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and to not make bids or offers or enter into transactions that are inconsistent with a course of dealing.
The Exchange believes it is reasonable and equitable to continue to waive the one-time Membership Application Fee, monthly Trading Permit Fee, API Testing and Certification Fee, and monthly MEI Port Fee for Market Makers that trade solely in Proprietary Products (including options on SPIKES) until June 30, 2020, since the waiver of such fees provides incentives to interested market participants to trade in Proprietary Products. This should result in increasing potential order flow and liquidity in MIAX Proprietary Products, including options on SPIKES.
The Exchange believes it is reasonable and equitable to continue to waive the API Testing and Certification fee assessable to Market Makers that trade
The Exchange believes it is reasonable, equitable and not unfairly discriminatory that Market Makers who trade in Proprietary Products along with multi-listed classes will continue to not have Proprietary Products counted toward those Market Makers' class assignment count or percentage of total national average daily volume for monthly Trading Permit Fees and monthly MEI Port Fees in order to incentivize existing Market Makers who currently trade in multi-listed classes to also trade in Proprietary Products, without incurring certain additional fees.
The Exchange believes that the proposed extension of the fee waivers constitutes an equitable allocation of reasonable fees and other charges among its members and issuers and other persons using its facilities. The proposed extension of the fee waivers means that all prospective market makers that wish to become Market Maker Members of the Exchange and quote solely in Proprietary Products may do so and have the above-mentioned fees waived until June 30, 2020. The proposed extension of the fee waivers will continue to not apply to potential EEMs because the Exchange is seeking to enhance the quality of its markets in Proprietary Products through introducing more competition among Market Makers in Proprietary Products. In order to increase the competition, the Exchange believes that it must continue to waive entry type fees for such Market Makers. EEMs do not provide the benefit of enhanced liquidity which is provided by Market Makers, therefore the Exchange believes it is reasonable and not unfairly discriminatory to continue to only offer the proposed fee waivers to Market Makers (and not EEMs). Further, the Exchange believes it is reasonable and not unfairly discriminatory to continue to exclude Proprietary Products from an existing Market Maker's permit fees and port fees, in order to incentive such Market Makers to quote in Proprietary Products. The amount of a Market Maker's permit and port fee is determined by the number of classes quoted and volume of the Market Maker. By excluding Proprietary Products from such fees, the Exchange is able to incentivize Market Makers to quote in Proprietary Products. EEMs do not pay permit and port fees based on the classes traded or volume, so the Exchange believes it is reasonable, equitable, and not unfairly discriminatory to only offer the exclusion to Market Makers (and not EEMs).
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
The Exchange believes that the proposal to extend certain of the non-transaction fee waivers until June 30, 2020 for Market Makers in Proprietary Products would increase intra-market competition by incentivizing new potential Market Makers to quote in Proprietary Products, which will enhance the quality of quoting and increase the volume of contracts in Proprietary Products traded on MIAX. To the extent that this purpose is achieved, all the Exchange's market participants should benefit from the improved market liquidity for the Exchange's Proprietary Products. Enhanced market quality and increased transaction volume in Proprietary Products that results from the anticipated increase in Market Maker activity on the Exchange will benefit all market participants and improve competition on the Exchange.
The Exchange does not believe that the proposed rule change will impose any burden on intra-market competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed changes for each separate type of market participant (new Market Makers and existing Market Makers) will be assessed equally to all such market participants. While different fees are assessed to different market participants in some circumstances, these different market participants have different obligations and different circumstances as discussed above. For example, Market Makers have quoting obligations that other market participants (such as EEMs) do not have.
The Exchange does not believe that the proposed rule change will impose any burden on inter-market competition that is not necessary or appropriate in furtherance of the purposes of the Act because the proposed extension of the fee waivers apply only to the Exchange's Proprietary Products (including options on SPIKES), which are traded exclusively on the Exchange.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to amend Rule 21.7 (Opening Auction Process) in connection with the opening triggers for its opening rotation process for the Regular Trading Hours (“RTH”) trading session in equity options.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Rule 21.7 (Opening Auction Process) in connection with the opening triggers for its opening rotation process for the Regular Trading Hours (“RTH”) trading session in equity options. Currently, Rule 21.7(d)(1) governs the RTH opening rotation triggers for equity options, as well as index options. Particularly, regarding equity options, Rule 21.7(d)(1) provides that the System
Specifically, the Exchange proposes to include the System's observation of the first disseminated quote on the primary market in the security underlying the equity options as an additional opening trigger for equity options.
The proposed additional timing steps in connection with the opening triggers are intended to ensure that the market for the underlying security has had sufficient time to open prior to the initiation of the opening rotation where there is not both a two-sided quote and an execution in the underlying security. By waiting a requisite amount of time after the System observes one of the opening triggers, the proposed process pursuant to proposed Rule 21.7(d)(1)(A)(i) is intended to permit post-opening price discovery to occur in the underlying security prior to the opening of options on the security. Similarly, by initiating the opening rotation upon the System's observation of both opening triggers prior to the passage of two minutes, proposed Rule 21.7(d)(1)(A)(ii) ties the Exchange's opening process to specific market conditions in the underlying security that generally indicate that sufficient post-opening price discovery has occurred prior to the opening of options on the security. To illustrate, if the System were to observe a disseminated quote (or transaction) in the primary market for the underlying security, it would begin the two-minute (or shorter) timer pursuant to proposed Rule 21.7(d)(1)(A)(i). If two minutes then passed without the System's observation of a disseminated transaction (or quote) on the primary market for the underlying security (which would cause the scenario in Rule 21.7(d)(1)(A)(ii) to occur) then it would initiate the opening rotation after a time period determined by the Exchange, as it currently does today. Conversely, if the System were to observe a disseminated quote (or transaction) in the primary listing market and begin the two minute (or shorter) timer, but then observe a disseminated transaction (or quote) in the primary listing market before the passage of two minutes (or shorter), it would then, at the time it observed the disseminated transaction (or quote) prior to the passage of two minutes (or shorter), initiate the opening rotation after a period of time determined by the Exchange.
The Exchange notes that the proposed rule change in connection with initiating the opening rotation upon receipt of a trade and a quote in the underlying is consistent with the opening process rules of NYSE Arca.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that the proposed rule change to include the first dissemination of a quote on the primary market for the underlying security as an additional opening trigger for equity options would serve to remove impediments to and perfect the mechanism of a free and open market and national market system by incorporating an additional opening trigger into the Exchange's opening process which would help ensure that the primary market for the underlying is adequately situated with the appropriate liquidity and active price discovery in order to open for trading options on the underlying. Additionally, the proposed rule change would foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities because it will align the triggers for its equity options opening rotation with the triggers used by most other options exchanges.
In addition to this, the Exchange believes that the proposed rule change to implement additional timing procedures in connection with the System's observation of the first disseminated transaction and/or quote in the primary market for the underlying security prior to the initiation of the opening rotation would also serve to remove impediments to and perfect the mechanism of a free and open market
The Exchange does not believe that the proposed changes would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule changes would impose any burden on intramarket competition that is not necessary in furtherance of the purposes of the Act, because the proposed additional opening trigger and steps in the opening trigger process would apply in the same manner to all equity options. The proposed rule change impacts a System process that occurs prior to the opening of trading, and merely modifies when the System will initiate an opening rotation. The Exchange also does not believe that the proposed change would impose any burden on intermarket competition that is not necessary in furtherance of the purposes of the Act, because use of the first disseminated quote from the primary market as a trigger for the opening rotation, as well as the combination of both opening triggers, or of one opening trigger plus a pause period of a two minutes (or shorter) prior to initiating the opening rotation, is consistent with the rules of other options exchanges.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) Impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change consists of amendments to the FICC Government Securities Division (“GSD”) Rulebook (“Rules”)
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend the Rules in order to facilitate the submission of term repo activity through the Service by: (i) Providing a mechanism by which a Sponsoring Member may cause the termination and liquidation of a Sponsored Member's positions arising from Sponsored Member Trades between the Sponsoring Member and its Sponsored Member that have been novated to FICC and (ii) revising how FICC calculates the funds-only settlement obligations of Sponsored Members and Sponsoring Members with respect to Sponsored Member Trades that have haircuts in order to ensure that the calculation does not result in a return of the haircuts until final settlement. In addition, the proposed rule change would make a correction and certain clarifications and conforming changes, as described in greater detail below.
Under Rule 3A (Sponsoring Members and Sponsored Members), certain Netting Members are permitted to sponsor, as “Sponsoring Members,” qualified institutional buyers as defined by Rule 144A
Under Rule 3A, a Sponsoring Member is permitted to submit to FICC, for comparison, novation, and netting, certain types of eligible securities transactions between itself and its Sponsored Members (“Sponsored Member Trades”).
Sponsoring Members are also responsible for providing FICC with a Sponsoring Member Guaranty
Although Rule 3A currently permits Sponsoring Members to submit term repo activity within the Service,
The current Rules allow only FICC to cause the termination and liquidation of a Sponsored Member's positions, even though the relevant Sponsoring Member is responsible for the Sponsored Member's payment and performance in respect of such positions. Rule 22A governs any such termination and liquidation by FICC.
A Sponsoring Member is required to advise FICC if circumstances have arisen that require FICC to cease to act for a Sponsored Member.
The inability of a Sponsoring Member to trigger the termination and liquidation of a Sponsored Member's positions, particularly term repo activity, may result in additional capital requirements for Sponsoring Members and their parent organizations under regulatory standards that implement the recommendations of the Basel Committee on Banking Supervision (the “BCBS”). This is because, if a Sponsoring Member cannot trigger the termination and liquidation of a Sponsored Member's positions, it is less able to stop the effective extension of credit to the client under the Sponsoring Member Guaranty.
In addition to giving FICC the exclusive ability to cause the termination and liquidation of a Sponsored Member's positions, Rule 22A provides for FICC to control such termination and liquidation of a Sponsored Member's Final Net Settlement Positions.
FICC's control of such termination and liquidation of Sponsored Member Trades could expose the Sponsoring Member to certain risks that other intermediaries do not typically face. This is because, in the event FICC ceases to act for a Sponsored Member under Rule 22A,
FICC is proposing to amend Rule 3A to add a new Section 18. This new section would allow a Sponsoring Member to cause the termination and liquidation of a Sponsored Member's positions arising from Sponsored Member Trades between the Sponsoring Member and the Sponsored Member for which the Sponsoring Member is responsible. The section would not, however, limit the ability of FICC to cease to act for a Sponsored Member.
In the event (i) the Sponsoring Member triggers the termination of a Sponsored Member's positions or (ii) FICC ceases to act for the Sponsored Member and the Sponsoring Member does not continue to perform the obligations of the Sponsored Member, both the Sponsored Member's positions and the Sponsoring Member's corresponding positions arising from the Sponsored Member Trades between the Sponsoring Member and the Sponsored Member would be terminated. Thereupon, the Sponsoring Member would calculate a net liquidation value of such terminated positions, which liquidation value would be paid either to or by the Sponsored Member by or to the Sponsoring Member. FICC would not, as a practical matter, be involved in such settlement and would not need to take any market action because the termination of the Sponsored Member's positions and the corresponding Sponsoring Member's positions would leave FICC flat. Additionally, the Sponsoring Member would indemnify FICC for any claim by a Sponsored Member arising out of the Sponsoring Member's calculation of the net liquidation value.
By allowing Sponsoring Members to terminate and liquidate a Sponsored Member's positions that arise from Sponsored Member Trades between the Sponsored Member and the Sponsoring Member that have been novated to FICC, FICC believes that the new Section 18 would align the Service to other intermediated relationships and allow Sponsoring Members to more effectively manage the risks of Sponsored Member Trades, particularly term repo activity. Sponsoring Members and their Sponsored Members would be able to agree with one another in their bilateral documentation on the circumstances in which the Sponsoring Member would be permitted to cause the termination of the Sponsored Member's positions. Such agreement would not affect FICC's ability to cease to act for a Sponsored Member in accordance with existing Rules 3A, 21 and 22.
FICC believes that providing Sponsoring Members with greater ability to manage their risks associated with Sponsored Member Trades would allow Sponsoring Members to submit to FICC more Sponsored Member Trades, including, in particular, term repo activity. FICC believes that having more centrally cleared term repo transactions would promote the prompt and accurate clearance and settlement of securities transactions because more securities transactions would benefit from FICC's risk management and guaranty of settlement.
Further, FICC believes that allowing the Sponsoring Member to take market action would decrease the price risks currently faced by Sponsoring Members (as described in the last paragraph of Item II(A)1(ii)(A) above) without increasing the litigation risk to FICC arising from a Sponsored Member default because the Sponsoring Member would indemnify FICC for any losses or expense arising from a Sponsored Member's claim related to the Sponsoring Member's calculation of any liquidation amount.
FICC is proposing to add a new Section 18 to Rule 3A, which would (i) permit a Sponsoring Member to cause the termination and liquidation of a Sponsored Member's positions arising from Sponsored Member Trades between the Sponsoring Member and the Sponsored Member and (ii) govern how the termination and liquidation would be effectuated. Section 18 would contain the following subsections.
Subsection (a) would clarify the scope of positions to which proposed Section 18 applies. It would state that Section 18 applies only to positions arising from Sponsored Member Trades within the meaning of subsection (a) of the Sponsored Member Trade definition.
Subsection (a) would further state that Section 18 would not apply if either (i) FICC has ceased to act for the relevant Sponsoring Member or (ii) a Corporation Default has occurred. FICC has discretion in the event that it ceases to act for a Sponsoring Member to close-out the positions of Sponsored Members for which the defaulting Sponsoring Member was responsible or to allow them to settle.
Subsection (b) of proposed Section 18 would set out the process by which a Sponsoring Member or FICC may cause the termination of a Sponsored Member's positions. It would provide that the Sponsoring Member or FICC may cause such termination by delivering a notice to FICC or the Sponsoring Member, respectively. FICC anticipates that each Sponsored Member and Sponsoring Member would agree in the bilateral documentation between them as to what circumstances or events give rise to the ability of the Sponsoring Member to deliver a notice to FICC terminating the Sponsored Member's positions.
The notice submitted by a Sponsoring Member to FICC (or vice versa) would cause the termination of all of the positions of the Sponsored Member that arose from Sponsored Member Trades between the Sponsoring Member and the Sponsored Member and that have been novated to FICC. The notice would also cause the termination of the corresponding positions of the Sponsoring Member (
Subsection (b) would also provide that the termination of the Sponsored Member's positions (and the Sponsoring Member's corresponding positions) would be effected by the Sponsoring Member's establishment of a final Net Settlement Position for each Eligible Netting Security with a distinct CUSIP number (“Final Net Settlement Position”). This provision would align with existing Rule 22A,
Subsection (c) of proposed Section 18 would specify how the Final Net Settlement Positions established pursuant to subsection (b) would be liquidated (
Subsection (c) would first provide that the Sponsoring Member would liquidate the Final Net Settlement Positions established pursuant to subsection (b) by establishing (i) a single liquidation amount in respect of the Sponsored Member's Final Net Settlement Positions (a “Sponsored Member Liquidation Amount”) and (ii) a single liquidation amount in respect of the Sponsoring Member's Final Net Settlement Positions (a “Sponsoring Member Liquidation Amount”). The Sponsored Member Liquidation Amount would be owed either by FICC to the Sponsored Member or by the Sponsored Member to FICC because it would relate to the Sponsored Member's Final Net Settlement Positions with FICC, while the Sponsoring Member Liquidation Amount would be owed either by FICC to the Sponsoring Member or by the Sponsoring Member to FICC because it would relate to the Sponsoring Member's Final Net Settlement Positions with FICC.
Because the Final Net Settlement Positions of the Sponsoring Member would be identical to, but in the opposite direction of, the Final Net Settlement Positions of the Sponsored Member, the Sponsored Member Liquidation Amount would equal the Sponsoring Member Liquidation Amount. Therefore, if FICC were to owe the Sponsored Member Liquidation Amount to the Sponsored Member, the Sponsoring Member would owe the Sponsoring Member Liquidation Amount to FICC. By the same token, if the Sponsored Member were to owe the Sponsored Member Liquidation Amount to FICC, FICC would owe the Sponsoring Member the Sponsoring Member Liquidation Amount. In all instances, FICC would owe and be owed the same amount of money.
Subsection (c) would also provide how the Sponsoring Member may calculate the Sponsoring Member Liquidation Amount. It would state that the Sponsoring Member may calculate the Sponsoring Member Liquidation Amount based on prevailing market prices of the relevant securities and/or the gains realized and losses incurred by the Sponsoring Member in hedging its risk associated with the liquidation of the Sponsoring Member's Final Net Settlement Positions. Subsection (c) would further clarify that such Sponsoring Member Liquidation Amount may also take into account any losses and expenses incurred by the Sponsoring Member in connection with the liquidation of the positions. This approach would be broadly consistent with how FICC would calculate an amount owing by a Member in respect of its Final Net Settlement Positions under existing Rule 22A.
Subsection (c) would provide that, if a Sponsored Member Liquidation Amount is due to FICC, the Sponsoring Member would be obligated to pay such Sponsored Member Liquidation Amount to FICC under the Sponsoring Member Guaranty and that this obligation would, automatically and without further action, be set off against the obligation of FICC to pay the corresponding Sponsoring Member Liquidation Amount to the Sponsoring Member. By virtue of such setoff, the Sponsored Member's obligation to FICC would be discharged, as would FICC's obligation to the Sponsoring Member. The Sponsoring Member would, however, have a reimbursement claim against the Sponsored Member in an amount equal to the Sponsored Member Liquidation Amount. This reimbursement claim would arise as a matter of law by virtue of the Sponsoring Member's performance under Sponsoring Member Guaranty, though Sponsoring Members and Sponsored Members may specify terms related to the reimbursement claim in their bilateral documentation. FICC would have no rights or obligations in respect of any such reimbursement claim.
If a Sponsored Member Liquidation Amount were owed by FICC to the Sponsored Member, subsection (c) would provide for the Sponsoring Member to satisfy that obligation by
Under existing Rule 22A,
Under Section 8(g) of existing Rule 3A,
Subsection (e) of proposed Section 18 would clarify FICC acknowledges that a Sponsoring Member may take a security interest in FICC's obligations to the Sponsored Member. Such security interest would not impose new obligations on FICC, but could allow the Sponsoring Member to direct FICC to submit payments due to the Sponsored Member to the Sponsoring Member, so that the Sponsoring Member can apply such amounts to the Sponsored Member's unsatisfied obligations to the Sponsoring Member. Subsection (e) additionally would provide that, if Section 18 were to apply, FICC's security interest in the Sponsored Member's assets would be subordinated to the Sponsoring Member's security interest. As noted above, if Section 18 applied, FICC would not need to look to the Sponsored Member or its assets for performance in respect of the positions that are terminated under Section 18.
In light of the intermediary relationship between a Sponsoring Member and its Sponsored Member, a Sponsoring Member may choose to post to its Sponsored Member client a haircut in order to address regulatory and/or investment guideline concerns. Specifically, the regulations and/or investment guidelines to which a Sponsored Member is subject may require that it receive Eligible Securities worth more than the cash that it is due to receive at final settlement of a FICC-cleared reverse repo,
However, under Rule 13, FICC's standard funds-only settlement process involves marking to market twice a day each Business Day all positions associated with term repo activity, including any Sponsored Member Trade with a Close Leg that is scheduled to occur two or more Business Days after the settlement of the Start Leg.
When the Market Value exceeds the Contract Value, the Collateral Mark is negative for, and thus payable by, the Member party that has a Net Short Position (
In order to ensure that haircuts are not returned until final settlement, FICC proposes to amend Rule 3A and Rule 1. Specifically, FICC proposes to amend Section 9(a) of Rule 3A to provide that, if the parties to a Sponsored Member Trade agree for such Sponsored Member Trade to have a haircut, then any Funds-Only Settlement Amount applicable to such Sponsored Member Trade that includes a Collateral Mark would be calculated without regard for the Collateral Mark. Such Collateral Mark would be replaced by either a Haircut Deficit or Haircut Surplus. A “Haircut Deficit” would exist if the amount by which the Market Value as of the settlement date of the Start Leg exceeded the Contract Value of the Close Leg (the “Initial Haircut”) is greater than the amount by which the Market Value as of the time of measurement exceeds the Contract Value of the Close Leg (the “Current Haircut”). Any Haircut Deficit would be payable by the Member party with a Net Long Position. A “Haircut Surplus” would exist if the Current Haircut exceeds the Initial Haircut, and any Haircut Surplus would be payable by the Member party with a Net Short Position. FICC also proposes to amend Section 9(a) of Rule 3A to make clear that any Initial Haircut would be as agreed between the parties to the Sponsored Member Trade, and that FICC would not be under any obligation to verify the parties' agreement with respect to any Initial Haircut, and its calculation of the Initial Haircut would be conclusive and binding on the parties.
For example, if on initial settlement of a Sponsored Member Trade a Sponsored Member transferred $98 in cash and received Eligible Securities worth $100,
FICC would also revise Rule 1 to add new defined terms; these new defined terms are related to the proposed clarifications to Rule 3A described in the paragraph above. FICC would add the following new defined terms: (i) Current Haircut, (ii) Haircut Deficit, (iii) Haircut Surplus and (iv) Initial Haircut.
FICC believes that the proposed changes to Rule 3A and Rule 1 described above would allow a Sponsoring Member and its Sponsored Member who intend for one of those two parties to remain overcollateralized for the duration of a Sponsored Member Trade to transfer a haircut between each other and allow such haircut to remain with the intended party until final settlement of the Sponsored Member Trade.
FICC proposes to make a correction as well as certain clarifications and conforming changes to Rule 3A, as further described below.
FICC proposes to make certain clarifications to Section 8(c) of Rule 3A related to proposed Section 18 described in Item II(A)1(ii) above.
First, FICC is proposing to add a parenthetical to Section 8(c) clarifying that the operational netting provisions of Section 8(b) do not substantively modify a Sponsored Member's obligations to FICC. As noted above, Section 8(b) provides that, for operational convenience, FICC calculates a single Net Settlement Position and Fail Net Settlement Position in each CUSIP for the Sponsoring Member's Sponsoring Member Omnibus Account. Section 8(c), in turn, provides that each Sponsored Member shall satisfy its “allocable portion” of the Deliver Obligations and Receive Obligations established for the Sponsoring Member Omnibus Account.
Neither Section 8(b) nor Section 8(c) modifies the obligations of any Sponsored Member; those provisions are simply designed for operational convenience. Each Sponsored Member still remains responsible for its Deliver Obligations to and Receive Obligations from FICC, which are calculated in accordance with Section 7 of Rule 3A. The Sponsored Member's “allocable portion” of the Deliver Obligations and Receive Obligations of the Sponsoring Member Omnibus Account will always equal its Deliver Obligations to and Receive Obligations from FICC, as calculated under Section 7 of Rule 3A.
Therefore, in order to eliminate doubt regarding the extent of the Sponsored Member's obligations upon a termination and liquidation of a Sponsored Member's positions pursuant to proposed Section 18, FICC is proposing to add a parenthetical to Section 8(c) to make clear that a Sponsored Member's “allocable portion” of the obligations established for the Sponsoring Member Omnibus Account are the obligations of the Sponsored Member, as calculated in Section 7 of Rule 3A.
FICC is also proposing to add language at the end of Sections 8(c) and 9(b) to clarify that, if a Sponsoring Member satisfies the net Deliver Obligations and Receive Obligations or the net Funds-Only Settlement Amount obligations of its Sponsoring Member Omnibus Account, including through the setoff described in proposed Section 18, before the Sponsoring Member receives corresponding performance from the Sponsored Member, such satisfaction would constitute performance by the Sponsoring Member under the Sponsoring Member Guaranty with respect to the relevant Sponsored Member's allocable portion of the Sponsoring Member Omnibus Account Deliver Obligations and Receive Obligations or Funds-Only Settlement Amount obligations.
If a termination and liquidation under proposed Section 18 were to occur, the Sponsoring Member would be required to perform on behalf of the Sponsored Member under the Sponsoring Member Guaranty. The clarification described above is designed to ensure that, when the Sponsoring Member effects such performance, it would be entitled to
FICC also proposes to make a correction as well as certain clarifications and conforming changes to Rule 3A. The proposed correction, clarifications and conforming changes are related to the clarifications described in Item II(A)1(iii) above with respect to the haircut.
To enhance clarity, FICC proposes to make certain structural changes to Rule 3A, Section 9. Specifically, FICC proposes to move language from current subsection (b) of Section 9 and make it subsection (c). This, in turn, would require conforming changes to re-letter original Sections 9(c) and 9(d) to 9(d) and 9(e), respectively. FICC also proposes to make a conforming grammatical change by deleting “such” and replacing it with “the” in the first sentence of proposed subsection (c). FICC also proposes to revise proposed Section 9(c) of Rule 3A to clarify that the Sponsored Member is responsible for satisfying the allocable portion of the Funds-Only Settlement Amount calculated for the Sponsoring Member Omnibus Account.
FICC believes these proposed changes are consistent with the requirements of the Act, and the rules and regulations applicable to a registered clearing agency. Specifically, FICC believes that the proposed changes are consistent with Section 17A(b)(3)(F) of the Act
Section 17A(b)(3)(F) of the Act requires, in part, that the Rules be designed to (i) remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions and (ii) promote the prompt and accurate clearance and settlement of securities transactions.
FICC believes that the proposed changes described in Item II(A)1(ii) above,
FICC also believes the proposed changes are designed to promote the prompt and accurate clearance and settlement of securities transactions. By allowing Sponsoring Members to manage risks associated with Sponsored Member Trades more effectively, FICC believes the proposed changes would enable Sponsoring Members to submit a greater number of securities transactions to be cleared and settled by a central counterparty. In particular, FICC believes Sponsoring Members would be able to submit to FICC more term repo activity. FICC's clearance and settlement of such term repo activity would promote the prompt and accurate clearance and settlement of securities transactions by increasing the number of transactions subject to FICC's risk management and guaranty of settlement.
FICC believes the proposed changes described in Item II(A)1(iii) above,
FICC believes the proposed correction, clarifications, and conforming changes described in Item II(A)1(iv) above are also designed to promote the prompt and accurate clearance and settlement of securities transactions by enhancing clarity and transparency regarding the Service. Having transparent and clear provisions regarding the Service would enable Members to better understand the operation of the Service and would provide Members with increased predictability and certainty regarding their rights and obligations. FICC believes that this increased predictability and certainty regarding their rights and obligations may encourage Sponsoring Members to submit a greater number of securities transactions to be cleared and settled by FICC, and in particular, term repo activity. FICC's clearance and settlement of such term repo activity would promote the prompt and accurate clearance and settlement of securities transactions by increasing the number of transactions subject to FICC's risk management and guaranty of settlement. Therefore, FICC believes the proposed correction, clarifications, and
Rule 17Ad-22(e)(23)(i) under the Act requires FICC to establish, implement, maintain, and enforce written policies and procedures reasonably designed to publicly disclose all relevant rules and material procedures.
FICC believes that the proposed changes in Item II(A)1(ii) above could have an impact on competition by promoting and burdening competition. The proposal to allow a Sponsoring Member to control the termination and liquidation of its Sponsored Member's FICC-cleared positions could promote competition by increasing the ability of Sponsoring Members to more effectively manage the risks of Sponsored Member Trades, particularly Sponsored Member Trades with a scheduled final settlement date beyond the next Business Day after the initial settlement date. Such increased risk management ability, in turn, could cause more institutions to become Sponsoring Members, and existing and future Sponsoring Members to accept a greater number and variety of Sponsored Members and Sponsored Member Trades, including, in particular, term repo activity. FICC also believes the proposed changes in Item II(A)1(ii) above could promote competition by allowing Sponsoring Members and Sponsored Members to negotiate the circumstances in which the Sponsoring Member could cause the termination and liquidation of the Sponsored Member's positions. The prospect of negotiation could allow Sponsored Members to consider various Sponsoring Members and the terms they offer.
Conversely, the proposed changes described in Item II(A)1(ii) above to allow a Sponsoring Member to control the termination and liquidation of its Sponsored Member's FICC-cleared positions could burden competition by applying a different standard for the termination and liquidation of Sponsored Members' FICC-cleared positions than the standard that applies to other Members under Rule 22A.
Regardless of whether the potential burden on competition discussed in the previous paragraph is significant, FICC believes that any burden on competition that may be created by these proposed changes would be necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.
FICC believes that any burden on competition created by the proposed changes described in Item II(A)1(ii) above is necessary in furtherance of the purposes of the Act to (i) remove impediments to and perfect the mechanism of a national system for the prompt and accurate clearance and settlement of securities transactions and (ii) promote the prompt and accurate clearance and settlement of securities transactions.
Furthermore, FICC believes that any burden on competition resulting from allowing a Sponsoring Member to control the termination and liquidation of its Sponsored Member's FICC-cleared positions would be appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act,
FICC believes that the proposed changes described in Item II(A)1(iii) above to facilitate the submission of term repo activity through the Service by revising how FICC calculates the funds-only settlement obligations of Sponsored Members and Sponsoring Members with respect to Sponsored Member Trades with haircuts could promote competition. This is because the proposed changes would honor the parties' contractual intent (as described in Item II(A)1(iii) above) and, thus, encourage more term repo activity within the Service. As such, FICC believes that these proposed changes could promote competition.
In addition, FICC does not believe that the proposed correction, clarifications, and conforming changes in Item II(A)1(iv) above would have an impact on competition. These changes would simply provide additional clarity, transparency and consistency to the Rules and not affect Members' rights and obligations. As such, FICC believes that these proposed changes would not have any impact on competition.
FICC reviewed the proposed rule change with its Sponsoring Members in order to benefit from their expertise. Written comments relating to this proposed rule change have not been received from the Sponsoring Members or any other person. FICC will notify the Commission of any written comments received by FICC.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange proposes to amend Rule 6.11 (Opening Auction Process) in connection with the opening triggers for
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Rule 6.11 (Opening Auction Process) in connection with the opening triggers for its opening rotation process for the Regular Trading Hours (“RTH”) trading session in equity options. Currently, Rule 6.11(d)(1) governs the RTH opening rotation triggers for equity options, as well as index options. Particularly, regarding equity options, Rule 6.11(d)(1) provides that the System
Specifically, the Exchange proposes to include the System's observation of the first disseminated quote on the primary market in the security underlying the equity options as an additional opening trigger for equity options.
The proposed additional timing steps in connection with the opening triggers are intended to ensure that the market for the underlying security has had sufficient time to open prior to the initiation of the opening rotation where there is not both a two-sided quote and an execution in the underlying security. By waiting a requisite amount of time after the System observes one of the opening triggers, the proposed process pursuant to proposed Rule 6.11(d)(1)(A)(i) is intended to permit post-opening price discovery to occur in the underlying security prior to the opening of options on the security. Similarly, by initiating the opening rotation upon the System's observation of both opening triggers prior to the passage of two minutes, proposed Rule 6.11(d)(1)(A)(ii) ties the Exchange's opening process to specific market conditions in the underlying security that generally indicate that sufficient post-opening price discovery has occurred prior to the opening of options on the security. To illustrate, if the System were to observe a disseminated quote (or transaction) in the primary market for the underlying security, it would begin the two-minute (or shorter) timer pursuant to proposed Rule 6.11(d)(1)(A)(i). If two minutes then passed without the System's observation of a disseminated transaction (or quote) on the primary market for the underlying security (which would cause the scenario in Rule 6.11(d)(1)(A)(ii) to occur) then it would initiate the opening rotation after a time period determined by the Exchange, as it currently does today. Conversely, if the System were to observe a disseminated quote (or transaction) in the primary market and begin the two minute (or shorter) timer, but then observe a disseminated transaction (or quote) in the primary market before the passage of two minutes (or shorter), it would then, at the time it observed the disseminated transaction (or quote) prior to the passage of two minutes (or shorter), initiate the opening rotation after a period of time determined by the Exchange.
The Exchange notes that the proposed rule change in connection with initiating the opening rotation upon receipt of a trade and a quote in the underlying is consistent with the opening process rules of NYSE Arca.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that the proposed rule change to include the first dissemination of a quote on the primary market for the underlying security as an additional opening trigger for equity options would serve to remove impediments to and perfect the mechanism of a free and open market and national market system by incorporating an additional opening trigger into the Exchange's opening process which would help ensure that the primary market for the underlying is adequately situated with the appropriate liquidity and active price discovery in order to open for trading options on the underlying. Additionally, the proposed rule change would foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities because it will align the triggers for its equity options opening rotation with the triggers used by most other options exchanges.
In addition to this, the Exchange believes that the proposed rule change to implement additional timing procedures in connection with the System's observation of the first disseminated transaction and/or quote in the primary market for the underlying security prior to the initiation of the opening rotation would also serve to remove impediments to and perfect the mechanism of a free and open market and national market system by ensuring that stability is present in the underlying markets upon the initiation of the opening rotation to the benefits of investors. The proposed rule change is intended to promote the maintenance of a fair and orderly market and, in general, to protect investors and the public interest by either waiting a requisite amount of time after the System observes one opening trigger in order to allocate enough time to permit the price of the underlying security to stabilize after its opening, or by initiating the opening rotation upon the System's observation of both opening triggers (as proposed), thus tying the Exchange's open to the existence of liquidity on the primary market which generally indicates that sufficient post-opening price discovery has occurred prior to the opening of options on the underlying security. Additionally, the Exchange does not believe that the proposed rule change in connection with initiating trading on the Exchange when the System observes a quote and a trade in the underlying security, or observes either a quote or a trade in the underlying security followed by a pause, which, as proposed would be two minutes (or shorter) would significantly impact investors or the public interest because, as stated, these conditions are consistent with other options exchanges that have substantively the same conditions in place in connection with their opening processes.
The Exchange does not believe that the proposed changes would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule changes would impose any burden on intramarket competition that is not necessary in furtherance of the purposes of the Act, because the proposed additional opening trigger and steps in the opening trigger process would apply in the same manner to all equity options. The proposed rule change impacts a System process that occurs prior to the opening of trading, and merely modifies when the System will initiate an opening rotation. The Exchange also does not believe that the proposed change would impose any burden on intermarket competition that is not necessary in furtherance of the purposes of the Act, because use of the first disseminated quote from the primary market as a trigger for the opening rotation, as well as the combination of both opening triggers, or of one opening trigger plus a pause period of a two minutes (or shorter) prior to initiating the opening rotation, is consistent with the rules of other options exchanges.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
Cboe Exchange, Inc. (the “Exchange” or “Cboe Options”) proposes to amend the opening triggers for its opening rotation process for equity options. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the Exchange's website (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend Rule 5.31 (Opening Auction Process) in connection with the opening triggers for its opening rotation process for the Regular Trading Hours (“RTH”) trading session in equity options. Currently, Rule 5.31(d)(1) governs the RTH opening rotation triggers for equity options, as well as index options. Particularly, regarding equity options, Rule 5.31(d)(1) provides that the System
Specifically, the Exchange proposes to include the System's observation of the first disseminated quote on the primary market in the security underlying the equity options as an additional opening trigger for equity options.
The proposed additional timing steps in connection with the opening triggers are intended to ensure that the market for the underlying security has had sufficient time to open prior to the initiation of the opening rotation where there is not both a two-sided quote and an execution in the underlying security. By waiting a requisite amount of time after the System observes one of the opening triggers, the proposed process pursuant to proposed Rule 5.31(d)(1)(A)(i) is intended to permit post-opening price discovery to occur in the underlying security prior to the opening of options on the security. Similarly, by initiating the opening rotation upon the System's observation of both opening triggers prior to the passage of two minutes, proposed Rule 5.31(d)(1)(A)(ii) ties the Exchange's opening process to specific market conditions in the underlying security that generally indicate that sufficient post-opening price discovery has occurred prior to the opening of options on the security. To illustrate, if the System were to observe a disseminated quote (or transaction) in the primary market for the underlying security, it would begin the two-minute (or shorter) timer pursuant to proposed Rule 5.31(d)(1)(A)(i). If two minutes then passed without the System's observation of a disseminated transaction (or quote) on the primary market for the underlying security (which would cause the scenario in Rule 5.31(d)(1)(A)(ii) to occur) then it would initiate the opening rotation after a time period determined by the Exchange, as it currently does today. Conversely, if the System were to observe a disseminated quote (or transaction) in the primary market and begin the two minute (or shorter) timer, but then observe a disseminated transaction (or quote) in the primary market before the passage of two minutes (or shorter), it would then, at the time it observed the disseminated transaction (or quote) prior to the passage of two minutes (or shorter), initiate the opening rotation after a period of time determined by the Exchange.
The Exchange notes that the proposed rule change in connection with initiating the opening rotation upon receipt of a trade and a quote in the underlying is consistent with the opening process rules of NYSE Arca.
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
The Exchange believes that the proposed rule change to include the first dissemination of a quote on the primary market for the underlying security as an additional opening trigger for equity options would serve to remove impediments to and perfect the mechanism of a free and open market and national market system by incorporating an additional opening trigger into the Exchange's opening process which would help ensure that the primary market for the underlying is adequately situated with the appropriate liquidity and active price discovery in order to open for trading options on the underlying. Additionally, the proposed rule change would foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities because it will align the triggers for its equity options opening rotation with the triggers used by most other options exchanges.
In addition to this, the Exchange believes that the proposed rule change to implement additional timing procedures in connection with the System's observation of the first disseminated transaction and/or quote in the primary market for the underlying security prior to the initiation of the opening rotation would also serve to remove impediments to and perfect the mechanism of a free and open market and national market system by ensuring that stability is present in the underlying markets upon the initiation of the opening rotation to the benefits of investors. The proposed rule change is intended to promote the maintenance of a fair and orderly market and, in general, to protect investors and the public interest by either waiting a requisite amount of time after the System observes one opening trigger in order to allocate enough time to permit the price of the underlying security to stabilize after its opening, or by initiating the opening rotation upon the System's observation of both opening triggers (as proposed), thus tying the Exchange's open to the existence of liquidity on the primary market which generally indicates that sufficient post-opening price discovery has occurred prior to the opening of options on the underlying security. Additionally, the Exchange does not believe that the proposed rule change in connection with initiating trading on Cboe Options when the System observes a quote and a trade in the underlying security, or observes either a quote or a trade in the underlying security followed by a pause, which, as proposed would be two minutes (or shorter) would significantly impact investors or the public interest because, as stated, these conditions are consistent with other options exchanges that have substantively the same conditions in place in connection with their opening processes.
The Exchange does not believe that the proposed changes would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the proposed rule changes would impose any burden on intramarket competition that is not necessary in furtherance of the purposes of the Act, because the proposed additional opening trigger and steps in the opening trigger process would apply in the same manner to all equity options. The proposed rule change impacts a System process that occurs prior to the opening of trading, and merely modifies when the System will initiate an opening rotation. The Exchange also does not believe that the proposed change would impose any burden on intermarket competition that is not necessary in furtherance of the purposes of the Act, because use of the first disseminated quote from the primary market as a trigger for the opening rotation, as well as the combination of both opening triggers, or of one opening trigger plus a pause period of a two minutes (or shorter) prior to initiating the opening rotation, is consistent with the rules of other options exchanges.
The Exchange neither solicited nor received comments on the proposed rule change.
Because the proposed rule change does not: (i) Significantly affect the
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Small Business Administration.
30-Day notice.
The Small Business Administration (SBA) is publishing this notice to comply with requirements of the Paperwork Reduction Act (PRA) requires agencies to submit proposed reporting and recordkeeping requirements to OMB for review and approval, and to publish a notice in the
Submit comments on or before February 10, 2020.
Comments should refer to the information collection by name and/or OMB Control Number and should be sent to:
Curtis Rich, Agency Clearance Officer, (202) 205-7030,
The U.S. Small Business Administration will collect, analyze, and interpret information gathered through this generic clearance to identify services' accessibility, navigation, and use by customers, and make improvements in service delivery based on customer insights gathered through developing an understanding of the user experience interacting with Government.
Comments may be submitted on (a) whether the collection of information is
Social Security Administration.
Notice announcing updated penalty inflation adjustments for civil monetary penalties for 2020.
The Social Security Administration is giving notice of its updated maximum civil monetary penalties. These amounts are effective from January 15, 2020 through January 14, 2021. These figures represent an annual adjustment for inflation. The updated figures and notification are required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act).
Sotiris Planzos, Acting Counsel for Investigations and Enforcement, Room 2-ME-5, 6401 Security Boulevard, Baltimore, MD 21235-6401, 410-965-3498. For information on eligibility or filing for benefits, call the Social Security Administration's national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit the Social Security Administration's internet site, Social Security Online, at
On June 27, 2016, pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act),
Section 1129 CMPs (42 U.S.C. 1320a-8):
Section 1140 CMPs (42 U.S.C. 1320b-10):
Based upon a review of the Administrative Record assembled in this matter, and in consultation with the Attorney General and the Secretary of the Treasury, I conclude that there is a sufficient factual basis to find that the relevant circumstances described in section 219 of the Immigration and Nationality Act, as amended (hereinafter “INA”) (8 U.S.C. 1189), exist with respect to Asa'ib Ahl al-Haq, also known as AAH; Asa'ib Ahl al-Haq min Al-Iraq; Asaib al Haq; Asa'ib Ahl Al-Haqq; League of the Righteous; Khazali Network; Khazali Special Group; Qazali Network; The People of the Cave; Khazali Special Groups Network; Al-Tayar al-Risali; and The Missionary Current.
Therefore, I hereby designate the aforementioned organization and its aliases as a foreign terrorist organization pursuant to section 219 of the INA.
This determination shall be published in the
Acting under the authority of and in accordance with section 1(a)(ii)(A) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, Executive Order 13284 of January 23, 2003, and Executive Order 13886 of September 9, 2019, I hereby determine that the person known as Laith al-Khazali, also known as Layth al-Khaz'ali, also known as Layth Hadi Sa'id al-Khazali, also known as Layith Hadi Sa'id al-Khaz'ali, is a foreign person who has committed or has attempted to commit, or poses a significant risk of committing, or has participated in training to commit, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States.
Consistent with the determination in section 10 of Executive Order 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order.
This notice shall be published in the
Acting under the authority of and in accordance with section 1(a)(ii)(A) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, Executive Order 13284 of January 23, 2003, and Executive Order 13886 of September 9, 2019, I hereby determine that the person known as Qays al-Khazali, also known as Qays al-Khaz'ali, also known as Qais al-Khazali, also known as Qays Hadi Sa'id al-Khazali, is a foreign person who has committed or has attempted to commit, or poses a significant risk of committing, or has participated in training to commit, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States.
Consistent with the determination in section 10 of Executive Order 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order.
This notice shall be published in the
Acting under the authority of and in accordance with section 1(a)(ii)(A) of Executive Order 13224 of September 23, 2001, as amended by Executive Order 13268 of July 2, 2002, Executive Order 13284 of January 23, 2003, and Executive Order 13886 of September 9, 2019, I hereby determine that the person known as Asa'ib Ahl al-Haq, also known as AAH, also known as Asa'ib Ahl al-Haq min Al-Iraq, also known as Asaib al Haq, also known as Asa'ib Ahl Al-Haqq, also known as League of the Righteous, also known as Khazali Network, also known as Khazali Special Group, also known as Qazali Network, also known as The People of the Cave, also known as Khazali Special Groups Network, also known as Al-Tayar al-Risali, also known as The Missionary Current, is a foreign person who has committed or has attempted to commit, or poses a significant risk of committing, or has participated in training to commit, acts of terrorism that threaten the security of U.S. nationals or the national security, foreign policy, or economy of the United States.
Consistent with the determination in section 10 of Executive Order 13224 that prior notice to persons determined to be subject to the Order who might have a constitutional presence in the United States would render ineffectual the blocking and other measures authorized in the Order because of the ability to transfer funds instantaneously, I determine that no prior notice needs to be provided to any person subject to this determination who might have a constitutional presence in the United States, because to do so would render ineffectual the measures authorized in the Order.
This notice shall be published in the
Wisconsin Central Ltd. (WCL) has filed a verified notice of exemption under 49 CFR part 1152 subpart F—
WCL has certified that: (1) No local traffic has moved over the Line for two years; (2) any overhead traffic on the Line can be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line either is pending with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication) and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance of service shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA)
A copy of any petition filed with the Board should be sent to WCL's representative, Bradon J. Smith, Fletcher & Sippel LLC, 29 N Wacker Drive, Suite 800, Chicago, IL 60606.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available at
By the Board, Allison C. Davis, Director, Office of Proceedings.
Federal Aviation Administration (FAA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FAA invites public comments about our intention to request the Office of Management and Budget (OMB) approval for a new information collection. The
Written comments should be submitted by February 10, 2020.
Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/FAA, and sent via electronic mail to
Daniel T. Ronneberg by email at:
Under part 211 of title 49 Code of Federal Regulations (CFR), this document provides the public notice that on October 30, 2019, the National Railroad Passenger Corporation
Specifically, Amtrak has petitioned FRA for a waiver from the requirements of 49 CFR 238.111(a), pre-revenue service acceptance testing, for Siemens Charger locomotives, ALC-42 variants included, to operate across the entirety of Amtrak's operating network. Following FRA's correspondence to Amtrak dated May 16, 2019, Amtrak began to perform a select number of SC-44 Charger performance tests on several long-distance network routes. Results have been generally positive thus far with a low number of correctional recommendations sent back to the Original Equipment Manufacturer (OEM). Amtrak intends to perform additional SC-44 testing in 2020 to further validate the Charger platform in a long-distance environment prior to receiving ALC-42 deliveries.
Since the receipt of FRA's May 16, 2019 correspondence, Amtrak has also provided to FRA the entirety of the design documentation received to date from Siemens for the ALC-42 procurement. Most of these ALC-42 preliminary design review documents are the SC-44 final design documents. These include designs of the suspension system, wheel profile, crash energy management, fuel tank, and other car body drawings. Further, no changes to the dimensions or car body profile of the locomotive will vary between the ALC-42 or the SC-44. The ALC-42 will have a minimal (<0.5%) empty weight variance due to different internal components such as head-end power (HEP) transformer and cab signal, and a minimal (<2.0%) loaded gross weight variance due to increased fuel/diesel exhaust fluid (DEF)/sand capacity than the SC-44. Amtrak states these small weight variances reside below the floor and therefore should have negligible effect from low center of gravity. The other notable differences between the two platform versions will reside within the cab (additional positive train control systems, screen interfaces) and inside the engine room (different fuel filtration, HEP inverter, brake grid, etc.).
Based on the above and the Charger platform testing that has been performed to date, Amtrak requests a waiver from the requirements of 49 CFR 238.111(a) testing for Siemens Charger locomotives, ALC-42 variants included.
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested parties desire an opportunity for oral comment and a public hearing, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
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Communications received by February 24, 2020 will be considered by FRA before final action is taken. Comments received after that date will be considered if practicable.
Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to
Issued in Washington, DC.
Under part 211 of title 49 Code of Federal Regulations (CFR), this document provides the public notice that on December 4, 2019, Caltrain petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR part 238, Passenger Equipment Safety Standards. FRA assigned the petition Docket Number FRA-2019-0106.
Specifically, Caltrain seeks a waiver of compliance from portions of 49 CFR 238.131(a)(1) for its new six-car Stadler Electric Multiple Unit (EMU) trainsets currently under construction. The Federal regulation incorporates American Public Transportation Association (APTA) Standard PR-M-S-18-10,
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
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•
•
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Communications received by February 24, 2020 will be considered by FRA before final action is taken. Comments received after that date will be considered if practicable. Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to
Issued in Washington, DC.
Office of the Comptroller of the Currency (OCC), Treasury.
Notice and request for comment.
The OCC, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on the renewal of an information collection as required by the Paperwork Reduction Act of 1995 (PRA).
An agency may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.
The OCC is soliciting comment concerning renewal of an information collection titled, “Retail Foreign Exchange Transactions,” which is currently an approved collection.
Comments must be submitted on or before March 10, 2020.
Commenters are encouraged to submit comments by email, if possible. You may submit comments by any of the following methods:
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You may review comments and other related materials that pertain to this information collection beginning on the date of publication of the second notice for this collection
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• For assistance in navigating
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Shaquita Merritt, OCC Clearance Officer, (202) 649-5490 or, for persons who are deaf or hearing impaired, TTY, (202) 649-5597, Chief Counsel's Office, Office of the Comptroller of the Currency, 400 7th Street SW, Washington, DC 20219.
Under the PRA (44 U.S.C. 3501
The OCC's retail forex rule (12 CFR part 48) allows national banks and Federal savings associations to offer or enter into retail foreign exchange transactions. In order to engage in these transactions, institutions must comply with various reporting, disclosure, and recordkeeping requirements included in that rule.
The reporting requirements in 12 CFR 48.4 state that, prior to initiating a retail forex business, a national bank or Federal savings association must provide the OCC with prior notice and obtain a written supervisory no-objection letter. In order to obtain a supervisory no-objection letter, a national bank or Federal savings association must have written policies, procedures, and risk measurement and management systems and controls in place to ensure that retail forex transactions are conducted in a safe and sound manner. The national bank or Federal savings association also must provide other information required by the OCC, such as documentation of customer due diligence, new product approvals, and haircuts applied to noncash margins.
Under 12 CFR 48.5, a national bank or Federal savings association must promptly provide the customer with a statement reflecting the financial result of the transactions and the name of any introducing broker to the account. The institution must follow the customer's specific instructions on how the offsetting transaction should be applied.
Twelve CFR 48.6 requires that a national bank or Federal savings association furnish a retail forex customer with a written disclosure before opening an account through which the customer will engage in retail forex transactions. It further requires a national bank or Federal savings association to secure an acknowledgment from the customer that the disclosure was received and understood. Finally, the section requires the disclosure by a national bank or Federal savings association of its profitable accounts ratio and its fees and other charges.
Twelve CFR 48.10 requires a national bank or Federal savings association to issue monthly statements to each retail forex customer and send confirmation statements following transactions.
Twelve CFR 48.13(c) prohibits a national bank or Federal savings association engaging in retail forex transactions from knowingly handling the account of any related person of another retail forex counterparty unless it receives proper written authorization, promptly prepares a written record of the order, and transmits to the counterparty copies of all statements and written records. Twelve CFR 48.13(d) prohibits a related person of a national bank or Federal savings association engaging in retail forex transactions from having an account with another retail forex counterparty unless it receives proper written authorization and copies of all statements and written records for such accounts are transmitted to the counterparty.
Twelve CFR 48.15 requires a national bank or Federal savings association to provide a retail forex customer with 30 days prior notice of any assignment of any position or transfer of any account of the retail forex customer. It also requires a national bank or Federal savings association to which retail forex accounts or positions are assigned or transferred to provide the affected customers with risk disclosure statements and forms of acknowledgment and obtain the signed acknowledgments within 60 days.
The customer dispute resolution provisions in 12 CFR 48.16 require certain endorsements, acknowledgments, and signatures. The section also requires that a national bank or Federal savings association, within 10 days after receipt of notice from the retail forex customer that the customer intends to submit a claim to arbitration, provide the customer with a list of persons qualified in the dispute resolution.
Twelve CFR 48.7 and 48.13 require that a national bank or Federal savings association engaging in retail forex transactions keep full, complete, and systematic records and to establish and implement internal rules, procedures, and controls. Section 48.7 also requires that a national bank or Federal savings association keep account, financial ledger, transaction, and daily records, as well as memorandum orders, post-execution allocation of bunched orders, records regarding its ratio of profitable accounts, possible violations of law, records for noncash margin, and monthly statements and confirmations. Twelve CFR 48.9 requires policies and procedures for haircuts for noncash margin collected under the rule's margin requirements and annual evaluations and modifications of the haircuts.
Comments submitted in response to this notice will be summarized and included in the request for OMB approval. All comments will become a matter of public record. Comments are invited on:
(a) Whether the collection of information is necessary for the proper performance of the functions of the OCC, including whether the information has practical utility;
(b) The accuracy of the OCC's estimate of the burden of the information collection;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Department of the Treasury.
Notice of availability; request for comments.
The Board of Trustees of the Bricklayers & Allied Craftsmen Local 7 Pension Fund (Fund), a multiemployer pension plan, has submitted an application to reduce benefits under the plan in accordance with the Multiemployer Pension Reform Act of 2014 (MPRA). The purpose of this notice is to announce that the application submitted by the Board of Trustees of the Fund has been published
Comments must be received by February 24, 2020.
You may submit comments electronically through the Federal eRulemaking Portal at
Comments may also be mailed to the Department of the Treasury, MPRA Office, 1500 Pennsylvania Avenue NW, Room 1224, Washington, DC 20220, Attn: Danielle Norris. Comments sent via facsimile or email will not be accepted.
For information regarding the application from the Fund, please contact Treasury at (202) 622-1534 (not a toll-free number).
MPRA amended the Internal Revenue Code to permit a multiemployer plan that is projected to have insufficient funds to reduce pension benefits payable to participants and beneficiaries if certain conditions are satisfied. In order to reduce benefits, the plan sponsor is required to submit an application to the Secretary of the Treasury, which must be approved or denied in consultation with the Pension Benefit Guaranty Corporation (PBGC) and the Department of Labor.
On December 13, 2019, the Board of Trustees of the Fund submitted an application for approval to reduce benefits under the plan. As required by MPRA, that application has been published on Treasury's website at
Comments are requested from interested parties, including participants and beneficiaries, employee organizations, and contributing employers of the Fund. Consideration will be given to any comments that are timely received by Treasury.
Departmental Offices, Treasury.
Notice.
For the period beginning January 1, 2020, and ending on March 31, 2020, the U.S. Immigration and Customs Enforcement Immigration Bond interest rate is 1.61 per centum per annum.
Rates are applicable January 1, 2020 to March 31, 2020.
Comments or inquiries may be mailed to Will Walcutt, Supervisor, Funds Management Branch, Funds Management Division, Fiscal Accounting, Bureau of the Fiscal Services, Parkersburg, West Virginia 26106-1328.
You can download this notice at the following internet addresses:
Ryan Hanna, Manager, Funds Management Branch, Funds Management Division, Fiscal Accounting, Bureau of the Fiscal Service, Parkersburg, West Virginia 261006-1328, (304) 480-5120; Will Walcutt, Supervisor, Funds Management Branch, Funds Management Division, Fiscal Accounting, Bureau of the Fiscal Services, Parkersburg, West Virginia 26106-1328, (304) 480-5117.
Federal law requires that interest payments on cash deposited to secure immigration bonds shall be “at a rate determined by the Secretary of the Treasury, except that in no case shall the interest rate exceed 3 per centum per annum.” 8 U.S.C. 1363(a). Related Federal regulations state that “Interest on cash deposited to secure immigration bonds will be at the rate as determined by the Secretary of the Treasury, but in no case will exceed 3 per centum per annum or be less than zero.” 8 CFR 293.2. Treasury has determined that interest on the bonds will vary quarterly and will accrue during each calendar quarter at a rate equal to the lesser of the average of the bond equivalent rates on 91-day Treasury bills auctioned during the preceding calendar quarter, or 3 per centum per annum, but in no case less than zero. [FR Doc. 2015-18545] In addition to this Notice, Treasury posts the current quarterly rate in Table 2b—Interest Rates for Specific Legislation on the TreasuryDirect website.
U.S.-China Economic and Security Review Commission.
Notice of open public hearing.
Notice is hereby given of the following hearing of the U.S.-China Economic and Security Review Commission.
The Commission is mandated by Congress to investigate, assess, and report to Congress annually on “the national security implications of the economic relationship between the United States and the People's Republic of China.” Pursuant to this mandate, the Commission will hold a public hearing in Washington, DC on January 23, 2020 on “China's Quest for Capital: Motivations, Methods, and Implications.”
The hearing is scheduled for Thursday, January 23, 2020 at 9:30 a.m.
TBD, Washington, DC. A detailed agenda for the hearing will be posted on the Commission's website at
Any member of the public seeking further information concerning the hearing should contact Leslie Tisdale Reagan, 444 North Capitol Street NW, Suite 602, Washington, DC 20001; telephone: 202-
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final action; implementation of court order.
Pursuant to an order from the U.S. District Court for the Northern District of California in the consolidated cases of
January 10, 2020.
The docket, which includes
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
Elsewhere in this issue of the
Pursuant to this order, DOE submitted the documents, as originally signed and dated in 2016. By publishing this final action, DOE reaffirms the validity of the original signatures on the ECS documents under 1 CFR 18.1 and 18.7.
Each of the ECS documents is substantively identical to the documents previously posted to DOE's website. However, consistent with the normal publication process, each document has been reviewed and edited to ensure that the requirements set out by the Administrative Committee of the
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
The Energy Policy and Conservation Act of 1975 (EPCA or the Act), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment. In addition to specifying a list of covered consumer products and commercial equipment, EPCA contains provisions that enable the Secretary of Energy to classify additional types of consumer products as covered products. On April 18, 2016, the U.S. Department of Energy (DOE or the Department) published a final coverage determination to classify portable air conditioners (ACs) as covered consumer products under the applicable provisions in EPCA. In this final rule, DOE establishes new energy conservation standards for portable ACs. DOE has determined that the energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.
The effective date of this rule is March 10, 2020. Compliance with the standards established for portable ACs in this final rule is required on and after January 10, 2025.
The docket for this rulemaking, which includes
The docket web page can be found at
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
Mr. Bryan Berringer, 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) 586-0371. Email:
Ms. Sarah Butler, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121.
Title III, Part B
Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B))
In accordance with these and other statutory provisions discussed in this document, DOE is adopting energy conservation standards for portable ACs. The standards, which correspond to trial standard level (TSL) 2 (described in section V.A of this document), are minimum allowable combined energy efficiency ratio (CEER) standards, which are expressed in British thermal units (Btu) per watt-hour (Wh), and are shown in Table I.1. These standards apply to all single-duct portable ACs and dual-duct portable ACs that are manufactured in, or imported into, the United States starting on January 10, 2025.
Table I.2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of portable ACs, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document. DOE also performed three sensitivity analyses on its primary assertion that portable air conditioners are used and operated in a similar manner to room air conditioners to further analyze the effects of the benefits and cost to consumers from these products. In one sensitivity analysis, DOE found that reducing operating hours by 50 percent, resulted in an estimate of one-third of the energy cost savings relative to the primary estimate. In this low-usage case, the average LCC savings for all consumers under the adopted standards would be $35 (compared with $125 in the primary estimate), and 42 percent of consumers would be impacted negatively (compared with 27 percent in the primary estimate). The simple payback period would be 5.1 years (compared with 2.6 years in the primary estimate). Further details are presented in section IV.E, V.B.1, and appendix 8F and appendix 10E of the final rule TSD.
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 (2017-2051). Using a real discount rate of 6.6 percent, DOE estimates that the INPV for manufacturers of portable ACs in the case without new standards is $738.5 million in 2015$. Under the adopted standards, DOE expects the change in INPV to range from −34.3 percent to −28.8 percent, which is approximately −$253.4 million to −$212.4 million. In order to bring products into compliance with new standards, DOE expects the industry to incur total conversion costs of $320.9 million.
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.
DOE's analyses indicate that the adopted energy conservation standards for portable ACs would save a significant amount of energy. Relative to the case without new standards the lifetime energy savings for portable ACs purchased in the 30-year period that begins in the anticipated year of compliance with the new standards (2022-2051), amount to 0.49 quadrillion Btu, or quads.
The cumulative net present value (NPV) of total consumer benefits of the standards for portable ACs ranges from $1.25 billion (at a 7-percent discount rate) to $3.06 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for portable ACs purchased in 2022-2051.
In addition, the new standards for portable ACs 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 25.6 million metric tons (Mt)
The value of the CO
DOE also calculated the value of the reduction in emissions of the non-CO
DOE also estimates that the present value of the NO
Table I.3 summarizes the economic benefits and costs expected to result from the adopted standards for portable ACs.
The benefits and costs of the adopted standards, for portable ACs sold in 2022-2051, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are (1) the reduced consumer operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO
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 portable ACs shipped in 2022-2051. The benefits associated with reduced CO
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,
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.
Based on the analyses culminating in this final rule, DOE found the benefits to the nation of the standards (energy savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (loss of INPV and LCC increases for some users of these products). DOE has concluded that the standards in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy.
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 portable ACs.
Title III, Part B of the EPCA, Public Law 94-163 (codified as 42 U.S.C. 6291-6309) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”). EPCA authorizes the Secretary of Energy to classify additional types of consumer products not otherwise specified in Part A as covered products. For a type of consumer product to be classified as a covered product, the Secretary must determine that:
(1) Classifying the product as a covered product is necessary for the purposes of EPCA; and
(2) The average annual per-household energy use by products of such type is likely to exceed 100 kilowatt-hours (kWh) per year. (42 U.S.C. 6292(b)(1))
Under the authority established in EPCA, DOE published the April 2016 Final Coverage Determination that established portable ACs as a covered product because such a classification is necessary or appropriate to carry out the purposes of EPCA, and the average U.S. household energy use for portable ACs is likely to exceed 100 kWh per year. 81 FR 22514 (Apr. 18, 2016).
EPCA, as amended, grants DOE authority to prescribe an energy
(1) the average per household energy use within the United States by products of such type (or class) exceeded 150 kilowatt-hours (kWh) (or its Btu equivalent) for any 12-month period ending before such determination;
(2) the aggregate household energy use within the United States by products of such type (of class) exceeded 4,200,000,000 kWh (or its Btu equivalent) for any such 12-month period;
(3) substantial improvement in the energy efficiency of products of such type (or class) is technologically feasible; and
(4) the application of a labeling rule under 42 U.S.C. 6294 to such type (or class) is not likely to be sufficient to induce manufacturers to produce, and consumers and other persons to purchase, covered products of such type (or class) which achieve the maximum energy efficiency which is technologically feasible and economically justified. (42 U.S.C. 6295(l)(1))
DOE has determined that portable ACs meet the four criteria outlined in 42 U.S.C. 6295(l)(1) for prescribing energy conservation standards for newly covered products. Specifically, DOE has determined that for a 12-month period ending before such determination, the average per household energy use within the U.S. by portable ACs exceeded 150 kWh (see chapter 7 of this final rule technical support document (TSD)). DOE has also determined that the aggregate household energy use within the United States by portable ACs exceeded 4,200,000,000 kWh (or its Btu equivalent) for such a 12-month period (see chapter 10 of this final rule TSD). Further, DOE has determined that substantial improvement in the energy efficiency of portable ACs is technologically feasible (see section IV.C of this document and chapter 5 of the final rule TSD), and has determined that the application of a labeling rule under 42 U.S.C. 6294 to portable ACs is not likely to be sufficient to induce manufacturers to produce, and consumers and other persons to purchase, portable ACs that achieve the maximum energy efficiency which is technologically feasible and economically justified (see chapter 17 of this final rule TSD).
Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedures for portable ACs were established in a final rule published on June 1, 2016 (81 FR 35241; hereinafter the “June 2016 TP Final Rule”), and appear at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix CC (hereinafter “appendix CC”) and 10 CFR 430.23(dd).
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including portable ACs. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) Moreover, DOE may not prescribe a standard (1) for certain products, including portable ACs, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard, and by considering, to the greatest extent practicable, the following seven statutory factors:
(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, states that 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 U.S. 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 U.S. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE
Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).
Finally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's current test procedures for portable ACs address standby mode and off mode energy use, as do the new standards adopted in this final rule.
DOE has not previously conducted an energy conservation standards rulemaking for portable ACs. Consequently, there are currently no Federal energy conservation standards for portable ACs.
On February 27, 2015, DOE published a notice of public meeting and notice of availability of a preliminary TSD for portable AC energy conservation standards (hereinafter the “February 2015 Preliminary Analysis”). In the preliminary analysis, DOE conducted in-depth technical analyses in the following areas: (1) Engineering, (2) markups to determine product price, (3) energy use, (4) LCC and PBP, and (5) national impacts. 80 FR 10628. The preliminary TSD that presented the methodology and results of each of these analyses is available at
DOE also conducted, and discussed in the preliminary TSD, several other analyses that supported the major analyses or were expanded upon in the later stages of the standards rulemaking. These analyses included: (1) The market and technology assessment; (2) the screening analysis, which contributes to the engineering analysis; and (3) the shipments analysis,
DOE held a public meeting on March 18, 2015, to discuss the analyses and solicit comments from interested parties regarding the preliminary analysis it conducted. The meeting covered the analytical framework, models, and tools that DOE uses to evaluate potential standards; the results of preliminary analyses performed by DOE for this product; the potential energy conservation standard levels derived from these analyses that DOE could consider for this product; and any other issues relevant to the development of energy conservation standards for portable ACs.
Interested parties commented at the public meeting and submitted written comments regarding the following major issues: Rulemaking schedule with respect to establishing the test procedure, covered product configurations, product classes and impacts on consumer utility, technology options, efficiency levels (ELs), incremental costs, data sources, and cumulative regulatory burden.
Comments received in response to the February 2015 Preliminary Analysis helped DOE identify and resolve issues related to the preliminary analysis. After reviewing these comments, DOE gathered additional information, held further discussions with manufacturers, and completed and revised the various analyses described in the preliminary analysis.
On June 13, 2016, DOE published an energy conservation standards (ECS) notice of proposed rulemaking (hereinafter the “June 2016 ECS NOPR”) and notice of public meeting. 81 FR 38397. The June 2016 ECS NOPR and accompanying TSD presented the results of DOE's updated analyses and proposed new standards for portable ACs. On July 20, 2016, DOE held a standards public meeting to discuss the issues detailed in the June 2016 ECS NOPR (hereinafter the “July 2016 STD Public Meeting”). Interested parties, listed in Table II.1, commented on the various aspects of the proposed rule and submitted written comments.
Following the July 2016 STD Public Meeting, DOE gathered additional information and incorporated feedback from comments received in response to the June 2016 ECS NOPR. Based on this information, DOE revised the analyses presented in the June 2016 ECS NOPR for this final rule. The results of these analyses are detailed in the final rule TSD, available in the docket for this rulemaking.
DOE developed this final rule after considering verbal and written comments, data, and information from interested parties that represent a variety of interests. The following discussion addresses issues raised by these commenters.
When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify differing standards. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility of the feature to the consumer and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
In the February 2015 Preliminary Analysis, DOE did not consider energy conservation standards for portable ACs other than single-duct or dual-duct portable ACs, as the test procedure proposed at that time did not include provisions for testing other portable ACs. Furthermore, DOE did not separate portable ACs into multiple product classes for the February 2015 Preliminary Analysis following a determination that there is no unique utility associated with single-duct or dual-duct portable ACs.
The test procedure established in the June 2016 TP Final Rule maintained provisions for testing only single-duct and dual-duct portable AC configurations and therefore, in the June 2016 ECS NOPR that was published following the June 2016 TP Final Rule, DOE proposed standards for a single product class of single-duct and dual-duct portable AC configurations. In this final rule, DOE is establishing standards for one product class for all single-duct and dual-duct portable ACs. Comments received relating to the scope of coverage and product classes are discussed in section IV.A of this document.
EPCA sets forth generally applicable criteria and procedures for DOE's adoption and amendment of test procedures. (42 U.S.C. 6293) Manufacturers of covered products must use these test procedures to certify to DOE that their product complies with energy conservation standards and to quantify the efficiency of their product.
With respect to the process of establishing test procedures and standards for a given product, DOE notes that it generally follows the approach laid out in its guidance found in 10 CFR part 430, subpart C, appendix A (Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products). Pursuant to that guidance, DOE endeavors to issue final test procedure rules for a given covered product in advance of the publication of a NOPR proposing energy conservation standards for that covered product.
On May 9, 2014, DOE initiated a test procedure rulemaking for portable ACs by publishing a notice of data availability (hereinafter the “May 2014 TP NODA”) to request feedback on potential testing options. In the May 2014 TP NODA, DOE discussed various industry test procedures and presented results from its investigative testing that evaluated existing methodologies and alternate approaches that could be incorporated in a future DOE test procedure, should DOE determine that portable ACs are covered products. 79 FR 26639.
On February 25, 2015, DOE published a NOPR (hereinafter the “February 2015 TP NOPR”) in which it proposed to establish test procedures for single-duct and dual-duct portable ACs. The proposed test procedures were based upon industry methods to determine energy consumption in active modes, off-cycle mode, standby modes, and off mode, with certain modifications to ensure the test procedures are repeatable and representative. 80 FR 10211.
On November 27, 2015, DOE published a supplemental notice of proposed rulemaking (SNOPR) (hereinafter the “November 2015 TP SNOPR”), in which it proposed revisions to the test procedure proposed in the February 2015 TP NOPR to
On June 1, 2016, following publication of the April 2016 Final Coverage Determination, DOE published the June 2016 TP Final Rule that established test procedures for portable ACs at appendix CC and 10 CFR 430.23(dd). 81 FR 35241. The energy conservation standards established in this final rule are expressed in terms of CEER, in Btu per Wh, based on the seasonally adjusted cooling capacity (SACC), in Btu per hour, as determined in accordance with the DOE test procedure for portable ACs at appendix CC.
In response to the June 2016 ECS NOPR, DOE received comments from interested parties regarding DOE's portable AC test procedures and the associated impacts on the analysis for new standards. The following sections discuss the relevant test procedure comments.
DOE received several comments regarding the timing of the publication of the June 2016 TP Final Rule and manufacturers' opportunity to use the final test procedure in evaluating design options and the proposed standards level from the June 2016 ECS NOPR. GE, AHAM, JMATEK, and China claimed that neither manufacturers nor third-party laboratories have the equipment or expertise to conduct tests according to appendix CC. GE and China commented that laboratories would require additional time and investment to upgrade their test chambers to measure the infiltration air and to fully understand the repeatability and reproducibility of the new test procedure. AHAM stated that, with sufficient time, it expected to identify laboratories that could test enough portable AC models to provide additional test data for DOE's analysis. JMATEK asserted that additional time would be necessary to test its full product line. (GE, Public Meeting Transcript, No. 39 at pp. 17, 64, 129-130; AHAM, Public Meeting Transcript, No. 39 at pp. 14-15, 64; AHAM, No. 43 at p. 3; China, No. 34 at p. 3; JMATEK, No. 40 at p. 2)
In a memo published on August 19, 2016, and titled, “Memo_AHAM Request for Info on PACs_2016-08-19” (hereinafter the “DOE response memo”),
As discussed in section III.F of this document, several interested parties requested that DOE extend the June 2016 ECS NOPR comment period to provide manufacturers and test laboratories additional time to gain expertise with the test procedures in appendix CC and collect and analyze performance data to help support the standards rulemaking. To address those comments, on August 8, 2016, DOE published a notice to extend the original comment period for the June 2016 ECS NOPR by 45 days. DOE stated that this extension would allow additional time for AHAM and its members and other interested parties to test existing models to the test procedure; examine the data, information, and analysis presented in the STD NOPR TSD; gather any additional data and information to address the proposed standards; and submit comments to DOE. 81 FR 53961. As discussed further in section IV.C of this final rule, DOE believes that the comment period extension addressed the concerns presented by commenters as this timeline allowed AHAM and its members to conduct testing and provide data for 22 portable AC models, which DOE has incorporated into its analysis.
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 final rule discusses the results of the screening analysis for portable ACs, 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.
When DOE adopts a new or amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for portable ACs, 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
For each TSL, DOE projected energy savings from application of the TSL to portable ACs purchased in the 30-year period that begins in the year of compliance with the standards (2022-2051).
DOE used its NIA spreadsheet models to estimate national energy savings (NES) from potential standards for portable ACs. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by products at the locations where they are used. For electricity, DOE reports NES 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 (
To adopt any new or amended standards for a covered product, DOE must determine that such action would result in significant energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, for the District of Columbia Circuit in
As noted above, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.
In determining the impacts of potential standards on manufacturers, DOE conducts a 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 industry-wide impacts analyzed include (1) INPV, which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national NPV 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.
EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered product in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of a product (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with new or amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of new or amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.
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
In establishing product classes, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this document would not reduce the utility or performance of the products under consideration in this rulemaking.
EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the Department of Justice (DOJ) in making such a determination, DOE transmitted copies of its proposed rule and the NOPR TSD to the Attorney General for review, with a request that the DOJ provide its determination on this issue. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for portable ACs 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.
DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the adopted standards 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 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 of this document; the emissions impacts are reported in section V.B.6 of this final rule. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document.
In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the 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). 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 document.
In response to the June 2016 ECS NOPR, DOE received additional comments from interested parties regarding general issues, discussed in the following section.
AHAM, De' Longhi, GE, Temp-Air, ASAP, and the California IOUs supported DOE's efforts to establish a test procedure and initial energy conservation standards for portable ACs. GE expects that, with the DOE test procedure and standards in place, consumers will be better able to select an appropriately sized portable AC for their cooling needs. ASAP similarly believes that a portable AC test procedure and energy conservation standards would help consumers compare the actual performance of portable ACs and reduce energy consumption, particularly because this is a growing product category and portable ACs use approximately twice as much energy as room ACs. The California IOUs claimed that consumers may use portable ACs as replacements for room ACs and dehumidifiers, and therefore encouraged DOE to set standards that have similar levels of stringency to those products. (AHAM, Public Meeting Transcript, No. 39 at p. 12; AHAM, No. 43 at p. 1; De' Longhi, No. 41 at p. 1; GE, Public Meeting Transcript, No. 39 at pp. 16-17; Temp-Air, No. 45 at p. 1; ASAP, Public Meeting Transcript, No. 39 at p. 10; California IOUs, No. 42 at p. 1)
In this final rule, DOE is establishing energy conservation standards for portable ACs that, pursuant to EPCA (42 U.S.C. 6295(o)(2)(A)), are determined to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified.
GE expressed concern about the NOPR proposals due to the lack of time manufacturers and third-party laboratories have had to understand the test procedure. (Public Meeting Transcript, No. 39 at pp. 16-18) AHAM noted that DOE developed the portable AC test procedure in parallel with the standards analysis, which, according to AHAM, minimized manufacturers' ability to participate in the rulemaking. AHAM suggested that manufacturers need at least 6 months between the date of publication of the test procedure and the close of the June 2016 ECS NOPR comment period to gain expertise with the test procedure and collect a sufficient sample of test results to assess
In response to AHAM's request for a comment period extension, on August 15, 2016, DOE extended the comment period for the June 2016 ECS NOPR by 45 days from the original comment deadline of August 12, 2016, to September 26, 2016. 81 FR 53961.
Following the comment period extension, AHAM submitted additional comments expressing concern with DOE's approach to proceed with a standards analysis and development in the absence of a final test procedure. AHAM noted that 42 U.S.C. 6295(r) requires that a new standard must include test procedures prescribed in accordance with 42 U.S.C. 6293, and AHAM stated that it believes this requirement is not effective if a test procedure is not finalized with sufficient time prior to a proposed or final standards rule, limiting the involvement and ability for manufacturers and interested parties to evaluate the standards. In the case of the June 2016 ECS NOPR analysis, AHAM asserted that manufacturers, efficiency advocates, and interested parties have had little experience with the test procedure and have been unable to use it to assess the standards analysis, and in particular the estimated impacts on consumers and manufacturers. AHAM suggested that DOE should not issue a new portable AC standard without determining if it is justified and how consumers, especially those with low and fixed incomes, may be impacted via increased product cost and loss of functionality, features, and choice. (AHAM, No. 43 at pp. 2, 30)
AHAM commented that no standard can pass the substantial evidence test if it is not based on a final test procedure, if one is required, and noted that such test procedure must have been based on a full and useful opportunity for the public to comment on the procedure and its impact on proposed standard levels. AHAM additionally noted that Section 7 of the Process Improvement Rule (10 CFR part 430, subpart C, appendix A) states that DOE will attempt to identify any necessary modifications to establish test procedures when “initiating the standards development process.” Further, AHAM stated that section 7(b) states that “needed modifications to test procedures will be identified in consultation with experts and interested parties early in the screening stage of the standards development process,” and section 7(c) states that “final, modified test procedures will be issued prior to the NOPR on proposed standards.” AHAM commented that the same principles apply to new test procedures and the Process Improvement Rule indicates that it also applies to development of new standards. (AHAM, No. 43 at p. 2)
In response, DOE notes that AHAM and several other interested parties, including, manufacturers, efficiency advocates, utilities, and manufacturer organizations, have participated in every stage of the portable AC standards rulemaking, providing valuable feedback to DOE. As discussed earlier in this section, DOE extended the comment period for the June 2016 ECS NOPR by 45 days from the original comment deadline. With this additional time, AHAM's members were able to test 22 portable ACs according to the test procedures in appendix CC. AHAM provided the test data to DOE, performed a similar analysis to determine appropriate efficiency levels, and recommended a new standards level. Therefore, DOE believes that AHAM has had sufficient time to evaluate the June 2016 ECS NOPR proposal. DOE appreciates AHAM's feedback and has incorporated their information into this final rule analysis.
In addition to its standard LCC analysis, DOE did consider how the standards would affect certain groups of consumers, including senior-only households, low-income households, and small business. Presentation of the approach to the consumer sub-groups development can be found in section IV.I of this document and LCC results can be found in section V.B.1.b of this final rule.
China suggested an additional year for manufacturers to comply with any portable AC standards. (China, No. 34 at p. 3)
EPCA requires that newly-established standards shall not apply to products manufactured within five years after the publication of the final rule. (42 U.S.C. 6295(l)(2)) In accordance with this requirement, compliance with the energy conservation standards established in this final rule will be required 5 years after the date of publication of this standards final rule in the
The Joint Commenters supported DOE's proposal that portable AC certification reports include CEER and SACC, duct configuration, presence of a heating function, and primary condensate removal feature, noting that these proposed certification reporting requirements will provide useful information both to the public and to DOE for use in a future rulemaking. (Joint Commenters, No. 44 at p. 6) AHAM opposed reporting of the presence of a heating function in the certification reports because the test procedure in appendix CC does not test the heating function and the heating function is not relevant to compliance with DOE's proposed standard. (AHAM, No. 43 at p. 30) DOE is including the reporting requirement for presence of a heating function in this final rule because the information will aid DOE in collecting and analyzing product characteristics in support of future rulemakings, and does not believe that including this reporting requirement represents a substantive burden to manufacturers in preparing certification reports.
JMATEK requested clarification regarding the acceptable tolerance of cooling capacity and efficiency and heating mode measurements, specifically the SACC and CEER tolerances, and detailed information regarding calculating heating mode performance. (JMATEK, No. 40 at p. 2) The certification requirements proposed in the NOPR only require reporting the presence of heating mode and do not require reporting heating mode performance. The provisions in 10 CFR 429.62(a) specify the sampling plan to be used to demonstrate compliance with the portable AC standards, including 10 CFR 429.62(a)(3) and 10 CFR 429.62(a)(4) which provide the rounding requirements for SACC and CEER, respectively. Appendix CC contains test equipment and measurement requirements.
China asked, under the proposed enforcement provision in 10 CFR 429.134(n), whether the certified SACC is valid only if the average measured SACC is within 5 percent of the certified SACC is an upper or lower limit, or both. (China, No. 34 at p. 4) The provision refers to the absolute value of the difference between the measured
AHAM agreed with DOE's proposed enforcement approach but noted that a 5-percent tolerance might not be enough given the inexperience with the new test procedure. AHAM suggested that DOE should work to understand the variation in that test with regard to determining cooling capacity before deciding on a threshold. (AHAM, No. 43 at p. 30) The 5-percent tolerance on cooling capacity for enforcement is consistent with the tolerance used for packaged terminal air conditioners (PTACs) and packaged terminal heat pumps (PTHPs). Because cooling mode testing for PTACs and PTHPs utilize the same air enthalpy method that is the basis for the cooling mode testing in appendix CC, DOE determined that a similar cooling capacity tolerance for enforcement is appropriate for portable ACs, and thus establishes 5-percent tolerance limit in this final rule.
The California IOUs urged DOE to require portable ACs with dehumidification mode to meet the Federal standards for dehumidifiers, and that DOE should include the presence of dehumidification mode in the certification reporting requirements. They noted that the majority of portable ACs currently available for purchase from major retailers are equipped with a dehumidification mode, and the advertised moisture removal capacities for these units are comparable to those of residential dehumidifiers. The California IOUs also noted that certain retailer websites allow consumers to sort and filter listings for portable AC units by moisture removal capacity, and therefore posited that consumer purchasing decisions are likely influenced by the dehumidification capacity. The California IOUs further suggested that consumers may opt for a portable AC unit instead of purchasing a separate dehumidifier, or may use their existing portable AC as a dehumidifier. The California IOUs stated that DOE opted to exclude dehumidification mode from the portable AC test procedure because it determined dehumidification mode operating hours are insignificant, based on the assessment of a metered study, even though the study included only 19 sites from two states and participants were informed of the test purpose and scope prior to the study. Therefore, the California IOUs suggested that the study did not accurately estimate the consumer propensity for using dehumidification mode, as it did not capture consumers purchasing, or repurposing, a portable AC with the intent of also using it as a dehumidifier. The California IOUs suggested that if portable ACs are not covered under the Federal standards for dehumidifiers, DOE should require that portable ACs with dehumidification mode also meet the Federal energy conservation standards for dehumidifiers when operating in that mode and require that manufacturers indicate the presence of dehumidification mode as a certification requirement, similar to the same requirement for heating mode. According to the California IOUs, this additional requirement would mandate that moisture removal performed by portable ACs is tested and labeled in accordance with DOE requirements for residential dehumidifiers, and as a result, consumers would be better-informed when making purchasing decisions. The California IOUs stated that this would ensure that standards for residential dehumidifiers are not circumvented by multi-functional units such as portable ACs. (California IOUs, No. 42 at p. 2)
Dehumidification naturally occurs as a result of the refrigeration-based air-cooling process. However, air conditioning products are typically optimized to remove sensible heat, while dehumidifiers are optimized to remove latent heat, so they would achieve different operating efficiencies when dehumidifying. Additionally, the definition for dehumidifier in 10 CFR 430.2 specifically excludes air conditioning products (portable ACs, room ACs, and packaged terminal ACs) to avoid ambiguity as to what would be classified as a dehumidifier. Therefore, portable ACs would not be subject to energy conservation standards for dehumidifiers. Furthermore, requiring portables ACs to be tested, labeled, and certified for performance in dehumidification mode according to the same requirements as for residential dehumidifiers would be
This section addresses the analyses DOE has performed for this rulemaking with regard to portable ACs. 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 NIA uses a second spreadsheet tool that provides shipments projections and calculates NES and NPV 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:
DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. This activity includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include: (1) A determination of the scope of the rulemaking and product classes, (2) manufacturers and industry structure, (3) existing efficiency programs, (4) shipments information, (5) market and industry trends, and (6) technologies or design options that could improve the energy efficiency of portable ACs. The key findings of DOE's market assessment are summarized below. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment.
DOE conducted the February 2015 Preliminary Analysis based on the portable AC definition proposed in the February 2015 TP NOPR, which stated that a portable AC is an encased assembly, other than a “packaged terminal air conditioner,” “room air conditioner,” or “dehumidifier,” that is designed as a portable unit to deliver cooled, conditioned air to an enclosed space. A portable AC is powered by
In the April 2016 Final Coverage Determination, DOE codified this definition at 10 CFR 430.2, with minor editorial revisions that did not modify the intent or scope of the definition:
A portable encased assembly, other than a “packaged terminal air conditioner,” “room air conditioner,” or “dehumidifier,” that delivers cooled, conditioned air to an enclosed space, and is powered by single-phase electric current. It includes a source of refrigeration and may include additional means for air circulation and heating. 81 FR 22514 (April 18, 2016).
NAM requested clarification regarding what is considered a spot cooler and what products are covered under the energy conservation standards proposed in the June 2016 ECS NOPR. NAM stated that there are approximately five small business manufacturers in the U.S. that produce “portable commercial ACs,” which they consider to be niche products manufactured on a case-by-case basis. NAM suggested that these small business manufacturers are unsure if the test procedure is applicable to their products, as 90 to 95 percent of them operate on single-phase power, and are unsure as well if their products would be covered under the proposed energy conservation standards. Temp-Air commented that their products are intended for temporary applications and the usage environment for their products is different than those products currently under consideration. Temp-Air stated that its portable AC market share is less than 0.1 percent of DOE's annual projected portable AC shipments volume. Therefore, Temp-Air urged DOE to revise and clarify its portable AC definition to exclude single-phase models destined for commercial industrial applications. NAM and Temp-Air commented that classifying these products as covered products obliges small business manufacturers to expend a significant amount of their research and development (R&D) budgets to save a limited amount of overall energy due to the low shipments volume. NAM and Temp-Air claimed that if the small business manufacturers' products are expected to meet the proposed conservation standards, these manufacturers will be unable to take on the additional costs and will close. (NAM, Public Meeting Transcript, No. 39 at pp. 19-20, 110; Temp-Air, No. 45 at p. 1) During the July 2016 STD Public Meeting, DOE clarified that in the April 2016 Final Coverage Determination, DOE established a definition of all portable ACs that are considered to be covered products that could be subject to test procedures or standards. Under EPCA, a “consumer product” is any article of a type that consumes, or is designed to consume, energy and which, to any significant extent, is distributed in commerce for personal use or consumption by individuals. (42 U.S.C. 6291(1)) EPCA further specifies that the definition of a consumer product applies without regard to whether the product is in fact distributed in commerce for personal use or consumption by an individual. (42 U.S.C. 6291(1)(B)) DOE's definition of “portable air conditioner” excludes units that could normally not be used in a residential setting by including only those portable ACs that are powered by single-phase electric current. Thus, any product with single-phase power that otherwise meets the definition of a portable AC is a covered product, regardless of the manufacturer-intended application or installation location.
However, DOE also clarified in the July 2016 STD Public Meeting that not every product that meets the definition of portable AC may be subject to DOE's test procedures and standards. As DOE explained, only those products that meet the definition of single-duct or dual-duct portable AC, as established in the June 2016 TP Final Rule, would be subject to the appendix CC test procedure and the standards proposed in the June 2016 ECS NOPR. DOE maintains this approach in this final rule, and establishes energy conservation standards only for products that meet the definition of single-duct or dual-duct portable AC as codified 10 CFR 430.2
When evaluating and establishing energy conservation standards, DOE divides covered products into product classes by the type of energy used or by capacity or other performance-related features that justify a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE must consider such factors as the utility to the consumer of the feature and other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
Portable ACs recently became a covered product when DOE issued the April 2016 Final Coverage Determination on April 18, 2016, and therefore do not have existing energy conservation standards or product class divisions. 81 FR 22514.
Following an evaluation of the portable AC market in preparation of the February 2015 Preliminary Analysis, DOE determined that there are three types of duct configurations that affect product performance: Single-duct, dual-duct, and spot cooler. DOE noted in the February 2015 Preliminary Analysis that the DOE test procedure proposed in the February 2015 TP NOPR did not include measures of spot cooler performance, and, therefore, as discussed previously, DOE did not consider standards for spot coolers. See chapter 3 of the preliminary TSD for more information.
DOE further evaluated if there was any consumer utility associated with the single-duct and dual-duct configurations under consideration. As detailed in chapter 3 of the preliminary TSD, DOE investigated installation locations and noise levels, and found that duct configuration had no impact on either of these key consumer utility variables. Therefore, DOE determined in the February 2015 Preliminary Analysis that a single product class is appropriate for portable ACs.
In the June 2016 ECS NOPR, DOE proposed to maintain the February 2015 Preliminary Analysis approach, in which only single-duct and dual-duct portable ACs would be considered for potential standards as one product class. For portable ACs that can be optionally configured in both single-duct and dual-duct configurations, DOE further proposed that operation in both duct configurations be certified under any future portable AC energy conservation standards. In the June 2016 TP Final Rule, DOE subsequently required that if a product is able to operate as both a single-duct and dual-duct portable AC as distributed in commerce by the manufacturer, it must be tested and rated for both duct configurations. 81 FR 35241, 35247 (June 1, 2016).
ASAP, the Joint Commenters, and the California IOUs supported a single product class for portable ACs and agreed with DOE's conclusion that there is no consumer utility associated with duct configuration. The California IOUs further stated that although aesthetics is an important consumer utility, product images from several major online retailers (
AHAM opposed a single product class for portable ACs and instead proposed that DOE define separate product classes for single-duct and dual-duct portable ACs. AHAM argued that dual-duct units are not as portable as single-duct units, primarily due to having two hoses instead of one. AHAM also noted that one hose is typically longer with a greater pressure drop, so a larger diameter hose is needed. (AHAM, Public Meeting Transcript, No. 39 at p. 36; AHAM, No. 43 at p. 9)
AHAM further asserted that a recent AHAM consumer survey showed that size and weight of a unit are important considerations for consumers, and that nearly seven of ten portable AC owners indicated that duct configuration was a key purchase factor. AHAM concluded from this survey that duct configuration does offer a unique consumer utility and therefore is a basis for separate product classes. (AHAM, No. 43 at p. 9)
In addition to the consumer utility factors of installation locations and product noise, which DOE previously determined did not depend on duct configuration, DOE considered other factors raised by AHAM that could justify separate product classes for portable ACs based on duct configuration. For all units in its test sample, DOE observed that the ducts are similarly constructed from plastic in a collapsible design, and typically weigh approximately 1 pound, as compared to overall product weights ranging from 45 to 86 pounds. DOE also notes that all dual-duct units in its test sample had the same size and length ducts for the condenser inlet and exhaust ducts. DOE does not expect the minimal weight increase associated with a second duct to have a significant impact on consumer utility in terms of portability. Further, DOE has observed no consistent efficiency improvement associated with either single-duct or dual-duct portable ACs. Accordingly, duct configuration would not justify different standards. Therefore, DOE maintains the approach used in the February 2015 Preliminary Analysis and June 2016 ECS NOPR and establishes a single product class for portable ACs in this final rule.
In the preliminary market and technology assessment, DOE identified 16 technology options in four different categories that would be expected to improve the efficiency of portable ACs, as measured by the DOE test procedure, shown in Table IV.1:
In the June 2016 ECS NOPR, DOE noted that propane refrigerant is widely used for portable ACs manufactured and sold internationally, and that R-32 is being introduced in some markets outside the U.S. for portable and room ACs, albeit primarily because it is has a low global warming potential (GWP). Based on this product availability and discussions with manufacturers, DOE included alternative refrigerants as a potential technology option in the technology assessment.
DOE also noted in the June 2016 ECS NOPR that a potential means of improving portable AC efficiencies, air flow optimization, was not included as a technology option in the February 2015 Preliminary Analysis. DOE did, however, consider optimized air flow in the engineering analysis in the February 2015 Preliminary Analysis, and therefore further assessed optimized air flow as a technology option in the June 2016 ECS NOPR.
Therefore, in addition to the technology options considered in the February 2015 Preliminary Analysis, DOE considered alternative refrigerants and air flow optimization in the June 2016 ECS NOPR, as shown in Table IV.2.
After identifying all potential technology options for improving the efficiency of portable ACs, DOE performed a screening analysis (see section IV.B of this final rule and chapter 4 of the final rule TSD) to determine which technologies merited further consideration in the engineering 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)
(2)
(3)
(4)
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 subsequent sections include comments from interested parties pertinent to the screening criteria and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria.
The Significant New Alternatives Policy (SNAP) final rule, published by the U.S. EPA on April 10, 2015 (hereinafter the “SNAP rule”), limits the maximum allowable charge of alternative refrigerants in portable ACs to 300 grams for R-290 (propane), 2.45 kilograms for R-32, and 330 grams for R-441A. The SNAP rule limits were consistent with those included for portable room ACs in Underwriter's Laboratories (UL) Standard 484, “Standard for Room Air Conditioners” (UL 484), eighth edition. However, the most recent version of UL 484, the ninth edition, reduces the allowable amount of flammable refrigerant (
AHAM agreed with DOE's determination that although portable ACs are currently available internationally with amounts of flammable refrigerants, such as propane, manufacturers are unable to sell those products in the U.S. market while complying with the ninth edition of UL 484. (AHAM, No. 43 at p. 14)
The California IOUs disagreed with DOE's decision to screen out alternative refrigerants as a technology option, because the most common refrigerant for portable air conditioners (R-410A) will likely be prohibited in California and Europe in favor of more efficient alternatives by the 2021 effective date, and the analysis in the June 2016 ECS NOPR did not consider the likely state of the industry in 2021. The California IOUs also suggested that DOE consider the 2016 strategy proposal by the California Air Resources Board (CARB) that is likely to push the industry towards more efficient refrigerants, such as R-32 and R-290. The California IOUs noted that this climate pollutant reduction strategy proposes to limit the 100-year GWP of refrigerants in portable ACs to 750, and would also be effective in 2021. The proposal effectively prohibits the sale of portable ACs that use the R-410A refrigerant in California. The authors of the proposal note that AC refrigerants are likely to meet this requirement due to a fluorinated GHG regulation by the European Union (EU) and a White House Council on Environmental Quality pledge of $5 billion over the next 10 years in research of low-GWP refrigerants for refrigerators and air conditioning equipment. The California IOUs noted that while the 2016 CARB strategy is still in the proposal stage, the EU regulation will take effect in 2020, and Article 11 of this regulation prohibits placing on the market any “movable room air-conditioning equipment” that contains hydrofluorocarbon (HFC) refrigerants with GWP of 150 or more. The regulation would likely prohibit both R-410A and R-32. The California IOUs stated that, in response, manufacturers such as De' Longhi and GREE have begun producing portable ACs using R-290, which is claimed to be 10 percent more efficient than its R-410A counterpart. (California IOUs, No. 42 at p. 3)
The Joint Commenters stated that although DOE screened out propane due to the refrigerant charge limitations of the UL safety standards, UL certification has failed to become an industry standard for portable ACs, and TopTenReviews' list of the 10 best portable ACs of 2016 includes four units that are not UL-certified. (Joint Commenters, No. 44 at p. 3)
DOE believes that UL certification is a key consumer protection program that ensures the operational safety of portable ACs. Manufacturers implementing propane in their portable ACs would not be able to receive UL certification for their products, which may result in significant adverse safety impacts. Accordingly, DOE continued to screen propane (R-290) from further consideration in this final rule analysis.
In the June 2016 ECS NOPR, DOE noted that certain room ACs commercially available on the U.S. market utilize the mildly flammable R-32, but it was not aware of any portable ACs available in the U.S. market or on other markets that incorporate R-32. Because this technology has not been incorporated in commercial products or in working prototypes for portable ACs, DOE screened out R-32 refrigerant as a technology option.
In response to the June 2016 ECS NOPR, AHAM agreed with DOE's proposal to screen out R-32 refrigerant because the UL standard, which is based on the elevation of the installed product and did not specifically assess use of R-32 in portable ACs that sit on the floor. AHAM and GE noted that the UL standard does not preclude, but also does not consider, the high pressure refrigeration system inside the room. Instead, it considers a compressor outside the room. Therefore, even if the UL safety standard currently does not preclude use of R-32 in portable ACs based on charge limits, these commenters urged DOE to further consider any safety concerns that might arise from a compressor and refrigeration system inside the room. AHAM also commented that efficiency gains associated with R-32 are currently unknown, and due to higher static pressure, the portable AC refrigeration system would need to be redesigned for the use of this refrigerant. (AHAM, No. 43 at pp. 13-14; GE, Public Meeting Transcript, No. 39 at pp. 45-46)
In response to the June 2016 ECS NOPR, other commenters generally stated that R-32 is a viable alternative refrigerant for portable ACs that would improve efficiency. ASAP and LG noted that the R-32 charge limit in UL 484 (approximately 1 kilogram) would not preclude use of R-32 in portable ACs, and ASAP stated that one manufacturer claims a 10-percent reduction in energy
To evaluate the commenters' estimates of the reduction in energy use and increase in efficiency for R-32 as compared to R-410A and to identify any other performance impacts, DOE further investigated changes in performance associated with switching to R-32. As discussed in chapter 3 of the final rule TSD, DOE reviewed multiple studies and experiments conducted on other air conditioning products which suggested performance improvements when switching to R-32 ranging from 2 to 5 percent for cooling capacity and 1 to 4 percent for efficiency, depending upon the test conditions. DOE notes that the models referenced by the California IOUs are not sold in the U.S., and therefore were not included in this rulemaking analysis.
Nonetheless, because R-32 is a viable refrigerant based on the UL safety requirements and because the information provided by interested parties and described in various studies consistently indicate performance improvements through the use of this refrigerant, in this final rule DOE maintained R-32 as a potential design option for improving portable AC efficiency.
In the February 2015 Preliminary Analysis, DOE identified duct insulation as a potential means for improving portable AC efficiency, as less heat from the condenser air would be transferred through the duct wall and would instead be transferred out of the conditioned space. During interviews, manufacturers indicated that they have considered insulated ducts to improve performance but have not identified any insulated ducts that are collapsible for packaging and shipping. No portable AC in DOE's teardown sample for the engineering analysis included insulated ducts. In the absence of a collapsible design, such an insulated duct would need to be packaged for shipment in its fully expanded configuration, significantly increasing the package size. Because of this significantly increased packaging size for non-collapsible insulated ducts and unavailability on the market of collapsible designs, DOE determined that insulated ducts are not technologically feasible, are impractical to manufacture and install, and would impact consumer utility. Therefore, DOE screened out insulated ducts as a design option for portable ACs in the February 2015 Preliminary Analysis and in the June 2016 ECS NOPR.
AHAM agreed with DOE's assessment of duct insulation, because incorporating such a design option would significantly increase shipping costs and weight of the product, and could also cause it to be more difficult for consumers to install and eventually store the product in the off season. (AHAM, No. 43 at p. 12)
AHAM noted that DOE modeled and considered only four of the sixteen retained design options in the engineering analysis and provided reasons for not modeling seven other design options that were retained from the screening analysis. AHAM argued that the retention of these seven design options is not justified if they are not used in the engineering analysis for the various reasons provided in the June 2016 ECS NOPR and STD NOPR TSD. AHAM proposed that DOE remove the design options that were not considered in the June 2016 ECS NOPR engineering analysis. (AHAM, No. 43 at pp. 9-10)
In the market and technology assessment, DOE identifies all technology options that may increase portable AC efficiency. The screening analysis eliminates certain technology options from further consideration based on the four criteria outlined at 10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b). Any technology options meeting the four criteria are considered in the engineering analysis. However, DOE does not necessarily incorporate all of the retained technologies in developing the cost-efficiency relationship. Any technology options meeting the screening criteria but not included as a means to improve efficiency in the engineering analysis are discussed further in section IV.C of this document.
In the June 2016 ECS NOPR, DOE considered increased heat exchanger area as a technology option that passed the screening analysis and was implemented in the engineering analysis as a design approach for reaching higher efficiency levels. DOE considered up to a 20-percent heat exchanger area increase and determined that the associated increase in weight and case size would not significantly impact consumer utility.
The Joint Commenters agreed with DOE's conclusion that all available data suggest that heat exchanger areas can be increased by 20 percent and represents a significant improvement to the analysis to better capture the full range of potential efficiency improvements. (Joint Commenters, No. 44 at p. 5)
AHAM disagreed with DOE's assertion that ability to move, install, or store the product would not be impacted if the case dimensions were to change to accommodate a 20 percent larger heat exchanger. AHAM argued that an increased heat exchanger size would increase the overall case size and increase weight, thereby impacting consumer utility by making the product more difficult to move from room to room and, particularly, up and down stairs. AHAM therefore urged DOE to remove increased heat exchanger area from the design approaches to reach higher efficiency levels and screen out this technology option. AHAM also commented that, although DOE did not indicate how much weight an increased heat exchanger might add to a product, AHAM determined from data gathered by its members that a heat exchanger area increase associated with a 4,000 Btu/h capacity increase would correlate to an average product weight increase of 16.6 pounds. AHAM further suggested that current portable ACs are already
As discussed in chapter 5 of the final rule TSD, DOE does not expect that the increase in heat exchanger size, and the resulting increases in case size and weight, would impact product portability. In addition to noting that all portable ACs equipped with wheels, which assist in changing locations on the same floor, DOE found the typical unit weight increase would be limited to about 6 percent, or less than 5 pounds, at the maximum heat exchanger size increase of 20 percent, which did not result in any units in DOE's test sample requiring additional lifting assistance compared to what would already be required with the currently reported unit weight. Additional detail can be found in chapter 5 of the final rule TSD. DOE also notes that the heat exchanger size increases do not necessarily affect the depth of the product case, typically a portable AC's smallest dimension, and would not preclude any units with this technology option from fitting through doorways, hallways, or stairwells.
For these reasons, DOE retained the technology option of a 20-percent heat exchanger area increase in the final rule screening analysis.
As discussed in section IV.A.3 of this document, in the June 2016 ECS NOPR DOE noted that a potential means of improving portable AC efficiencies, air flow optimization, was not included as a technology option in the February 2015 Preliminary Analysis. DOE did, however, consider optimized air flow in the engineering analysis in the February 2015 Preliminary Analysis, and therefore further assessed optimized air flow and included it as a technology option in the June 2016 ECS NOPR.
AHAM requested that DOE define “optimized airflow” and demonstrate a specific efficiency improvement that corresponds to it; otherwise, AHAM asserted, this design option is too uncertain and should be screened out. AHAM suggested that if optimized airflow means reducing the flow over the condenser, that approach would be a safety concern for single-duct units, as the condenser must to be cooled for safe operation of the unit. (AHAM, No. 43 at p. 14)
Chapter 3 of the NOPR TSD explains that optimized airflow refers to the reduction of infiltration air. Further, the optimized airflow technology option satisfies all four of the screening criteria, and it was therefore further considered in the final rule engineering analysis. However, as discussed in section IV.C of this document, DOE has determined that manufacturers would likely not rely on optimized airflow to improve portable AC efficiency because of the limited impact on performance under the test procedures in appendix CC.
Through a review of each technology, DOE concludes that all of the other identified technologies listed in section IV.A.3 of this document met all four screening criteria to be examined further as design options in DOE's final rule analysis. In summary, DOE did not screen out the following technology options, as shown in Table IV.3:
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 (
In the engineering analysis, DOE establishes the relationship between the manufacturer production cost (MPC) and improved portable AC efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design option, (2) efficiency level, or (3) reverse engineering (or cost assessment). The design-option approach involves adding the estimated cost and associated efficiency of various efficiency-improving design changes to the baseline product to model different levels of efficiency. The efficiency-level approach uses estimates of costs and efficiencies of products available on the market at distinct efficiency levels to develop the cost-efficiency relationship. The reverse-engineering approach involves testing products for efficiency and determining cost from a detailed bill of materials (BOM) derived from reverse engineering representative products. The efficiency ranges from that of the least-efficient portable AC sold today (
In the preliminary engineering analysis, DOE used a hybrid approach of the design-option and reverse-engineering approaches described above. This approach involved physically disassembling commercially available products, reviewing publicly available cost information, and modeling equipment cost. From this information, DOE estimated the MPCs for a range of products available at that time on the market. DOE then considered the steps manufacturers would likely take to improve product efficiencies. In its analysis, DOE determined that manufacturers would likely rely on certain design options to reach higher efficiencies. From this information, DOE estimated the cost and efficiency impacts of incorporating specific design options at each efficiency level.
In the June 2016 ECS NOPR, DOE followed the same general approach as for the preliminary engineering analysis, but modified the analysis based on the test procedure for portable ACs in appendix CC, comments from interested parties, and the most current available information.
For this final rule, DOE largely maintained the approach from the NOPR, with slight modifications to incorporate feedback from interested parties and further refinements to the engineering analysis. This section provides more detail on the development of efficiency levels and determination of MPCs in the final rule engineering analysis.
A baseline unit typically just meets current energy conservation standards and provides basic consumer utility. Because there are no existing energy conservation standards for portable ACs, DOE observed whether units tested with lower efficiencies incorporated similar design options or features, and considered these features when defining a baseline configuration. To determine energy savings that will result from a new energy conservation standard, DOE compares energy use at each of the higher efficiency levels to the energy consumption of the baseline unit. Similarly, to determine the changes in price to the consumer that will result from an energy conservation standard, DOE compares the price of a unit at each higher efficiency level to the price of a unit at the baseline.
DOE noted in chapter 5 of the preliminary analysis TSD that the air flow pattern through a portable AC has a significant effect on measured cooling capacity and energy efficiency ratio, as determined according to test method proposed in the February 2015 Test Procedure NOPR (the current proposal at the time of the preliminary analysis). For units that draw air from the conditioned space over the condenser and then exhaust it outside of the conditioned space, an equivalent amount of infiltration air must enter the conditioned space due to the net negative pressure differential that is created between the conditioned and unconditioned spaces. Because the test conditions proposed in the February 2015 Test Procedure NOPR specify that infiltration air would be at a higher temperature than the conditioned air, the infiltration air offsets a portion of the cooling provided by the portable AC. The greater the amount of infiltration air, the lower the overall cooling capacity will be. Based on the measured condenser exhaust air flow rates and the corresponding calculated magnitudes of the infiltration air heating effect, DOE determined in the February 2015 Preliminary Analysis that single-duct units (
After the February 2015 Preliminary Analysis, DOE established the portable AC test procedure in appendix CC, which incorporates two cooling mode test conditions and weighting factors to determine overall performance. Because the additional test condition is at a lower outdoor temperature and has a significantly larger weighting factor than the original test condition, the impact of infiltration air on overall performance is greatly reduced. Therefore, the approach of considering a baseline unit to be a single-duct portable AC with typical system components was no longer valid. DOE instead pursued an alternate analysis approach in the June 2016 ECS NOPR, which utilized the results from all units in DOE's test sample, including 24 portable ACs (one test sample was tested in both a single-duct and dual-duct configuration) covering a range of configurations, product capacities, and efficiency as tested according the DOE test procedure in appendix CC.
DOE developed a relationship between cooling mode power and SACC, which is a measure of cooling capacity that weights the performance at each of the cooling mode test conditions in appendix CC, using a best fit power curve. DOE then used this relationship to develop an equation to determine nominal CEER for a given SACC based on the results of DOE's testing according to the test procedure in appendix CC, shown below.
In the June 2016 ECS NOPR, DOE then assessed the relative efficiency of each unit in the test sample by comparing the measured CEER from testing to the nominal CEER as defined by the equation above (DOE will refer to this ratio of actual CEER to nominal CEER as the performance ratio (PR) for a given unit). DOE proposed to define baseline performance as a PR of 0.72, which is based on the minimum PR observed for units in the test sample. Additional details on the baseline units are in chapter 5 of the NOPR TSD.
AHAM objected to the methodology used to determine the baseline level proposed in the June 2016 ECS NOPR, stating that the limited data sample was not representative of the minimum performance of products on the market and that it would have been able to provide test data on a wide range of products if the test procedure had been finalized earlier. Nonetheless, AHAM stated that the combined DOE and newly developed AHAM data set suggests that DOE's proposed baseline level is reasonable. (AHAM, No. 43 at pp. 4, 14)
During the July 2016 STD Public Meeting and in a subsequent request for data and information submitted to DOE on July 21, 2016,
AHAM also expressed concern that DOE did not appear to have run a complete test using the final test procedure and instead relied on a significant amount of modeled data. (AHAM, No. 43 at p. 4) As discussed in the June 2016 ECS NOPR and during the July 2016 STD Public Meeting, all
After the June 2016 ECS NOPR analysis, AHAM compiled additional test data from its members for 22 portable ACs whose results are listed in Table IV.4. (AHAM, No. 43 at pp. 3, 5-6)
AHAM analyzed the combined sample set of its and DOE's data, totaling 47 units, to determine the best-fit power regression, a new nominal CEER equation (shown below), and the relative efficiency of each unit in the combined test sample by comparing the measured CEER from testing to the new nominal CEER. AHAM confirmed DOE's conclusion in the June 2016 ECS NOPR that efficiency would typically increase with capacity, but estimated different coefficients in the nominal CEER equation. (AHAM, No. 43 at pp. 3, 5-6)
In conducting this final rule engineering analysis, DOE included the data supplied by AHAM and also reassessed its own test data and performance modeling. DOE corrected minor errors in its test data and more accurately represented the modeled performance of dual-duct units operating at the lower 83 °F test condition. For those units where the user manual clearly states that the fan operates continuously during off-cycle mode, DOE included the off-cycle mode power in this final rule analysis.
For the final rule, DOE updated the relationship between cooling mode power and SACC and the subsequent nominal CEER equation to reflect the revised set of test and modeled data. The resulting updated nominal CEER equation is shown below.
DOE reassessed the PRs for each unit and found the baseline value to be 0.67, which is the minimum PR observed in the combined test sample. Although this baseline PR value is lower than the value of 0.72 presented in the June 2016 ECS NOPR, applying the new value to the updated nominal CEER curve results in a baseline efficiency level curve for this final rule that closely matches the baseline efficiency level analyzed in the June 2016 ECS NOPR. Additional details on the baseline units efficiency level are included in chapter 5 of the final rule TSD.
DOE develops incremental efficiency levels based on the design options manufacturers would likely use to improve portable AC efficiency. While certain technology options identified in Table IV.1 of this final rule and discussed in chapter 3 of the final rule TSD meet all the screening criteria and may produce energy savings in certain real-world situations, DOE did not further consider each of them in the engineering analysis because specific efficiency gains were either not clearly
In the February 2015 Preliminary Analysis, DOE conducted its engineering analysis, including defining efficiency levels, assuming that manufacturers would rely on airflow optimization to improve portable AC efficiencies. However, for the June 2016 ECS NOPR analysis, DOE updated the efficiency levels to reflect performance based on appendix CC, which was different from the proposed test procedure that was the basis of the February 2015 Preliminary Analysis. Appendix CC includes a second cooling mode outdoor test condition for dual-duct units and infiltration air conditions for both single-duct and dual-duct units. The CEER metric for both single-duct and dual-duct units includes a weighted-average measure of performance at the two cooling mode test conditions, along with measures of energy use in standby and off modes. Appendix CC does not include provisions proposed in the February 2015 TP NOPR for measuring case heat transfer.
As discussed in the February 2015 Preliminary Analysis, although the initial test procedure proposal included a CEER metric that combined energy use in cooling mode, heating mode, and various low-power modes, the preliminary analysis was conducted using cooling mode energy efficiency ratio (EER
The two cooling mode test conditions in appendix CC are weighted based on the percentage of annual hours for each test condition, on average, for geographical locations that correspond to expected portable AC ownership. The majority (80 percent) of the total hours were estimated to relate to the lower of the two outdoor temperatures, 83 degrees Fahrenheit (°F) dry-bulb. Because at this lower outdoor temperature, there is only a 3 °F dry-bulb temperature differential and subsequent 0.38 Btu per pounds of dry air enthalpy differential between the indoor and outdoor air, the potential impact of infiltration air heating effects on the overall CEER metric is substantially reduced. For this reason, DOE found no significant relationship between duct configuration or air flow optimization and improved efficiency, and therefore alternatively considered component efficiency improvements as the primary means to increase CEER in the June 2016 ECS NOPR engineering analysis. Accordingly, in the June 2016 ECS NOPR, DOE defined its efficiency levels, other than the max-tech, based on the performance observed in its test sample, independent of duct configuration or level of air flow optimization.
As discussed previously in section IV.C.1.a, in the June 2016 ECS NOPR, DOE characterized and compared performance among all portable ACs in its test sample and determined a relationship between SACC and a general representation of expected CEER. DOE then assessed individual unit performance relative to this nominal CEER relationship and identified a baseline efficiency level at PR = 0.72, with PR defined as the ratio of actual CEER to nominal CEER.
For Efficiency Level 2 (EL 2), DOE determined the PR that corresponded to the maximum available efficiency across a full range of capacities (1.14), and then selected an intermediate Efficiency Level 1 (EL 1) based on a PR between the baseline and EL 2 (0.94). For Efficiency Level 3 (EL 3), DOE identified the PR for the single highest efficiency unit observed in its test sample (1.31).
Due to the variations in performance among units in DOE's test sample, DOE conducted additional performance modeling to augment its test data when estimating efficiency and manufacturing costs at each efficiency level. DOE numerically modeled component improvements for each of the 21 out of 24 test units for which detailed component information were available to estimate potential efficiency improvements to existing product configurations. The component improvements were performed in three steps for each unit.
The first incremental improvement for each unit included a 10-percent increase in heat exchanger frontal area and raising the compressor energy efficiency ratio (EER) to 10.5 Btu/Wh, the maximum compressor efficiency identified at the time of the February 2015 Preliminary Analysis.
The second incremental component efficiency improvement step for each unit included a 15-percent increase in heat exchanger frontal area from the original test unit and an improvement in compressor efficiency to an EER of 11.1 Btu/Wh, which DOE identified as the maximum efficiency for currently available single-speed R-410A rotary compressors of the type typically found in portable ACs and other similar products. As with the 10-percent heat exchanger area increase, DOE expected that a chassis size and weight increase would be necessary to fit a 15-percent increased heat exchanger, but concluded that portability and consumer utility would not be significantly impacted.
DOE included all available design options in the third efficiency improvement step for each unit, including a 20-percent increase in heat exchanger frontal area from the original test unit, more efficient electronically commutated motor (ECM) blower motor(s), and a variable-speed compressor with an EER of 13.7 Btu/Wh. DOE concluded that a 20-percent increase in heat exchanger size was the maximum allowable increase for consumer utility and portability to be retained, as discussed in section IV.B.2 of this document. DOE also improved standby controls efficiency in this final step, adjusting the standby power for each test unit to the minimum observed standby power of 0.46 watts (W) in its test sample. With these design options modeled for units in its test sample, DOE found that the single, theoretical maximum-achievable efficiency among all modeled units corresponded to a PR of 1.75, which DOE defined as Efficiency Level 4 (EL 4).
Table IV.5 summarizes the specific improvements DOE considered when modeling the performance of higher efficiency design options applied to each test unit in the June 2016 ECS NOPR. Depending on the unit, these design options could be associated with
In the June 2016 ECS NOPR, DOE analyzed efficiency levels according to the original nominal CEER equation previously discussed and the PR values listed in Table IV.6:
Figure IV.1 plots each efficiency level curve for SACCs from 50 to 10,000 Btu/h, based on the June 2016 ECS NOPR nominal CEER curve scaled by the PR assigned to each efficiency level.
Additional details on the selection of efficiency levels in the June 2016 ECS NOPR may be found in chapter 5 of the NOPR TSD.
ASAP and the Joint Commenters agreed with DOE's consideration of variable-speed compressors in the STD NOPR analysis and agreed that they can improve both part-load and full-load efficiency. (ASAP, Public Meeting Transcript, No. 39 at pp. 72; Joint Commenters, No. 44 at p. 5) The California IOUs supported the inclusion of variable-speed compressors as a technology option and, although DOE was unable to identify any portable AC models that utilize variable-speed compressors, they suggested that DOE consider models, such as the Climax VS12. (California IOUs, No. 42 at p. 2)
AHAM noted that the test procedure proposed at the time of the June 2016 ECS NOPR would not capture any efficiency gains associated with implementing a variable-speed compressor for single-duct units, as there is no part-load requirement for single-duct portable ACs and the test is conducted at one temperature. AHAM therefore suggested that DOE not consider variable-speed compressors for single-duct portable ACs in the engineering analysis. AHAM suggested that the burden and costs of implementing a variable-speed compressor for portable ACs would outweigh the efficiency gains and it would also lead to larger and heavier enclosures (20-percent larger chassis). AHAM also stated that manufacturers would need to use inverter controls that are costly and would also require an electronic expansion valve to modulate refrigerant flow differently as compared to a single-speed compressor, both of which are costly design options. (AHAM, No. 43 at p. 13)
DOE included variable-speed compressors as a design option in the June 2016 ECS NOPR because of their high efficiency during continuous operation, and not for their part-load capability. As discussed in chapter 5 of the June 2016 ECS NOPR TSD, DOE modeled each test unit with a variable-speed compressor with an EER of 13.7 Btu/Wh, representative of the maximum available compressor efficiency for the capacity range appropriate for portable ACs. This EER is consistent with the EER of the compressor used in the Climax VS12 unit identified by the California IOUs. DOE's estimates for efficiency improvements in the June 2016 ECS NOPR were based on the maximum operational efficiency and did not consider part-load efficiency gains. Therefore, DOE's consideration of variable-speed compressors is appropriate for both single-duct and dual-duct portable ACs in this final rule analysis. In addition, DOE's analysis accounted for the higher costs when incorporating variable-speed compressors, including their more costly controls. DOE also modeled larger case sizes that would accommodate larger heat exchangers, and the larger case sizes would also accommodate variable-speed compressors and their associated components.
AHAM agreed with DOE's assessment of inertia and scroll compressors, stating that implementing these compressors would significantly affect portability and consumer utility of the product. AHAM noted that a portable AC is used entirely inside a home with no portion
Consistent with the June 2016 ECS NOPR analysis, DOE did not consider inertia or scroll compressors in developing the final rule efficiency analysis.
AHAM commented that determining the sizes of compressors available in the future for portable ACs may be difficult considering that manufacturers may begin developing compressors for alternative refrigerants. AHAM therefore suggested that DOE determine the future availability of current compressors through discussions with compressor manufacturers. AHAM agreed with DOE's assessment that moving to EL 3 or EL 4 would force manufacturers to remove certain portable AC cooling capacities from the market due to compressor availability being driven by room ACs. (AHAM, No. 43 at pp. 11, 17)
The Joint Commenters suggested that DOE's concerns regarding the availability of high-efficiency compressors to meet higher efficiency levels are unwarranted. They noted that because portable ACs are a newly covered product, the lead time between the publication of the final rule and the compliance date will be 5 years, and therefore, manufacturers and component suppliers, including compressor manufacturers, will have 5 years to develop new products and components. The Joint Commenters further noted that the markets for both room ACs and dehumidifiers will likely drive increased production of high-efficiency compressors, especially because the next room AC standard is scheduled to take effect no later than 2022 and DOE is funding a project conducted by ORNL in partnership with GE to develop a 13 EER room AC. The Joint Commenters also noted that dehumidifiers use similar components as portable ACs and a new ENERGY STAR specification for dehumidifiers that will take effect later this year is likely to drive increased compressor efficiencies. The Joint Commenters asserted that available compressor efficiencies typically increase over time, as seen in the recent room AC rulemaking, and it is therefore reasonable to expect that the available efficiencies of both single-speed and variable-speed compressors will increase in the years before a portable AC standard takes effect. The Joint Commenters concluded that the long lead time before the portable AC standard would take effect, along with multiple market drivers, would ensure adequate availability of high-efficiency compressors to meet higher efficiency levels. (Joint Commenters, No. 44 at pp. 1-3)
DOE conducts its analyses based on currently available information. Accordingly, DOE has analyzed compressor efficiencies for compressors currently available to manufacturers. While the highest efficiency single-speed and variable-speed compressors are available in the appropriate capacity range for portable ACs, the number of models and different capacities available may not be sufficient to cover the entire range of portable AC capacities a manufacturer would include in its product line. The 5-year period prior to compliance with the standards established in this final rule may allow compressor manufacturers sufficient time to develop components and products for a range of efficiencies. However, as stated in the June 2016 ECS NOPR, compressor availability for portable ACs is largely driven by the room AC market. Compressors optimized for room AC operation are not necessarily optimal for portable ACs. Therefore, DOE maintains its concerns regarding availability of the highest efficiency single-speed and variable-speed compressors for portable ACs, and took these concerns into account when establishing the standards in this final rule.
In chapter 5 of the June 2016 ECS NOPR TSD, DOE concluded that adding insulation to the product case would result in little or no improvement compared to existing product cases. Because heat transfer through the case has a minimal impact on overall cooling capacity, the test procedure adopted in appendix CC does not include a measurement of case heat transfer.
AHAM proposed that because DOE is not aware of any portable ACs that use additional case insulation, it should be removed as a technology option due to the lack of data. AHAM observed that DOE did not include a measure of case heat transfer in the CEER metric in appendix CC because DOE concluded it was insignificant, and therefore any energy savings would not be captured by the test procedure and would have no impact on the standards analysis. (AHAM, No. 43 at p. 12)
DOE identified case insulation as a technology option because it may improve the efficiency of portable ACs when operated in the field, albeit by a small amount. This technology option satisfies all four of the screening analysis criteria, and was therefore retained in the screening analysis and considered in the engineering analysis. However, case insulation was not considered as a means manufacturers would likely use to improve efficiency in the June 2016 ECS NOPR engineering analysis due to its insignificant impact on capacity. DOE adopts that same approach in this final rule.
In chapter 5 of the June 2016 ECS NOPR TSD, DOE noted that no units in the test sample provided additional sealing in the duct connections. DOE, therefore, lacked information regarding leakage rates and potential savings associated with reducing condenser air leakage to the room, and did not further consider the improvements associated with improved duct connections in the June 2016 ECS NOPR.
The Joint Commenters noted that while DOE was unable to incorporate improved duct connections as a technology option in the June 2016 ECS NOPR engineering analysis due to lack of data, manufacturers may be able to improve duct connections as a way to improve efficiency. (Joint Commenters, No. 44 at p. 4)
AHAM commented that it has no information regarding the heat impacts of air leakage at the duct connections and, based on DOE's own assessment and lack of data, proposed that DOE remove this as a design option. (AHAM, No. 43 at p. 12)
DOE notes that although duct connections were not ultimately implemented to reach higher efficiency levels in the June 2016 ECS NOPR engineering analysis, this technology option satisfies all four of the screening analysis criteria and was therefore retained in the screening analysis and considered in the engineering analysis. DOE adopts that same approach in this final rule.
In chapter 5 of the June 2016 ECS NOPR TSD, DOE discussed improved standby efficiency as a component improvement in the engineering analysis.
AHAM asserted that there is no substantial gain from improving standby power of electronic controls in terms of improving efficiency and therefore proposed that DOE remove it as a technology option as there will be an insignificant impact when compared to overall portable AC energy consumption. (AHAM, No. 43 at p. 11)
DOE observes that improved standby power would positively impact CEER, and the impact would be measurable,
In the chapter 5 of the June 2016 ECS NOPR TSD, DOE concluded that because portable ACs already include many design options to improve heat transfer in the evaporator and condenser, and because it lacked information on the potential efficiency gains with microchannel heat exchangers, microchannel heat exchangers were not considered in the engineering analysis as a design option to reach increased portable AC efficiencies. DOE expected that manufacturers would most likely rely on increased heat exchanger cross sectional areas to improve heat transfer and increase efficiencies.
AHAM agreed with DOE and further stated that microchannel heat exchangers do not work well for portable ACs because they are more suitable for the condenser rather than the evaporator due to the difficulty in draining condensing water. AHAM also commented that, because portable ACs spray condensed water onto the condenser to increase the heat exchange, poor draining capability will also affect the condenser. AHAM also asserted that microchannel heat exchangers are complicated, extremely expensive to implement, and easily retain more dirt in the unit, decreasing cooling performance at a much faster rate. (AHAM, No. 43 at pp. 10-11)
ASAP and the Joint Commenters noted that the NOPR engineering analysis did not consider potential efficiency gains from microchannel heat exchangers, which may be utilized by manufacturers to meet the portable AC energy conservation standards. The Joint Commenters referenced research performed in 2006 that found microchannel condensers can result in a 6- to 10-percent increase in refrigeration system efficiency, and additional research for mobile air conditioning that indicated that microchannel heat exchangers can increase efficiency by 8 percent. (ASAP, Public Meeting Transcript, No. 39 at pp. 67-68; Joint Commenters, No. 44 at p. 4)
DOE agrees that microchannel heat exchangers are associated with efficiency improvements, but also agrees with AHAM regarding the complexity of incorporating these heat exchangers into portable ACs. Due to the issues in implementing microchannel heat exchangers and the lack of information regarding their use in portable ACs, DOE maintains the June 2016 ECS NOPR approach for this final rule analysis, in which DOE does not consider this design option in the engineering analysis because it expects that manufacturers would instead rely on increasing heat exchanger cross-sectional areas to increase heat transfer.
AHAM analyzed the data in the combined sample of portable ACs and concluded that a greater percentage of test units fell short of the proposed efficiency level (TSL 2) than DOE estimated for its own test sample in the June 2016 ECS NOPR. AHAM determined that 17 percent of units in the combined dataset would meet TSL 2, suggesting that 83 percent of the units would require a redesign. Therefore, AHAM proposed that DOE adopt a median PR of 0.90 based on the combined AHAM and DOE data. AHAM stated that a PR of 0.90 would better reflect the current status of units on the market and also would require more reasonable redesigns for manufacturers, especially for a new standard. AHAM noted that its proposed level is between DOE's June 2016 ECS NOPR TSL 1 and TSL 2, and according to AHAM would require a 50-percent redesign of the tested units. (AHAM, No. 43 at pp. 7-8)
As discussed in chapter 5 of the June 2016 ECS NOPR TSD, DOE assessed the number of units that would require a complete product redesign, as opposed to less costly and impactful component improvements, and found that 46 percent of units in the test sample would require a significant product redesign at TSL 2 (see table 5.5.4 in the STD NOPR TSD). Also, DOE's energy conservations standards are not determined solely based on the number of units that would require updates to meet the new levels, but rather the range of criteria discussed in section II.A of this document. These considerations are discussed at length in the June 2016 ECS NOPR and TSD and are reassessed and addressed in this final rule.
As discussed in the following section, DOE considered the combined DOE and AHAM dataset to update its engineering analysis in this final rule.
For this final rule, DOE maintained the engineering analysis approach utilized in the June 2016 ECS NOPR, with additional modifications and improvements based primarily on comments and data received in response to the June 2016 ECS NOPR. As discussed in in section IV.C.1.a, DOE updated the test data and improved the performance modeling in this final rule and subsequently updated the relationship for nominal CEER based on measured SACC as follows:
DOE also identified a baseline efficiency level with a PR of 0.67 for this final rule, based on the updated test unit performance.
DOE subsequently adjusted its efficiency levels based on the updated unit performance data utilized in this final rule. For EL 2, DOE determined the PR that corresponded to the maximum available efficiency across a full range of capacities (1.04), and then selected an intermediate efficiency level for EL 1 based on a PR between the baseline and EL 2 (0.85). For EL 3, DOE identified the PR for the single highest efficiency unit observed in its test sample (1.18).
In this final rule, DOE relied on the same numerically modeled component improvements for each of the 21 out of 24 test units considered in the June 2016 ECS NOPR. DOE also modeled component improvements for an additional 2 units for which DOE identified detailed component information. The component improvements were performed in three steps for each unit, similar to the improvements conducted for the June 2016 ECS NOPR engineering analysis. For this final rule, DOE utilized the same component efficiency improvements outlined in Table IV.5, maintaining the same maximum single-speed and variable speed compressor efficiencies (11.1 Btu/Wh and 13.7 Btu/Wh, respectively), the same maximum
With these design options modeled for units in its test sample, DOE found that the single, theoretical maximum-achievable efficiency among all modeled units corresponded to a PR of 1.62, which DOE defined as EL 4.
DOE emphasizes that the changes listed in Table IV.5 do not uniquely correlate with efficiency levels beyond the baseline. Baseline through EL 3 are defined by the range of test data, while EL 4 is defined by the maximum theoretical PR after modeling all design options listed in Table IV.5.
In this final rule, DOE analyzed efficiency levels based on test samples and modeled performance according to the following equation and the PR values listed in Table IV.7:
Figure IV.2 plots each efficiency level curve for SACCs from 50 to 10,000 Btu/h, based on the nominal CEER curve scaled by the PR assigned to each efficiency level.
Additional details on the selection of efficiency levels may be found in chapter 5 of the final rule TSD.
In the February 2015 Preliminary Analysis, DOE developed incremental MPC estimates based on the optimized airflow approach to improving efficiencies. For the June 2016 ECS NOPR analysis, DOE developed new incremental MPC estimates based on the changes to the efficiency levels detailed in section IV.C.1 of the June 2016 ECS NOPR, and also based on feedback from interested parties and on information
DOE subsequently determined the costs for all other torn-down and modeled units, and determined the average costs associated with each incremental component efficiency improvement when moving between efficiency levels. In addition to the costs associated with the improved components themselves, DOE also considered the increased costs associated with other related product changes, such as increasing case sizes to accommodate larger heat exchangers.
Although DOE's test and modeled data resulted in a range of PRs from 0.72 to 1.75, DOE noted in the June 2016 ECS NOPR that not all units in its test sample were capable of reaching higher PRs with the identified design option changes. For example, the modeled max-tech PR represented a unit in the test sample that had a high PR as a starting point (near EL 3). Modeling increased heat exchanger sizes and a more efficient compressor in that unit resulted in a higher modeled PR than could be achieved theoretically by applying the same design options to baseline units. For the units that started at lower PRs, DOE expected that manufacturers would have to undertake a complete product redesign and optimization to reach higher PRs, rather than just applying the identified design options. As a result, manufacturers of these units would incur higher MPCs to reach the higher efficiency levels and also significant conversion costs associated with updating their product lines. These conversion costs are discussed further in chapter 12 of the June 2016 ECS NOPR TSD.
In the June 2016 ECS NOPR, DOE found that only three units in the teardown sample would be capable of reaching EL 3 without significant product redesign (
For the June 2016 ECS NOPR, DOE calculated all MPCs in 2014 dollars (2014$), the most recent year for which full-year data was available at the time of the analysis. Table IV.8 presents the MPC estimates DOE developed for the June 2016 ECS NOPR.
Additional details on the development of the incremental cost estimates for the June 2016 ECS NOPR analysis may be found in chapter 5 of the June 2016 ECS NOPR TSD.
During the July 2016 STD Public Meeting, AHAM stated it would work to gather and provide to DOE product cost information. (AHAM, Public Meeting Transcript, No. 39 at p. 75-76) GE commented that it was unable to provide accurate cost feedback due to concerns regarding conducting the test procedure and testing units of all duct configurations. (GE, Public Meeting Transcript, No. 39 at p. 18)
AHAM subsequently stated that it and its members were unable to verify the manufacturer product cost estimates in the June 2016 ECS NOPR because all portable ACs are produced overseas, and the new test procedures will require reductions in reported capacities of existing products. AHAM suggested that manufacturers have not yet fully explored the design requirements to reach the various ELs and therefore urged DOE to reassess its engineering and costing analysis to incorporate the effects of both capacity changes and modifications necessary to meet the ELs. AHAM argued that it is not sufficient to say that the costs associated with the capacity changes are incorporated in all ELs from the base case onward because the constraints on size and portability to maintain the product as portable will have significant effects on the practicality of technology options, particularly adding evaporator or condenser coil area. (AHAM, No. 43 at p. 22)
GREE commented that, based on its calculations, larger chassis designs are necessary to meet the proposed standards and consumers are likely unwilling to accept the additional costs associated with tooling. (GREE, Public Meeting Transcript, No. 39 at pp. 21-22)
As discussed in chapter 5 of the June 2016 ECS NOPR TSD, based on the range of observed heat exchanger areas in its test sample, DOE determined that a 20-percent increase in heat exchanger area is an appropriate limit to maintain portability and avoid impacting consumer utility. DOE also notes that all costs necessary to increase heat exchanger areas and the corresponding chassis design changes were considered in the product cost estimates presented in the June 2016 ECS NOPR and are also considered in this final rule. Additionally, DOE accounted for the changes to both CEER and SACC that would result from incorporating the design option changes in its June 2016 ECS NOPR engineering analysis.
AHAM noted that no portable ACs are manufactured in the U.S., and some are manufactured by third-party manufactures instead of by those who market them. Therefore, AHAM does not believe it is possible to characterize the cost structure of Chinese manufacturing plants and ultimately determine the manufacturer costs for overseas manufacturers. During the July 2016 STD Public Meeting and in its July 21, 2016 request for data and information, AHAM requested insight into how the cost model was developed and how DOE is able to estimate the manufacturing costs for portable ACs. (AHAM, Public Meeting Transcript, No. 39 at pp. 76-77)
The DOE response memo stated that DOE accounts for the location of a manufacturing facility when determining labor costs as well as
For the final rule analysis, DOE followed the same approach as used in the June 2016 ECS NOPR to develop incremental MPC estimates at each efficiency level. DOE updated the incremental MPC estimates from the June 2016 ECS NOPR based on the changes to the ELs detailed in section IV.C.1 of this final rule, feedback from interested parties, improved test unit modeling, and updated cost modeling.
As described in section IV.C.1.a of this final rule, DOE incorporated minor updates to its own data set and included the AHAM test data to determine performance trends and ELs. The adjusted data and slightly different EL curve shape compared to the June 2016 ECS NOPR shifted a few of the data points that would be included in each EL. Additionally, DOE did not have access to the AHAM test units for teardowns or cost modeling, so by necessity relied on its own sample of units to define the representative incremental MPCs at each EL. For this final rule, DOE also calculated all MPCs in 2015$, the most recent year for which full-year data was available at the time of the final rule analysis. Table IV.9 presents the updated MPC estimates DOE developed for this final rule.
Additional details on the development of the incremental cost estimates for the final rule analysis may be found in chapter 5 of the final rule TSD.
The markups analysis develops appropriate markups (
The manufacturer markup converts MPC to manufacturer selling price (MSP). DOE developed an average manufacturer markup by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed by publicly-traded manufacturers primarily engaged in appliance manufacturing and whose combined product range includes portable ACs.
DOE developed baseline and incremental markups for the manufacturers and retailers in the distribution chain. Baseline markups are applied to the price of products with baseline efficiency, while incremental markups are applied to the difference in price between baseline and higher-efficiency models (the incremental cost increase). The incremental markup is typically less than the baseline markup, and is designed to maintain similar per-unit operating profit before and after new or amended standards.
DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups.
AHAM commented that it strongly disagrees with the concept of incremental markups. According to AHAM, manufacturers, wholesalers, retailers and contractors have all provided numerous amounts of data, studies, and surveys saying that the incremental markup concept has no foundation in actual practice. AHAM asked what additional information DOE would need to reassess the markups approach. AHAM further asked if DOE would agree to put the concept of incremental markups up for peer review. (AHAM, No. 39 at pp. 80-81) AHAM states that DOE persists in relying on a simplistic interpretation of economic theory that assumes only variable costs can be passed through to customers because economic returns on capital cannot increase in a competitive marketplace. According to AHAM, they and the other associations and industry participants are unanimous in declaring that DOE's conclusions are simply incorrect and that percentage margins throughout the distribution channels have remained largely constant. In addition, AHAM noted that Shorey Consulting has shown that empirical studies of industry structure and other variables have only weak correlation with profitability, demonstrating that the economic theory DOE relies upon is proven not to apply in practice. Rather than continue to debate past each other, AHAM commented that DOE should submit both its work and that of the various industry groups to an independent peer review process. (AHAM, No. 43 at p. 20)
DOE disagrees that the theory behind the concept of incremental markups has been disproved. The concept is based on a simple notion: An increase in profitability, which is implied by keeping a fixed markup percentage when the product price goes up and demand is relatively inelastic, is not likely to be viable over time in a business that is reasonably competitive. DOE agrees that empirical data on markup practices would be desirable, but such information is closely held and difficult to obtain.
Regarding the Shorey Consulting interviews with appliance retailers, although the retailers said that they maintain the same percentage margin after amended standards for refrigerators took effect, it is not clear to what extent the wholesale prices of refrigerators actually increased. There is some empirical evidence indicating that prices may not always increase following a new standard.
DOE's analysis necessarily considers a simplified version of the world of
DOE acknowledges that its approach to estimating retailer markup practices after amended standards take effect is an approximation of real-world practices that are both complex and varying with business conditions. However, DOE continues to maintain that its assumption that standards do not facilitate a sustainable increase in profitability is reasonable. Chapter 6 of the final rule TSD provides details on DOE's development of markups for portable ACs.
The purpose of the energy use analysis is to determine the annual energy consumption of portable AC at different efficiencies in representative U.S. single-family homes, multi-family residences, and commercial settings, and to assess the energy savings potential of increased portable AC efficiency. The energy use analysis estimates the range of energy use of portable AC in the field (
DOE determined a range of annual energy consumption of portable ACs as a function of the unit's annual operating hours to meet the cooling demand, which depends on the efficiency of the unit, power (watts) of three modes of operation (cooling, fan, and standby), and the percentage of time in each mode. DOE also performed three sensitivity analyses on energy consumption, including looking at the effects of geographical distribution, room threshold size and overall operation time on consumer benefits and costs.
EIA's Residential Energy Consumption Survey (RECS) provides information on whether households use a room AC. Because portable ACs and room ACs often serve a similar function,
AHAM commented that DOE's consumer sample based on room ACs does not geographically match results AHAM obtained through an online survey. (AHAM, No. 43 at p. 19) Although DOE has not received the full survey results from AHAM, DOE conducted a sensitivity analysis using data points estimated from Figure 6 in Appendix B of AHAM's comments. DOE reweighted its residential and commercial sample such that 24 percent of the sample was from the Northeast, 13 percent from the Midwest, 29 percent from the South, and 34 percent from the West. DOE found that this sensitivity marginally increased LCC savings and reduced the percent of negatively impacted consumers for both sectors. Results for this sensitivity can be found in the final rule TSD appendix 8F.
The California IOUs commented that DOE's estimate for its residential room size threshold of 1,000 square feet could be further refined using data from 2013 study by the National Association of Home Builders. The California IOUs suggested DOE's current method limits the sample of potential installations of portable ACs. (California IOUs, No. 42 at p. 4)
Sizing charts provided by vendors indicate that portable ACs are intended to cool rooms having an area as large as approximately 525 to 600 square feet. A review of retail websites, however, indicated portable ACs may be used in rooms as large as 1,000 square feet. DOE assumed 1,000 square feet to be the maximum room size a user would attempt to cool using a portable AC. In practice, only 60 records in the RECS 2009 sample (about 2 percent) represent rooms between 600 and 1,000 square feet.
As a sensitivity, DOE removed the room size threshold from its analysis and calculated LCC results using the full room AC sample. Removing this threshold made minimal impact on the results. In this scenario, the average LCC savings for residential consumers under the proposed standard (TSL 2) would be $107 (compared with $108 in the primary estimate), and 28 percent of consumers would be impacted negatively (compared with 27 percent in the primary estimate). The simple payback period would be 2.8 years (compared with 2.8 years in the primary estimate). The full sensitivity results can be found in the final rule TSD appendix 8F.
To estimate the operating hours of portable ACs used in commercial settings, DOE developed a building sample from the 2012 Commercial Buildings Energy Consumption Survey
AHAM and the California IOUs encouraged DOE to replace 2003 CBECS data with 2012 CBECS data. (AHAM, No. 39 at pp. 85-87; California IOUs, No. 42 at p. 4)
DOE updates its inputs for analyses with credible and verifiable sources as data become available. At the time the June 2016 ECS NOPR analysis was completed, 2012 CBECS with expenditure microdata was not yet available, so DOE used 2003 CBECS. Because the data set was released in time for use in the final rule, DOE is using 2012 CBECS in its final rule analysis as recommended by AHAM and the California IOUs.
To estimate the cooling operating hours of portable ACs using datasets that are statistically representative, DOE used the same method and updated datasets that were used in the 2011 direct final rule for room ACs. 76 FR 22454 (Apr. 21, 2011). For each sample household, RECS provides the estimated energy use for cooling by room ACs. After assigning an efficiency and capacity to the room AC, DOE could then estimate its operating hours in cooling mode. DOE adjusted the operating hours in cooling mode to account for the likelihood that improvement in building shell efficiency would reduce the cooling load and operating hours.
Some interested parties objected to DOE's use of room AC data as a proxy for portable AC operating hours. AHAM stated that DOE misrepresents portable ACs by referencing and scaling characteristic and performance data from room air conditioners. (AHAM, No. 43 at p. 18) AHAM asserted that for a standards rule to be technologically feasible and economically justified, it must be based on product-specific data, not assumptions and estimates. (AHAM, No. 43 at pp. 1-2) De' Longhi stated that from their experience, while room ACs are typically used as the main cooling system, portable ACs are often used as supplementary systems when central systems are not activated or out of order so that the annual hours of use for portable ACs are lower than for room ACs. (De' Longhi, No. 41 at p. 1)
AHAM and De' Longhi stated that a De' Longhi survey
DOE maintains that room AC cooling hours are an appropriate proxy for portable AC cooling hours as both products are used for cooling defined spaces and their product usage is broadly similar. However, DOE agrees with the commenters that the De' Longhi survey cannot be used to conclusively draw a relationship between the total annual cooling mode hours of portable ACs and room ACs. To account for potential differences between consumer use of portable ACs and room ACs, DOE conducted a sensitivity analysis which assumes lower annual hours of use for portable ACs in comparison to room ACs. Specifically, in this sensitivity analysis, DOE scaled the room AC cooling mode hours of use by half while maintaining the assumption that portable ACs are used during the same time of year as room ACs, since the use of both types of cooling equipment is likely to be consistent seasonally. The results of this sensitivity analysis estimate one-third of the energy cost savings relative to the primary estimate. In this low-usage case, the average LCC savings under the adopted standards (TSL 2) would be $35 (compared with $125 in the primary estimate), and 42 percent of consumers would be impacted negatively (compared with 27 percent in the primary estimate). The simple payback period would be 5.1 years (compared with 2.8 years in the primary estimate). Further details are presented in appendix 8F and appendix 10E of the final rule TSD. Thus, even if consumers use portable ACs substantially less than room ACs, the overall impacts on consumers would be positive. It should be noted that lower product usage would imply a longer lifetime; however, in this sensitivity analysis, the lifetime was not lengthened. A longer lifetime would increase savings, reduce the payback period, and reduce the population segment that is negatively impacted.
AHAM recommended that DOE use data from the study by Burke
AHAM claims that the data DOE has used raise serious and separate concerns under the Data Quality Act.
DOE maintains that the data sources and methodology used in its analyses meet the guidelines developed by OMB in response to the Data Quality Act. Data used in DOE's analysis draws from the best available statistically-significant representation of how U.S. consumers
The California IOUs suggested that DOE use projected cooling degree-days for the LCC analysis year (2022) to accurately quantify the required cooling load. (California IOUs, No. 42 at p. 4) DOE agrees and has incorporated this suggestion into its final rule analysis using census division cooling degree-day trends from
To estimate the number of hours in fan-only mode, DOE utilized a field metering analysis of a sample of portable ACs in 19 homes.
Chapter 7 of the final rule TSD provides details on DOE's energy use analysis for portable ACs.
DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for portable ACs. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost. DOE used the following two metrics to measure consumer impacts:
• The LCC (life-cycle cost) is the total consumer expense of a product over the life of that product, consisting of total installed cost (manufacturer selling price, distribution chain markups, sales tax, and installation costs) plus operating costs (expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product.
• The simple PBP (payback period) is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the simple PBP by dividing the change in purchase cost at higher ELs by the change in annual operating cost for the year that new standards are assumed to take effect.
For any given EL, DOE calculates the LCC savings as the change in LCC in a standards case relative to the LCC in the no-new-standards case, which reflects the estimated efficiency distribution of portable ACs in the absence of new or amended energy conservation standards. In contrast, the simple PBP for a given EL is measured relative to the baseline product.
For each considered EL, DOE calculated the LCC and PBP for a nationally representative set of housing units and commercial buildings that use portable ACs. DOE used the EIA's 2009 RECS to develop household samples for portable ACs based on households that use room ACs. DOE also used the EIA's 2012 CBECS to develop a sample of commercial buildings that use portable ACs, again based on buildings that use room ACs. For each sample household or commercial building, DOE determined the energy consumption for the portable ACs and the appropriate electricity price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of portable ACs.
Inputs to the calculation of total installed cost include the cost of the product—which includes MPCs, manufacturer markups, retailer and distributor markups, and sales taxes—and installation costs. Note in the case of portable ACs, DOE assumed that installation costs would not change with efficiency ELs. So the difference of installation cost between the baseline and higher ELs is then $0. Inputs to the calculation of operating expenses include annual energy consumption, energy prices and price projections, repair and maintenance costs, product lifetimes, and discount rates. DOE created distributions of values for product lifetime and discount rates with probabilities attached to each value, to account for their uncertainty and variability. Sales tax and electricity prices are tied to the geographic locations of purchasers drawn from the residential and commercial samples.
The 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 simulation randomly samples input values from the probability distributions and portable AC user samples. The model calculated the LCC and PBP for products at each EL for 10,000 housing units or commercial buildings per simulation run.
DOE calculated the LCC and PBP for all consumers as if each were to purchase a new product in the expected year of compliance with new standards. Any new standards would apply to portable ACs manufactured 5 years after publication of the final standard. (42 U.S.C. 6295(l)(2)) Therefore, for purposes of its analysis, DOE used 2022 as the first year of compliance with new standards.
Table IV.10 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. For energy use, RECS and CBECS were used for number of hours of use in cooling mode. A field metering report provided information regarding the fan-mode of portable ACs.
To calculate consumer product costs, DOE multiplied the MPCs developed in the engineering analysis by the markups described in section IV.D of this document (along with sales taxes). DOE used different markups for baseline products and higher-efficiency products, because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency products.
Economic literature and historical data suggest that the real costs of many products may trend downward over time according to “learning” or “experience” curves. Experience curve analysis implicitly includes factors such as efficiencies in labor, capital investment, automation, materials prices, distribution, and economies of scale at an industry-wide level.
Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. Available evidence indicated that no installation costs would be incurred for baseline installation or be impacted with increased ELs.
For each sampled household and building, DOE determined the energy consumption for a portable AC at different ELs using the approach described in section IV.E of this final rule.
DOE used average prices (for baseline products) and marginal prices (for higher-efficiency products) which vary by season, region, and baseline electricity consumption level for the LCC. DOE estimated these prices using data published with the Edison Electric Institute (EEI) Typical Bills and Average Rates reports for summer and winter 2014.
For both the residential and commercial sectors, DOE defined the average price as the ratio of the total bill to the total electricity consumption. For the residential sector, DOE used the EEI data to also define a marginal price as the ratio of the change in the bill to the change in energy consumption. For the commercial sector, marginal prices cannot be estimated directly from the EEI data, so DOE used a different approach, as described in chapter 8 of the final rule TSD.
Regionally weighted-average values for each type of price were calculated for the nine census divisions and four large states (CA, FL, NY and TX). Each EEI utility in a division was assigned a weight based on the number of consumers it serves. Consumer counts were taken from the most recent EIA Form 861 data (2012).
DOE assigned seasonal average and marginal prices to each household or commercial building in the LCC sample based on its location and its baseline monthly electricity consumption for an average summer or winter month. For a detailed discussion of the development
To estimate future prices, DOE used the projected annual changes in average residential and commercial electricity prices that are consistent with cases described on p. E-8 in
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. Based on available data and low product purchase prices, DOE concluded that repair frequencies are low and do not increase for higher-capacity or higher-efficiency units. DOE assumed a zero cost for all ELs.
AHAM commented that higher ELs may require use of variable-speed compressors to meet a potential standard and this would impact the repair rate and cost of higher ELs. (AHAM, No. 43 at pp. 25-26) AHAM was unable to provide data to show that variable-speed compressors would require an increased repair rate or cost, but suggested DOE consult with manufacturers. DOE has not found any evidence that repair rates or costs would increase with efficiency for portable ACs nor did any manufacturer provide data to suggest this occurs in the market today. Therefore, DOE estimates that portable AC repair rates and costs do not change with higher efficiency units.
The product lifetime is the age at which the product is retired from service. Given similar mechanical components and uses, DOE considered that the lifetime distribution of portable ACs is the same as that of room ACs, as estimated for the 2011 direct final rule. 76 FR 22454 (April 21, 2011). The average lifetime is 10.5 years.
AHAM also noted that although room ACs and portable ACs are used for similar purposes, they are different products and therefore they may have different lifetimes. (AHAM, No. 39 at p. 96) AHAM commented that DOE should use an average product lifetime of 7 years for portable ACs and referenced a 2010 survey conducted by AHAM. (AHAM, No. 43 at pp. 23-24)
AHAM did not provide the survey in its comments and DOE is unable to locate a copy of the survey in the public record; therefore, DOE is unable to verify AHAM's estimate and determine whether the lifetime estimate is specifically for portable ACs or for a similar product. Additionally, if AHAM's estimate is for the portable AC product, it is unclear how a 2010 survey could accurately measure the average lifetime for a product that has only been available in large residential markets since the early 2000s. An accurate calculation of the average lifetime requires at least one full turnover of stock to sample the entire age distribution to include the longest living units that exceed the average lifetime. Assuming the first appreciable number of shipments of portable ACs occurred in 2000, the oldest possible lifetime captured in AHAM's survey would be 10 years. Excluding longer lived portable ACs that have not yet failed would bias an estimate of the average to lower values. Without the details of the survey methodology, DOE is unable to include AHAM's estimate in derivation of a lifetime distribution.
ASAP stated that using the lifetime of room ACs or dehumidifiers is reasonable, given the similarities of the products and the components that make up those products. (ASAP, No. 39 at pp. 98-99) The Joint Commenters noted that portable dehumidifiers are very similar to portable ACs, as the two products share the same basic refrigeration system components and are both portable units placed inside a room. The Joint Commenters also noted that DOE estimates the average lifetime of a portable dehumidifier (11 years) is slightly longer than the average lifetime of a room AC (10.5 years) and therefore, DOE's assumption for the average lifetime of portable ACs may be conservative. (Joint Commenters, No. 44 at p. 6) DOE continues to use an average lifetime of 10.5 years derived from room ACs given the similarity in their components.
Chapter 8 of the final rule TSD provides details on DOE's development of lifetimes for portable ACs.
In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for portable ACs based on consumer financing costs and the opportunity cost of consumer funds.
DOE applies weighted average discount rates calculated from consumer debt and asset data, rather than marginal or implicit discount rates.
To establish residential discount rates for the LCC analysis, DOE identified all relevant household debt or asset classes in order to approximate a consumer's opportunity cost of funds related to appliance energy cost savings. DOE estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board's Survey of Consumer Finances
To establish commercial discount rates for the LCC analysis, DOE estimated the cost of capital for companies that purchase a portable AC. The weighted average cost of capital is commonly used to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund investments, so their cost of capital is the weighted average of the cost to the firm of equity and debt financing as estimated from financial data for publicly traded firms in the sectors that purchase computers. For this analysis, DOE used Damadoran Online
AHAM commented that DOE has traditionally used a real (inflation adjusted) discount rate in the LCC calculation based on averaging the various components of debt and assets. AHAM noted that AHAM and others have commented that an average consumer discount rate is inappropriate and that DOE should use a marginal rate based on the cost of available borrowed funds, generally credit card debt. (AHAM, No. 43 at p. 24) In response to questions by AHAM, DOE stated in the DOE response memo and maintains that when assessing the NPV of an investment in energy efficiency, the marginal interest rate alone (assuming it were the interest rate on the credit card used to make the purchase, for example) would only be the relevant discount rate if either: (1) The consumer were restricted from rebalancing their debt and asset holdings (by redistributing debt and assets based on the relative interest rates available) over the entire time period modeled in the LCC analysis; or (2) the risk associated with an investment in energy efficiency was at a level commensurate with that reflected by credit card interest rates (
In reference to the first point, rebalancing, AHAM commented that the inherent assumption allowing rebalancing is that consumers will defer consumption (
DOE believes that using an average discount rate in the LCC best approximates the actual opportunity cost of funds faced by consumers. This opportunity cost of funds is the time-value of money for consumers. Interest rates, which are set by supply and demand for credit and capital in the financial market, vary across consumers and across financial investment or credit source based on the risk associated with that consumer or with that investment type. Because the purpose of the LCC analysis is to determine the distributional impacts of the proposed standard across heterogeneous consumers in the population, to account for variation in access to rates of return on investments and interest rates of debt faced by consumers in the population, DOE generates a discount rates based on the average of the interest rates associated with debts and assets holdings, weighted by the share of funds associates with each of those debts or assets in the portfolio. This is the best approximation of the actual opportunity cost of funds for each household,
In reference to the second point concerning risk, AHAM stated DOE is carrying the concepts of capital asset pricing (CAPM) used in the commercial sector (and used by DOE to set commercial discount rates), which, essentially, assumes that the cost of equity is set in relationship to a risk free rate and the systemic variance between a security (or set of cash flows) and a widely diversified set of equities. AHAM commented that DOE, in discussing point (2), focuses on “risk premiums” associated with types of investments. Within the context of the CAPM model, AHAM stated that all the risks discussed by DOE are diversifiable, non-systemic risk. AHAM suggested that they should be incorporated (and are incorporated by the DOE Monte Carlo process) in the cash flow
First, DOE raised the issue of risk not in the context of its method but rather to explain circumstances in which a higher discount rate might be appropriate. In any case, DOE disagrees that the discussion regarding the risk premium appropriate for an investment in energy efficiency is irrelevant to the choice of discount rate used in the LCC. As DOE stated before, while there is limited data available on the risk associated with specific types of energy efficiency investments, Mills et al. (2006) present results from an analysis demonstrating that the risk associated with the returns from investing in an ENERGY STAR Building are in line with that of long-term government bonds (
AHAM
As DOE has responded in the past to comments on this topic, the LCC analysis is not modeling a purchase decision. The LCC analysis estimates the NPV of financial trade-offs of increased upfront product costs weighed against reduced operating costs over the lifetime of the covered product, assuming the product has already been obtained and installed. Implicit or “imputed” discount rates referred to by AHAM are not the appropriate rates to use in the context of the LCC analysis because such rates deviate from market interest rates due to a variety of factors (
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular EL, DOE's LCC analysis considered the projected distribution (market shares) of product efficiencies under the no-new-standards case (
To estimate the energy efficiency distribution of portable ACs for 2022, DOE's LCC analysis considered the projected distribution (market shares) of product efficiencies under the no-new-standards case (
The simple PBP 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. PBPs are expressed in years. PBPs 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 simple PBP calculation for each EL are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not applied.
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)) For each considered EL, 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 new standards would be required (see section V.B.1.c of this final rule).
DOE uses projections of annual product shipments to calculate the national impacts of potential amended or new energy conservation standards on energy use, NPV, and future manufacturer cash flows.
DOE received data on portable AC shipments in 2014 from manufacturer interviews. The manufacturer interviews also provided information which suggested that the average annual growth in portable AC shipments between 2004 and 2013 was 30 percent. To estimate historical shipments prior to 2004, DOE interpolated between 1985 (the date that portable ACs were introduced to the residential market) and 2004.
DOE estimated a saturation rate to project shipments of portable ACs. DOE assumed that the portable AC saturation rate would be no greater than half the current room AC saturation rate (based on RECS 2009) by the end of the analysis period,
For the final rule analysis, DOE applied price and efficiency elasticity parameters to estimate the effect of new standards on portable AC shipments. DOE estimated the price and efficiency elasticity parameters from a regression analysis that incorporated shipments, purchase price, and efficiency data specific to several residential appliances during 1989-2009. Based on evidence that the price elasticity of demand is significantly different over the short run and long run for other consumer goods (
AHAM commented that it believes that DOE has under-estimated the price/feature elasticity effects on portable ACs. AHAM stated that DOE has used a generic elasticity factor without looking at the specific conditions of the portable AC marketplace and that importers who purchase portable ACs and name-brand report that they are in this business because of retailer demand for a full product line. AHAM notes that if manufacturers are forced to recalibrate cooling capacity and increase size and weight, the dynamic of the portable AC market will diminish, with retailers ceasing to require portable ACs as part of a perceived full-line of products and leading to a negative impact on shipments. As such, AHAM recommended that DOE conduct sensitivity analyses on energy saved and on manufacturer impact based on a 15 percent and a 30 percent decline in shipments from the 1.32 million unit base case. (AHAM, No. 43 at p. 26)
AHAM's suggestion of a 15 percent or 30 percent decline in shipments does not appear to be based on any data source. At TSL 2, a 15 percent decline in shipments implies a price elasticity of −1.7. A 30 percent decline implies a price elasticity of −3.4 which is significantly smaller (
AHAM commented that the decline in shipments from the no-new-standards case should not count as a beneficial reduction in energy consumption. While the use of energy by portable ACs will decline when fewer of them are bought, AHAM stated that this is not a net national benefit. Rather, AHAM noted that the loss of consumer utility and the decline in consumer purchases of a product are the sort of results that the EPCA statute specifically prohibits when it leads to a product or a set of product features being withdrawn from the market. AHAM commented that in the case of portable ACs, the cost will increase and product features will worsen, if not disappear, leading to fewer portable ACs being purchased. AHAM suggested that DOE should specifically exclude the effects of energy savings from its energy reduction calculations in the NIA. (AHAM, No. 43 at p. 28-29)
DOE agrees that the energy savings and the NPV should reflect shipments from only the affected stock (
For details on the shipments analysis, see chapter 9 of the final rule TSD for further information.
The NIA assesses the NES and the NPV from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific ELs.
DOE evaluates the impacts of new standards by comparing a case without such standards with standards-case projections. The no-new-standards case characterizes energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market if DOE adopted new standards at specific energy ELs (
Higher-efficiency portable ACs reduce the operating costs for a consumer, which can lead to greater use of the product. A direct rebound effect occurs when a product that is made more efficient is used more intensively, such that the expected energy savings from the efficiency improvement may not fully materialize. DOE examined a 2009 review of empirical estimates of the rebound effect for various energy-using products.
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 at
Table IV.12 summarizes the inputs and methods DOE used for the NIA analysis for the final rule. Discussion of these inputs and methods follows the table. See chapter 10 of the final rule TSD for further details.
A key component of the NIA is the trend in energy efficiency projected for the no-new-standards case and each of the standards cases. Section IV.F.8 of this document describes how DOE developed an energy efficiency distribution for the no-new-standards case (which yields a shipment-weighted average efficiency) for each of the considered product classes for the year of anticipated compliance with an amended or new standard. To project the trend in efficiency absent new standards for portable ACs over the entire shipments projection period, DOE used as a starting point the shipments-weighted cooling energy efficiency ratio (SWEER) estimated for 2022 in the LCC analysis and assumed an annual increase in efficiency equal to the increase estimated for room ACs in the 2011 direct final rule: 0.25 percent between 2022 and 2051. 76 FR 22454 (April 21, 2011). The approach is further described in chapter 10 of the final rule TSD.
For the standards cases, DOE used a “roll-up” scenario to establish the shipment-weighted efficiency for the year that standards are assumed to become effective (2022). In this scenario, the market of products in the no-new-standards case that do not meet the standard under consideration would “roll up” to meet the new standard level, and the market share of products above the standard would remain unchanged.
To develop standards case efficiency trends after 2022, DOE developed SWEER growth trends for each standard level that maintained, throughout the analysis period (2022-2051), the same difference in per-unit average cost as was determined between the no-new-standards case and each standards case in 2022. The approach is further described in chapter 10 of the final rule TSD.
The NES analysis involves a comparison of national energy consumption of the considered products between each potential standards case (TSL) and the case with no new or amended energy conservation standards. DOE calculated the annual NES by multiplying the number of units (stock) of each product (by vintage or age) by the annual energy consumption savings per unit (also by vintage). DOE calculated unit annual energy consumption savings based on the difference in unit annual 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 (
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 GHG and other emissions in the NIA 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
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 developed portable AC price trends based on historical PPI data. DOE applied the same trends to project prices at each considered EL. By 2051, which is the end date of the projection period, the average portable AC price is projected to drop 53 percent relative to 2013. DOE's projection of product prices is described in appendix 10C of the final rule TSD.
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 portable ACs. In addition to the default price trend, DOE considered two product price sensitivity cases: (1) A
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 electricity prices by the projection of annual national-average residential and commercial electricity price changes in the Reference case described on p. E-8 in
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 OMB to Federal agencies on the development of regulatory analysis.
In analyzing the potential impact of new energy conservation standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by a new or amended national standard. The purpose of a subgroup analysis is to determine the extent of any such disproportional impacts. DOE evaluates impacts on particular subgroups of consumers by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For this final rule, DOE analyzed the impacts of the considered standard levels on three subgroups: (1) Low-income households, (2) senior-only households, and (3) small businesses. The analysis used subsets of the RECS 2009 sample composed of households that meet the criteria and CBECS 2012 for the considered subgroups. DOE used the LCC and PBP spreadsheet model to estimate the impacts of the considered EL on these subgroups. Chapter 11 in the final rule TSD describes the consumer subgroup analysis.
DOE performed an MIA to estimate the financial impacts of new energy conservation standards on manufacturers of portable ACs and to estimate the potential impacts of such standards on direct employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects and includes analyses of projected industry cash flows, INPV, investments in R&D and manufacturing capital, and domestic manufacturing employment. Additionally, the MIA seeks to determine how new or amended energy conservation standards might affect manufacturing 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, product shipments, manufacturer markups, and investments in 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 or amended standards, the GRIM estimates a range of possible impacts under different markup scenarios.
The qualitative part of the MIA addresses manufacturer characteristics and market trends. Specifically, the MIA considers such factors as a potential standard's impact on manufacturing capacity, competition within the industry, 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 portable AC manufacturing industry based on the market and technology assessment, preliminary manufacturer interviews, and publicly-available information. This included a top-down analysis of portable AC manufacturers that DOE used to derive preliminary financial inputs for the GRIM (
In Phase 2 of the MIA, DOE prepared a framework industry cash-flow analysis to quantify the potential impacts of portable AC energy conservation standards. 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
In addition, during Phase 2, DOE developed interview guides to distribute to manufacturers of portable ACs 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 conducted structured, detailed interviews with representative manufacturers. During these interviews, DOE discussed engineering, manufacturing, procurement, and financial topics to validate assumptions used in the GRIM and to identify key issues or concerns. A description of the key issues raised by portable AC manufacturers during interviews conducted for the June 2016 ECS NOPR can be found in section IV.J.3 of the June 2016 ECS NOPR. See section IV.J.3 of this final rule for a description of public comments received by DOE regarding the June 2016 ECS NOPR. DOE also used manufacturer feedback to qualitatively assess impacts of new standards on manufacturing capacity, direct employment, and cumulative regulatory burden. See appendix 12A of the final rule TSD for an example of the NOPR-phase interview guide.
As part of Phase 3, DOE evaluated whether subgroups of manufacturers may be disproportionately impacted by new standards or may not be accurately represented by the average cost assumptions used to develop the industry cash flow analysis. Such manufacturer subgroups may include small business manufacturers, low-volume manufacturers (LVMs), niche players, and/or manufacturers exhibiting a cost structure that largely differs from the industry average. DOE identified one manufacturer subgroup for a separate impact analysis: Small business manufacturers. The small business subgroup is discussed in section VI.B of this document, “Review under the Regulatory Flexibility Act” and in chapter 12 of the final rule TSD.
DOE uses the GRIM to quantify the changes in cash flow due to new or amended 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 or amended energy conservation standard. The GRIM spreadsheet uses the inputs to arrive at a series of annual cash flows, beginning in 2017 (the base year of the analysis) and continuing to 2051. DOE calculated INPVs by summing the stream of annual discounted cash flows during this period. For manufacturers of portable ACs, DOE used a real discount rate of 6.6 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 or amended 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 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.
Manufacturing a higher efficiency product is typically more expensive than manufacturing a baseline product due to the use of more complex and typically more costly components. The changes in the MPCs of the analyzed products can affect the revenues, gross margins, and cash flow of the industry. For each EL, DOE used the MPCs developed in the engineering analysis, as described in section IV.C.2 of this final rule and further detailed in chapter 5 of the final rule TSD. Additionally, DOE used information from its teardown analysis, described in section IV.C of this final rule, to disaggregate the MPCs into material and labor costs. For a complete description of the MPCs, see chapter 5 of the final rule TSD.
The GRIM estimates manufacturer revenues based on total unit shipment projections and the distribution of those shipments by EL. Changes in sales volumes and efficiency mix over time can significantly affect manufacturer finances. For this analysis, the GRIM used the NIA's annual shipment forecasts derived from the shipments analysis from 2017 (the base year) to 2051 (the end of the analysis period). See chapter 9 of the NOPR TSD for additional details.
New energy conservation standards may cause manufacturers to incur conversion costs to bring their production facilities and equipment designs into compliance with the new standards. DOE evaluated the level of conversion-related expenditures that would be needed to comply with each considered EL. 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 R&D, testing, marketing, and other non-capitalized costs necessary to make product designs comply with new or amended 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.
DOE used multiple sources of data to evaluate the level of product and capital conversion costs and stranded assets manufacturers would likely face to comply with new energy conservation standards. In estimating per-platform conversion costs at each EL considered in this final rule, DOE primarily used estimates of capital requirements derived from the portable AC product teardown analysis and the engineering model (as described in section IV.C of this final rule) in combination with the conversion cost assumptions used in the final rule for dehumidifiers. DOE also used feedback provided by manufacturers during interviews. Using the test sample efficiency distribution (including AHAM-provided data points), per-platform conversion cost estimates were then aggregated and scaled to derive total industry estimates of product and capital conversion costs.
In general, DOE assumes that all conversion-related investments occur
MSPs include direct manufacturing production costs (
Under the preservation of gross margin percentage scenario, DOE applied a single uniform “gross margin percentage” markup across all ELs, which assumes that manufacturers would be able to maintain the same amount of profit as a percentage of revenues at all ELs within a product class. DOE used the baseline manufacturer markup, 1.42, which accounts for the two sourcing structures that characterize the portable AC market. Single-duct and dual-duct portable ACs sold in the U.S. are manufactured by overseas original equipment manufacturers (OEMs) either for sale by contract to an importer or for direct sale to retailers and builders. The MPCs developed in the engineering analysis, as detailed in chapter 5 of the final rule TSD, reflect the cost of manufacturing at the OEM. For the OEM to importer sourcing structure, this production cost is marked up once by the OEM and again by the contracting the company who imports the product and sells it to retailers. This markup was used for all products when modeling the no-new-standards in the GRIM. This scenario represents the upper bound of industry profitability as manufacturers are able to fully pass on additional production costs due to standards to their customers under this scenario.
Under the preservation of per-unit operating profit markup scenario, DOE modeled a situation in which manufacturers are not able to increase per-unit operating profit in proportion to increases in manufacturer production costs. This scenario represents the lower bound of profitability and a more substantial impact on the portable AC industry as manufacturers accept a lower margin in an attempt to offer price competitive products while maintaining the same level of earnings before interest and tax (EBIT) they saw prior to new or amended standards.
A comparison of industry financial impacts under the two markup scenarios is presented in section V.B.2.a of this final rule.
During and following the July 2016 STD NOPR public meeting, manufacturers and trade organizations commented on the potential impact of new energy conservation standards on portable AC manufacturers. These comments are outlined below. DOE considered these comments when updating the analysis for this final rule.
During the July 2016 STD Public Meeting, both NAM and AHAM requested that DOE provide more details about conversion cost model assumptions in order to facilitate more focused feedback from member companies. Specific requests included the number of companies and production lines that were assumed in developing the industry conversion cost estimates. (NAM, Public Meeting Transcript, No. 39 at pp. 118-121; AHAM, Public Meeting Transcript, No. 39 at pp. 120-121)
Relatedly, during the July 20l6 Public Meeting, ASAP commented that the industry capital conversion cost estimated for the portable AC industry to reach TSL 2 is approximately eight times greater than the industry capital conversion costs estimated for dehumidifier manufacturers to comply with the standards adopted in the 2016 final rule for dehumidifiers (also TSL 2), despite the fact that, in both cases, DOE estimated that approximately 50 percent of platforms will require complete redesigns. ASAP requested that DOE provide details about the number of platforms assumed in estimates of industry conversion costs. (ASAP, Public Meeting Transcript, No. 39 at pp. 122-123)
DOE addressed the AHAM, NAM, and ASAP requests for information related to the inputs used in the estimation of industry conversion costs in the DOE response memo on August 19, 2016.
Regarding ASAP's comments related to differences in the magnitude of industry capital conversion cost estimates between the portable AC and the dehumidifier rulemakings, multiple factors explain the differences in industry conversion cost estimates between this final rule and the dehumidifiers final rule. First, on a per-platform capital investment basis, DOE estimates that portable ACs are more costly to produce than dehumidifiers, and, accordingly, capital changes are more costly. Additionally, DOE clarifies that, in the June 2016 ECS NOPR, it had estimated that approximately 77 percent of portable AC platforms would require at least a partial redesign (including a change in chassis size) at TSL 2. 81 FR 38398, 38448 (June 13, 2016). Finally, for the June 2016 ECS NOPR, DOE estimated that there were approximately 48 portable AC platforms available on the U.S. market (updated to 54 for this final rule), a substantially greater number of platforms than was estimated for the dehumidifier industry (DOE estimated there were approximately 30 dehumidifier platforms available on the U.S. market). Again, DOE provided information related to conversion cost model assumptions used for this final rule in the DOE response memo on August 19, 2016.
Regarding future shipments of portable ACs, AHAM commented that if energy conservation standards result in reduced consumer demand, which, in turn, leads to reduced shipments volumes relative to those estimated in the June 2016 ECS NOPR, negative impacts to manufacturers will be compounded. AHAM suggested that DOE re-examine manufacturer impacts to include a significantly reduced shipment scenario reflecting the potential reduction in consumer demand. (AHAM, No. 43 at p. 28) AHAM suggested that after doing this, DOE reevaluate its balancing of costs and benefits taking into account the increased burden on manufacturers when shipment volumes drop as AHAM projects. (AHAM, No. 43 at p. 28)
As discussed in section IV.G of this document, AHAM's suggestion of a decline in shipments relative to what was forecasted in the June 2016 ECS NOPR does not appear to be based on any data source. Accordingly, DOE has not modeled an alternative shipments
Relatedly, AHAM also commented that the estimated range of percent reduction in INPV (28.1 to 30.6) is dramatic for a small industry segment and out of proportion to the potential benefits. (AHAM, No. 43 at p. 28)
As discussed in section V.C.1 of this document, DOE weighs both the benefits and burdens associated with each TSL in order to decide upon a final standard level. Please see section V.C.1 for the cost-benefit discussion associated with the standard adopted in this final rule.
Finally, AHAM provided several comments relating to DOE's treatment of cumulative regulatory burdens. AHAM suggested that DOE include in its analysis of cumulative regulatory impacts any rulemaking that would have an overlapping compliance period to that of new the portable ACs standard. AHAM stated that this adjustment would more realistically reflect regulatory burden because it evaluates all rules with which manufacturers must comply at any given point. AHAM also stated that, in general, the time and resources needed to evaluate and respond to DOE's test procedures and energy conservation standards should not be excluded from the cumulative regulatory burden discussion. AHAM further commented that cumulative regulatory burden analysis should also account for the timing and technical and economic relationship of those rulemakings. AHAM stated that, for example, DOE's recent practice of amending the test procedure while at the same time proposing amended standards increases the burden on manufacturers in responding to DOE's proposed rules. AHAM added that home appliances are now in an endless cycle of regulation, where as soon as one compliance effort ends or is near completion, another round of regulation to change the standard again begins. (AHAM, No. 43 at pp. 29-30)
For this final rule analysis of cumulative regulatory burdens, DOE has extended the analysis to include energy conservation standards for other products also produced by portable AC manufacturers with a standards compliance year occurring within the compliance period for the new portable AC standard, as set forth in this final rule (2017 to 2022). Additionally, as in the June 2016 ECS NOPR analysis, the cumulative regulatory burden analysis includes energy conservation standards for products also produced by portable AC manufacturers with compliance years occurring within 3 years after the compliance year for the new portable AC standard. DOE will consider the remaining issues put forth by AHAM in the future as it continues to evaluate its approach to assessing cumulative regulatory burden.
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 CO
The analysis of power sector emissions uses marginal emissions factors that were derived from data in
Combustion emissions of CH
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 NIA.
For CH
The
SO
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 SO
Beginning in 2016, however, SO
CAIR established a cap on NO
The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE's energy conservation standards would likely reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on
The
As part of the development of this rule, DOE considered the estimated monetary benefits from the reduced emissions of CO
For this final rule, DOE relied on a set of values for the social cost of carbon (SC-CO
The SC-CO
Under section 1(b)(6) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, “assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The purpose of the SC-CO
As part of the interagency process that developed these SC-CO
When attempting to assess the incremental economic impacts of CO
Despite the limits of both quantification and monetization, SC-CO
It is important to emphasize that the current SC-CO
In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing CO
After the release of the interim values, the IWG reconvened on a regular basis to generate improved SC-CO
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-CO
In 2013 the IWG released an update (which was revised in July 2015) that contained SC-CO
It is important to recognize that a number of key uncertainties remain, and that current SC-CO
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-CO
DOE multiplied the CO
DOE received several comments on the development of and the use of the SC-CO
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 GHGs. 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. 23 at pp. 2-3) Furthermore, the Joint Advocates argued that without an SC-CO
The Joint Advocates stated that assessment and use of the Integrated Assessment Models (IAMs) in developing the SC-CO
In response to the comments on the SC-CO
As noted previously, in November 2013, OMB announced a new opportunity for public comment on the interagency technical support document underlying the revised SC-CO
IECA stated that the SC-CO
IECA stated that the SC-CO
IECA stated that the SC-CO
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 (
Regarding the use of global SC-CO
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 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 SC-CO
While carbon dioxide is the most prevalent GHG emitted into the atmosphere, other GHGs are also important contributors. These include methane and nitrous oxide. GWP values are often used to convert emissions of non-CO
In light of these limitations and the paucity of peer-reviewed estimates of the social cost of non-CO
Since that time, new estimates of the social cost of non-CO
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-CO
The SC-CH
DOE multiplied the CH
As noted previously, DOE estimated how the considered energy conservation standards would reduce site NO
DOE estimated the monetized value of NO
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.
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
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.
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
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 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 indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.
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).
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 (2022-2027), where these uncertainties are reduced. For more details on the employment impact analysis, see chapter 16 of the final rule TSD.
The following section addresses the results from DOE's analyses with respect to the considered energy conservation standards for portable ACs. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for portable ACs, 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.
DOE analyzed the benefits and burdens of four TSLs for portable ACs. These TSLs are equal to each of the ELs analyzed by DOE with results presented in this document. Detailed results for TSLs that DOE analyzed are in the final rule TSD.
Table V.1 presents the TSLs and the corresponding ELs, and average EERs and CEERs at each level that DOE has identified for potential new energy conservation standards for portable ACs. TSL 4 represents the maximum technologically feasible (“max-tech”) energy efficiency. TSL 3 consists of an intermediate EL below the max-tech level, corresponding to the single highest efficiency observed in DOE's test sample. TSL 2 represents the maximum available efficiency across the full range of capacities, and TSL 1 represents an intermediate level between the baseline and TSL 2.
DOE analyzed the economic impacts on portable ACs consumers by looking at the effects that potential new standards at each TSL would have on the LCC and PBP. DOE also examined the impacts of potential standards on selected consumer subgroups and three sensitivity analyses on energy consumption. These analyses are discussed below.
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 (
Table V.2 through Table V.7 show the LCC and PBP results for the TSLs considered for portable ACs for both sectors, residential and commercial. The LCC results presented in Table V.2 and Table V.3 combined the results for residential and commercial users, which means that DOE had to assign an appropriate weight to the results for each type of user. Using the weighting from the room AC rulemaking,
As discussed in section IV.E, DOE conducted a sensitivity analysis that assumes consumers use portable ACs 50 percent less than room ACs. For the proposed standard, TSL 2, the average LCC savings for all consumers declines to $35 (from $125) and 42 percent of consumers experience a net cost under the sensitivity analysis (from 24 percent). See appendix 8F and 10E of the final rule TSD for additional information.
In the consumer subgroup analysis, DOE estimated the impact of the considered TSLs on low-income households, senior-only households, and small businesses. Table V.8 compares the average LCC savings and PBP at each EL for the three consumer subgroups, along with the average LCC savings for the entire sample. In most cases, the average LCC savings and PBP for low-income households, senior-only households, and small businesses at the considered ELs are not substantially different from the average for all households. Chapter 11 of the final rule TSD presents the complete LCC and PBP results for the subgroups.
As discussed in section III.E.2, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. In calculating a rebuttable presumption PBP for each of the considered TSLs, DOE used point values, and, as required by EPCA, based the energy use calculation on the DOE test procedure for portable ACs. In contrast, the PBPs presented in section V.B.1.a were calculated using distributions for input values, with energy use based on field metering studies and RECS data.
Table V.9 presents the rebuttable-presumption PBP for the considered TSLs for portable ACs. While DOE examined the rebuttable-presumption criterion, it considered whether the standard levels considered for the final rule are economically justified through a more detailed analysis of the economic impacts of those levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range of impacts to the consumer, manufacturer, Nation, and environment. The results of that analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification. Table V.9 shows the rebuttable presumption PBPs for the considered TSLs for portable ACs.
DOE performed an MIA to estimate the impact of new energy conservation standards on portable AC manufacturers. 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.
The following tables illustrate the estimated financial impacts (represented by changes in INPV) of new energy conservation standards on portable AC manufacturers, as well as the conversion costs that DOE estimates manufacturers would incur at each TSL. To evaluate the range of cash-flow impacts on the portable AC manufacturing industry, DOE used two different markup scenarios to model the range of anticipated market responses to new energy conservation standards.
To assess the lower (less severe) end of the range of potential impacts, DOE modeled a preservation of gross margin percentage markup scenario, in which a flat markup of 1.42 (
To assess the higher (more severe) end of the range of potential impacts, DOE modeled the preservation of per-unit operating profit markup scenario, which assumes that manufacturers would not be able to preserve the same overall gross margin, but instead would cut their markup for minimally compliant products to maintain a cost-competitive product offering while maintaining the same overall level of operating profit in absolute dollars as in the no-new-standards case. The two tables below show the range of potential INPV impacts for manufacturers of portable ACs. Table V.10 reflects the lower bound of impacts (higher profitability) and Table V.11 represents the upper bound of impacts (lower profitability).
Each scenario results in a unique set of cash flows and corresponding industry values at each TSL. In the following discussion, the INPV results refer to the sum of discounted cash flows through 2051, the difference in INPV between the no-new-standards case and each standards case, and the total industry conversion costs required for each standards case.
Beyond impacts on INPV, DOE includes a comparison of free cash flow between the no-new-standards case and the standards case at each TSL in the year before new standards take effect to provide perspective on the short-run cash flow impacts in the discussion of the results below.
At TSL 1, DOE estimates the impact on INPV for manufacturers of portable ACs to range from −$61.8 million to −$53.8 million, or a decrease in INPV of 8.4 percent to 7.3 percent, under the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 68.0 percent to $16.1 million, compared to the no-new-standards case value of $50.5 million in 2021, the year before the projected compliance date.
At TSL 1, the industry as a whole is expected to incur $33.1 million in product conversion costs attributed to upfront research, development, testing, and certification, as well as $52.3 million in one-time investments in property, plant, and equipment (PP&E) necessary to manufacture updated platforms. The industry conversion cost burden at TSL 1 would be associated with updates for portable ACs sold in the U.S. that are currently at the baseline, approximately 22 percent of platforms and 37 percent of shipments. At TSL 1, roughly 67 percent of non-compliant platforms will require some new components, including larger heat exchangers (with increases in heat exchanger area of up to 20 percent), which may necessitate larger chassis sizes. The remaining non-compliant portable ACs will likely require a complete platform redesign, necessitating all new components and high associated re-tooling and R&D costs.
At TSL 2, DOE estimates the impact on INPV for manufacturers of portable ACs to range from −$253.4 million to −$212.4 million, or a decrease in INPV of 34.3 percent to 28.8 percent, under the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 255.5 percent to −$78.6 million, compared to the no-new-standards case value of $50.5 million in 2021, the year before the projected compliance date.
At TSL 2, the industry as a whole is expected to incur $124.4 million in product conversion costs associated with the upfront research, development, testing, and certification; as well as $196.5 million in one-time investments in PP&E for products requiring platform updates. The industry conversion cost burden at this TSL would be associated with updates for portable ACs sold in the U.S. that are currently below the EL corresponding to TSL 2, approximately 83 percent of platforms and 85 percent of shipments. At TSL 2, roughly 67 percent of non-compliant platforms will require some new components, including larger heat exchangers (with increases in heat exchanger area of up to 20 percent), which may necessitate larger chassis sizes. The remaining non-compliant portable ACs will likely require a complete platform redesign, necessitating all new components and high associated re-tooling and R&D costs.
At TSL 3, DOE estimates the impact on INPV for manufacturers of portable ACs to range from −$413.9 million to −$332.0 million, or a decrease in INPV of 56.0 percent to 45.0 percent, under the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 403.6 percent to −$153.4 million, compared to the no-new-standards case value of $50.5 million in 2021, the year before the projected compliance date.
At TSL 3, the industry as a whole is expected to incur $179.0 million in product conversion costs associated with the upfront research, development, testing, and certification; as well as $314.3 million in one-time investments in PP&E for products requiring platform redesigns. Again, the industry conversion cost burden at this TSL would be associated with updates for portable ACs sold in the U.S. that are currently below the EL corresponding to TSL 3, approximately 98 percent of platforms and 98 percent of shipments. At TSL 3, roughly 14 percent of non-compliant platforms will require some new components, including larger heat exchangers (with increases in heat exchanger area of up to 20 percent), which may necessitate larger chassis sizes. The remaining 86 percent of non-compliant portable ACs will likely require a complete platform redesign, necessitating all new components and high associated re-tooling and R&D costs.
At TSL 4, DOE estimates the impact on INPV for manufacturers of portable ACs to range from −$490.4 million to −$365.5 million, or a decrease in INPV of 66.4 percent to 49.5 percent, under the preservation of per-unit operating profit markup scenario and the preservation of gross margin percentage markup scenario, respectively. At this TSL, industry free cash flow is estimated to decrease by approximately 442.3 percent to −$173.0 million, compared to the base-case value of $50.5 million in 2021, the year before the projected compliance date.
At TSL 4, the industry as a whole is expected to spend $192.2 million in product conversion costs associated with the research and development and
To quantitatively assess the impacts of energy conservation standards on direct employment, DOE used the GRIM to estimate the domestic labor expenditures and number of production and non-production employees in the no-new-standards case and at each TSL. DOE used statistical data from the U.S. Census Bureau's 2014
Labor expenditures related to product manufacturing depend on 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. To do this, DOE relied on the Production Workers Annual Wages, Production Workers Annual Hours, Total Fringe Benefits, Annual Payroll, Production Workers Average for Year, and Number of Employees from the
The total production employees is then multiplied by the U.S. labor percentage to convert total production employment to total domestic production employment. The U.S. labor percentage represents the industry fraction of domestic manufacturing production capacity for the covered product. This value is derived from manufacturer feedback, product database analysis, and publicly available information.
However, DOE estimates that none of the portable ACs subject to the standards considered in this final rule analysis (single-duct and dual-duct portable ACs) are produced domestically. Therefore, DOE does not provide an estimate of direct employment impacts. Indirect employment impacts in the broader U.S. economy are documented in chapter 16 of the final rule TSD.
As noted in the previous section, no single-duct or dual-duct portable ACs are manufactured in the U.S. Therefore, new energy conservation standards would have no impact on U.S. production capacity.
The Small Business Administration (SBA) defines a “small business” as having 1,250 employees or less for North American Industry Classification System (NAICS) 333415 (“Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing”). Based on this SBA employee threshold, DOE identified one entity involved in the design and distribution of portable ACs in the U.S. that qualifies as a small business. Based upon available information, DOE does not believe that this company is a manufacturer. However, even if this small business does manufacture portable ACs, because the product sold by this company incorporates the highest-efficiency variable-speed compressor currently available on the market, DOE believes that the product will comply with the standard EL adopted in this final rule (EL 2). Therefore, DOE believes that costs for this company would be limited to testing, certification, and updates to marketing materials and product literature. For a discussion of the potential impacts on the small manufacturer subgroup, see section VI.B of this document and chapter 12 of the TSD.
One aspect of assessing manufacturer burden involves looking at the cumulative impact of multiple DOE standards and the product-specific regulatory actions of other Federal agencies 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. Assessing the impact of a single regulation may overlook this cumulative regulatory burden. In addition to energy conservation standards, other regulations can significantly affect manufacturers' financial operations. Multiple regulations affecting the same manufacturer can strain profits and lead companies to abandon product lines or markets with lower expected future returns than competing products. For these reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings pertaining to appliance efficiency.
Some portable AC manufacturers also make other products or equipment that could be subject to energy conservation standards set by DOE. DOE looks at the regulations that could affect portable AC manufacturers that will take effect approximately 3 years before and after the 2022 compliance date of the standards established in this final rule.
The compliance dates and expected industry conversion costs of relevant energy conservation standards are indicated in Table V.12. Included in the table are Federal regulations that have compliance dates 3 years before and after the portable AC compliance date (and also 8 years before the portable AC compliance date).
In addition to other Federal energy conservation standards, manufacturers cited potential restrictions on the use of certain refrigerants and State-level refrigerant recovery regulations as sources of cumulative regulatory burden for portable AC manufacturers. For more details, see chapter 12, section 12.7.3, of the final rule TSD.
DOE plans to seek public comment on the approaches it has used here (
This section presents DOE's estimates of the NES and the NPV of consumer benefits that would result from each of the TSLs considered as potential new standards.
To estimate the energy savings attributable to potential standards for portable ACs, 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.13 presents DOE's projections of the NES for each TSL considered for portable ACs. The savings were calculated using the approach described in section IV.H.2 of this document.
OMB Circular A-4
DOE estimated the cumulative NPV of the total costs and savings for consumers that would result from the TSLs considered for portable ACs. In accordance with OMB's guidelines on regulatory analysis,
The NPV results based on the aforementioned 9-year analytical period are presented in Table V.16. 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.
The results in Table V.16 reflect the use of a default trend to estimate the change in price for portable ACs 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 and 50 percent fewer operating hours 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 10C of the final rule TSD. In the high-price-decline case, the NPV of consumer benefits is higher than in the default case due to higher energy price trends. In the low-price-decline case, the NPV of consumer benefits is lower than in the default case due to lower energy price trends and the 50 percent fewer operating hours.
DOE expects that new energy conservation standards for portable ACs 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
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.
As discussed in section IV.C.1.b of this document, DOE has concluded that the standards adopted in this final rule will not lessen the utility or performance of the portable ACs under consideration in this rulemaking. Manufacturers of these products currently offer units that meet or exceed the adopted standards.
DOE considered any lessening of competition that would be likely to result from new or amended standards. As discussed in section III.E.1.e, the Attorney General of the United States (Attorney General) is required to determine the impact, if any, of any lessening of competition likely to result from a proposed standard and to transmit such determination in writing to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. To assist the Attorney General in making this determination, DOE provided the DOJ June 2016 ECS with copies of the June 2016 ECS NOPR and the NOPR TSD for review. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for portable ACs 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.
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 potential energy conservation standards for portable ACs is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and GHGs. Table V.17 provides DOE's estimate of cumulative emissions reductions expected to result from the TSLs considered in this rulemaking. The emissions were calculated using the multipliers discussed in section IV.K. DOE reports annual emissions reductions for each TSL in chapter 13 of the final rule TSD.
As part of the analysis for this rule, DOE estimated monetary benefits likely to result from the reduced emissions of CO
Table V.18 presents the global value of CO
As discussed in section IV.L.2, DOE estimated monetary benefits likely to result from the reduced emissions of CH
Table V.19 presents the value of the CH
DOE is well aware that scientific and economic knowledge about the contribution of CO
DOE also estimated the monetary value of the economic benefits associated with NO
The Secretary of Energy, in determining whether a standard is economically justified, may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No other factors were considered in this analysis.
Table V.22 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced GHG and NO
The national operating cost savings are domestic U.S. monetary savings that occur as a result of purchasing the covered portable ACs, 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 portable ACs shipped in 2022-2051. However, the GHG reduction is a benefit that accrues globally. Because CO
When considering new or amended energy conservation standards, the standards that DOE adopts for any type (or class) of covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering the seven
For this final rule, DOE considered the impacts of potential new standards for portable ACs 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 EL that is both technologically feasible and economically justified and saves a significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of each TSL, tables in this section present a summary of the results of DOE's quantitative analysis for each TSL. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of consumers who may be disproportionately affected by a national standard and impacts on employment.
DOE also notes that the economics literature provides a wide-ranging discussion of how consumers trade off upfront costs and energy savings in the absence of government intervention. Much of this literature attempts to explain why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of (1) a lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant delaying or altering purchases; (4) excessive focus on the short term, in the form of inconsistent weighting of future energy cost savings relative to available returns on other investments; (5) computational or other difficulties associated with the evaluation of relevant tradeoffs; and (6) a divergence in incentives (for example, between renters and owners, or builders and purchasers). Having less than perfect foresight and a high degree of uncertainty about the future, consumers may trade off these types of investments at a higher than expected rate between current consumption and uncertain future energy cost savings.
In DOE's current regulatory analysis, potential changes in the benefits and costs of a regulation due to changes in consumer purchase decisions are included in two ways. First, if consumers forego the purchase of a product in the standards case, this decreases sales for product manufacturers, and the impact on manufacturers attributed to lost revenue is included in the MIA. Second, DOE accounts for energy savings attributable only to products actually used by consumers in the standards case; if a standard decreases the number of products purchased by consumers, this decreases the potential energy savings from an energy conservation standard. DOE provides estimates of shipments and changes in the volume of product purchases in chapter 9 of the final rule TSD. However, DOE's current analysis does not explicitly control for heterogeneity in consumer preferences, preferences across subcategories of products or specific features, or consumer price sensitivity variation according to household income.
While DOE is not prepared at present to provide a fuller quantifiable framework for estimating the benefits and costs of changes in consumer purchase decisions due to an energy conservation standard, DOE is committed to developing a framework that can support empirical quantitative tools for improved assessment of the consumer welfare impacts of appliance standards. DOE has posted a paper that discusses the issue of consumer welfare impacts of appliance energy conservation standards, and potential enhancements to the methodology by which these impacts are defined and estimated in the regulatory process.
Table V.23 and Table V.24 summarize the quantitative impacts estimated for each TSL for portable ACs. The national impacts are measured over the lifetime of portable ACs 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 ELs contained in each TSL are described in section V.A of this document.
DOE first considered TSL 4, which represents the max-tech efficiency level. TSL 4 would save an estimated 1.28 quads of energy, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be $3.21 billion using a discount rate of 7 percent, and $7.96 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 67.5 Mt of CO
At TSL 4, the average LCC impact is a savings of $229 for the residential sector, $522 for the commercial sector, and $268 for both sectors. The simple payback period is 3.1 years for the residential sector, 1.6 years for the commercial sector, and 2.9 years for both sectors. The fraction of consumers experiencing a net LCC cost is 34 percent for the residential sector, 12 percent for the commercial sector, and 31 percent for both sectors.
At TSL 4, the projected change in INPV ranges from a decrease of $490.4 million to a decrease of $365.5 million, which correspond to decreases of 66.4 percent and 49.5 percent, respectively. DOE estimates that no portion of the market will meet the efficiency standard specified by this TSL in 2021, the year before the compliance year. As such, manufacturers would have to redesign all products by the 2022 compliance date to meet demand. Redesigning all units to meet the max-tech efficiency level would require considerable capital and product conversion expenditures. At TSL 4, the capital conversion costs
Beyond the direct financial impact on manufacturers, TSL 4 may also contribute to the unavailability of portable ACs at certain cooling capacities. The efficiency at TSL 4 is a theoretical level that DOE developed by modeling the most efficient components available. However, DOE is aware that the highest-efficiency compressors that are necessary to meet TSL 4 may not be available to all manufacturers for the full range of capacities of portable ACs. Because specific high-efficiency components available are driven largely by the markets for other products with higher shipments (
The Secretary concludes that at TSL 4 for portable ACs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on some consumers, and 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 0.95 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $2.17 billion using a discount rate of 7 percent, and $5.56 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 49.6 Mt of CO
At TSL 3, the average LCC impact is a savings of $143 for the residential sector, $342 for the commercial sector, and $169 for both sectors. The simple payback period is 3.5 years for the residential sector, 1.7 years for the commercial sector, and 3.2 years for both sectors. The fraction of consumers experiencing a net LCC cost is 38 percent for the residential sector, 14 percent for the commercial sector, and 35 percent for both sectors.
At TSL 3, the projected change in INPV ranges from a decrease of $413.9 million to a decrease of $332.0 million, which correspond to decreases of 56.0 percent and 45.0 percent, respectively. DOE estimates that approximately 2 percent of available platforms and 2 percent of shipments will meet the efficiency standards specified by this TSL in 2021, the year before the compliance year. As such, manufacturers would have to make upgrades to 98 percent of platforms by the 2022 compliance date to meet demand. Redesigning these units to meet the EL would require considerable capital and product conversion expenditures. At TSL 3, the capital conversion costs total as much as $314.3 million, roughly 11.8 times the industry annual ordinary capital expenditure in 2021 (the year leading up to new standards). DOE estimates that complete platform redesigns would cost the industry $179.0 million in product conversion costs. These conversion costs largely relate to the extensive research programs required to develop new products that meet the efficiency standards at TSL 3. These costs are equivalent to 15.8 times the industry annual budget for research and development. As such, the conversion costs associated with the changes in products and manufacturing facilities required at TSL 3 would require significant use of manufacturers' financial reserves (manufacturer capital pools), impacting other areas of business that compete for these resources and significantly reducing INPV. In addition, manufacturers could face a substantial impact on profitability at TSL 3. Because manufacturers are more likely to reduce their margins to maintain a price-competitive product at higher TSLs, especially in the lower-capacity portable segment, DOE expects that TSL 3 would yield impacts closer to the high end of the range of INPV impacts. If the high end of the range of impacts is reached, as DOE expects, TSL 3 could result in a net loss to manufacturers of 56.0 percent of INPV.
Similar to TSL 4, beyond the direct financial impact on manufacturers, TSL 3 may also contribute to the unavailability of portable ACs at certain cooling capacities. TSL 3 is based on the single highest efficiency unit in DOE's test sample. However, DOE believes few, if any, other units on the market are able to achieve these efficiencies and that the highest efficiency single-speed compressors likely necessary to meet TSL 3 may not be available to all manufacturers for the full range of capacities of portable ACs. Because high-efficiency components available at any given time are driven largely by the markets for other products with higher shipments (
The Secretary concludes that at TSL 3 for portable ACs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on some consumers, and 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 0.49 quads of energy, an amount DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $1.25 billion using a discount rate of 7 percent, and $3.06 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 25.6 Mt of CO
At TSL 2, the average LCC impact is a savings of $108 for the residential sector, $238 for the commercial sector, and $125 for both sectors. The simple payback period is 2.8 years for the residential sector, 1.4 years for the commercial sector, and 2.6 years for both sectors. The fraction of consumers experiencing a net LCC cost is 27 percent for the residential sector, 9 percent for the commercial sector, and 24 percent for both sectors.
At TSL 2, the projected change in INPV ranges from a decrease of $253.4 million to a decrease of $212.4 million, which correspond to decreases of 34.3 percent and 28.8 percent, respectively. DOE estimates that approximately 17 percent of available platforms and 15 percent of shipments will meet the efficiency standards specified by this TSL in 2021, the year before the compliance year. As such, manufacturers would have to make upgrades to 83 percent of platforms by the 2022 compliance date to meet demand. At TSL 2, the capital conversion costs total as much as $196.5 million, roughly 7.4 times the industry annual ordinary capital expenditure in 2021 (the year leading up to new standards). DOE estimates that complete platform redesigns would cost the industry $124.4 million in product conversion costs. These conversion costs largely relate to the extensive research programs required to develop new products that meet the efficiency standards at TSL 2. These costs are equivalent to 11.0 times the industry annual budget for R&D. Because manufacturers are more likely to reduce their margins to maintain a price-competitive product at higher TSLs, especially in the lower-capacity portable segment, DOE expects that TSL 2 would yield impacts closer to the high end of the range of INPV impacts. If the high end of the range of impacts is reached, as DOE expects, TSL 2 could result in a net loss to manufacturers of 34.3 percent of INPV.
After considering the analysis and weighing the benefits and burdens, the Secretary has concluded that at TSL 2 for portable ACs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings would outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers. Accordingly, the Secretary has concluded that TSL 2 would offer the maximum improvement in efficiency that is technologically feasible and economically justified, as defined by EPCA, and would result in the significant conservation of energy.
Therefore, based on the above considerations, DOE adopts the energy conservation standards for portable ACs at TSL 2. The new energy conservation standards for portable ACs, which are expressed as CEER as a function of SACC, are shown in Table V.25.
The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2015$) 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, and (2) the annualized monetary value of the benefits of GHG and NO
Table V.26 shows the annualized values for portable ACs 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 reductions (for which DOE used average social costs with a 3-percent discount rate),
Using a 3-percent discount rate for all benefits and costs, the estimated cost of the adopted standards for portable ACs is $59 million per year in increased equipment costs, while the estimated annual benefits are $240.0 million in reduced operating costs, $56.7 million in GHG reductions, and $3.3 million in reduced NO
Section 1(b)(1) of Executive Order (E.O.) 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 portable ACs are intended to address are as follows:
(1) Insufficient information and the high costs of gathering and analyzing relevant information leads some consumers to miss opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not realized due to misaligned incentives between purchasers and users. An example of such a case is when the equipment purchase decision is made by a building contractor or building owner who does not pay the energy costs.
(3) There are external benefits resulting from improved energy efficiency of products or equipment that are not captured by the users of such equipment. These benefits include externalities related to public health, environmental protection and national energy security that are not reflected in energy prices, such as reduced emissions of air pollutants and GHGs that impact human health and global warming. DOE attempts to qualify some of the external benefits through use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory Affairs (OIRA) in the OMB has determined that the regulatory action in this document is a significant regulatory action under section (3)(f) of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(B) of the Order, DOE has provided to OIRA: (i) The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; and (ii) an assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is
In addition, the Administrator of OIRA has determined that the regulatory action is an “economically” significant regulatory action under section (3)(f)(1) of E.O. 12866. Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has provided to OIRA an assessment, including the underlying analysis, of benefits and costs anticipated from the regulatory action, together with, to the extent feasible, a quantification of those costs; and an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, and an explanation why the planned regulatory action is preferable to the identified potential alternatives. These assessments can be found in the TSD for this rulemaking.
DOE has also reviewed this regulation pursuant to E.O. 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 E.O. 12866. To the extent permitted by law, agencies are required by E.O. 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 E.O. 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.
The Regulatory Flexibility Act (5 U.S.C. 601
DOE reviewed this final rule pursuant to the Regulatory Flexibility Act and the procedures and policies discussed above. Consistent with the June 2016 ECS NOPR, DOE has concluded that this rule would not have a significant impact on a substantial number of small entities. The factual basis for this certification is set forth below.
For manufacturers of portable ACs, 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 NAICS code and industry description and are available at
To estimate the number of companies that could be small business manufacturers of products covered by this rulemaking, DOE conducted a market survey using all available public information. To identify small business manufacturers, DOE surveyed the AHAM membership directory,
This small business may incur costs associated with certification, testing, and marketing updates. The product sold by this company is listed in the CEC's Appliance Database, indicating that this company already allocates a portion of its resources to testing and certification of its portable AC product under ANSI/ASHRAE 128-2001. Preemption of California's standard by the standard adopted in this final rule implies that the small business would divert its existing testing budget to testing according to DOE's test procedure in appendix CC. Testing and certifying under appendix CC would add costs relative to testing to ANSI/ASHRAE 128-2001 due to the dual test condition requirement for dual-duct portable ACs (the product configuration sold by the small business). While DOE does not have third-party test laboratory quotes for portable AC testing costs, DOE expects that the costs would be similar to testing whole-home dehumidifiers
On the basis of the foregoing, DOE certifies that the rule will not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a FRFA for this rule. DOE has transmitted this certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the SBA for review under 5 U.S.C. 605(b).
Additional compliance flexibilities may be available through other means. EPCA provides that a manufacturer of a covered consumer product 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. (42 U.S.C. 6295(t)) Additionally, section 504 of the Department of Energy Organization Act, 42 U.S.C. 7194, provides authority for the Secretary to adjust a rule issued under EPCA in order to prevent “special hardship, inequity, or unfair distribution of burdens” that may be imposed on that manufacturer as a result of such rule. Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003 for additional details.
DOE has determined that portable ACs are a covered product under EPCA. 81 FR 22514 (April 18, 2016). Because portable ACs are a covered product, manufacturers will need to certify to DOE that their products comply with the energy conservation standards established in this final rule. In certifying compliance, manufacturers must test their products according to the DOE test procedures, 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 portable ACs. 76 FR 12422 (Mar. 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.
Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has determined that the rule fits within the category of actions included in Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. (See 10 CFR part 1021, App. B, B5.1(b); 1021.410(b) and App. B, B(1)-(5).) The rule fits within this category of actions because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX determination for this rulemaking, and DOE does not need to prepare an Environmental Assessment or Environmental Impact Statement for this rule. DOE's CX determination for this rule is available at
E.O. 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 E.O. 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 E.O. also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no further action is required by E.O. 13132.
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of E.O. 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity, (2) write regulations to minimize litigation, (3) provide a clear legal standard for affected conduct rather than a general standard, and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of E.O. 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 E.O. 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 E.O. 12988.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects
This final rule does not contain a Federal intergovernmental mandate because it does not require expenditures of $100 million or more in any one year by the private sector. The final rule could result in expenditures of $100 million or more, but there is no requirement that mandates that result. Potential expenditures may include: (1) Investment in R&D and in capital expenditures by portable AC manufacturers in the years between the final rule and the compliance date for the new standards, and (2) incremental additional expenditures by consumers to purchase higher-efficiency portable ACs, starting at the compliance date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The
Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. This final rule establishes energy conservation standards for portable ACs that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified, as required by 6295(o)(2)(A) and 6295(o)(3)(B). A full discussion of the alternatives considered by DOE is presented in chapter 17 of the TSD for this final rule.
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.
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.
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.
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 portable ACs, 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.
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.”
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:
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).
The Secretary of Energy has approved publication of this final rule.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Reporting and recordkeeping requirements.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Reporting and recordkeeping requirements, and Small businesses.
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 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, to read as set forth below:
42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
(d) * * *
(b)
(2) Pursuant to § 429.12(b)(13), a certification report shall include the following public product-specific information: The combined energy efficiency ratio (CEER in British thermal units per Watt-hour (Btu/Wh)), the seasonally adjusted cooling capacity in British thermal units per hour (Btu/h), the duct configuration (single-duct, dual-duct, or ability to operate in both configurations), presence of heating function, and primary condensate removal feature (auto-evaporation, gravity drain, removable internal collection bucket, or condensate pump).
(r)
(1) If the certified seasonally adjusted cooling capacity is found to be valid, the certified value will be used as the basis for determining the minimum allowed combined energy efficiency ratio for the basic model.
(2) If the certified seasonally adjusted cooling capacity is found to be invalid, the average measured seasonally adjusted cooling capacity will be used to determine the minimum allowed combined energy efficiency ratio for the basic model.
42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
(cc)
I am responding to your June 13, 2016 letter seeking the views of the Attorney General about the potential impact on competition of proposed energy conservation standards for portable air conditioners.
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 was delegated to the Assistant Attorney General for the Antitrust Division in 28 CFR 0.40(g).
In conducting its analysis, the Antitrust Division examines whether a proposed standard may lessen competition, for example, by substantially limiting consumer choice or increasing industry concentration. A lessening of competition could result in higher prices to manufacturers and consumers.
We have reviewed the proposed standards contained in the Notice of Proposed Rulemaking (81 FR 38398, June 13, 2016) and the related technical support documents. We have also monitored the public meeting held on the proposed standards on July 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 portable air conditioners are likely to have a significant adverse impact on competition.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including battery chargers. EPCA also requires the U.S. Department of Energy (DOE) to periodically determine whether more-stringent standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this final rule, DOE is adopting new energy conservation standards for uninterruptible power supplies, a class of battery chargers. It has determined that the new energy conservation standards for these products would result in significant conservation of energy, and are technologically feasible and economically justified.
The effective date of this rule is March 10, 2020. Compliance with the new standards established for uninterruptible power supplies in this final rule is required on and after January 10, 2022.
The docket for this rulemaking, which includes
The docket web page can be found at
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
Jeremy Dommu, 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) 586-9870. Email:
Celia Sher, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 287-6122. Email:
Title III, Part B
Pursuant to EPCA, any new or amended energy conservation standard must be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) EPCA also provides that not later than 6 years after issuance of any final rule establishing or amending a standard, DOE must publish either a notice of determination that standards for the product do not need to be amended, or a notice of proposed rulemaking including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m))
In accordance with these and other statutory provisions discussed in this document, DOE is adopting new energy conservation standards for uninterruptible power supplies (hereafter referred to as “UPSs”), a class of battery chargers. The adopted standards, which are expressed in average load adjusted efficiency, are shown in Table I-1. These standards apply to all products listed in Table I-1 and manufactured in, or imported into, the United States starting on and after two years after the publication of this final rule that utilize a NEMA 1-15P or 5-15P input plug and have an AC output.
Table I-2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of UPSs, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document.
The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the reference year through the end of the analysis period (2016-2048). Using a real discount rate of 6.1 percent, DOE estimates that the INPV for manufacturers of UPSs in the case without new standards is $2,575 million in 2015$. Under the adopted standards, DOE expects the change in INPV to range from −15.9 percent to 6.3 percent, which is approximately −$409 million to $162 million. In order to bring products into compliance with adopted standards, DOE expects the industry to incur total conversion costs of $36 million.
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.
DOE's analyses indicate that the adopted energy conservation standards for UPSs would save a significant amount of energy. Relative to the case without new standards, the lifetime energy savings for UPSs purchased in the 30-year period that begins in the anticipated year of compliance with the new standards (2019-2048), amount to 0.94 quadrillion British thermal units (Btu), or quads.
The cumulative net present value (NPV) of total consumer benefits of the standards for UPSs ranges from $1.3 billion (at a 7-percent discount rate) to $3.0 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product costs for UPSs purchased in 2019-2048.
In addition, the adopted standards for UPSs 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)
The value of the CO
Table I-3 summarizes the economic benefits and costs expected to result from the adopted standards for UPSs.
The benefits and costs of the adopted standards, for UPSs sold in 2019-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are (1) the reduced consumer operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO
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 UPSs shipped in 2019-2048. The benefits associated with reduced CO
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 CO
DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K, and IV.L of this final rule.
Based on the analyses culminating in this final rule, DOE found the benefits to the nation of the standards (energy savings, consumer LCC savings, positive NPV of consumer benefit, and emission reductions) outweigh the burdens (loss of INPV and LCC increases for some users of these products). DOE has concluded that the standards in this final rule represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in significant conservation of energy.
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 battery chargers. DOE's regulations define “battery charger” as a device that charges batteries for consumer products, including battery chargers embedded in other consumer products. 10 CFR 430.2.
Title III, Part B of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (codified as 42 U.S.C. 6291-6309) established the Energy Conservation Program for Consumer Products Other Than Automobiles, a program covering most major household appliances (collectively referred to as “covered products”), which includes battery chargers.
Section 309 of the Energy Independence and Security Act of 2007 (“EISA 2007”) amended EPCA by directing DOE to prescribe, by rule, definitions and test procedure for the power use of battery chargers (42 U.S.C. 6295(u)(1)), and to issue a final rule that prescribes energy conservation standards for battery chargers or classes of battery chargers or determine that no energy conservation standard is technologically feasible and economically justified. (42 U.S.C. 6295(u)(1)(E)). DOE finalized energy conservation standards for some classes of battery chargers on June 13, 2016 (81 FR 38266), and the standards prescribed in this final rule for other classes of battery chargers represent an extension of those requirements.
Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing, (2) labeling, (3) the establishment of Federal energy conservation standards, and (4) certification and enforcement procedures. The Federal Trade Commission (FTC) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 42 U.S.C. 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for battery chargers appears at title 10 of the Code of Federal Regulations (CFR) part 430, subpart B, appendix Y.
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including battery chargers. Any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary of Energy determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) For certain products, including battery chargers, if no test procedure has been established for the product, or (2) if DOE determines by rule that the standard is not
(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the standard;
(3) The total projected amount of energy (or as applicable, water) savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
(6) The need for national energy and water conservation; and
(7) Other factors the Secretary of Energy (Secretary) considers relevant.
Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))
Additionally, EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE determines that products within such group (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate.
Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d)).
Finally, pursuant to the amendments contained in EISA 2007), any final rule for new or amended energy conservation standards promulgated after July 1, 2010, is required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)).
In a final rule published on June 13, 2016, DOE prescribed the current energy conservation standards for battery chargers manufactured on and after July 13, 2018. 81 FR 38266. These standards, which do not cover UPSs, are set forth in DOE's regulations at 10 CFR 430.32 and are repeated in Table II-1.
DOE originally proposed energy conservation standards for battery chargers including UPSs in the battery charger energy conservation standards NOPR published on March 27, 2012 (March 2012 NOPR). In this NOPR, DOE proposed to test all covered battery chargers, including UPSs, using the battery charger test procedure finalized on June 1, 2011 and to regulate them
DOE issued a battery charger energy conservation standards supplemental notice of proposed rulemaking (“SNOPR”) to propose revised energy standards for battery chargers on September 1, 2015. See 80 FR 52850. This notice did not propose standards for UPSs because of DOE's intention to regulate UPS as part of the separate rulemaking for computer and battery backup systems. DOE also issued a battery charger test procedure NOPR on August 6, 2015, which proposed to exclude backup battery chargers, including UPSs, from the scope of the battery charger test procedure. See 80 FR 46855. DOE held a public meeting on September 15, 2015 to discuss both of these notices.
During 2014, DOE explored whether to regulate UPSs as “computer systems.” See,
Additionally, DOE received a number of stakeholder comments on the August 2015 battery charger test procedure NOPR and the September 2015 battery charger energy conservation standard SNOPR regarding regulation of UPSs. After considering these comments, DOE reconsidered its position and found that since a UPS meets the definition of a battery charger, it is more appropriate to regulate UPSs as part of the battery charger rulemaking, rather than the computers rulemaking. While the changes proposed in the August 2015 battery charger test procedure NOPR and the September 2015 energy conservation standard SNOPR were finalized on May 20, 2016 (81 FR 31827) and June 13, 2016 (81 FR 38266), respectively, DOE continues to conduct rulemaking activities to consider test procedures and energy conservations standards for UPSs as part of ongoing and future battery charger rulemaking proceedings.
DOE published a notice of proposed rulemaking on May 19, 2016 to amend the battery charger test procedure to include specific testing requirements for UPSs (“UPS test procedure NOPR”). See 81 FR 31542. Subsequently, DOE proposed energy conservation standards for UPSs as part of the battery charger regulations in the NOPR published on August 5, 2016 (August 2016 NOPR). See 81 FR 52196. On December 12, 2016, DOE finalized the addition of specific testing provisions for UPSs in the UPS test procedure final rulemaking. See 81 FR 89806. DOE is now finalizing energy conservation standards for UPSs as part of the battery charger regulation in this final rule.
In response to the August 2016 NOPR, DOE received written comments from 8 interested parties, including manufacturers, trade associations, standards development organizations and energy efficiency advocacy groups. Table III-1 lists the entities that commented on the August 2016 NOPR. These comments are discussed in further detail below. The full set of comments on the August 2016 NOPR can be found at:
A number of interested parties also provided oral comments at the September 16, 2016, public meeting. These comments can be found in the public meeting transcript (Pub. Mtg. Tr., No. 0014) which is available on the docket.
DOE published the UPS test procedure final rule on December 12, 2016. 81 FR 89806. DOE advises all stakeholders to review that final rule.
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
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 final rule discusses the results of the screening analysis for UPSs, 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 technical support document (TSD).
When DOE proposes to adopt an amended standard for a type or class of covered product, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for UPSs, 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.B of this final rule and in chapter 5 of the final rule TSD.
For each trial standard level (TSL), DOE projected energy savings from application of the TSL to UPSs purchased in the 30-year period that begins in the year of compliance with the adopted standards (2019-2048).
DOE used its national impact analysis (NIA) spreadsheet models to estimate national energy savings (NES) from potential new standards for UPSs. The NIA spreadsheet model (described in section IV.H of this final 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 (
To adopt any new standards for a covered product, DOE must determine that such action would result in significant energy savings. (42 U.S.C. 6295(o)(3)(B)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, for the District of Columbia Circuit in
As noted in this preamble, EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(I)(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.
In determining the impacts of potential amended standards on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step includes both a short-term assessment—based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation—and a long-term assessment over a 30-year period. The industry-wide impacts analyzed include (1) industry net present value (INPV), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different types of manufacturers, including impacts on small manufacturers. Third, DOE considers the impact of standards on domestic manufacturer employment and manufacturing capacity, as well as the potential for standards to result in plant closures and loss of capital investment. Finally, DOE takes into account cumulative impacts of various DOE regulations and other regulatory requirements on manufacturers.
For individual consumers, measures of economic impact include the changes in LCC and payback period (PBP) associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard.
EPCA requires DOE to consider the savings in operating costs throughout
The LCC is the sum of the purchase price of a product (including its installation) and the operating cost (including energy, maintenance, and repair expenditures) discounted over the lifetime of the product. The LCC analysis requires a variety of inputs, such as product prices, product energy consumption, energy prices, maintenance and repair costs, product lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as product lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value.
The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.
For its LCC and PBP analysis, DOE assumes that consumers will purchase the covered products in the first year of compliance with new or amended standards. The LCC savings for the considered efficiency levels are calculated relative to the case that reflects projected market trends in the absence of new or amended standards. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.
Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As discussed in section IV.H, DOE uses the NIA spreadsheet models to project national energy savings.
In establishing product classes, and in evaluating design options and the impact of potential standard levels, DOE evaluates potential standards that would not lessen the utility or performance of the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data available to DOE, the standards adopted in this document would not reduce the utility or performance of the products under consideration in this rulemaking.
EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine the impact, if any, of any lessening of competition likely to result from a standard and to transmit such determination to the Secretary within 60 days of the publication of a proposed rule, together with an analysis of the nature and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the Department of Justice (DOJ) in making such a determination, DOE transmitted copies of its proposed rule and the NOPR TSD to the Attorney General for review, with a request that the DOJ provide its determination on this issue. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for UPS 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.
DOE also considers the need for national energy conservation in determining whether a new or amended standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the adopted standards 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.
DOE maintains that environmental and public health benefits associated with the more efficient use of energy are important to take into account when considering the need for national energy conservation. The adopted standards 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 of this document; the estimated emissions impacts are reported in section V.B.6 of this final rule. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document.
In determining whether an energy conservation standard is economically justified, DOE may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) To the extent DOE identifies any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”
As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effect potential amended energy conservation standards would have on the payback period for consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test. In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section IV.F of this final rule.
The compliance date is the date when a covered product is required to meet a new or amended standard. In the August 2016 NOPR, DOE proposed a compliance period of two year following the publication date of a final UPS
CA IOUs suggested that DOE align the compliance date for the UPS energy conservation standards with the June 2018 battery charger standards compliance date. (CA IOUs, No.0016 at p.1) After considering this recommendation, DOE believes that a two-year compliance interval is necessary to ensure that manufacturers have sufficient time to comply with the standards DOE is adopting for UPSs. UPSs were considered in the initial battery charger rulemaking efforts, which set a two year compliance period, and DOE feels that adopting an identical two year compliance period in this rulemaking is appropriate. 81 FR 38266.
CA IOUs additionally stated their understanding that the current California Title 20 UPS standards will remain in effect in California until the compliance date for the federal UPS standards in 2019. (CA IOUs, No.0016 at p.2) DOE clarifies that state energy conservation standards for UPSs prescribed or enacted before publication of this final rule, will not be preempted until the compliance date of the Federal energy conservation standards for UPSs. (42 U.S.C. 6295(ii)(1)) DOE further notes that the final DOE test procedure for UPSs preempts any state regulation regarding the testing of the energy efficiency of UPSs. See 42 U.S.C. 6297(a)(1).
During the September 16, 2016 public meeting, and in subsequent written comments responding to the NOPR, stakeholders provided input regarding general issues pertinent to the rulemaking, such as issues regarding the proposed standard levels. These issues are discussed in this section.
Schneider Electric disagreed with DOE's proposed standards, stating that the combination of broad scope and excessive minimum requirements, particularly for VI UPSs, will likely result in less consumer choice and a higher cost of compliance than estimated by DOE. (Schneider Electric, No. 0017 at p. 3) Schneider Electric also expressed concern that the proposed standard for VI UPSs is higher than that of VFD UPSs. (Schneider Electric, No. 0017 at p. 15) In contrast, ASAP et al. recommended that DOE adopt TSL 3 instead of TSL 2, in order to increase energy savings. They noted that TSL 3 would increase FFC energy savings by 6.8 percent and CO
The Department appreciates the stakeholder comments with regard to its proposed standards. In selecting a given standard, DOE must choose the level that achieves the maximum energy savings that is determined to be technologically feasible and economically justified. In making such a determination, DOE must consider, to the extent practicable, the benefits and burdens based on the seven criteria described in EPCA (see 42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII)). DOE's weighing of the benefits and burdens based on the final rule analysis and rationale for the standard selection is discussed in section V of this document. With regard to TSL 3, DOE notes that the NOPR analysis showed a negative net present value using a 7 percent discount rate for VFD UPSs at TSL 3, and marginally negative average LCC savings for VFD UPSs at TSL 3.
This section addresses the analyses DOE has performed for this rulemaking with regard to UPSs. Separate subsections address each component of DOE's analyses.
DOE used several analytical tools to estimate the impact of the standards adopted 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:
DOE develops information in the market and technology assessment that provides an overall picture of the market for the products concerned, including the purpose of the products, the industry structure, manufacturers, market characteristics, and technologies used in the products. This activity includes both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include (1) a determination of the scope of the rulemaking and product classes, (2) manufacturers and industry structure, (3) existing efficiency programs, (4) shipments information, (5) market and industry trends, and (6) technologies or design options that could improve the energy efficiency of UPSs. The key findings of DOE's market assessment are summarized in this section IV.A. See chapter 3 of the final rule TSD for further discussion of the market and technology assessment.
In the August 2016 NOPR, DOE proposed to maintain the scope of coverage for UPS energy conservation standards as defined by its proposal for the UPS test procedure. 81 FR 52206.
NEMA and ITI contended that DOE has misclassified UPSs as battery chargers and that the primary function of UPSs is equipment protection rather than charging batteries. A majority of UPSs fall outside the scope of the standalone battery charging systems and therefore should not be defined as battery chargers. (NEMA and ITI, No. 0019 at p. 2) As explained in section III.A of the UPS test procedure NOPR published on May 19, 2016, DOE notes that UPSs meet the statutory definition of battery charger as stated in 10 CFR 430.2. UPSs may provide various types of power conditioning and monitoring functionality depending on their architecture and input dependency. They also maintain the fully-charged state of lead acid batteries with high self-discharge rates so that in the event of a power outage, they are able to provide backup power instantly to the connected load. Maintaining the lead acid battery therefore directly affects a UPS's overall energy efficiency. In 10 CFR 430.2, a battery charger is defined as a device that charges batteries for consumer products. The definition of battery charger does not state that the primary function of the device must be to charge batteries for consumer
During the public meeting held on September 16, 2016, Schneider Electric noted that households in the North America are generally wired for 12A at 120V, which gives them an approximate upper power limit of 1440W. Schneider Electric requested that DOE limit the scope of UPS rulemaking to a rounded up value of 1500W. (Schneider Electric, Pub. Mtg. Tr., No. 0014 at pp. 12-13) DOE notes that the December 12, 2016 UPS test procedure final rulemaking revised the scope of the UPS test procedure based on stakeholder comments received on the UPS test procedure NOPR. The UPS test procedure only applies to UPSs that use battery(s) as their energy storage systems, use a standardized NEMA 1-15P or 5-15P input plug and have an AC output. 81 FR 89806. NEMA 1-15P or 5-15P input plugs are capable of handling up to 15A at 125V, which gives them an upper power limit of 1875 W. In subsequent written comments since the public meeting, both NEMA and ITI, and Schneider Electric have expressed implicit support in favor of DOE's adoption of NEMA 1-15P and 5-15P input plugs to limit the scope of UPS rulemaking, but have requested that this limitation be added to both the test procedure and energy conservation standards. (NEMA and ITI, No. 0019 at p. 4; Schneider Electric, No. 0017 at p. 1) DOE agrees with NEMA and ITI and Schneider Electric and is therefore updating the scope such that any product that meets the definition of a UPS, utilizes a NEMA 1-15P or 5-15P input plug and has an AC output is covered under the energy conservation standard being adopted in this final rule. DOE notes that this harmonizes with the scope of the recent UPS test procedure. 81 FR 89806.
Philips Lighting requested that DOE clarify whether the proposed energy conservation standards only apply to consumer UPSs. Further, Philips Lighting requested DOE to state that emergency UPS systems,
DOE notes that its authority to implement energy conservation standards for battery chargers under EPCA extends only to consumer products. Thus, this rule applies to those UPSs that are of a type which, to any significant extent, are distributed into commerce for personal use or consumption. See 42 U.S.C. 6291(1). Additionally, the battery charger energy conservation standards, of which the UPS energy conservation standards are a subset, explicitly exclude from scope all back-up battery chargers except those that meet the definition of a UPS, utilize battery(s) as their energy storage system, use a standardized NEMA 1-15P or 5-15P input plug and have an AC output.
In the July 2014 computer and battery backup systems (computer systems) framework document, DOE identified three technology options for UPSs that would be expected to improve the efficiency of UPSs. The technologies options are: semiconductor improvements, digital signal processing and space vector modulation, and transformer-less UPS topologies.
DOE's further research into space vector modulation technology for UPSs has shown that it may have limited advantage in the scope of this rule and is intended primarily for higher power applications. Therefore, DOE did not consider this technology.
After identifying all potential technology options for improving the efficiency of UPSs, DOE performed the screening analysis (See section IV.B of this document and chapter 4 of the Final Rule TSD) on these technologies to determine which to consider further in the analysis and which to eliminate.
DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking:
(1)
(2)
(3)
(4)
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 in the subsequent sections of this preamble.
The subsequent sections include comments from interested parties pertinent to the screening criteria, DOE's evaluation of each technology option against the screening analysis criteria, and whether DOE determined that a technology option should be excluded (“screened out”) based on the screening criteria.
Transformer-less UPS designs offer some of the highest efficiencies in the industry with lowered weight, wider input voltage tolerances, near unity input power factor, reduced harmonic distortion and need for components that mitigate electromagnetic interference (EMI) generated by the device. However, interviews with manufacturers have shown this to be a limited access
Through a review of each technology, DOE tentatively concludes that all of the other identified technologies listed in section IV.A.2 of this document met all four screening criteria to be examined further as design options in DOE's final rule analysis. In summary, DOE did not screen out the following technology options: use of materials with high magnetic permeability such as Sendust for the inductor core and Litz wiring in indictor coils, silicon carbide, gallium arsenide and other wide band gap semiconductors, capacitors with low ESR, PCBs with higher copper content and variable speed fan control.
DOE determined that these technology options are technologically feasible because they are being used or have previously been in commercially-available products or working prototypes. DOE also finds that all of the remaining technology options meet the other screening criteria. For additional details, see chapter 4 of the Final Rule TSD.
NEMA and ITI contended that the remaining technology options combined will result in less than one percent increase in UPS efficiency at optimum performance and the burden of redesigning and testing for sub-percent improvement in UPS efficiency is not justified. (NEMA and ITI, No. 0019 at pp. 5-6) Schneider Electric argued that of all the remaining technologies, only higher copper content in PCBs and line cords has the potential of offering significant improvement in UPS efficiency only at the 100 percent loading point, which accounts for 30 percent of the average load adjusted efficiency. Further, Schneider Electric noted DOE is effectively limiting market participation to companies who own or have access to the fundamental intellectual property required to produce high efficiency UPSs by pushing UPS energy efficiency requirements well above the ENERGY STAR requirements. (Schneider Electric, No. 0017 at p. 3)
DOE notes that all remaining technology options were identified in consultation with manufacturers and other interested parties. These parties identified all remaining technology options as viable options for improving UPS efficiencies across all three product classes. Thus, while these remaining technologies may have varying effects on UPS efficiencies in each of the three product classes, DOE disagrees with Schneider Electric's written comment that only higher copper content in PCBs will likely create significant UPS efficiency gains and that all remaining technology options combined will improve UPS efficiency by less than one percent. Further, DOE notes that all remaining technology options satisfied the screening criteria, which ensures that the technology options are not protected by intellectual property laws and are readily available to all UPS manufacturers. Manufacturers may use any of the remaining technology options or their combination to improve the average load adjusted efficiencies of their UPS basic models. Lastly, DOE points out that per a stakeholder comment from ICF International at the September 16, 2016 public meeting, 78% of all UPS available in commerce are ENERGY STAR compliant, which demonstrates that technology options required to attain high levels of energy efficiency are readily available to multiple UPS manufacturers. (ICF, Pub. Mtg. Tr., No. 0014 at p. 24)
NEMA and ITI noted that VFD and VI UPSs typically do not have constantly rotating fans and argued that variable speed fan control technology will have limited effect on VFD and VI UPS efficiencies. Further, NEMA and ITI argued that wide band gap semiconductors are only useful in VFI UPS design with little usefulness in VI UPS designs and no usefulness in VFD UPS designs. NEMA and ITI contended that wide band gap semiconductors typically offer 0.25 percent improvement in UPS efficiency in applicable designs while costing up to three times more than traditional semiconductors. Lastly, NEMA and ITI argued that the use of Sendust and Litz wiring is limited to transformer-less UPS designs, which are not being pursued due to intellectual property limitations and requested that DOE consult with DOJ if the use of such designs is pursued. (NEMA and ITI, No. 0019 at p. 5)
DOE notes that of all the representative units across all three product classes, only the representative unit corresponding to EL 0 for VFI UPSs utilized variable speed fan control. None of the other representative units, including those used to generate EL 1 and EL 2 for VFI UPSs, utilized variable speed fan control or wide band gap semiconductors. While these two technology options were identified in consultation with manufacturers and other interested parties as viable options for improving UPS efficiencies across all three product classes, the efficiency levels being adopted in this final rule can be achieved without these two technology options as demonstrated by the representative units in VFD and VI UPS product classes. DOE disagrees with NEMA and ITI's claim that Sendust and Litz wiring technology options are limited to transformer-less UPS designs. UPSs across all three product classes incorporate a battery charger to keep their internal batteries fully charged. At the least, Sendust and Litz wiring may be used in the core and winding of transformers and inductors in these battery chargers to improve its efficiency which will improve the overall UPS efficiency.
Lastly, NEMA and ITI noted that some of the remaining technology options coupled with the high proposed energy conservation standards will tread into patent-protected areas, potentially lessening competition. NEMA and ITI noted that DOE is obliged to consult with DOJ regarding the potential competition effects and marketplace issues. (NEMA and ITI, No. 0019 at p. 16) As explained in section IV.B, DOE identified these technologies in consultation with manufacturers and other interested parties. These technology options have been screened for intellectual property protection and are readily available to all UPS manufacturers. Therefore, DOE disagrees with the stakeholder claim that these technology options will tread into patent-protected areas. Further, DOJ concluded that the proposed energy conservation standards for UPSs are unlikely to have a significant adverse impact on competition. DOJ's assessment letter is attached to the end of this rule.
In the engineering analysis, DOE establishes the relationship between the manufacturer production cost (MPC) and improved UPS efficiency. This relationship serves as the basis for cost-benefit calculations for individual consumers, manufacturers, and the Nation. DOE typically structures the engineering analysis using one of three approaches: (1) Design option, (2) efficiency level, or (3) reverse engineering (or cost assessment). The design-option approach involves adding the estimated cost and associated efficiency of various efficiency-improving design changes to the baseline product to model different levels of efficiency. The efficiency-level approach uses estimates of costs and efficiencies of products available on the market at distinct efficiency levels to develop the cost-efficiency relationship. The reverse-engineering approach involves testing products for efficiency
DOE used a combination of the design-option and efficiency-level approach when determining the efficiency curves for UPSs. UPSs are composed of a single highly integrated PCB consisting of control and power conversion circuitry without any interchangeable components. The efficiency-level approach therefore is more suited to creating the cost-efficiency relationship since components cannot be removed to understand their impact on overall power consumption. However, DOE did use the design-option approach to determine the maximum technologically feasible EL because these products are not available on the market currently.
DOE began its analysis by completing a comprehensive study of the market for units that are in scope. A review of retail sales data, the ENERGY STAR qualified product list of compliant devices and manufacturer interviews aided DOE in identifying the most prevalent units in the market as well as those that are the least and most expensive and efficient. DOE then used a combination of purchased units for in-house efficiency testing as well as efficiency data directly from the ENERGY STAR database of compliant devices. The data from testing and the ENERGY STAR database allowed DOE to choose representative units and create multiple ELs for each product class.
In taking the hybrid efficiency-level and design option approach, DOE chose multiple units of the same product class striving to ensure variations between successive units (
NEMA and ITI and Schneider Electric noted that because of differences between DOE's proposed test procedure and ENERGY STAR's test procedure for UPSs, DOE must adjust the average load adjusted efficiency of representative units whose efficiency data were collected from ENERGY STAR data by 0.2 to 0.4 percent. (NEMA and ITI, No. 0019, pp. 9-10, Schneider Electric, No. 0017 at p. 15) Similarly, during the public meeting held on September 16, 2016, ICF International stated that the differences between the two test procedures would produce a variance between 0.1 to 0.3 percent in the average load adjusted efficiency of UPSs. (ICF International, Pub. Mtg. Tr., No. 0014 at pp. 93). NEMA and ITI requested in written comments that if the DOE persists on pursuing the strict ELs as proposed in the NOPR, DOE must either mathematically determine the impacts of the proposed new UPS test procedure and adjust the ENERGY STAR data accordingly or undertake an extensive amount of additional physical testing and base the standard on these new data. (Schneider Electric, No. 0019 at p. 2)
DOE identifies in Table IV-1 the representative units that were tested as well as those whose efficiency values were collected from the ENERGY STAR database. DOE has revised its analysis for all ELs identified in Table IV-1 for which the efficiency value of representative units were collected from the ENERGY STAR database to account for the differences between DOE's test procedure and the ENERGY STAR test procedure for UPSs. Further, Table IV-1 shows that among the ELs proposed as energy conservation standards during the NOPR and finalized in this rulemaking, EL 1 for VFD UPSs and EL 1 for VI UPSs use a representative unit where the efficiency value was collected from the ENERGY STAR database and therefore did not have a battery connected during test. DOE is adopting the EL 1 for VFD UPSs and EL 1 for VI UPSs but notes that because DOE has revised its analysis to account for the differences between DOE's test procedure and the ENERGY STAR test procedure for UPSs, the standard equations have been slightly altered. For VFI UPSs, DOE is finalizing the proposed standard equation at EL 1 because the representative units for this EL was tested using DOE's proposed test procedure which automatically captures the losses due to a connected battery, and thus, no adjustments are necessary. The test data and the corresponding analysis for this EL therefore does not require an update.
Individual ELs for a UPS product class were created by curve-fitting and extrapolating the efficiency values of either a test unit or that of a unit identified from the ENERGY STAR database as explained in the previous section, IV.C. Each of the ELs are labeled EL 0 through EL 3 and reflect increasing efficiency due to technological advances. EL 0 represents baseline performance, EL 1 is described as the minimum required efficiency to be ENERGY STAR compliant, EL 2 is the best technology currently available in the market and EL 3 is the maximum efficiency theoretically achievable. As such, a representative unit for EL 0 was selected from the least efficient market segment of a particular product class. EL 1 and EL 2 were then represented by the least and most efficient ENERGY STAR unit respectively in the same power range. While DOE derived EL 0 through EL 2 via testing and using the online ENERGY STAR database, DOE created EL 3 from data obtained during manufacturer interviews.
Schneider Electric disagreed with DOE's approach of deriving an EL extending to the entire output power range of the scope based on the test result of a single representative unit. Schneider Electric further contended that DOE's selection of representative units appears arbitrary, that the corresponding ELs fail to account for fixed core losses that dominate at lower
As explained earlier in this section, DOE did not select representative units nor establish ELs based on a statistical analysis of the efficiency distributions of the UPS market. DOE selected representative units on the basis of a unit's ability to achieve a certain average load adjusted efficiency at a particular cost while ensuring that the technology used to arrive at that efficiency passes DOE's screening analysis and is readily available to all manufacturers. In selecting representative units, DOE intentionally strived to minimize additional feature sets so that they would have minimal impact on the unit's efficiency measurement. Similarly, DOE attempted to keep the output power range constant between successive representative units of the same product class, ensuring that the resultant efficiency levels can be reasonably compared to one another without additional variables. Therefore, contrary to Schneider Electric's comment, DOE's selection of representative units were not arbitrary and were carefully selected.
Further, in measuring the input and output powers of a single representative unit at multiple loading points, DOE also effectively captured the energy performance of UPSs across the entire output power range. For example, measuring a 400W VFD UPS at 25% load successfully captures how fixed losses dominate at lower power levels. DOE's proposed ELs, each of which was derived using a single representative unit, is shown in Figure IV-1 through Figure IV-3. The shape of these ELs demonstrate less stringent efficiency requirements at lower output power levels since high efficiency values are harder to achieve where fixed losses dominate. DOE therefore believes that its use of a single representative unit to derive ELs for the entire output power range of the scope is accurate and reiterates that the ELs were not generated to conform to all the units tested by DOE for the NOPR analysis or to the publically available ENERGY STAR database. To expect the ELs to align with these data is to have misunderstood how DOE's engineering analysis and testing were performed. Finally in response to NEMA and ITI's comment regarding a preference for a flat line standard similar to that of ENERGY STAR, DOE believes that would be inaccurate in that it would treat UPSs of all power ranges equally, incentivizing secondary features across certain power ranges while excluding them from others.
While DOE did not derive ELs using statistical analysis of the efficiency distribution of the UPS market, DOE did use efficiency distribution data in its downstream analyses to evaluate what proportion of the UPS market would shift in response to a certain EL as well as each EL's cost and benefit to the individual consumer, the manufacturer and the Nation.
Lastly, in response to Schneider Electric's argument that there are units among DOE's dataset with a lower average load adjusted efficiency than the ones selected by DOE as representative units for establishing EL 0 for VFD and VI UPSs, DOE clarifies that while EL 0 establishes a baseline, its intention is not to represent the absolute least efficient units in the marketplace. Instead EL 0 simply represents a market segment that demonstrates a generally lower efficiency trend and the bulk of UPS shipments below EL 1. This is because, in the absence of preexisting Federal energy conservation standards, which is the case for UPSs, the absolute least efficient unit available in the market can be as inefficient as a certain UPS manufacturer desires, making it an outlier instead of a representation of the general least efficient market segment. Therefore, selecting the least efficient units found in commerce as EL 0 representative units is not an accurate representation of the general least efficient market segment.
Figure IV-1 through Figure IV-3 are graphical representations of the ELs for VFD UPS, VI UPS and VFI UPS types respectively.
Schneider Electric noted that five VFD UPSs tested by DOE pass DOE's proposed energy conservation standard for the VFD UPS product class within the margin of gauge R&R variances for the test equipment at Schneider Electric, indicating a marginal failure. Further, Schneider Electric noted that none of the VI UPS units tested by DOE as part of the NOPR analysis or any of the compliant VI UPSs with rated output power less than 1000W listed in the ENERGY STAR database meet DOE's proposed EL 2 for the VI UPS product class. Schneider Electric argued that adoption of EL 2 for the VI UPS product class will eliminate VI UPSs with rated output powers less than 1000W, which
DOE notes that that compliance certification sampling provisions outlined in 10 CFR part 429 provide the necessary allowance in certified rating to accommodate small part to part variations such as gauge R&R variances. In response to Schneider Electric's comment that none of the units tested by DOE passes the proposed standard, DOE clarifies that this is due to the best-fit curves overshooting at certain data points resulting in a set of equations that are marginally more stringent than intended by as much as one-tenth of a percent. Among the test data published in the August 2016 NOPR were the efficiency values for the VI UPS EL 2 representative unit. Because EL 2 for VI UPSs was created using this representative unit's efficiency values, the unit itself would only pass the standard if it remained exactly as derived. However, due to the over approximation by the best fit curves as explained above, the EL appeared more stringent at certain data points causing the representative unit to demonstrate a marginal fail. DOE has adjusted the standard equations to account for this over approximation in this final rule which will resolve the issue with the EL 2 representative unit not passing the very EL it helped create. Additionally, the lack of a VI UPS unit in the ENERGY STAR database does not necessarily mean products that can achieve the required efficiency does not exist in the marketplace. ENERGY STAR is a voluntary program with stringent testing and compliance requirements, which manufacturers may not choose to undergo. The EL 2 representative unit for VI UPSs is again such an example. Similarly, as of October 10, 2016, there are five compliant VFI UPSs in the ENERGY STAR database under 700W, of which three units pass the EL 1 standard for VFI UPSs with significant margin to account for differences between DOE's test procedure and ENERGY STAR's. This refutes Schneider Electric's argument that there are currently no VFI UPSs under 700W in the ENERGY STAR database and continues to demonstrate that technology options are readily available to UPS manufacturers to produce VFI UPSs that meet DOE's adopted energy conservation standard.
It is also important to note that, In addition to the changes made to the analysis discussed in the previous two sections, IV.C.1 and IV.C.2, DOE updated its analysis with AEO2016 data as explained in section IV.H.2. In selecting a given standard, DOE must choose the level that achieves the maximum energy savings that is determined to be technologically feasible and economically justified. In making such a determination, DOE found that TSL 2 is no longer economically justified as a result of the above changes. Therefore, as described in section V.C, DOE is adopting TSL 1 in this final rule, which includes a less stringent standard for VI UPSs than initially proposed, and accordingly alleviates objections from Schneider Electric on the stringency of the proposed level for this product class.
Schneider Electric and NEMA and ITI also requested that DOE thoroughly examine the performance of secondary features that are unrelated to battery charging. All three stakeholders commented that these secondary features which include services such as USB charging ports, wired and wireless connectivity, displays, communications and other functions provide significant added utility to the consumer and DOE risks eliminating these consumer demanded utilities from UPS products by only considering cost versus electrical efficiency relationship. Further Schneider Electric provided a list of these consumer requested features along with what their corresponding allowance should be and proposed an alternate adjusted efficiency metric that accommodates the suggested allowances in place of the average load adjust efficiency metric proposed by DOE in the UPS test procedure. (NEMA and ITI, No. 0019 at pp. 3; Schneider Electric, No. 0017 at pp. 1-2, 13)
After careful review of the stakeholder comments summarized above, DOE is including provisions in the UPS test procedure to allow the limiting of secondary features that do not contribute to the maintenance of fully charged battery(s) or delivery of load power, similar to the provisions in place in the test procedure for all other battery chargers. See the December 12, 2016 UPS test procedure final rulemaking. 81 FR 89806. This will allow manufacturers to disable these secondary features in order to reduce or eliminate the impact that the energy consumption of these features has on the measured efficiency metric. However, DOE is not adopting the proposed alternative calculation that Schneider Electric proposed at this time. DOE does note that there are provisions in place, as outlined in 10 CFR 430.27, for an interested party to submit a petition for a test procedure waiver for a basic model of a covered product if the basic model's design prevents it from being tested according to the test procedure or if the results of the test procedure yield materially inaccurate or unrepresentative comparative data. When a waiver or interim waiver is granted, manufacturers are permitted to use an alternative test method to evaluate the performance of their product type in a manner representative of the energy consumption characteristics of the basic model. Accordingly, manufacturers may pursue this approach to petition DOE to allow the use of an alternative test method, which may include an alternative method for calculating the efficiency metric used to certify compliance with applicable energy conservation standards. More information on the waiver process is available on DOE's website:
For UPSs, DOE developed average manufacturer and distribution markups for ELs by examining the annual Securities and Exchange Commission (SEC) 10-K reports filed by publicly-traded UPS manufacturers and distribution chains and further verified during stakeholder interviews. DOE used these validated markups to convert consumer prices into manufacturer selling prices (MSPs) and then into MPCs.
In general, DOE's cost analysis of representative units demonstrated a direct correlation between MPC and average load adjusted efficiency (see Figure 5.5.1 through 5.5.3 in chapter 5 of the Final Rule TSD). However, the one exception to this correlation was the EL 1 representative unit for VFD UPSs. This representative unit has a higher output power rating and average load adjusted efficiency, but a lower MPC compared to the EL 0 representative unit of the same product class.
In addition to the two representative units discussed here, DOE has found other VFD UPSs that demonstrate this negative correlation between MPC and average load adjusted efficiency between EL 0 and EL 1.
DOE believes that this exception to the otherwise direct correlation between MPC and average load adjusted efficiency of UPSs has several possible explanations. For the VFD UPSs in scope of this rulemaking, DOE believes consumers may typically be more concerned with the reliability of the
It is also worth noting that the difference in MSP between the VFD UPS EL 0 and EL 1 representative units is $5.10 and while this can be significant on its own, it may only be a small fraction of the cost of the connected equipment that it is protecting or the potential loss in productivity if said connected equipment were to lose power. DOE believes this is one of the reasons why devices at EL 0 continue to exist in the market place at a price higher than more efficient EL 1 models.
However, negative costs are unexpected in an economic theory that assumes a perfect capital market with perfect rationality of agents having complete information. In such a market, because more efficient UPSs save consumers money on operating costs compared to the baseline product, consumers would have an incentive to purchase them even in the absence of standards. For these reasons, DOE discussed perceived lower reliability of less expensive models as a possible explanation for the exception to the otherwise direct correlation between MPC and average load adjusted efficiency of UPSs and requested comments on its understanding of why less efficient UPSs continue to exist in the market at a price higher than more efficient units. DOE also requested comments on the impact that energy conservation standards for UPSs will have on the costs and efficiencies of existing UPS models, including various aspects of the inputs to the installed cost analysis, such as assumptions about consumers' response to first cost versus long-term operating cost, assumptions for manufacturer capital and product conversion costs, and other factors.
NEMA and ITI responded to this request for comment by stating their agreement with DOE's analysis that less efficient VFD units continue to sell in the marketplace at a higher price due to perceived reliability. However, NEMA and ITI also stated that DOE did not analyze the high likelihood that these products include other features such as USB charging ports, wired and wireless connectivity, integrated on-board data displays, or other performance features in the NOPR TSD. Taken in this context, the DOE's statement can be followed to a logical conclusion that consumers will accept slightly lower efficiency and higher cost for greater functionality and utility. Similarly, Schneider Electric commented that less efficient UPSs continue to exist in the market at a higher price due to various factors such as but not limited to form factor, display functionality, legibility, outlet quantity, position, line cord length, battery runtime, surge protection rating, environmentally friendly materials and packaging, communication and software capability, brand reputation and reliability and product warranty. (NEMA and ITI, No. 0019 at p. 13; Schneider Electric, No. 0017 at p. 16)
DOE appreciates the feedback from NEMA and ITI and Schneider Electric and generally agrees with some of the features highlighted such as brand reputation, product warranty, form factor, materials and packaging as possible reasons for why less efficient units continue to exist in the market at a higher price. DOE has therefore kept the cost analysis intact from the NOPR.
The markups analysis develops appropriate markups (
For retailers, DOE developed separate markups for baseline products (baseline markups) and for the incremental cost of more-efficient products (incremental markups). Incremental markups are coefficients that relate the change in the MSP of higher-efficiency models to the change in the retailer sales price. DOE relied on economic data from the U.S. Census Bureau
The manufacturer markups, which convert MSPs to MPCs are calculated as part of the MIA and are not presented in the markups analysis. DOE developed average manufacturer markups by examining the annual SEC 10-K reports filed by publicly traded UPS manufacturers then refining these estimates based on manufacturer feedback.
Chapter 6 of the final rule TSD provides details on DOE's development of markups for UPSs.
The purpose of the energy use analysis is to determine the annual energy consumption of UPSs at different efficiencies in representative U.S. single-family homes, multi-family residences, and commercial buildings, and to assess the energy savings potential of increased UPS efficiency. The energy use analysis estimates the range of energy use of UPSs in the field (
To develop energy use estimates, DOE multiplied UPS power loss as a function of rated output power, as derived in the engineering analysis, by annual operating hours. In the NOPR, DOE assumed that UPSs are operated for 24 hours per day, 365 days per year, at a typical load specific to each product class. DOE assumed average loading for VFD UPSs to be 25 percent, average loading for VI products to be 50 percent, and average loading for VFI products to be 75 percent.
CA IOUs agreed with DOE's loading assumption of 25% for VFD UPSs, but noted that existing computer usage data suggest this loading is likely to be low. Furthermore, CA IOUs disagreed with DOE's loading assumption of 50% for VI UPSs, arguing that these products are much more likely to be utilized with
In response to these comments, DOE has adjusted its loading assumptions for all product classes in the energy use analysis to match those in the ENERGY STAR UPS specification and in the DOE UPS test procedure. For VFD UPSs with rated output power of 1500 W or less, the weighted average loading assumption uses the following weights: 0.2 at 25 percent loading, 0.2 at 50 percent loading, 0.3 at 75 percent loading, and 0.3 at 100 percent loading. For all other UPSs, the weighted average loading assumption uses the following weights: 0.3 at 50 percent loading, 0.4 at 75 percent loading, and 0.3 at 100 percent loading. DOE agrees that little field data exist on the energy use of UPSs, and that in the absence of such data, it is preferable to rely upon the consensus loading assumptions agreed upon as part of the ENERGY STAR specification development.
CA IOUs additionally requested that DOE consider the efficiency degradation of UPSs which may occur over the lifetime of a product. Age-induced battery degradation and elevated self-discharge rates would lead to an increase in energy use with age. (CA IOUs, No. 0016 at p. 3) DOE notes that no data are available, nor were they submitted, on how the energy use of UPSs may change with age. Furthermore, it is possible to regularly replace UPS batteries over the lifetime of a UPS, eliminating the potential efficiency degradation due to an aging battery. The battery replacement cost is assumed to be the same across all efficiency levels in the analysis, and therefore was not included in the LCC analysis. For these reasons, DOE did not include efficiency degradation with age in its energy use analysis for the final rule.
CA IOUs further requested that DOE revise its energy use analysis to take into account the usage of UPSs that can act as mobile battery packs. CA IOUs contend that the energy usage of such devices is significantly different from other UPSs, since the device undergoes far more discharge cycles and is likely to operate more frequently with a partially discharged battery, increasing energy use. (CA IOUs, No. 0016 at pp. 4-5) DOE notes that devices that act only as a mobile battery pack, and are not designed to provide continuity of load in case of input power failure, do not meet the definition of a UPS. Additionally, any UPS that only has outputs providing direct current (
EEI requested that the energy use analysis be revised to account for the energy consumption of the UPS components only, and not include the energy usage of connected loads. (EEI, No. 0021 at p. 4) DOE clarifies that its energy use analysis only considers the energy consumed by the UPS device itself, including energy conversion losses that occur while providing power to a connected load. The energy use analysis does not include energy that merely passes through the UPS. However, in order to calculate this energy consumption by the UPS, it is necessary to assume the energy going through the UPS to the connected end-use equipment. It is for this reason that DOE considers the type of connected equipment when determining the average loading condition assumptions. In the absence of any field data for UPSs, DOE is relying on the ENERGY STAR loading assumptions for the final rule.
To capture the diversity of products available to consumers, DOE collected data on the distribution of UPS output power rating from product specifications listed on online retail websites. DOE then developed product samples for each UPS product class based on a market-weighted distribution of product features found to impact efficiency as determined by the engineering analysis.
Chapter 7 of the final rule TSD provides details on DOE's energy use analysis for UPSs.
DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for UPSs. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost. DOE used the following two metrics to measure consumer impacts:
• The LCC (life-cycle cost) is the total consumer expense of an appliance or product over the life of that product, consisting of total installed cost (manufacturer selling price, distribution chain markups, sales tax, and installation costs) plus operating costs (expenses for energy use, maintenance, and repair). To compute the operating costs, DOE discounts future operating costs to the time of purchase and sums them over the lifetime of the product.
• The PBP (payback period) is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost at higher efficiency levels by the change in annual operating cost for the year that amended or new standards are assumed to take effect.
For any given efficiency level, DOE measures the change in LCC relative to the LCC in the no-new-standards case, which reflects the estimated efficiency distribution of UPSs in the absence of new or amended energy conservation standards. In contrast, the PBP for a given efficiency level is measured relative to the baseline product.
For each considered efficiency level in each product class, DOE calculated the LCC and PBP for a nationally representative set of housing units, as well as one for commercial buildings. For each sample household and commercial building, DOE determined the energy consumption for the UPS and the appropriate electricity price. By developing a representative sample of households, the analysis captured the variability in energy consumption and energy prices associated with the use of UPSs.
DOE was unable to locate a survey sample specific to UPS users for either the residential or commercial sector. However, as mentioned in the previous section, manufacturer interviews indicate that most VFD products are used with personal computers, around three quarters of low-end VI products are used with computers and workstations, and around three quarters of higher-end VI and VFI products are used with servers. DOE thus created residential and commercial samples for desktop computers as a proxy for the sample of VFD and VI UPS owners, and a sample for servers as a proxy for the sample of VFI UPS owners.
DOE developed its residential sample from the set of individual responses to the Consumer Electronics Association's (CEA's)
To create a commercial building sample, DOE relied on EIA's Commercial Buildings Energy Consumption Survey (CBECS), a nationally representative survey with a rich dataset of energy-related characteristics of the nation's stock of commercial buildings.
Inputs to the calculation of total installed cost include the cost of the product—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, product lifetimes, and discount rates. DOE created distributions of values for product lifetime, discount rates, and sales taxes, with probabilities attached to each value, to account for their uncertainty and variability.
The computer model DOE uses to calculate the LCC and PBP relies on a Monte Carlo simulation to incorporate uncertainty and variability into the analysis. The Monte Carlo simulations randomly sample input values from the probability distributions and UPS user samples. The model calculated the LCC and PBP for products at each efficiency level for 10,000 housing units and 10,000 commercial buildings per simulation run.
DOE calculated the LCC and PBP for all consumers of UPSs as if each were to purchase a new product in the first year of required compliance with new standards. Any new standards would apply to UPSs manufactured two years after the date on which any new standard is published. Therefore, for purposes of its analysis, DOE used 2019 as the first year of compliance with any new standards for UPSs.
Table IV-2 summarizes the approach and data DOE used to derive inputs to the LCC and PBP calculations. The subsections that follow provide further discussion. Details of the spreadsheet model, and of all the inputs to the LCC and PBP analyses, are contained in chapter 8 of the final rule TSD and its appendices.
To calculate consumer product costs, DOE multiplied the MPCs developed in the engineering analysis by the markups described above (along with sales taxes). DOE used different markups for baseline products and higher-efficiency products, because DOE applies an incremental markup to the increase in MSP associated with higher-efficiency product. The prices used in the LCC and PBP analysis are MPC in the compliance year, as described in chapter 5 of the TSD.
Examination of historical price trends for a number of appliances that have been subject to energy conservation standards indicates that an assumption of constant real prices and costs may overestimate long-term trends in appliance prices. Economic literature and historical data suggest that the real costs of these products may in fact trend downward over time according to
ASAP et al. noted that DOE has included price trends in its analyses for several other products, including mature products, and implied that DOE should incorporate a price trend for UPSs. (ASAP et al., No. 0020 at p. 3) DOE notes that its methodology for determining appropriate price trends for a given product relies on collecting sufficient historical data on shipments and prices to perform the necessary analysis. DOE reiterates that it was unable to find any such data for UPSs. In the absence of data, DOE assumed no price trend for UPSs in the final rule.
Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE found no evidence that installation costs would be impacted with increased efficiency levels for UPSs. DOE received no comments on installation costs for UPSs.
For each sampled household and commercial building, DOE determined the energy consumption for a UPS at different efficiency levels using the approach described in section IV.E of this document.
DOE used marginal electricity prices to characterize the incremental savings associated with ELs above the baseline. The marginal electricity prices vary by season, region, and baseline household electricity consumption level for the LCC. DOE estimated these prices using data published with the Edison Electric Institute (EEI) Typical Bills and Average Rates reports for summer and winter 2014.
To estimate electricity prices in future years, DOE multiplied the average regional prices by annual energy price factors derived from the forecasts of annual average residential and commercial electricity price changes by region that are consistent with cases described on p. E-8 in
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. For UPSs, DOE assumed that small incremental increases in product efficiency produce no, or only minor, changes in repair and maintenance costs compared to baseline efficiency products. DOE received no comments on maintain or repair costs.
For UPSs, DOE performed a search of the published literature to identify minimum and maximum average lifetimes from a variety of sources. DOE also considered input from manufacturer interviews conducted in early 2015. Table IV-3 summarizes the UPS lifetimes that DOE compiled from the literature and manufacture interviews. Where a range for lifetime was given, DOE noted the minimum and maximum values; where there was only one figure, DOE recorded this figure as both the minimum and maximum value. DOE computed mean lifetime by averaging these values across the product class.
Using these minimum, maximum, and mean lifetimes, DOE constructed survival functions for the various UPS product classes. No more than 10 percent of units were assumed to fail before the minimum lifetime, and no more than 90 percent of units were assumed to fail before the maximum lifetime. DOE assumed these survival functions have the form of a cumulative Weibull distribution, a probability distribution commonly used to model appliance lifetimes. Its form is similar to that of an exponential distribution, which models a fixed failure rate, except a Weibull distribution allows for a failure rate that can increase over time as appliances age. DOE received no comments on its estimate of UPS lifetimes. For additional discussion of UPS lifetimes, refer to chapter 8 of the final rule TSD.
In the calculation of LCC, DOE applies discount rates appropriate to households to estimate the present value of future operating costs. DOE estimated a distribution of residential discount rates for UPSs based on
DOE applies weighted average discount rates calculated from consumer debt and asset data, rather than marginal or implicit discount rates.
To establish residential discount rates for the LCC analysis, DOE identified all relevant household debt or asset classes in order to approximate a consumer's opportunity cost of funds related to appliance energy cost savings. It estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board's Survey of Consumer Finances
To establish commercial discount rates for the LCC analysis, DOE estimated the cost of capital for companies that purchase a UPS. The weighted average cost of capital is commonly used to estimate the present value of cash flows to be derived from a typical company project or investment. Most companies use both debt and equity capital to fund investments, so their cost of capital is the weighted average of the cost to the firm of equity and debt financing, as estimated from financial data for publicly traded firms in the sectors that purchase UPSs. For this analysis, DOE used Damodaran online
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE's LCC analysis considered the projected distribution (market shares) of product efficiencies under the no-standards case (
The estimated market penetration of ENERGY STAR-qualified UPSs was 78 percent in 2013, the most recent year for which data were available.
These market shares in each efficiency level were estimated based on national data. Regional data are not available. All other factors being the same, it would be anticipated that higher efficiency purchases in certain regions in the no-standards case would correlate positively with higher energy prices. To the extent that this occurs, it would be expected to result in some lowering of the consumer operating cost savings from those calculated in this final rule.
The payback period is the amount of time it takes the consumer to recover the additional installed cost of more-efficient products, compared to baseline products, through energy cost savings. Payback periods are expressed in years. Payback periods that exceed the life of the product mean that the increased total installed cost is not recovered in reduced operating expenses.
The inputs to the PBP calculation for each efficiency level are the change in total installed cost of the product and the change in the first-year annual operating expenditures relative to the baseline. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed.
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)) 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 new standards would be required.
DOE uses projections of annual product shipments to calculate the national impacts of potential amended or new energy conservation standards on energy use, NPV, and future manufacturer cash flows.
DOE relied on data from Frost & Sullivan and ENERGY STAR to develop the shipments in the no-standards case for UPSs.
Frost & Sullivan provide no classification by type of UPS within the relevant power range. However, the 2013 ENERGY STAR unit shipment data collection process
To project UPS shipments from 2020-2048, DOE extrapolated the linear trends forecasted by Frost & Sullivan from 2014 to 2019. In conjunction with the 2013 fixed split between topologies and a fixed portion of 0.9 for the United States relative to North American shipments, DOE projected the increasing linear trend in global UPS shipments <1 kW and the decreasing linear share of North American revenue to forecast shipments from 2019 to 2048.
NEMA and ITI noted that ENERGY STAR shipment data for UPSs indicate an 18 percent decline in shipments from 2014 and 2015. They also note that shipment projections of desktop computers show a declining market. NEMA and ITI state that DOE's shipments analysis is in error, and relies on historical data which is no longer applicable. (NEMA and ITI, No. 0019 at p. 13) In response to DOE's request for shipment data in the NOPR, Schneider also noted that ENERGY STAR shipment volume estimates have been in decline, but did not provide any shipment data due to confidentiality restrictions. (Schneider Electric, No. 0017 at p. 16)
DOE clarifies that its shipment analysis does not depend on historical data gathered independently, but rather relies on the analysis provided by the market research firm Frost & Sullivan. Frost & Sullivan provide their own market projections out to 2019 (partially based on its own historical data), after which DOE linearly extrapolated the shipment trends. DOE has no reason to suspect the Frost & Sullivan analysis is flawed, and continues to rely on it for the final rule. DOE acknowledges that there may have been short-lived market impacts in the past year or two due to various economic factors, and that the ENERGY STAR shipment data may reflect this dynamic. However, DOE notes that the penetration of ENERGY STAR products in the market may fluctuate, and ENERGY STAR shipment estimates do not provide a complete picture of the market. DOE further emphasizes that its shipment analysis is a long term projection over 30 years starting in 2019.
DOE acknowledges that desktop computer shipments are in decline, but notes that server shipments are not. Furthermore, Schneider acknowledged during the public meeting held on September 16, 2016, that there are growing applications of UPSs other than desktop computers and servers (
DOE acknowledges that there is some uncertainty regarding the future market growth of UPSs, and few analyses exist in the literature over the time period in DOE's analysis. As a result, DOE performed a sensitivity scenario of the national impact analysis assuming lower shipment growth over the 30-year analysis period. This sensitivity scenario is described in appendix 10B of the final rule TSD. While the absolute value of the energy savings estimates vary using this alternate shipments scenario, the relative comparison of the different trial standard levels analyzed does not.
Increases in product prices resulting from standards may affect shipment volumes. To DOE's knowledge, price elasticity estimates are not readily available in existing literature for UPSs, and hence DOE assumed a price elasticity of demand of zero.
During the public meeting held on September 16, 2016, Schneider inquired if price elasticity was factored into the analysis. (Schneider Electric, Pub. Mtg. Tr., No. 0014 at pp. 64-65) Schneider believes that DOE's analysis overestimates the market's willingness to absorb costs. (Schneider Electric, No. 0017 at p. 16) EEI similarly inquired as to how prices could increase without having a negative effect on shipments and manufacturer profits. (EEI, Pub. Mtg. Tr., No. 0014 at p. 66) NEMA and ITI disagreed with DOE's underlying assumption that consumers will continue to purchase UPSs of specific topologies regardless of price impacts. They stated that consumers of UPSs are very price-conscious. (NEMA and ITI, No. 0019 at p.6) NEMA and ITI also stated that as mobile computing and cloud computing services have grown relative to desktop computing, consumers can more easily opt to switch to these options instead of purchasing a more expensive UPS. Therefore, the price elasticity for UPSs is non-zero. (NEMA and ITI, No. 0019 at p. 14) No data were provided, however, to support the above statements.
DOE assumes that UPSs are not discretionary electronic devices, and consumers purchase UPSs for power continuity, power reliability, safety, and security needs which cannot be addressed by other products. Consumers with such critical needs are unlikely to forgo or delay the purchase of a UPS. DOE further assumes that in response to a modest price increase in UPSs, consumers are very unlikely to respond by switching from desktop computing to a much more expensive mobile computing platform with similar performance. DOE therefore believes that the UPS market is price inelastic, and continues to assume a price elasticity of demand of zero in its analysis in the absence of any data suggesting otherwise. Furthermore, there are many features available in specific UPS product classes (
See chapter 9 of the final rule TSD for further details on the development of shipments projections. In response to the above comments regarding the price elasticity of demand, DOE acknowledges that no data exist to inform the analysis for UPSs. As a result, DOE performed a sensitivity scenario of the national impact analysis assuming a non-zero price elasticity of demand in the residential sector. DOE did not perform a sensitivity scenario using a non-zero price elasticity in the commercial sector, as DOE believes business requirements for safety and security result in an inelastic market. A price elasticity developed for household appliances was used in the absence of any literature estimates specific to UPSs. This sensitivity scenario is described in appendix 10B of the final rule TSD. While the absolute value of the energy and operating cost savings estimates vary using this alternate price elasticity scenario, the relative comparison of the different trial standard levels analyzed does not.
The NIA assesses the national energy savings (NES) and the national net present value (NPV) from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels.
DOE evaluates the impacts of new or amended standards by comparing a case without such standards with standards-case projections. The no-new-standards case characterizes energy use and consumer costs for each product class in the absence of new or amended energy conservation standards. For this projection, DOE considers historical trends in efficiency and various forces that are likely to affect the mix of efficiencies over time. DOE compares the no-new-standards case with projections characterizing the market for each product class if DOE adopted new or amended standards at specific energy efficiency levels (
DOE uses a spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL. Interested parties can review DOE's analyses by changing various input quantities within the spreadsheet. The NIA spreadsheet model uses typical values (as opposed to probability distributions) as inputs.
Table IV-5 summarizes the inputs and methods DOE used for the NIA analysis for the final rule. Discussion of these inputs and methods follows the
A key component of the NIA is the trend in energy efficiency projected for the no-new-standards case and each of the standards cases. Section IV.F.8 of this rule 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 product classes for the year of anticipated compliance with an amended or new standard. To project the trend in efficiency for UPSs over the entire shipments projection period, DOE examined past improvements in efficiency over time. Little data exist to suggest that UPS efficiencies would improve in the 30 years following 2019 in the no-standards case. The approach is further described in chapter 10 of the final rule TSD.
Schneider submitted a figure showing that UPS efficiency has improved from 1995 to 2016 in the absence of a mandatory energy conservation standard, due to consumer demand and the impact of voluntary programs such as ENERGY STAR. (Schneider Electric, No. 0017 at p. 17) Similarly, NEMA and ITI stated that there is little relevant historic efficiency trend information because the UPS market has already been transformed by the ENERGY STAR UPS program. (NEMA and ITI, No. 0019 at 14) In contrast, CA IOUs agreed with DOE's assessment that UPS efficiencies would not improve in the no-new-standards case, as evidenced by the reported average maintenance-mode power consumptions of UPSs in the California Energy Commission (CEC) appliance database from 2013-to-date. (CA IOUs, No. 0016 at pp. 3-4) DOE notes that the figure submitted by Schneider was for a 1500 VA VFI UPS only, and was not accompanied by the underlying data, nor were any details provided regarding how the data were assembled. It is unclear whether the figure is representative of all UPSs, of all VFI UPSs, of only a subset of VFI UPSs at this rated output power, or of only a single UPS with a specific set of unchanging features. Schneider did not provide data on the efficiency trend for all product classes of UPSs. Given these limitations with the figure submitted by Schneider, and the available data found in the CEC appliance database, there is not sufficient data to suggest UPS efficiency has improved in the absence of an energy conservation standard. DOE continues to assume no efficiency improvement in the no-new-standards case for the final rule.
For the standards cases, DOE used a “roll-up” scenario to establish the shipment-weighted efficiency for the year that standards are assumed to become effective (2019). In this scenario, the market shares of products in the no-standards case that do not meet the standard under consideration would “roll up” to meet the new standard level, and the market share of products above the standard would remain unchanged. To develop standards case efficiency trends after 2019, DOE implemented the same trend as in the no-standards case: Zero percent for UPSs.
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 or amended energy conservation standards. DOE calculated the national energy consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy consumption (also by vintage). DOE calculated annual NES based on the difference in national energy consumption for the no-new-standards case and for 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 (
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
EEI disagreed with DOE's use of
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.
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 electricity prices in future years, DOE multiplied the average regional prices by annual energy price factors derived from the forecasts of annual average residential and commercial electricity price changes by region that are consistent with cases described on p. E-8 in
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.
In analyzing the potential impact of new or amended energy conservation standards on consumers, DOE evaluates the impact on identifiable subgroups of consumers that may be disproportionately affected by a new or amended national standard. The purpose of a subgroup analysis is to determine the extent of any such disproportional impacts. DOE evaluates impacts on particular subgroups of consumers by analyzing the LCC impacts and PBP for those particular consumers from alternative standard levels. For this final rule, DOE analyzed the impacts of the considered standard levels on two subgroups: (1) Low-income households and (2) small businesses. DOE used the LCC and PBP spreadsheet model to estimate the impacts of the considered efficiency levels on these subgroups. Chapter 11 in the final rule TSD describes the consumer subgroup analysis.
DOE conducted an MIA for UPSs to estimate the financial impacts of new energy conservation standards on manufacturers of UPSs. The MIA has both quantitative and qualitative aspects. 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 are data on the industry cost structure, manufacturer production costs (MPCs), and shipments; as well as assumptions about manufacturer markups and manufacturer conversion costs. The key MIA output is INPV. The GRIM calculates annual cash flows using standard accounting principles. DOE used the GRIM to compare changes in INPV between the no-standards case and various TSLs (the standards cases). The difference in INPV between the no-standards case and the standards cases represents the financial impact of new energy conservation standards on UPS manufacturers. Different sets of assumptions (markup scenarios) produce different INPV results. The qualitative part of the MIA addresses factors such as manufacturing capacity; characteristics of, and impacts on, any particular subgroup of manufacturers; the cumulative regulatory burden placed on UPS manufacturers; and any impacts on competition.
DOE uses the GRIM to quantify the changes in cash flows over time due to new energy conservation standards. These changes in cash flows result in either a higher or lower INPV for the standards cases compared to the no-standards case. The GRIM analysis uses a standard annual cash flow analysis that incorporates manufacturer costs, manufacturer markups, shipments, and industry financial information as inputs. It then models changes in costs, investments, and manufacturer margins that result from new energy conservation standards. The GRIM uses these inputs to calculate a series of annual cash flows beginning with the reference year of the analysis, 2016, and continuing through the terminal year of the analysis, 2048. DOE computes INPV by summing the stream of annual discounted cash flows during the analysis period. DOE used a real discount rate of 6.1 percent, the same discount rate used in the August 2016 NOPR, for UPS manufacturers in this final rule. NEMA and Schneider commented that the discount rate was inappropriate for this analysis (NEMA and ITI, No. 0019, at p. 14) (Schneider Electric, No. 0017 at p. 18). DOE used publicly available information from the SEC 10-Ks of publicly traded UPS manufacturers to estimate a discount rate that was reflective of the capital structure of the UPS industry. DOE then asked for feedback on its estimated discount rate of 8.2 percent during manufacturer interviews. Based on
DOE expects new energy conservation standards for UPSs to cause manufacturers to incur conversion costs to bring their production facilities and product designs into compliance with new standards. For the MIA, DOE classified these conversion costs into two major groups: (1) Capital conversion costs and (2) product conversion costs. Capital conversion costs are investments in property, plant, and equipment necessary to adapt or change existing production facilities such that new product designs can be fabricated and assembled. Product conversion costs are investments in research, development, testing, marketing, certification, and other non-capitalized costs necessary to make product designs comply with new standards.
In the August 2016 NOPR, DOE estimated product conversion costs for manufacturers that would have to redesign their UPSs to meet standards. DOE did not estimate capital conversion costs in the August 2016 NOPR. After reviewing comments in response to the August 2016 NOPR, DOE included capital conversion costs and increased product conversion costs for the final rule, based on these comment responses. The revised conversion costs used in the final rule are significantly higher at each of the TSLs than the conversion costs presented in the August 2016 NOPR. The conversion costs used in this final rule are presented in section V.B.2.a.
During the NOPR public meeting, NEMA questioned how the shipments analysis impacted the product conversion costs estimated and commented that only the products that already meet adopted standards would not require redesign (NEMA and ITI, No. 0019 at p. 15) (NEMA, Pub. Mtg. Tr., No. 0014 at p. 62). DOE agrees that UPSs that do not meet adopted standards would require redesign. DOE uses the efficiency distributions for each product class from the shipments analysis to determine how many UPS models in each product class would not meet the required ELs. For the final rule, DOE updated the efficiency distributions used in the shipments analysis. DOE used this updated efficiency distribution in the final rule MIA. More information on the updated shipments analysis can be found in section IV.G if this final rule and in chapter 9 of the final rule TSD.
NEMA and Schneider also commented that compliance with adopted standards would require investments in testing equipment and tooling to print new circuit boards for redesigned UPSs. (NEMA and ITI, No. 0019 at p. 15) (Schneider Electric, No. 0017 at p. 19) In the final rule, DOE accounted for these additional investments for tooling in the capital conversion cost estimates included in the final rule, based on these comment responses. DOE did not include the cost of testing equipment in the capital conversion costs. DOE recognizes that manufacturers will incur additional testing costs in complying with adopted standards. However, DOE included these additional testing costs as part of the product conversion costs, since DOE believes that most UPS manufacturers will outsource testing to third parties. To estimate industry-wide testing costs, DOE used quotes from third party laboratories to calculate the cost of testing two units for all of the models in the UPS industry. DOE notes that the UPS final rule test procedure does not require manufacturers to test two units per platform and stipulates that manufacturers may choose to test either one or two units per model. DOE used the cost of testing two units per platform to reflect DOE's uncertainty of which testing option a manufacturer may choose. Please see the December 12, 2016 UPS test procedure final rulemaking for more information. 81 FR 89806.
Schneider commented that testing equipment would become stranded because the increase in price of UPS caused by the adopted standards would reduce the demand for UPSs (Schneider Electric, No. 0017 at p. 20). DOE did not estimate stranded assets for testing equipment. The shipments analysis shows that UPS shipment volume increases throughout the analysis period, indicating that there would not be reduced demand for UPSs following adopted standards. Based on the shipments analysis, DOE does not believe that testing equipment would become stranded at any of the analyzed ELs. For more information on the shipments analysis, please see section IV.G of this final rule and chapter 9 of the final rule TSD.
Schneider further commented on the duration of UPS product design cycles and asserted that these cycles are typically longer than the two year compliance period for adopted UPS standards (Schneider Electric, No. 0017 at p. 2, 19) (Schneider Electric, Pub. Mtg. Tr., No. 0014 at p. 75-76). In the final rule, DOE accounted for the increased level of investment required to redesign UPS models outside of the regular product design cycles by significantly increasing the product redesign cost estimates included in the product conversion costs of the August 2016 NOPR.
ASAP and the CA IOUs commented that the product conversion costs estimated in the August 2016 NOPR were over-estimated, given that the majority of manufacturers would choose to increase their production capacity for transformer-less UPSs instead of redesigning covered UPSs that do not meet adopted standards (ASAP
See chapter 12 of the final rule TSD for a complete description of DOE's assumptions for capital and product conversion costs.
Manufacturing more efficient UPSs is more expensive than manufacturing baseline products due to the need for more costly materials and components. The higher MPCs for these more efficient products can affect the revenue and gross margin, and cash flow for the industry, making these product costs key inputs for the GRIM and the MIA. In the MIA, DOE used the MPCs calculated in the engineering analysis,
INPV, the key GRIM output, depends on industry revenue, which depends on the quantity and prices of UPSs shipped in each year of the analysis period. Industry revenue calculations require forecasts of: (1) Total annual shipment volume of UPSs; (2) the distribution of shipments across product classes (because prices vary by product class); and, (3) the distribution of shipments across ELs (because prices vary by efficiency).
In the no-standards case shipment analysis, shipments of UPSs were based on market forecast data from Frost and Sullivan and ENERGY STAR. Since UPS technology evolves more rapidly than other appliance technologies, DOE extrapolated forecasted trends from market research data instead of relying on a stock accounting approach.
DOE modeled a roll-up shipment scenario to estimate shipments of UPSs. In the roll-up shipment scenario, consumers who would have purchased UPSs that fail to meet the new standards in the no-standards case, purchase UPSs that just meet the new standards, but are not more efficient than those standards, in the standards cases. Those consumers that would have purchased compliant UPSs in the no-standards case continue to purchase the exact same UPSs in the standards cases. DOE updated the shipments analysis for the final rule based on comments and data provided in response to the shipment analysis presented in the August 2016 NOPR. The MIA used these updated shipments in the final rule.
For a complete description of the updated shipments see the shipments analysis discussion in section IV.G of this final rule and in chapter 9 of the final rule TSD.
As discussed in section IV.J.2.b, the MPCs for UPSs are the manufacturers' costs for those products. These costs include materials, direct labor, depreciation, and overhead, which are collectively referred to as the cost of goods sold (COGS). The MSP is the price received by UPS manufacturers from their customers, typically a distributor but could be the direct users, regardless of the downstream distribution channel through which the UPSs are ultimately sold. The MSP is not the cost the end-user pays for the UPS since there are typically multiple sales along the distribution chain and various markups applied to each sale. The MSP equals the MPC multiplied by the manufacturer markup. The manufacturer markup covers all the UPS manufacturer's non-production costs (
Modifying these manufacturer markups in the standards cases yields a different set of impacts on UPS manufacturers than in the no-standards case. For the MIA, DOE modeled two standards case markup scenarios to represent the uncertainty regarding the potential impacts on prices and profitability for UPS manufacturers following the implementation of new energy conservation standards. The two markup scenarios are; (1) a preservation of gross margin, or flat, markup scenario and (2) a pass through markup scenario. Each scenario leads to different manufacturer markup values, which, when applied to the inputted MPCs, result in varying revenue and cash flow impacts on UPS manufacturers.
DOE modeled two markup scenarios to represent the upper and lower bounds of prices and profitability following adopted standards. The preservation of gross margin markup scenario represents the best case scenario for manufacturers. DOE recognizes that manufacturers do not expect to be able to mark up the additional cost of production in the standards cases, given the competitive UPS market, and modeled the pass through markup scenario to represent a lower bound on profitability. DOE used the same markup scenarios in the final rule MIA that were used in the in August 2016 NOPR.
DOE conducted interviews with manufacturers following the publication of the July 2014 framework document in preparation for the NOPR analysis. Schneider inquired if DOE had conducted additional interviews specific to UPSs after the manufacturer interviews that took place in preparation for the March 27, 2012 battery charger NOPR (Schneider Electric, Pub. Mtg. Tr., No. 0014 at p. 54). DOE did conduct manufacturer interviews with UPS manufacturers in 2016 in preparation for the August 2016 NOPR. DOE did not conduct any further interviews with manufacturers between the August 2016 NOPR and the final rule, because further interviews were not necessary to alter the MIA for the final rule. Instead DOE, relied on comments from interested parties to update the MIA for the final rule.
During these interviews, DOE asked manufacturers to describe their major concerns with this UPS rulemaking. UPS manufacturers identified one key issue during these interviews, the burden of testing and certification.
UPS manufacturers stated that the costs associated with testing and certifying all of their products covered by this rulemaking could be burdensome. UPS manufacturers commented that since efficient products do not typically earn a premium in the UPS market, manufacturers do not regularly conduct efficiency testing or pursue energy-efficient certifications for the majority of their product offerings. As a result, the testing and certification required for compliance with a potential standard represents additional costs to the typical product testing conducted by UPS manufacturers. Since adopted standards would require all UPS offerings to be tested and certified, UPS manufacturers explained that this process could become expensive. DOE included the testing and certification costs as part of the product conversion costs included in section IV.J.2.a of this final rule.
In response to the August 2016 NOPR, NEMA and Schneider commented that the test procedure could require multiple days to complete, which could become costly. NEMA and Schneider further stated that the increased testing time could place a constraint on production capacity (NEMA, Pub. Mtg. Tr., No. 0014 at p. 60) (Schneider Electric, No. 0017 at p. 19, 21). DOE did not test any models covered by the scope of the adopted standards that required multiple days to test. DOE does not find that the time needed to complete the test procedure would limit manufacturers' ability to meet demand for compliant UPSs.
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 CO
The analysis of power sector emissions uses marginal emissions factors that were derived from data in
Combustion emissions of CH
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
SO
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 SO
Beginning in 2016, however, SO
CSAPR established a cap on NO
The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE's energy conservation standards would likely reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on
The
As part of the development of this rule, DOE considered the estimated monetary benefits from the reduced emissions of CO
For this final rule, DOE relied on a set of values for the social cost of CO
The SC-CO
Under section 1(b)(6) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, “assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” The purpose of the SC-CO
As part of the interagency process that developed these SC-CO
When attempting to assess the incremental economic impacts of CO
Despite the limits of both quantification and monetization, SC-CO
It is important to emphasize that the current SC-CO
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 CO
After the release of the interim values, the IWG reconvened on a regular basis to generate improved SC-CO
Each model takes a slightly different approach to model how changes in emissions result in changes in economic damages. A key objective of the interagency process was to enable a consistent exploration of the three models, while respecting the different approaches to quantifying damages taken by the key modelers in the field. An extensive review of the literature was conducted to select three sets of input parameters for these models: Climate sensitivity, socio-economic and emissions trajectories, and discount rates. A probability distribution for climate sensitivity was specified as an input into all three models. In addition, the interagency group used a range of scenarios for the socio-economic parameters and a range of values for the discount rate. All other model features were left unchanged, relying on the model developers' best estimates and judgments.
In 2010, the IWG selected four sets of SC-CO
In 2013 the IWG released an update (which was revised in July 2015) that contained SC-CO
It is important to recognize that a number of key uncertainties remain, and that current SC-CO
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-CO
DOE multiplied the CO
The U.S. Chamber of Commerce (USCC) and the Industrial Energy Consumers of America commented on the development of and the use of the SC-CO
In conducting the interagency process that developed the SC-CO
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.
IECA stated that the SC-CO
OMB Circular A-4
Regarding the use of global SC-CO
IECA stated that the social cost of carbon places U.S. manufacturing at a distinct competitive disadvantage. IECA added that the higher SC-CO
IECA stated that the social cost of carbon value is unrealistically high in comparison to carbon market prices. (IECA, No. 0015 at p. 3) The SC-CO
As noted previously, DOE estimated how the considered energy conservation standards would decrease power sector NO
DOE estimated the monetized value of NO
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.
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
The output of this analysis is a set of time-dependent coefficients that capture the change in electricity generation,
EEI disagreed with DOE's utility impact analysis, believing the results are overstated. EEI believes that 0 MW of capacity will be installed with or without the proposed standards coming into effect, and that there should be no estimated savings associated with “avoiding” renewable capacity that will be built anyway. (EEI, No. 0021 at pp. 7-8) DOE's analysis does not estimate how much new power plant capacity will not be installed as a result of lower demand caused by standards. Rather, the analysis estimates the difference in total installed capacity in the standards case compared to the base case. The lower electricity demand could allow more coal-fired capacity to be retired, and also mean that less renewable capacity will be needed.
DOE considers employment impacts in the domestic economy as one factor in selecting a standard. Employment impacts from new or amended energy conservation standards include both direct and indirect impacts. Direct employment impacts are any changes in the number of employees of manufacturers of the products subject to standards, their suppliers, and related service firms. The MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more-efficient appliances. Indirect employment impacts from standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, caused by (1) reduced spending by 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 indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.
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).
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 (2019-2025), where these uncertainties are reduced. For more details on the employment impact analysis, see chapter 16 of the final rule TSD.
The following section addresses the results from DOE's analyses with respect to the considered energy conservation standards for UPSs. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for UPSs, 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.
DOE analyzed the benefits and burdens of four TSLs for UPSs. These TSLs were developed by combining specific efficiency levels for each of the product classes analyzed by DOE. DOE presents the results for the TSLs in this document, while the results for all efficiency levels that DOE analyzed are in the final rule TSD.
Table V-1 presents the TSLs and the corresponding efficiency levels that DOE has identified for potential energy conservation standards for UPSs. TSL 4 represents the maximum technologically feasible (“max-tech”) energy efficiency for all product classes. TSL 3 represents maximum NES while at positive NPV in aggregate across all three product classes (the NPV of VFD UPSs is negative). TSL 2 represents maximum energy savings at positive NPV for all product classes. TSL 1 represents the minimum possible standard considered, and also corresponds to the maximum consumer NPV for each product class.
DOE analyzed the economic impacts on UPS consumers by looking at the effects that potential new 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.
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 (
Table V-2 through Table V-7 show the LCC and PBP results for the TSLs considered for each product class. In the first of each pair of tables, the simple payback is measured relative to the baseline product. In the second table, the impacts are measured relative to the efficiency distribution in the in the no-new-standards case in the compliance year (see section IV.F.8 of this document). 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.
In the consumer subgroup analysis, DOE estimated the impact of the considered TSLs on low-income households and small businesses. Table V-8 through Table V-13 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 for low-income households and small businesses at the considered efficiency levels are not substantially different from the average for all households. Chapter 11 of the final rule TSD presents the complete LCC and PBP results for the subgroups.
As discussed in section IV.F.9, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. In calculating a rebuttable presumption payback period for each of the considered TSLs, DOE used discrete values, and, as required by EPCA, based the energy use calculation on the DOE test procedures for UPSs. In contrast, the PBPs presented in section V.B.1.a were calculated using distributions that reflect the range of energy use in the field.
Table V-14 presents the rebuttable-presumption payback periods for the considered TSLs for UPSs. While DOE examined the rebuttable-presumption criterion, it considered whether the standard levels considered for this rule are economically justified through a more detailed analysis of the economic impacts of those levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range of impacts to the consumer, manufacturer, Nation, and environment. The results of that analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification.
DOE performed an MIA to estimate the impact of new energy conservation standards on UPS manufacturers. The following section describes the estimated impacts on UPS manufacturers at each analyzed TSL. Chapter 12 of the final rule TSD explains the analysis in further detail.
Table V-15 and Table V-16 present the financial impacts (represented by changes in INPV) of analyzed standards on UPS manufacturers as well as the conversion costs that DOE estimates UPS manufacturers would incur at each TSL. To evaluate the range of cash-flow impacts on the UPS industry, DOE modeled two markup scenarios that correspond to the range of anticipated market responses to new standards. Each scenario results in a unique set of cash flows and corresponding industry values at each TSL.
In the following discussion, the INPV results refer to the difference in industry value between the no-standards case and the standards cases that result from the sum of discounted cash flows from the reference year (2016) through the end of the analysis period (2048). The results also discuss the difference in cash flows between the no-standards case and the standards cases in the year before the compliance date for new standards. This difference in cash flow represents the size of the required conversion costs relative to the cash flow generated by the UPS industry in the absence of new energy conservation standards.
To assess the upper (less severe) bound of the range of potential impacts on UPS manufacturers, DOE modeled a preservation of gross margin markup scenario. This scenario assumes that in the standards cases, manufacturers would be able to fully pass on higher production costs required to produce more efficient products to their consumers. Specifically, the industry would be able to maintain its average no-standards case gross margin (as a percentage of revenue) despite the higher product costs in the standards cases. In general, the larger the product price increases, the less likely manufacturers are to achieve the cash flow from operations calculated in this scenario because it is less likely that
To assess the lower (more severe) bound of the range of potential impacts on manufacturers, DOE modeled the pass through markup scenario. In this scenario DOE assumes that manufacturers are able to pass through the incremental costs of more efficient UPSs to their customers, but without earning any additional operating profit on those higher costs. This scenario represents the lower bound of the range of potential impacts on manufacturers because manufacture margins are compressed as a result of this markup scenario.
TSL 1 sets the efficiency level at EL 1 for all UPSs. At TSL 1, DOE estimates impacts on INPV to range from −$409 million to $162 million, or a change in INPV of −15.9 percent to 6.3 percent. At this TSL, industry free cash flow is estimated to decrease by approximately 15.2 percent to $74 million, compared to the no-standards case value of $87 million in 2018, the year leading up to the adopted standards.
As TSLs approach max-tech, the number of UPS shipments that do not meet required efficiency levels, and subsequently the number of UPSs requiring redesign, increases. Conversion costs scale with the increased number of UPSs that require redesign to meet efficiency levels. At TSL 1, DOE estimates that UPS manufacturers will incur a total of $36 million in conversion costs. DOE estimates that manufacturers will incur $28 million in product conversion costs at TSL 1 as manufacturers comply with test procedure requirements and increase R&D efforts necessary to redesign UPSs that do not meet efficiency levels. Capital conversion costs are estimated to be $9 million at TSL 1, driven by investments in tooling required to print new circuit boards for redesigned UPSs.
At TSL 1, the shipment-weighted-average MPCs decrease by approximately 2 percent for VFD UPSs and increase by approximately 18 percent for VI UPSs and 10 percent for VFI UPSs relative to the no-standards case MPCs in 2019, the compliance year of the adopted standards. In the preservation of gross margin markup scenario, manufacturers are able to recover their $36 million in conversion costs over the course of the analysis period through the increases in MPCs for VI and VFI UPSs causing a slightly positive change in INPV at TSL 1 under the preservation of gross margin markup scenario.
Under the pass through markup scenario, the MPC increases at TSL 1 result in reductions in manufacturer markups from 1.57 in the no-standards case to 1.44 for VI UPSs and from 1.76 in the no-standards case to 1.67 for VFI UPSs at TSL 1. The MPC decrease for VFD UPSs at TSL 1 results in an increase in manufacturer markup from 1.55 in the no-standards case to 1.57 at TSL 1. The reductions in manufacturer markups for VI and VFI UPSs and $36 million in conversion costs incurred by manufacturers cause a moderately negative change in INPV at TSL 1 under the pass through markup scenario.
TSL 2 sets the efficiency level at EL 1 for VFD and VFI UPSs and EL 2 for VI UPSs. At TSL 2, DOE estimates impacts on INPV to range from −$636 million to $257 million, or a change in INPV of −24.7 percent to 10.0 percent. At this TSL, industry free cash flow is estimated to decrease by approximately 19.5 percent to $70 million, compared to the no-standards case value of $87 million in 2018, the year leading up to the adopted standards.
DOE expects higher conversion costs at TSL 2 than at TSL 1 because TSL 2 sets the efficiency level at EL 2 for VI UPSs, resulting in an increased number of VI UPSs that do not meet the efficiency levels required at this TSL. DOE estimates that manufacturers will incur a total of $47 million in conversion costs at TSL 2. DOE estimates that manufacturers will incur $35 million in product conversion costs at TSL 2 as manufacturers comply with test procedure requirements and increase R&D efforts necessary to redesign UPSs to meet the required efficiency levels at TSL 2. Capital conversion costs are estimated to be $11 million at TSL 2, driven by investments in tooling required to print new circuit boards for redesigned UPSs.
At TSL 2, the shipment-weighted-average MPCs decrease by approximately 2 percent for VFD UPSs and increase by approximately 38 percent for VI UPSs and 10 percent for VFI UPSs relative to the no-standards case MPCs in 2019, the compliance year of the standards. In the preservation of gross margin markup scenario, manufacturers are able to recover their $47 million in conversion costs over the course of the analysis period through the increases in MPCs for VI and VFI UPSs causing a moderately positive change in INPV at TSL 2 under the preservation of gross margin markup scenario.
Under the pass through markup scenario at TSL 2, the MPC increases result in reductions in manufacturer markups from 1.57 in the no-standards case to 1.37 for VI UPSs at TSL 2 and from 1.76 in the no-standards case to 1.67 for VFI UPSs at TSL 2. The MPC decrease for VFD UPSs at TSL 2 results in an increase in manufacturer markup from 1.55 in the no-standards case to 1.57 in the standards case at TSL 2. The reductions in manufacturer markups for VI and VFI UPSs and $47 million in conversion costs cause a significantly negative change in INPV at TSL 2 under the pass through markup scenario.
TSL 3 sets the efficiency level at EL 1 for VFI UPSs and EL 2 for VFD and VI UPSs. At TSL 3, DOE estimates impacts on INPV to range from −$976 million to $389 million, or a change in INPV of −37.9 percent to 15.1 percent. At this TSL, industry free cash flow is estimated to decrease by approximately 20.9 percent to $69 million, compared to the no-standards case value of $87 million in 2018, the year leading up to the adopted standards.
DOE estimates that manufacturers will incur a total of $50 million in conversion costs at TSL 3. DOE estimates that manufacturers will incur $38 million in product conversion costs at TSL 3 as manufacturers comply with test procedure requirements and increase R&D efforts necessary to redesign VFD and VI UPSs to have best-in-market efficiency and VFI UPSs to meet the required efficiency level at TSL 3. Capital conversion costs are estimated to be $12 million at TSL 3, driven by investments in tooling required to print new circuit boards for redesigned UPSs.
At TSL 3, the shipment-weighted-average MPCs increase by approximately 25 percent for VFD UPSs, 38 percent for VI UPSs, and 10 percent for VFI UPSs relative to the no-standards case MPCs in 2019, the compliance year of the adopted standards. In the preservation of gross margin markup scenario, manufacturers are able to recover their $50 million in conversion costs over the course of the analysis period through the increases in MPCs causing a moderately positive change in INPV at TSL 3 under the preservation of gross margin markup scenario.
Under the pass through markup scenario at TSL 3, the increases in shipment-weighted-average MPCs result in reductions in manufacturer markups, from 1.55 in the no-standards case to 1.43 for VFD UPSs at TSL 3, from 1.57 in the no-standards case to 1.37 for VI UPSs at TSL 3, and from 1.76 in the no-standards case to 1.67 for VFI UPSs at TSL 3. The reductions in manufacturer markups and $50 million in conversion costs incurred by manufacturers cause a significantly negative change in INPV at TSL 3 under the pass through markup scenario.
TSL 4 sets the efficiency level at EL 3 for all UPSs, which represents max-tech. At TSL 4, DOE estimates impacts on INPV to range from −$3,266 million to $4,801 million, or a change in INPV of −126.8 percent to 186.4 percent. At this TSL, industry free cash flow is estimated to decrease by approximately 24.3 percent to $66 million, compared to the no-standards case value of $87 million in 2018, the year leading up to the adopted standards.
DOE expects that manufacturers will incur higher total conversion costs at TSL 4 than at any of the lower TSLs because manufacturers will required to redesign the vast majority of their UPSs to meet max-tech. DOE estimates that manufacturers will incur $44 million in product conversion costs as manufacturers comply with test procedure requirements and increase R&D efforts necessary to redesign UPSs to meet max-tech at TSL 4. Capital conversion costs are estimated to be $14 million at TSL 4, driven by investments in tooling required to print new circuit boards for the majority of UPSs.
At TSL 4, the shipment-weighted-average MPCs increase significantly by approximately 46 percent for VFD UPSs, 489 percent for VI UPSs, and 207 percent for VFI UPSs relative to the no-standards case MPCs in 2019, the compliance year of the adopted standards. In the preservation of gross margin markup scenario, manufacturers are able to recover their $58 million in conversion costs over the course of the analysis period through the increases in MPCs causing a significantly positive change in INPV at TSL 4 under the preservation of gross margin markup scenario.
Under the pass through markup scenario at TSL 4, the MPC increases result in reductions in manufacturer markups, from 1.55 in the no-standards case to 1.36 for VFD UPSs at TSL 4, from 1.57 in the no-standards case to 1.30 for VI UPSs at TSL 4, and from 1.76 in the no-standards case to 1.30 for VFI UPSs at TSL 4. The reductions in manufacturer markups and $58 million in conversion costs incurred by manufacturers cause a significantly negative change in INPV at TSL 4 under the pass through markup scenario.
Manufacturer interviews, comment responses to the August 2016 NOPR, and DOE's research indicate that all UPS components that would be modified to improve the efficiency of UPSs are manufactured abroad (Schneider Electric, Pub. Mtg. Tr., No. 0014 at p. 72). DOE was able to identify a handful of UPS manufacturers that do assemble these UPS components domestically. Based on manufacturer interviews, DOE stated in the August 2016 NOPR that there would most likely not be an impact on the amount of domestic workers involved in the assembly of UPSs due to new energy conservation standards. 81 FR 52230. Subsequently, DOE did not conduct a quantitative domestic employment impact analysis on UPS manufacturers in the August 2016 NOPR.
NEMA and Schneider Electric commented that manufacturers may move their assembly abroad as testing and assembling compliant UPSs becomes more expensive (Schneider Electric, No. 0017 at p. 20). NEMA went on to reference the number of companies listed in the Online Certifications Directory from Underwriters Laboratories
DOE used the GRIM to estimate the domestic assembly expenditures and the number of domestic assembly workers in the no-standards case at each TSL. DOE used statistical data from the U.S. Census Bureau's 2014 Annual Survey of Manufacturers to calculate labor expenditures associated with the North American Industry Classification System (NAICS) code 335999. DOE estimated that 10 percent of labor expenditures for this NAICS code is attributed to UPS assembly expenditures in the no-standards case.
Table V-17 represents the potential impacts the adopted standards could have on domestic UPS assembly employment. The upper bound of the results estimates the maximum change in the number of assembly workers that could occur after compliance with adopted energy conservation standards when assuming that manufacturers continue to assemble the same scope of covered products. It also assumes that domestic assembly does not shift to lower labor-cost countries. To address the risk of manufacturers choosing to assemble UPSs abroad, the lower bound of the employment results estimate the maximum decrease in domestic UPS assembly workers in the industry if some or all existing assembly was moved outside of the United States. While the results present a range of estimates, the following sections also include qualitative discussions of the impacts on UPS assembly at the various TSLs. Finally, the domestic UPS assembly employment impacts shown are independent of the employment impacts from the broader U.S. economy, documented in chapter 17 of the final rule TSD.
DOE estimates that in the absence of new energy conservation standards, there would be approximately 206 domestic employees involved in assembling UPSs in 2019. Table V-17 presents the range of potential impacts of adopted energy conservation standards on domestic assembly workers in the UPS industry.
At the upper end of the employment impact range, DOE does not expect any impact on the amount of domestic workers involved in the assembly of UPSs at the analyzed TSLs. While compliant UPS component configurations may change or become more costly, DOE estimates that the same amount of employees would be needed to assemble these products.
At the lower end of the range, DOE models a situation where some domestic employment associated with UPS assembly moves abroad as a result of new energy conservation standards. As UPS MPCs increase due to adopted standards, NEMA and Schneider stated that manufacturers may relocate domestic assembly facilities to countries with lower labor costs in an effort to reduce the total cost of UPS production (Schneider Electric, No. 0017 at p. 20) (NEMA and ITI, No. 0019 at p. 15). The lower end of the employment impact range represents these potential relocation decisions as decreases in domestic assembly employment at higher TSLs. At TSL 1, the TSL adopted in this final rule, DOE concludes that, based on the shipment analysis, manufacturer interviews, and the results of the domestic assembly employment analysis, manufacturers could face a moderate negative impact on domestic assembly employment due to the increased total cost of UPS assembly in 2019.
DOE also recognizes there are several UPS and UPS component manufacturers that have employees in the U.S. that work on design, technical support, sales, training, testing, certification, and other requirements. However, feedback from manufacturer interviews and comment responses to the August 2016 NOPR did not indicate there would be negative changes in the domestic employment of the design, technical support, or other departments of UPS and UPS component manufacturers located in the U.S. in response to new energy conservation standards.
UPS manufacturers stated that they did not anticipate any capacity constraints at any of the analyzed ELs, given a two-year timeframe from the publication of a final rule and the compliance year.
Using average cost assumptions to develop an industry cash-flow estimate may not be adequate for assessing differential impacts among manufacturer subgroups. Small manufacturers, niche product manufacturers, and manufacturers exhibiting cost structures substantially different from the industry average could be affected disproportionately. DOE identified one manufacturer subgroup that it believes could be disproportionally impacted by energy conservation standards and would require a separate analysis in the MIA, small businesses. DOE analyzes the impacts on small businesses in a separate analysis in section VI.B of this final rule as part of the Regulatory Flexibility Analysis. DOE did not identify any other adversely impacted manufacturer subgroups for this rulemaking based on the results of the industry characterization.
One aspect of assessing manufacturer burden involves considering the cumulative impact of multiple DOE
Some UPS manufacturers could also make other products that could be subject to energy conservation standards set by DOE. DOE looks at these regulations that could affect UPS manufacturers that will take effect approximately 3 years before or after the estimated 2019 compliance date of adopted energy conservation standards for UPSs.
The compliance dates and expected industry conversion costs of relevant energy conservation standards are presented in Table V-18. Included in the table are Federal regulations that have compliance dates three (and six) years before or after the UPS compliance date.
DOE discusses these and other requirements and includes the full details of the cumulative regulatory burden analysis in chapter 12 of the final rule TSD. DOE will continue to evaluate its approach to assessing cumulative regulatory burden for use in future rulemakings to ensure that it is effectively capturing the overlapping impacts of its regulations. DOE plans to seek public comment on the approaches it has used here (
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 amended standards.
To estimate the energy savings attributable to potential new standards for UPSs, 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 amended standards (2019-2048). Table V-19 presents DOE's projections of the national energy savings for each TSL considered for UPSs. The savings were calculated using the approach described in section IV.H.2 of this final rule.
OMB Circular A-4
DOE estimated the cumulative NPV of the total costs and savings for consumers that would result from the TSLs considered for UPSs. In accordance with OMB's guidelines on regulatory analysis,
The NPV results based on the aforementioned 9-year analytical period are presented in Table V-22. The impacts are counted over the lifetime of products purchased in 2019-2048. 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.
DOE expects that amended energy conservation standards for UPSs 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 (2019-2025), where these uncertainties are reduced.
The results suggest that the adopted standards are likely to have a negligible impact on the net demand for labor in the economy. The net change in jobs is so small that it would be imperceptible in national labor statistics and might be offset by other, unanticipated effects on employment. Chapter 16 of the final rule TSD presents detailed results regarding anticipated indirect employment impacts.
As discussed in section IV.C of this final rule, DOE has concluded that the standards adopted in this final rule will not lessen the utility or performance of UPSs under consideration in this rulemaking. Manufacturers of these products currently offer units that meet or exceed the adopted standards.
DOE considered any lessening of competition that would be likely to result from new UPS standards. As discussed in section III.D.1.e, 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. (42 U.S.C. 6295(o)(2)(B)(ii)) To assist the Attorney General in making this determination, DOE provided DOJ with copies of the August 2016 NOPR and the TSD for review. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for UPSs 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.
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 potential energy conservation standards for UPSs is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and greenhouse gases. Table V-23 provides DOE's estimate of cumulative emissions reductions expected to result from the TSLs considered in this rulemaking. The emissions were calculated using the multipliers discussed in section IV.K of this document. DOE reports annual emissions reductions for each TSL in chapter 13 of the final rule TSD.
As part of the analysis for this rule, DOE estimated monetary benefits likely to result from the reduced emissions of CO
Table V-24 presents the global value of CO
DOE is well aware that scientific and economic knowledge about the contribution of CO
DOE also estimated the monetary value of the economic benefits associated with NO
The Secretary of Energy, in determining whether a standard is economically justified, may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) No other factors were considered in this analysis.
Table V-26 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced CO
The national operating cost savings are domestic U.S. monetary savings that occur as a result of purchasing the covered UPSs, and are measured for the lifetime of products shipped in 2019-2048. The benefits associated with reduced CO
When considering new or amended energy conservation standards, the standards that DOE adopts for any type (or class) of covered product must be designed to achieve the maximum improvement in energy efficiency that the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or amended standard must also result in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B))
For this final rule, DOE considered the impacts of new standards for UPSs at each TSL, beginning with the maximum technologically feasible level, to determine whether that level was economically justified. Where the max-tech level was not justified, DOE then considered the next most efficient level and undertook the same evaluation until it reached the highest efficiency level that is both technologically feasible and economically justified and saves a significant amount of energy.
To aid the reader as DOE discusses the benefits and/or burdens of each TSL, tables in this section present a summary of the results of DOE's quantitative analysis for each TSL. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of consumers who may be disproportionately affected by a national standard and impacts on employment.
DOE also notes that the economics literature provides a wide-ranging discussion of how consumers trade off upfront costs and energy savings in the absence of government intervention. Much of this literature attempts to explain why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of (1) a lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant delaying or altering purchases; (4) excessive focus on the short term, in the form of inconsistent weighting of future energy cost savings relative to available returns on other investments; (5) computational or other difficulties associated with the evaluation of relevant tradeoffs; and (6) a divergence in incentives (for example, between renters and owners, or builders and purchasers). Having less than perfect foresight and a high degree of uncertainty about the future, consumers may trade off these types of investments at a higher than expected rate between current consumption and uncertain future energy cost savings.
In DOE's current regulatory analysis, potential changes in the benefits and costs of a regulation due to changes in consumer purchase decisions are included in two ways. First, if consumers forego the purchase of a product in the standards case, this decreases sales for product manufacturers, and the impact on manufacturers attributed to lost revenue is included in the MIA. Second, DOE accounts for energy savings attributable only to products actually used by consumers in the standards case; if a standard decreases the number of products purchased by consumers, this decreases the potential energy savings from an energy conservation standard. DOE provides estimates of shipments
While DOE is not prepared at present to provide a fuller quantifiable framework for estimating the benefits and costs of changes in consumer purchase decisions due to an energy conservation standard, DOE is committed to developing a framework that can support empirical quantitative tools for improved assessment of the consumer welfare impacts of appliance standards. DOE has posted a paper that discusses the issue of consumer welfare impacts of appliance energy conservation standards, and potential enhancements to the methodology by which these impacts are defined and estimated in the regulatory process.
Table V-27 and Table V-28 summarize the quantitative impacts estimated for each TSL for UPSs. The national impacts are measured over the lifetime of UPSs purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2019-2048). The energy savings, emissions reductions, and value of emissions reductions refer to full-fuel-cycle results. The efficiency levels contained in each TSL are described in section V.A of this final rule.
DOE first considered TSL 4, which represents the max-tech efficiency levels. TSL 4 would save an estimated 3.0 quads of energy, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be -$30 billion using a discount rate of 7 percent, and −$53 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 156 Mt of CO
At TSL 4, the average LCC impact is a savings of −$12 for VFD UPSs, −$396 for VI UPSs, and −$388 for VFI UPSs. The simple payback period is 3.8 years for VFD UPSs, 36 years for VI UPSs, and 18 years for VFI UPSs. The fraction of consumers experiencing a net LCC cost is 80 percent for VFD UPSs, 100 percent for VI UPSs, and 99 percent for VFIs.
At TSL 4, the projected change in INPV ranges from a decrease of $3,266 million to an increase of $4,801 million, which corresponds to a decrease of 126.8 percent to an increase of 186.4 percent.
The Secretary concludes that at TSL 4 for UPSs, the benefits of energy savings, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the negative NPV of consumer benefits, economic burden on some consumers, and the potentially significant 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 1.3 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $0.03 billion using a discount rate of 7 percent, and $0.75 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 68 Mt of CO
At TSL 3, the average LCC impact is a savings of −$4 for VFD UPSs, $4 for VI UPSs, and $36 for VFI UPSs. The simple payback period is 2.6 years for VFD UPSs, 4.6 years for VI UPSs, and 4.4 years for VFI UPSs. The fraction of consumers experiencing a net LCC cost is 51 percent for VFD UPSs, 50 percent for VI UPSs, and 2 percent for VFIs.
At TSL 3, the projected change in INPV ranges from a decrease of $976 million to an increase of $389 million, which corresponds to a decrease of 37.9 percent to an increase of 15.1 percent.
The Secretary concludes that at TSL 3 for UPSs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on some consumers, and the potential 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 1.2 quads of energy, an amount DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $1.0 billion using a discount rate of 7 percent, and $2.5 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 2 are 61 Mt of CO
At TSL 2, the average LCC impact is a savings of $32 for VFD UPSs, $4 for VI UPSs, and $36 for VFI UPSs. The simple payback period is 0.0
At TSL 2, the projected change in INPV ranges from a decrease of $636 million to an increase of $257 million, which corresponds to a decrease of 24.7 percent to an increase of 10.0 percent.
The Secretary concludes that at TSL 2 for UPSs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on some consumers and the potential reduction in manufacturer INPV. Consequently, the Secretary has concluded that TSL 2 is not economically justified.
DOE then considered TSL 1, which would save an estimated 0.94 quads of energy, an amount DOE considers significant. Under TSL 1, the NPV of consumer benefit would be $1.3 billion using a discount rate of 7 percent, and $3.0 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 1 are 49 Mt of CO
At TSL 1, the average LCC impact is a savings of $32 for VFD UPSs, $12 for VI UPSs, and $36 for VFI UPSs. The simple payback period is 0.0
At TSL 1, the projected change in INPV ranges from a decrease of $409 million to an increase of $163 million, which corresponds to a decrease of 15.9 percent to an increase of 6.3 percent.
After considering the analysis and weighing the benefits and burdens, the Secretary has concluded that at TSL 1 for UPSs, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings would outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV. Accordingly, the Secretary has concluded that TSL 1 would offer the maximum improvement in efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy.
Therefore, based on the above considerations, DOE adopts the energy conservation standards for UPSs at TSL 1. The adopted energy conservation standards for UPSs, which are expressed in average load adjusted efficiency, are shown in Table V-29.
The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2015$) 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, and (2) the annualized monetary value of the benefits of CO
Table V-30 shows the annualized values for UPSs 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 CO
Using a 3-percent discount rate for all benefits and costs and the average SC-CO
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 UPSs are intended to address are as follows:
(1) Insufficient information and the high costs of gathering and analyzing relevant information leads some consumers to miss opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not realized due to misaligned incentives between purchasers and users. An example of such a case is when the equipment purchase decision is made by a building contractor or building owner who does not pay the energy costs.
(3) There are external benefits resulting from improved energy efficiency of products or equipment that are not captured by the users of such equipment. These benefits include externalities related to public health, environmental protection and national energy security that are not reflected in energy prices, such as reduced emissions of air pollutants and greenhouse gases that impact human health and global warming. DOE attempts to qualify some of the external benefits through use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory Affairs (OIRA) in the OMB has determined that the regulatory action in this document is a significant regulatory action under section (3)(f) of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of the Order, DOE has provided to OIRA: (i) The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; and (ii) an assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate. DOE has included these documents in the rulemaking record.
In addition, the Administrator of OIRA has determined that the regulatory
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.
The Regulatory Flexibility Act (5 U.S.C. 601
For manufacturers of UPSs, 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
UPS manufacturing is classified under NAICS 335999, “All Other Miscellaneous Electrical Equipment and Component Manufacturing.” The SBA sets a threshold of 500 employees or less for an entity to be considered as a small business manufacturer of those product classes.
To estimate the number of companies that could be small businesses that manufacture UPSs covered by this rulemaking, DOE conducted a market survey using publicly available information. DOE first attempted to identify all potential UPS manufacturers by researching certification databases (
DOE initially identified a total of 48 potential companies that sell UPSs in the United States. Of these, DOE estimated that 12 were small businesses in the August 2016 NOPR. After reviewing publicly available information, such as Hoovers
Schneider commented that compliance with adopted UPS standards would make it difficult for new manufacturers, especially smaller manufacturers, to enter the UPS market (Schneider Electric, No. 0017 at p. 21). The UPS industry, as covered by the scope of this rulemaking, presents barriers to entry for any new market participant, large or small. In addition to the high startup cost of producing cost-competitive UPSs, the large number of existing UPS manufacturers limits opportunities for new market entrants to gain market share. As a result, DOE does not believe that it would be more or less feasible to enter the UPS market, due to this rulemaking.
Based on DOE's determination that there are no domestic small UPS manufacturers, that companies making UPSs sourced from foreign components would not be responsible for the conversion costs, and that companies making UPSs would be able to pass on the potential increases in MPCs associated with adopted UPS standards, DOE previously certified in the August 2016 NOPR that the adopted standards will not have a significant economic impact on a substantial number of small entities. The factual basis for this certification has not changed.
Manufacturers of UPSs 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 UPSs, including any amendments adopted for that test procedure. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including UPSs. 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.
Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has determined that the rule fits within the category of actions included in Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. (See 10 CFR part 1021, App. B, B5.1(b); 1021.410(b) and App. B, B(1)-(5).) The rule fits within this category of actions because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX determination for this rulemaking, and DOE does not need to prepare an Environmental Assessment or Environmental Impact Statement for this rule. DOE's CX determination for this rule is available at
Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no further action is required by Executive Order 13132.
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity, (2) write regulations to minimize litigation, (3) provide a clear legal standard for affected conduct rather than a general standard, and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation (1) clearly specifies the preemptive effect, if any, (2) clearly specifies any effect on existing Federal law or regulation, (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction, (4) specifies the retroactive effect, if any, (5) adequately defines key terms, and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.
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
DOE has concluded that this final rule may require expenditures of $100 million or more in any one year by the private sector. Such expenditures may include (1) investment in research and development and in capital expenditures by UPSs manufacturers in the years between the final rule and the compliance date for the new standards and (2) incremental additional expenditures by consumers to purchase higher-efficiency UPSs, starting at the compliance date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The
Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. As required by 42 U.S.C. 6295(m), this final rule establishes new energy conservation standards for UPSs that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified, as required by 42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B). A full discussion of the alternatives considered by DOE is presented in chapter 17 of the TSD for this final rule.
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.
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.
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.
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 UPSs, 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.
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.”
In response to OMB's Bulletin, DOE conducted formal peer reviews of the energy conservation standards development process and the analyses that are typically used and prepared a report describing that peer review.
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).
The Secretary of Energy has approved publication of this final rule.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Reporting and recordkeeping requirements, and Small businesses.
DOE is publishing this document concerning uninterruptible power supplies to comply with an order from the U.S. District Court for the Northern District of California in the consolidated cases of
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 part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below:
42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
(z) * * *
(3) All uninterruptible power supplies (UPS) manufactured on and after January 10, 2022, that utilize a NEMA 1-15P or 5-15P input plug and have an AC output shall have an average load adjusted efficiency that meets or exceeds the values shown in the table in this paragraph (z)(3) based on the rated output power (P
I am responding to your August 8, 2016, letter seeking the views of the Attorney General about the potential impact on competition of proposed energy conservation standards for uninterruptible power supplies.
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 Assistant Attorney General for the Antitrust Division in 28 CFR 0.40(g).
In conducting its analysis, the Antitrust Division examines whether a proposed standard may lessen competition, for example, by substantially limiting consumer choice or increasing industry concentration. A lessening of competition could result in higher prices to manufacturers and consumers.
We have reviewed the proposed standards contained in the Notice of Proposed Rulemaking (81 FR 52196, Aug. 5, 2016) and the related Technical Support Documents. We also monitored the public meeting held on the proposed standards on September 16, 2016, reviewed supplementary information submitted to the Attorney General by the Department of Energy and public comments submitted in connection with this proceeding, and conducted interviews with industry representatives.
Based on the information currently available, we do not believe that the proposed energy conservation standards for uninterruptible power supplies are likely to have a significant adverse effect on competition. This conclusion is subject to some uncertainty, however, in part because manufacturers of uninterruptible power supplies have indicated that a large number of current products will not be able to immediately comply with the new standards and thus will likely be removed from the market. Nonetheless, we currently have no reason to believe that this will result in any particular manufacturer either exiting the market or gaining or increasing its market power and thereby harming competition.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
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.
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.
The docket for this rulemaking, which includes
The docket web page can be found at:
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
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:
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:
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,
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 (
In Table I.1, the term V
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”).
DOE's analysis of the impacts of the adopted standards on consumers is described in section IV.F of this document.
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
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.
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)
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”)
The value of the CO
DOE also calculated the value of the reduction in emissions of the non-CO
DOE also estimates the present value of the NO
Table I.3 summarizes the economic benefits and costs expected to result from the adopted standards for air compressors.
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 CO
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 CO
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),
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.
Based on the analyses culminating in this final rule, DOE
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.
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,
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.
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)).
Currently, there are no Federal energy conservation standards for air
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
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”).
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.
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
In the November 2016 notice of final determination, DOE adopted the following definition for compressor:
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:
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.
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.
“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.”
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:
○ 10-200 compressor motor nominal horsepower (hp), or
○ 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.
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.
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.
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;
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.
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,
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.
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
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.
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.
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.
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,
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.
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.
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.
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 (
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.
Sullair commented that, although single-phase and three-phase compressor packages are mostly identical, the motor and electrical equipment (
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
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.
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.
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,
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.
CAGI noted the scarcity of compressor data above a compressor motor nominal
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.
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 (
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.
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.
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
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.
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,
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 (
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.
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 (
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;
For the reasons outlined in this section (
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,
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
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.
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)
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)
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)
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.
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).
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
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 (
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,
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.”
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.
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
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.
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
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)
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 Atmosphères Explosibles [“ATEX”],
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)
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
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
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 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 (
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 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 Atmosphères Explosibles [“ATEX”],
DOE also found that hazardous environment compressors meet the second criterion of consumer utility. Using non-explosion-safe equipment, in
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.
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 °C. For low extremes, Sullair indicated temperatures below 5 °C, while CAGI indicated temperatures below 0 °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,
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 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 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 (
Similarly, DOE believes that certain weather-protected compressors (
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 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.
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 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 can have requirements for air purity, which is rated according to ISO 8573-1,
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,
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”).
Quincy:
Champion:
CPR:
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.
The American Petroleum Institute standard 619, “Rotary-Type Positive-Displacement Compressors for Petroleum, Petrochemical, and Natural Gas Industries,” (API 619)
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.
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:
○ 10-200 compressor motor nominal horsepower (hp), or
○ 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.
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.
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 § 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.
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 (
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”
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 (
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
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.
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
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;
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.
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.
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.
DOE has determined that any standards established by this rule will
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.
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.
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).
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 (
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
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.
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
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.
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.
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.
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.
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.
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.
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.”
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
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.
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 CO
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 CO
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.
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.
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.
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.
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:
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.
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
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.
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.
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.
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.
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.
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
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
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;
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.
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.
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
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.
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.
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.
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.
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.
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 (
• 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)
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” (
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.
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.
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),
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.
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.
DOE uses the following four screening criteria to determine which technology options are suitable for further consideration in an energy conservation standards rulemaking:
(1)
(2)
(3)
(4)
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.
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.
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:
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 (
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 (
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.
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.
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.
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.
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).
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.
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.
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.
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)
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.
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.
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.
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.
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.
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)
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 (
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.
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.
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:
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.
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.
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:
The efficiency levels for the rotary, lubricated, air-cooled, variable-speed equipment class are unchanged from the
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:
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).
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.
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
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.
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 (
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
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 (
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.
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.
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 (
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 (
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.
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).
The MSP-flow-efficiency relationship for the rotary, lubricated, air-cooled, fixed-speed equipment class is as follows:
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.
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.
The MSP-flow-efficiency relationship for the rotary, lubricated, air-cooled, variable-speed equipment class is as follows:
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.
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.
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.
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.
The markups analysis develops appropriate markups (
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
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.
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 (
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.
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”)
Table IV.13 shows the estimated distribution of air compressor application.
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
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.
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.
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.
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.
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,
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.
Atlas Copco submitted a second internal report
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,
• 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.
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.
DOE received no adverse comments on its NOPR equipment cost estimates, and maintained the same approach for the final rule.
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.
In conclusion, DOE does not expect installation cost to change with increased efficiency, so DOE did not include installation costs for this final rule.
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.
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”),
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
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.
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
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.
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.
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.
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 (
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.
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.
DOE uses projections of annual equipment shipments to calculate the national impacts of potential energy
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
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.
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.
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.
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
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.
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 (
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 (
The site-to-primary energy conversion factors are estimated by sector and end-
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
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
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,
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.
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.
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
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 (
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.
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.
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
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.
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 (
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.
As discussed previously, MSPs include direct manufacturing production costs (
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.
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.
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
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.
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.
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.
Consistent with the requirements of the Regulatory Flexibility Act (5 U.S.C. 601,
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.
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 CO
The analysis of power sector emissions uses marginal emissions factors that were derived from data in
Combustion emissions of CH
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.
SO
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 SO
Beginning in 2016, however, SO
CSAPR established a cap on NO
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
As part of the development of this rule, DOE considered the estimated monetary benefits from the reduced emissions of CO
The Social Cost of Carbon (“SC-CO
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
As part of the interagency process that developed these SC-CO
When attempting to assess the incremental economic impacts of CO
Despite the limits of both quantification and monetization, SC-CO
It is important to emphasize that the current SC-CO
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 CO
After the release of the interim values, the IWG reconvened on a regular basis to generate improved SC-CO
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-CO
In 2013 the IWG released an update (which was revised in July 2015) that contained SC-CO
It is important to recognize that a number of key uncertainties remain, and that current SC-CO
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-CO
DOE multiplied the CO
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.
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 CO
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 (
Regarding the use of global SCC values, DOE's analysis estimates both global and domestic benefits of CO
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.
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-CO
In light of these limitations and the paucity of peer-reviewed estimates of the social cost of non-CO
Since that time, new estimates of the social cost of non-CO
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-CO
The SC-CH
DOE multiplied the CH
As noted previously, DOE estimated how the considered energy conservation standards would reduce power sector NO
DOE estimated the monetized value of NO
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.
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
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.
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
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.
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”).
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.
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.
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.
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.
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 (
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
As discussed previously, using average cost assumptions to develop an
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.
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.
DOE also identified other regulatory burdens that will affect manufacturers of compressors, such as international energy conservation standards and EPA Tier IV emission regulation.
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.
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
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.)
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.
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.
OMB Circular A-4
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,
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.
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.
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.
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.
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.
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.
As part of the analysis for this rule, DOE estimated monetary benefits likely to result from the reduced emissions of CO
Table V.21 presents the global value of the CO
As discussed in section IV.L.2, DOE estimated monetary benefits likely to result from the reduced emissions of methane and N
DOE is well aware that scientific and economic knowledge about the contribution of CO
DOE also estimated the monetary value of the economic benefits associated with NO
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.
Table V.25 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced GHG and NO
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 CO
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,
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.
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.
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 CO
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.
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 CO
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 CO
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.
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 CO
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 CO
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 $42.0 million. This corresponds to a net loss of INPV of 13.5-percent and 10.2-percent, respectively.
After considering the analysis and weighing the benefits and burdens, the Secretary has concluded that at TSL 2 for compressors, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers. Accordingly, the Secretary has concluded that TSL 2 would offer the maximum improvement in efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy.
Therefore, based on the above considerations, DOE adopts the energy conservation standards for compressors at TSL 2. The new energy conservation standards for compressors, which are expressed as package isentropic efficiency, are shown in Table V.28.
The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2015$) 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 NO
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),
In the energy conservation standards NOPR, DOE proposed to adopt reporting requirements in a new § 429.63(b) within subpart B
• 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,
As a result, the total of data required to be included in the certification reports is now as follows:
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,
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.
The Regulatory Flexibility Act (5 U.S.C. 601,
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
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,
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;
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,
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.
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
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 (
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.
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
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.
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.
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
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.
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.
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
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.
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.
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.
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.
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.
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:
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).
The Secretary of Energy has approved publication of this final rule.
Confidential business information, Energy conservation, Household appliances, Imports, Reporting and recordkeeping requirements.
Administrative practice and procedure, Confidential business
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
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:
42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
(b) * * *
(13) Product specific information listed in §§ 429.14 through 429.63 of this chapter.
(b)
(2) Pursuant to § 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:
(
(
(
(G) The following mechanical characteristics, if applicable:
(
(
(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 (
(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.
42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
(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
(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.
(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 § 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 § 431.344.
(4) The second column (“Minimum Package Isentropic Efficiency”) references the third column (“η
(5) The second and third columns contain the term V
The following letter will not appear in the Code of Federal Regulations.
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.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy
The effective date of this rule is March 10, 2020. Compliance with the amended standards established for commercial packaged boilers in this final rule is required on and after January 10, 2023.
The docket, which includes
The docket web page can be found at
For further information on how to review the docket, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email:
Mr. James Raba, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-5B, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-8654. Email:
Mr. Peter Cochran, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (202) 586-9496. Email:
Title III of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6291,
EPCA requires DOE to conduct an evaluation of its standards for CPB equipment every 6 years and to publish either a notice of determination that such standards do not need to be amended or a notice of proposed rulemaking (NOPR) including new proposed standards. (42 U.S.C. 6313(a)(6)(C)(i)) This final rule satisfies DOE's statutory obligation under 42 U.S.C. 6313(a)(6)(C).
In accordance with these and other statutory requirements discussed in this document, DOE is adopting amended energy conservation standards for commercial packaged boilers. DOE has examined the existing CPB standards and concludes that modifying and expanding the existing 10 CPB equipment classes to 12 equipment classes is warranted. As discussed in detail in section IV.A.3 of this document, DOE opted to: (1) Discontinue the use of draft type as a criterion for equipment classes; and (2) establish separate equipment classes for “very large” commercial packaged boilers. Eliminating the use of draft type as a distinguishing feature for equipment classes consolidated the 4 existing draft-specific equipment classes into 2 non-draft-specific equipment classes, while adding very large commercial packaged boilers as separate equipment classes resulted in an additional 4 equipment classes. As a result, the total number of equipment classes has increased from 10 to 12. DOE is adopting more stringent standards for 8 of the 12 equipment classes in this final rule, which includes all classes except for the newly adopted very large CPB classes. The amended standards, which prescribe minimum thermal efficiencies (E
Table I.2 summarizes DOE's evaluation of the economic impacts of the adopted energy conservation standards on consumers of commercial packaged boilers, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
DOE's analysis of the impacts of the amended standards on consumers is described in section IV.F of this document and in chapter 8 of the final rule technical support document (TSD).
The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the reference year through the end of the analysis period (2016 to 2049). Using a real discount rate of 9.5 percent,
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.
DOE's analyses indicate that the adopted standards would save a significant amount of energy. The lifetime energy savings for commercial packaged boilers purchased in the 30-year period that begins in the anticipated first full year of compliance with amended standards (2020-2049), relative to the case without amended standards (referred to as the “no-new-standards case”), amount to 0.27 quadrillion Btu (quad).
The cumulative net present value (NPV) of total consumer benefits of the amended standards for commercial packaged boilers ranges from $0.558 billion (at a 7-percent discount rate) to $1.977 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased equipment and installation costs for commercial packaged boilers purchased in 2020-2049.
In addition, the adopted CPB standards are projected to yield significant environmental benefits. The energy savings described in this section are estimated to result in cumulative emission reductions (over the same period as for energy savings) of 16 million metric tons (Mt)
The value of the CO
Table I.3 summarizes the national economic benefits and costs expected to result from the adopted standards for commercial packaged boilers.
The benefits and costs of the adopted energy conservation standards, for covered commercial packaged boilers sold in 2020-2049, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of (1) the annualized national economic value of the benefits from consumer operation of the equipment that meets the amended standards (consisting primarily of reduced operating costs minus increases in equipment purchase price and installation costs) and (2) the
The national operating cost savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing the covered equipment. The national operating cost savings is measured for the lifetime of commercial packaged boilers shipped in 2020-2049. The CO
Estimates of annualized benefits and costs of the amended 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 CO
Using a 3-percent discount rate for all benefits and costs and the average SCC series corresponding to a value of $40.6/t in 2015 (in 2015$), the estimated cost of the adopted standards for commercial packaged boilers is $34 million per year in increased equipment costs, while the estimated annual benefits are $144 million in reduced operating costs, $27 million in CO
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.
Based on the analysis culminating in this final rule, DOE finds the benefits of the amended standards to the Nation (energy savings, positive NPV of consumer benefits, consumer LCC savings, and emission reductions) outweigh the burdens (loss of INPV for manufacturers and LCC increases for some consumers). DOE also concludes that the amended standards represent significant additional energy conservation and are technologically feasible and economically justified. DOE further notes that equipment achieving these standard levels is already commercially available for all equipment classes covered by this final rule.
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 commercial packaged boilers.
The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) Standard 90.1 (ASHRAE Standard 90.1), “Energy Standard for Buildings Except Low-Rise Residential Buildings,” sets industry energy efficiency levels for small, large, and very large commercial package air-conditioning and heating equipment, packaged terminal air conditioners, packaged terminal heat pumps, warm air furnaces, packaged boilers, storage water heaters, instantaneous water heaters, and unfired hot water storage tanks (collectively “ASHRAE equipment”). For each type of listed equipment, EPCA directs that if ASHRAE amends Standard 90.1, DOE must adopt amended standards at the new ASHRAE efficiency level, unless DOE determines, supported by clear and convincing evidence, that adoption of a more stringent level would produce significant additional conservation of energy and would be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)
Under EPCA, DOE must also review energy efficiency standards for commercial packaged boilers every six years and either: (1) Issue a notice of determination that the standards do not need to be amended as adoption of a more stringent level is not supported by clear and convincing evidence; or (2) issue a notice of proposed rulemaking including new proposed standards based on certain criteria and procedures in subparagraph (B).
In deciding whether a more-stringent standard is economically justified, under either the provisions of 42 U.S.C. 6313(a)(6)(A) or (C), DOE must determine whether the benefits of the standard exceed its burdens. DOE must make this determination after receiving comments on the proposed standard, and by considering, to the maximum extent practicable, the following seven factors:
(1) The economic impact of the standard on manufacturers and
(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 equipment that are likely to result from the standard;
(3) The total projected amount of energy savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the covered product 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 conservation; and
(7) Other factors the Secretary of Energy considers relevant.
Because ASHRAE did not update its efficiency levels for commercial packaged boilers in any of its most recent updates to ASHRAE Standard 90.1 (
EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents DOE 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. 6313(a)(6)(B)(iii)(I)) Furthermore, DOE 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 of 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 at the time of the Secretary's finding. (42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa))
Further, EPCA, as codified, establishes a rebuttable presumption that an energy conservation standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product that complies with the standard will be less than three times the value of the energy (and, as applicable, water) savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) However, while this rebuttable presumption analysis applies to most commercial and industrial equipment (42 U.S.C. 6316(a)), it is not a required analysis for ASHRAE equipment, including commercial packaged boilers (42 U.S.C. 6316(b)(1)). Nonetheless, DOE considered the criteria for rebuttable presumption as part of its economic justification analysis.
After carefully reviewing all CPB equipment classes, DOE has concluded that amended energy conservation standards for 8 of the 12 CPB equipment classes adopted in this final rule (
For the remaining 4 equipment classes, (
Prior to this final rule, DOE last amended its energy conservation standards for commercial packaged boilers through a final rule published in the
DOE is conducting this rulemaking pursuant to 42 U.S.C. 6313(a)(6)(C), which requires that every 6 years, DOE must publish either: (1) A notice of the determination that standards for the equipment do not need to be amended, or (2) a NOPR including proposed energy conservation standards. As noted above, DOE's last final rule for commercial packaged boilers was published on July 22, 2009. DOE is issuing this final rule pursuant to its statutory obligation under 42 U.S.C. 6313(a)(6)(C).
In initiating this rulemaking, DOE prepared a Framework document, “Energy Conservation Standards Rulemaking Framework Document for Commercial Packaged Boilers,” which describes the procedural and analytical approaches DOE anticipated using to evaluate energy conservation standards for commercial packaged boilers. DOE published a notice that announced both the availability of the Framework document and a public meeting to discuss the proposed analytical framework for the rulemaking. That notice also invited written comments from the public. 78 FR 54197 (Sept. 3, 2013). The Framework document is available at:
DOE held a public meeting on October 1, 2013, at which it described the various analyses DOE would conduct as part of the rulemaking, such as the engineering analysis, the life-cycle cost (LCC) and payback period (PBP) analyses, and the national impact analysis (NIA). Representatives of manufacturers, trade associations, environmental and energy efficiency advocates, and other interested parties attended the meeting. The participants discussed the following major topics, among others: (1) The rulemaking scope (2) test procedures for commercial packaged boilers; and (3) various issues related to the planned analyses of amended energy conservation standards. Interested parties also provided comments on the Framework document, which DOE considered and responded to in chapter 2 of the preliminary analysis TSD.
On November 20, 2014, DOE published a second notice, “Energy Conservation Standards for Commercial Packaged Boilers: Public Meeting and Availability of the Preliminary Technical Support Document” in the
On December 9, 2014, DOE held a public meeting, at which it described the methodology and preliminary results of the various analyses it conducted as part of the rulemaking, such as the engineering analysis, the LCC and PBP analyses, and the NIA. Representatives of manufacturers, trade associations, environmental and energy efficiency advocates, and other interested parties attended the meeting. The public meeting provided an opportunity for the attendees to provide feedback and comments that would help improve DOE's analysis and results for the NOPR stage. In addition, DOE also received several written comments from interested parties and stakeholders, in response to the preliminary analysis TSD.
On March 24, 2016, DOE subsequently published a notice of proposed rulemaking (NOPR) and notice of public meeting in the
On April 21, 2016, DOE held a public meeting where it presented and discussed the analyses conducted as part of this rulemaking (
In parallel to the energy conservation standards rulemaking, DOE published a notice of proposed determination on August 13, 2013 (August 2013 NOPD), which initiated a coverage determination to explicitly clarify DOE's statutory authority under EPCA to cover natural draft commercial packaged boilers. DOE initiated this coverage determination because the existing definition of “packaged boiler” could have allowed for differing interpretations as to whether natural draft commercial packaged boilers are covered equipment. 78 FR 49202. In the August 2013 NOPD, DOE proposed a definition for natural draft commercial packaged boilers that would clarify its statutory authority to cover such equipment. DOE sought public comments in response to its proposed determination and definition for natural draft commercial packaged boilers, and received several written comments from interested parties. In addition, DOE also received several comments in response to the preliminary analysis TSD that are relevant to the issue of coverage determination of natural draft commercial packaged boilers. After carefully reviewing all of the comments received on the issue of coverage determination of natural draft commercial packaged boilers and determining that the comments indicated a common and long-standing understanding from interested parties that natural draft commercial packaged boilers are and have been covered equipment under part A-1 of Title III of EPCA, DOE decided to withdraw the August 2013 NOPD on August 25, 2015 (August 2015 withdrawal notice). 80 FR 51487.
DOE also recently completed a separate test procedure rulemaking to consider an amended test procedure for commercial packaged boilers. On February 20, 2014, DOE initiated the test procedure rulemaking by publishing a request for information (RFI) in the
In 42 U.S.C. 6313(a), EPCA prescribes a number of compliance dates for amended standards for commercial packaged boilers. These compliance dates vary depending on the specific statutory authority under which DOE is conducting its review (
As discussed in section II.A of this document, EPCA requires that at least once every 6 years, DOE must review standards for commercial packaged boilers and publish either a notice of determination that standards for this type of equipment do not need to be amended or a NOPR containing amended standards. (42 U.S.C. 6313(a)(6)(C)(i)) EPCA requires that an amended standard prescribed under 42 U.S.C. 6313(a)(6)(C) must apply to products manufactured after the date that is the later of: (1) The date 3 years after publication of the final rule establishing a new standard or (2) the date 6 years after the effective date of the current standard for a covered product. (42 U.S.C. 6313(a)(6)(C)(iv)) The current standards for commercial packaged boilers went into effect in 2012. Thus, the date 3 years after publication of this final rule is later than the date 6 years after 2012, the effective date of the current standard. As a result, compliance with any amended energy conservation standards promulgated in this final rule is required starting from the dates specified in paragraph (b) of 10 CFR 431.87.
DOE's current test procedure for commercial packaged boilers is found at 10 CFR 431.86.
As stated previously, on December 9, 2016, DOE published a final rule amending the CPB test procedure. 81 FR 89276. The 2016 CPB TP final rule adopted specific sections of American National Standards Institute (ANSI)/AHRI Standard 1500, “Standard for Performance Rating of Commercial Space Heating Boilers,” (ANSI/AHRI Standard 1500-2015) as the basis of the test procedure for commercial packaged boilers, replacing the previous industry test standard BTS-2000. In addition, the 2016 CPB TP final rule incorporates the following amendments to the DOE test procedure: (1) Clarifies the coverage for field-constructed commercial packaged boilers and the applicability of DOE's test procedure and standards for this category of commercial packaged boilers, (2) provides an optional field test for commercial packaged boilers with rated input greater than 5,000,000 Btu/h, (3) provides a conversion method to calculate thermal efficiency based on combustion efficiency testing for steam commercial packaged boilers with rated input greater than 5,000,000 Btu/h, (4) modifies the inlet water temperature requirements during tests of hot water commercial packaged boilers, (5) establishes limits on the ambient temperature and relative humidity conditions during testing, (6) modifies setup and instrumentation requirements to remove ambiguity, and (7) standardizes terminology and provisions for “fuel input rate” and “rated input.”
In response to the March 2016 NOPR, DOE received several comments that are specifically related to the CPB test procedure. Comments related to the technical aspects of the test procedure development were considered and addressed in the test procedure final rule.
Several stakeholders expressed legal, procedural, and practical concerns regarding the timing of the test procedure and energy conservation standards revisions for commercial packaged boilers, and requested that DOE delay any further work on the rulemakings to amend efficiency standards until after the finalization of the test procedure. (Bradford White, No. 68 at p. 1; Gas Associations, No. 69 at p. 2; BHI, No. 71 at p. 5; Lochinvar, No. 70 at p. 7; AHRI, No. 76 at pp. 2-3; ABMA, No. 64 at p. 1, Crown, Public Meeting Transcript, No. 61 at p. 13; AHRI, Public Meeting Transcript, No. 61, at p. 14);
AHRI argued that the non-final status of the test procedure inhibits stakeholders' fair evaluation of the proposed standards and stressed the importance of having a known efficiency test procedure. AHRI pointed out that DOE is required to provide stakeholders the opportunity to submit meaningful comments (42 U.S.C. 6306(a), 42 U.S.C. 6314(b)), and opined that the joint proposal of test procedures and standards eliminates that opportunity. (AHRI, No. 76 at pp. 2-3)
AHRI further commented that having simultaneous rulemakings creates an unfair burden on stakeholders. (AHRI, Public Meeting Transcript, No. 61 at p. 80) Similarly, Raypak, Bradford White, and Crown commented that the ongoing changes to the test procedure do not allow manufacturers the opportunity to properly evaluate the effects of the proposed standards. Bradford White noted that their resources are focused on proposed test procedure changes. (Raypak, No. 72 at p. 1; Bradford White, No. 68 at p. 1; Crown, Public Meeting Transcript, No. 61 at p. 13; Bradford White, No. 68 at p. 12) Several stakeholders also contended that the timing of the test procedure and standards rulemaking violated DOE's own procedural policies or “the process rule.” (Gas Associations, No. 69 at p. 2; Bradford White, No. 68 at p. 12; Weil-McLain, No. 67 at p. 4; Spire, No. 73 at pp. 5-7; AHRI, No. 76 at p. 3; Lochinvar, No. 71 at p. 7) AHRI highlighted that the process rule is not merely a guideline, noting it was codified in the Code of Federal Regulations. AHRI contended that DOE must abide by its own regulations. (AHRI, No. 76 at p. 3)
DOE provided a detailed response on this issue in the 2016 CPB TP final rule. DOE re-iterates in this final rule that the amendments to the Federal test procedure includes updates to the referenced industry test standard (ANSI/AHRI Standard 1500-2015) which was developed by a consensus-based AHRI process. In May 2015, AHRI petitioned DOE to replace its references to BTS-2000 with ANSI/AHRI Standard 1500-2015. In addition, DOE received insightful and detailed comments on the proposed amendments to the test procedure in response to the 2016 CPB TP NOPR. Considering these developments leading up to the 2016 CPB TP final rule, the industry was involved at all stages of the test procedure rulemaking, and DOE's amendments are largely in keeping with the test methodology found in consensus-based industry standard ANSI/AHRI Standard 1500-2015. Any deviations in the 2016 CPB TP final rule from ANSI/AHRI 1500-2015 are a result of DOE's efforts to make the test procedure better reflect the energy efficiency during a representative average use cycle, as required by EPCA. (42 U.S.C. 6314(a)(2)). In the 2016 CPB TP final rule, as discussed in section III.B.3, DOE concluded that the amendments to the test procedure that were ultimately adopted would mitigate
Furthermore, in the energy conservation standards rulemaking, DOE granted a 30-day extension of the comment period following the publication of the March 2016 NOPR to ensure that stakeholders had sufficient time to comment on the analyses and results. Therefore, DOE believes that stakeholders have had adequate time to gauge the effect of the standards rulemaking to enable them to provide meaningful comments on its analysis and results.
Regarding the commenters' assertions that DOE has violated the process rule, DOE notes that the codified procedures at 10 CFR part 430, subpart C, appendix A (7)(c), Appendix A establish 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. In the case of commercial packaged boilers, DOE was petitioned by the industry to adopt the industry test standard AHRI Standard 1500-2015, while the energy conservation standards rulemaking was in process. The energy conservation standards rulemaking was initiated in August 2013 with the publication of the Framework document, as discussed in section II.B.2 of this final rule, and AHRI petitioned DOE to amend the test procedure in May 2015, as noted above. Therefore, per AHRI's request, DOE initiated a test procedure rulemaking concurrent with the standards rulemaking. As noted above and discussed in section III.B.3, the changes to the test procedure that were ultimately adopted in the 2016 CPB TP final rule mitigated stakeholders' concerns about impacts to efficiency ratings. Accordingly, DOE has concluded that there is no basis to delay the final rule adopting standards for commercial packaged boilers.
Several commenters indicated that they expected that the proposed changes to the test procedure would result in changes to the rated efficiency. Lochinvar, BHI, and AHRI questioned DOE's tentative determination that the test procedure changes would not impact efficiency ratings. (Lochinvar, No. 70 at p. 7; BHI, No. 71 at p. 3; AHRI No. 76 at p. 4)
Lochinvar noted that DOE's own test summary shows that the TP changes would reduce the rated efficiency of some boilers. Lochinvar also stated that anti-backsliding provisions would prevent DOE from making any changes to the standard after the fact if TP changes negatively impact ratings. (Lochinvar, No. 70 at p. 7) AHRI noted that DOE's conclusion that the efficiency ratings would not be impacted by the proposed test procedure changes is based on limited testing data, and stakeholders did not have sufficient time to provide meaningful comments. (AHRI No. 76 at p. 4) BHI added that that the rating of some equipment could be significantly impacted, given that the test procedure is significantly different. (BHI, No. 71 at pp. 3, 4-5) They suggested that the efficiency of 85-percent E
Weil-McLain and SoCalGas commented that the efficiency ratings of non-condensing boilers will drop due to the new test procedure and that the proposed increases in the minimum standard would combine to significantly reduce the types of feasible non-condensing equipment. (Weil-McLain, No. 67 at p. 2; SoCalGas, No. 77 at p. 2) AHRI commented that the analysis must be based on finalized test procedures in order to realistically represent the impacts of amended standards (including energy savings, cost to consumers and manufacturers). (AHRI, No. 76 at pp. 2-3) SoCal suggested that the benefits of TSL 1 may actually be closer to those calculated for TSL 2, given the proposed water temperature changes in the test procedure. (SoCalGas, No. 77 at p. 2)
In the 2016 CPB TP NOPR, DOE tentatively determined that the proposed test procedure amendments would not result in an overall measureable impact on equipment's measured efficiency. 81 FR 14642, 12878 (March 17, 2016). However, as discussed above, DOE received comments from stakeholders in response to both the March 2016 NOPR and the 2016 CPB TP NOPR suggesting that several proposals included in the 2016 CPB TP NOPR would impact efficiency ratings. In the 2016 CPB TP final rule, DOE addressed stakeholders' concerns and ultimately revised the proposals that could have resulted in changes to the efficiency ratings in order to mitigate impacts on the efficiency ratings.
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 equipment that is the subject of the rulemaking. As the first step in such an analysis, DOE conducts a market and technology assessment that 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 equipment 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 equipment 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, DOE notes that these screening criteria do not directly address the proprietary status of design options. DOE only considers efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level (
When DOE proposes to adopt an amended standard for a type or class of covered equipment, it determines the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such equipment. Accordingly, in the engineering analysis of this final rule, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for commercial packaged boilers, using the design parameters for the most efficient equipment currently available on the market. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.4 of this document and in chapter 5 of the final rule TSD.
For each trial standard level (TSL), DOE projected energy savings from the application of the TSL to commercial packaged boilers purchased in the 30-year period that begins in the year of compliance with amended standards (2020-2049).
DOE uses its NIA spreadsheet models to estimate energy savings from potential amended standards. The NIA spreadsheet model (described in section IV.H of this document) calculates savings in site energy, which is the energy directly consumed by equipment at the locations where they are used. For electricity, DOE reports national energy savings (NES) 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 (
To amend standards for commercial packaged boilers, DOE must determine that the standards would result in “significant” additional energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)(i)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals for the District of Columbia Circuit, in
EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.
EPCA requires DOE to consider the economic impact of a standard on manufacturers and the consumers of the products subject to the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(I)) In determining the impacts of a potential amended standard 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 industry-wide impacts analyzed include: (1) 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 NPV 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.
EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered equipment in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered equipment that are likely to result from an amended standard. (42 U.S.C. 6313(a)(6)(B)(ii)(II)) DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of the equipment (including installation cost and sales tax) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the equipment. The LCC analysis requires a variety of inputs, such as equipment prices, equipment energy consumption, energy prices, maintenance and repair costs, equipment lifetime, and discount rates appropriate for consumers. To account for uncertainty and variability in specific inputs, such as equipment lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that consumers will purchase the covered equipment in the first year of compliance with amended standards.
The PBP is the estimated amount of time (in years) it takes consumers to
The LCC savings for the considered efficiency levels are calculated relative to a no-new-standards-case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of consumers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC and PBP analysis is discussed in further detail in section IV.F of this document.
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. 6313(a)(6)(B)(ii)(III)) As discussed in section III.D.1 and section IV.E of this document and chapter 10 of the final rule TSD, DOE uses spreadsheet models to project national energy savings.
In determining whether amending a standard is economically justified, DOE evaluates any lessening of the utilities or performance of the considered equipment. (42 U.S.C. 6313(a)(6)(B)(ii)(IV)) Based on data available to DOE, the standards adopted in this document do not reduce the utility or performance of the equipment under consideration in this rulemaking. See section IV.A.3 and section IV.B for DOE's detailed determinations that adopted standards in this final rule do not reduce utility or performance of CBP equipment covered under this rulemaking.
EPCA directs DOE to consider the impact of any lessening of competition, as determined in writing by the Attorney General of the United States that is likely to result from a standard. (42 U.S.C. 6313(a)(6)(B)(ii)(V)) DOE transmitted a copy of its proposed rule to the Attorney General with a request that the Department of Justice (DOJ) provide its determination on this issue. On October 19, 2015, DOJ provided its determination to DOE that the amended standards for commercial packaged boilers are unlikely to have a significant adverse impact on competition. DOE has included this determination from DOJ at the end of this rule.
In considering new or amended energy conservation standards, EPCA also directs DOE to consider the need for the national energy conservation. (42 U.S.C. 6313(a)(6)(B)(ii)(VI)) The adopted standards are likely to improve 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 standards may affect these emissions, as discussed in section IV.K of this document. DOE reports the emissions impacts from each TSL it considered in section V.B.6 of this document. DOE also estimates the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this document.
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. 6313(a)(6)(B)(ii)(VII)) To the extent interested parties submit any relevant information regarding economic justification that does not fit into the other categories described above, DOE could consider such information under “other factors.”
EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of the equipment that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effects that amended energy conservation standards would have on the PBP for consumers. These analyses include, but are not limited to, the 3-year PBP 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. 6313(a)(6)(B)(ii) and (C)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1.c of this document.
In response to the efficiency levels proposed in the March 2016 NOPR (NOPR TSL 2), DOE received numerous comments on the appropriate levels for selection as the Federal standards.
The Joint Utilities expressed their support for the proposed standard levels (
BHI, Weil-McLain, and Lochinvar opposed the proposed standard levels at NOPR TSL 2, and Lochinvar encouraged DOE to make no change to the minimum efficiency standard. (BHI, No. 71 at p. 1; Weil-McLain, No. 67 at pp. 4-5; Lochinvar, No. 70 at p. 8)
BHI expressed concern that commercial packaged boilers meeting the efficiency levels proposed in the March 2016 NOPR for small gas-fired hot water (SGHW) and large gas-fired hot water (LGHW) equipment classes (85-percent E
Raypak suggested that DOE selected the proposed efficiency levels because higher efficiency standards exist in Europe. Raypak noted that the regulations governing boiler maintenance in Europe are substantially different, and that some countries require annual boiler inspections and service, which are not required in the United States. Raypak argued that DOE
Weil-McLain expressed concern that the proposed levels included in the NOPR TSL 2 would significantly reduce the non-condensing options available to consumers. Weil-McLain also added that DOE would erase a future increase in efficiency that was to take effect in 2022 pursuant to 10 CFR 431.87(c), noting that manufacturers' ability to make long-term development plans are impacted when efficiency requirements are obsoleted before they have even gone into effect. (Weil-McLain, No. 67 at pp. 2-3) Both Weil-McLain and BHI suggested that the proposed levels could reduce their ability to sell non-condensing commercial packaged boilers, and therefore would create a significant burden on manufacturers. (Weil-McLain, No. 67 at pp. 4-5; BHI, No. 71 at p. 1) BHI further commented that adopting NOPR TSL 2 would potentially reduce employment at their facilities. (BHI, No. 71 at p. 1) The Gas Associations urged DOE to revise the technical analysis and economic justification for the 85-percent level proposed in the March 2016 NOPR. The Gas Associations expressed concern about issues with possible condensation in the venting system and interior heat exchanger leading to premature failure and believe that the current standards are sufficient and justified. (Gas Associations, No. 69 at p. 2)
SoCalGas and AHRI recommended that DOE adopt NOPR TSL 1. (SoCalGas, No. 77 at p. 4; AHRI, No. 76 at pp. 27, 44) SoCalGas argued that the changes to test procedure may impact efficiency ratings, and noted that if a 1 percent decrease in ratings were to occur as a result of the test procedure changes, the result would be effectively requiring an 86-percent E
ABMA commented that the proposed levels included in NOPR TSL 2 for the LGHW and LOHW equipment classes (
Bradford White and Raypak recommended that DOE adopt a minimum standard of 82-percent E
Bradford White stated that the proposed level of 85-percent E
In view of the preceding stakeholder comments about TSLs, DOE notes that DOE is required to set a standard that achieves significant additional energy savings that is determined to be technologically feasible and economically justified. In making such a determination, DOE must consider, to the maximum extent practicable, the benefits and burdens based on the seven criteria described in EPCA (see 42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)). DOE's weighing of the benefits and burdens based on the final rule analysis and rationale for the TSL selection is discussed in section V and in detail in appendix 10C of the final rule TSD. DOE notes that much of the commentary regarding the selection of TSL levels for the standards is based on more detailed comments regarding specific portions of the final rule analysis. These comments related to specific analyses are addressed within the specific analysis section to which they pertain.
DOE also disagrees with Raypak's comments that the proposed standards were based on the standards applicable in Europe. Although DOE researches international energy efficiency regulations in the context of its market assessment, the standard levels that were proposed in the March 2016 NOPR, and those that are adopted in this final rule are not determined based on international regulations. Rather, DOE selects standard levels by weighing the benefits and burdens of each TSL to ensure that the standards save a significant additional amount of energy and are technologically feasible and economically justified, as required by EPCA. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)(i))
In addition, Bradford White questioned the selection of TSL 2 due the fact that it does not meet the rebuttable presumption payback of three years, and therefore would place a significant burden on consumers. (Bradford White, No. 68 at p. 4)
DOE notes that the 3-year payback period is contemplated under the rebuttable presumption test. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation and environment, and the results of this economic analysis are what serve as the basis for DOE to definitively evaluate the economic justification for a standard level. As detailed in section IV and section V of DOE's full economic analysis for this final rule document, DOE concludes based on clear and convincing evidence that the benefits of amended standards at TSL 2 outweigh the burdens, and the standards at TSL 2 are economically justified.
The Joint Advocates urged DOE to adopt NOPR TSL 3, noting that TSL 3 was found to be cost effective for purchasers and would more than double the national energy savings achieved by NOPR TSL 2. (Joint Advocates, No. 74 at p. 1) ASAP also suggested DOE should consider adopting NOPR TSL 3. (ASAP, Public Meeting Transcript, No. 61 at pp. 14-15) Weil-McLain, ABMA, and AHRI opposed the adoption of NOPR TSL 3. (Weil-McLain, No. 67 at p. 9; ABMA, No. 64 at p. 3; AHRI, No. 76 at pp. 1, 27, 44) Bradford White expressed the belief that the estimated gains of the SGHW equipment class at NOPR TSL 3 (
DOE considered the comments received in response to the consideration for TSL 3 as proposed in the March 2016 NOPR. However, based on DOE's updated analyses and the results presented in this final rule (see section V), TSL 3 is no longer economically feasible. Therefore, for the reasons discussed in section V.C.1, DOE has rejected TSL 3.
SoCalGas expressed concerns that the results of a SoCalGas modified LCC analysis shows a potentially significant burden to California and SoCalGas consumers, in particular regarding the LGHW equipment class, but acknowledged limitations to their analysis and filtering of the CBECS dataset. (SoCalGas, No. 77 at p. 4)
Nussbaum requests clarity on whether DOE's regulations are intended to remove enforcement from existing authorities, stating that California Energy Commission's interpretation is that DOE has taken over all enforcement related to efficiency. He further states that without state and local enforcement of efficiency, it will be sacrificed in order to achieve low NO
In response, DOE notes that while the SoCalGas analysis shows a small decline in the cost effectiveness (
AHRI pointed out that EPCA's requirements in 42 U.S.C. 6295(o)(2) for DOE to achieve the maximum improvement in energy efficiency in its energy conservation standards rulemakings do not apply to commercial packaged boilers. Therefore, AHRI suggested that DOE's entire analysis is predicated on a fundamental flaw because it reflects an analysis that blatantly disregards the crucial flexibility that DOE has to more fully consider negative impacts on industry, particularly on small business and job loss. (AHRI, No. 76 at p. 6)
DOE agrees that EPCA does not require DOE to select the standard level that provides the maximum improvement in energy savings for commercial packaged boilers. However, as discussed in section II.A, an amended CPB standard must be designed to achieve significant additional energy conservation and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)(i)) It is in DOE's discretion to adopt amended standards at any level that meet these legal criteria. DOE does not base its rulemaking solely on achieving maximum energy efficiency improvements as claimed by the stakeholders. In making the determination of economic justification of an amended standard, DOE considers, to the maximum extent practicable, the benefits and burdens of an amended standard based on the seven criteria described in EPCA, which include the economic impact of the standard on manufacturers. (See 42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII).) In considering both the standards proposed in the March 2016 NOPR and those being adopted in this final rule, DOE fully addressed EPCA's requirements in 42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII), including economic impact of the amended standards on manufacturers and small businesses. A discussion of DOE's weighting of the benefits and burdens based on these factors is contained in section V of this final rule. With regard to the specific comments on impact on manufacturers and employment impacts, DOE has considered these impacts, and they are discussed in V.B of this final rule. The differential impacts for small business manufacturers are discussed in section VI.B.
AHRI and Spire commented that DOE's CPB ECS rulemaking does not meet EPCA's requirement for clear and convincing evidence prescribed in 42 U.S.C. 6313 (a)(6)(A)(ii)(II), because DOE failed to provide reasonable basis for its analyses, such as its unsupported assumptions for venting costs and the fundamental energy use of commercial packaged boilers. AHRI further stated that this burden of proof is met only if evidence “instantly tilted the evidentiary scales” when viewed in light of alternative information.
DOE notes that it is adopting these standards pursuant to 42 U.S.C. 6313(a)(6)(C)(i)(II), which requires DOE to issue new standards based on “the criteria and procedures established under subparagraph (B).” In relevant part, subparagraph (B) specifies that: (1) In making a determination of economic justification, DOE must consider, to the maximum extent practicable, the benefits and burdens of an amended standard based on the seven criteria described in EPCA; (2) DOE may not prescribe any standard that increases the energy use or decreases the energy efficiency of a covered product; and (3) DOE may not prescribe any standard that interested persons have established by a preponderance of evidence is likely to result in the unavailability in the United States of any 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. 6313(a)(6)(B)(ii)-(iii))
Importantly, subparagraph (B) does not mention clear and convincing evidence. What is more, multiple features of the statutory text indicate that a rule establishing standards under subparagraph (C)(i)(II) need not be based on clear and convincing evidence.
In addition, subsection (a) includes multiple cross-references to various paragraphs, subparagraphs, clauses, and subclauses. See,
DOE also notes that clause (C)(i) contains two cross-references. Subclause (I), addressing one decision DOE might make, mandates that it be based on “the criteria established under subparagraph (A).” Subclause (II), addressing the decision DOE is making in this rulemaking, refers to “the criteria and procedures established under subparagraph (B).” By interpreting the latter phrase not to encompass “clear and convincing evidence,” DOE appropriately gives significance to this difference in language. Evidently “the criteria established under subparagraph (A)” are different from the “the criteria established under subparagraph (B)”; were they the same criteria, there would have been no need to use different cross-references. “Clear and convincing evidence” is in (A), not (B).To the extent there is ambiguity in paragraph (a)(6) about whether DOE must have clear and convincing evidence to establish an amended standard under subparagraph (C), DOE believes its approach is consistent with the purposes of subparagraph (C). That is to say, the intent of paragraph (6) is to include ASHRAE in the standards-developing process. ASHRAE maintains standards that achieve energy conservation with respect to the products to which paragraph (6) applies, and ASHRAE is expected to update those standards as technology and markets evolve over time. When ASHRAE has acted in a timely fashion, DOE is to reflect ASHRAE's standards in its own standards, unless it has clear and convincing evidence justifying more stringent standards (on the terms of subclause (A)(i)(II)). However, the statute directs DOE to review its standards every six years—in case ASHRAE has not acted. This six-year review encourages ASHRAE to keep its standards up to date, because if it has recently amended its standards (and triggered DOE to follow), DOE will not need to engage in its independent standards revision. But, if ASHRAE has not revisited its standards for some while, DOE's six-year review provides an occasion on which DOE might adopt more stringent standards, without being tied to the ASHRAE standards. By not imposing the “clear and convincing” threshold for such a rulemaking, the statute encourages ASHRAE to continually update its standards. In short, a common-sense approach to the purposes of subparagraph (C) aligns with the above careful textual reading.
DOE fully recognizes that whenever it must have “clear and convincing evidence” pursuant to subclause (A)(i)(II), it needs a higher degree of confidence in its conclusions than would be required under the “preponderance” standard that ordinarily applies in an agency rulemaking. In such matters, the administrative record, taken as a whole, must justify DOE in a strong conviction that its conclusions are highly likely to be correct.
However, some commenters appear to think that the “clear and convincing” threshold would preclude DOE from using its expert judgment to make predictions. That would not be the case in litigation; a “clear and convincing evidence” standard of proof does not restrict the type, quality, or nature of evidence, including expert opinions that can be used. Moreover, a standards-setting rulemaking is not a litigation, and the differences warrant some differences in how the “clear and convincing evidence” threshold operates. DOE both develops the record and reviews it to make findings. Also, as an agency tasked with setting policy, DOE is ordinarily expected to use its predictive judgment. The text of paragraph (6) is consistent with that notion. Subparagraph (B), which describes various factors that DOE is to consider in making a subclause (A)(i)(II) decision for which it would need clear and convincing evidence, repeatedly calls for predictive judgments. DOE is to forecast the likely energy savings of a standard, the economic costs and benefits of the standard, and other future effects. By their nature, these assessments cannot be instantly determined to be correct. Rather, DOE believes “clear and convincing evidence” would mean that DOE must be strongly convinced that its forecasts are highly likely to be reasonable forecasts given current conditions and information.
In sum, for purposes of setting standards under paragraph (a)(6), “clear and convincing evidence” can include the same sorts of evidence and analysis that DOE would use in any other standards rulemaking. But DOE will conclude it has “clear and convincing evidence” only when it is strongly convinced that it is highly likely to have reached appropriate findings. With respect to the findings discussed in this rulemaking, DOE does have that strong conviction, well placed given the record as a whole.
Spire further commented that the NOPR was issued without remotely sufficient information and analysis to justify adoption of the standards proposed and that key information and analysis underlying it has yet to be disclosed so that it can be exposed to potential refutation through comment, and as such the NOPR is inadequate to satisfy notice and comment requirements, and should therefore be withdrawn.
Under the notice-and-comment or informal rulemaking provisions of the Administrative Procedure Act, DOE must publish in the
This section addresses the analyses DOE has performed for this rulemaking with regard to commercial packaged boilers. Separate subsections address each component of DOE's analyses.
DOE used three analytical tools to estimate the impact of the standards. The first tool is a spreadsheet that calculates the LCC savings and PBP of potential amended energy conservation standards. See section IV.F and chapter 8 of final rule TSD for details of the LCC and PBP spreadsheet tool. The second tool is a Microsoft Excel spreadsheet that calculates national energy savings and net present value resulting from potential amended energy conservation standards. More details of this spreadsheet tool can be found in section IV.H and chapter 10 of the final rule TSD. The third spreadsheet tool, the Government Regulatory Impact Model (GRIM), helps DOE to assess manufacturer impacts of potential standards. See section IV.J and chapter
Additionally, DOE used output from the 2016 version of the Energy Information Administration's (EIA's)
For the market and technology assessment, DOE develops information that provides an overall snapshot of the market for the equipment considered, including the nature of the equipment, market characteristics, industry structure, and technologies that improve energy efficiency. DOE divides the market and technology assessment broadly into two categories: (1) Market assessment and (2) technology assessment. The purpose of the market assessment is to develop a qualitative and quantitative characterization of the CPB industry and market structure, based on information that is publicly available as well as data submitted by manufacturers and other interested parties. Issues addressed include CPB characteristics (gathered from market databases and literature), market share and equipment classes; existing regulatory and non-regulatory efficiency improvement initiatives; models currently available and their distribution with respect to efficiency and rated input in each equipment class. The purpose of the technology assessment is to investigate technologies currently used in commercial packaged boilers, and identify those that will improve the energy efficiency of commercial packaged boilers. The technology assessment results in a preliminary list of technology options that can improve the thermal and/or combustion efficiency of commercial packaged boilers. Chapter 3 of the final rule TSD contains all the information related to the market and technology assessment. The chapter also provides additional details on the methodology used, information gathered, and results. DOE typically uses the information gathered in this chapter in the various downstream analyses such as engineering analysis, shipment analysis, and manufacturer impact analyses.
For this final rule, DOE explored the market to identify manufacturers of commercial packaged boilers. As per the definition set forth in 10 CFR 431.82, a manufacturer of a commercial packaged boiler is any entity that: (1) Manufactures, produces, assembles, or imports a commercial packaged boiler in its entirety; (2) manufactures, produces, assembles, or imports a commercial packaged boiler in part, and specifies or approves the boiler's components, including burners or other components produced by others, as for example by specifying such components in a catalogue by make and model number or parts number; or (3) is any vendor or installer who sells a commercial packaged boiler that consists of a combination of components that is not specified or approved by a person described in the two previous parts of this definition.
Through extensive search of publicly available information, including DOE's Compliance Certification Database
In the NOPR analysis, DOE relied on equipment listing data from AHRI and other public sources and requested comment on any manufacturers of CPB equipment that were not represented in this analysis. Bradford White recommended that DOE review the paid research reports, included in research from BRG Building Solutions to identify manufacturers that are neither members of AHRI nor ABMA.
For the final rule, DOE's market analysis is primarily based on the Compliance Certification Database. The Compliance Certification Database houses certification reports and compliance statements submitted by manufacturers for covered equipment and equipment subject to Federal conservation standards. Manufacturers of all covered equipment are required to submit a certification report before a basic model is distributed in commerce. The Compliance Certification Database includes only certification records of current basic models that have been submitted to DOE in the past year. Thus, this database should provide the most comprehensive list of manufacturers actively selling commercial packaged boilers in the United States. However, DOE also surveyed the market to identify manufacturers that are not included in the Compliance Certification Database, but that appear to be actively selling CPB models. DOE reviewed AHRI and ABMA member manufacturers, and also searched publicly available information to identify several manufacturers who are neither members of AHRI nor ABMA. Through these information sources, DOE concludes it has generated a complete picture of the CPB market and manufacturers, and, thus, did not require the report suggested by Bradford White. The models offered by all manufacturers that DOE identified in this rulemaking characterize the market for commercial packaged boilers in the market and technology assessment (chapter 3 of the final rule TSD).
EPCA lists “packaged boilers” as a type of covered equipment. (42 U.S.C. 6311(1)) EPCA defines the term “packaged boiler” as “a boiler that is shipped complete with heating equipment, mechanical draft equipment, and automatic controls; usually shipped in one or more sections.” (42 U.S.C. 6311(11)(B))
In the 2016 CPB TP final rule, DOE consolidated various definitions related to commercial packaged boilers by revising its definitions for “packaged boiler” and “commercial packaged boiler” at 10 CFR 431.82, and removing the definitions for “packaged low pressure boiler” and “packaged high pressure boiler.” The definition for “packaged boiler” adopted by DOE in the 2016 CPB TP final rule is essentially the same as EPCA's definition, but clarifies that if the boiler is shipped in more than one section, the sections may be produced by more than one manufacturer, and may be originated or shipped at different times and from more than one location. DOE updated the definition of a “commercial packaged boiler” to define the term as a packaged boiler that meets all of the following criteria: (1) Has a rated input of 300,000 Btu/h or greater; (2) is distributed in commerce for space conditioning and/or service water heating in buildings but does not meet the definition of “hot water supply boiler”; (3) does not meet the definition of “field-constructed”; and (4) is designed to, or is operated at a steam pressure of at or below 15 psig or a water pressure at or below 160 psig and water temperature of 250 °F. 81 FR 89276, 89279-89280 (December 9, 2016). DOE also adopted a related definition for “field-constructed.”
As noted above, the definition of “packaged boiler” refers to a boiler that is shipped complete with heating
When evaluating and establishing energy conservation standards, DOE typically divides covered equipment into equipment classes based on the type of energy used, capacity, or performance-related features that justify a different standard. In making a determination whether a performance-related feature justifies a different standard, DOE considers such factors as the utility to the consumer of the feature and other factors DOE determines are appropriate. The current regulations for commercial packaged boilers list 10 equipment classes with corresponding energy efficiency standards for each.
The Joint Advocates and Bradford White supported DOE's reconfiguration of the equipment classes to eliminate draft type as a distinguishing feature. (Joint Advocates, No. 74 at p. 2; Bradford White, No. 68 at p. 4) The Joint Advocates added that natural draft boilers provide no distinct performance-related utility. (Joint Advocates, No. 74 at p. 2)
Weil-McLain, Spire, the Gas Associations, and BHI requested that DOE establish separate equipment classes for natural draft and mechanical draft commercial packaged boilers, noting that the ability to utilize natural draft in installations provides consumers with utility. (Weil-McLain, No. 67 at p. 6; BHI, No. 71 at pp. 14-15; Spire, No. 73 at p. 11; Gas Associations, No. 69 at p. 4; Crown, Public Meeting Transcript, No. 61 at p. 159) BHI stated that loss of the ability to use Category I venting (suitable for non-condensing boilers) is a loss in utility because the circumstances of many real world installations offer no practical alternatives to Category I venting. BHI argued that providing heat and hot water are not the only utility functions, features, and performance characteristics of boilers, and that designs that allow proper installation in a variety of cases are a critical aspect of utility so that such equipment can be installed and used safely. In addition, BHI stated that there is a point at which increasing installation costs become large enough to effectively create a “loss of utility,” and this situation in the real world is as likely to “result in the unavailability” of appropriate Category I boilers as a pure design issue. Further, BHI adds that DOE overstated the availability and utility of 85-percent gas-fired hot water boilers, particularly 85-percent atmospheric boilers in its screening analysis. BHI suggests that the adoption of 85-percent gas-fired hot water standard will leave many consumers with no cost effective option for replacement boiler and could lead to safety issues due to problems in venting system. BHI stated that this is a direct violation of the “safe harbor rule.” (BHI, No. 71 at pp. 4, 13-15) Spire also suggested that easy installation to existing natural draft venting systems should qualify as a unique utility of natural draft units and therefore should be preserved under 42 U.S.C. 6313(a)(6)(B)(i)(IV). Spire noted that DOE has recognized this fact in its decision to maintain separate equipment classes for “space-constrained” heat pumps and air conditions. (Spire, No. 72, at pp. 10-12) Raypak commented that DOE should not assume that all boiler installations will be capable of handling new installations at the amended efficiencies proposed in the March 2016 NOPR. They add that half of the commercial buildings were built before 1980 and when these boilers need to be replaced, it may not be possible to install an 85-percent efficient boiler in its place. Raypak further states that the category I boilers must be retained for such replacement scenarios. (Raypak, No. 72 at p. 3)
DOE maintains its position explained in the March 2016 NOPR and reiterates that the utility derived by consumers from commercial packaged boilers is in the form of the space heating function that a boiler performs, rather than the type of venting the boiler uses. Boilers requiring Category I or Category IV venting are capable of providing the same heating function to the consumer, and, thus, provide the same utility with respect to their primary function. DOE does not consider reduced costs associated with Category I venting in certain installations as a utility to the consumer, and also disagrees with BHI's assertion that there is a point at which the installation costs get so prohibitively expensive that they create a loss of utility to the consumer. Instead, the expenses associated with venting requirements are considered as an economic impact on consumers in the rulemaking's cost-benefit analysis and ultimately the analysis determines if the cost is economically prohibitive. Details regarding installation costs can be located in section IV.F.2. Further, DOE maintains that this final rule is not in violation of “safe harbor” rule because it does not result in the unavailability of any covered product class of performance characteristics (including reliability, features, sizes, capacities and volumes) that are substantially the same as those currently available. 42 U.S.C. 6313(a)(B)(iii)(II)(aa) DOE does not consider the type of venting to be a “feature” that would provide utility to consumers; instead DOE properly accounts for the economic benefits of the venting type in the economic analysis. Further, with regard to issues of safety in venting and incorrect
In the March 2016 NOPR, DOE tentatively decided to classify commercial packaged boilers with rated input greater than 10,000 kBtu/h into separate equipment classes and not amend energy conservation standards for those classes because of regulatory complexities and lack of sufficient data to justify amended standards. 81 FR 15851-15853. Specifically, DOE noted that commercial packaged boilers with rated input greater than 10,000 kBtu/h are generally engineered-to-order, have very low shipment volumes as compared to other equipment classes with lower rated input, and have limited potential for significant additional energy savings. These factors, combined with a lack of information on pricing, shipments, and rated efficiency, led DOE to not propose amended energy conservation standards for very large commercial packaged boilers; however, the current efficiency standards applicable for the large CPB equipment classes remain applicable to the very large CPB equipment classes.
In response to these proposed amendments, Bradford White and ABMA expressed support for the introduction of the “Very Large” equipment classes. (Bradford White, No. 68 at p. 4; ABMA, No. 64 at p. 1) However, ABMA requested DOE to place a capacity limit on this rulemaking. (ABMA, No. 64 at p. 1) Raypak expressed support for not increasing the efficiency standard for very large commercial packaged boilers. (Raypak, No. 72 at p. 4) ABMA also noted that very large commercial packaged boilers are generally custom-built, and obtaining realistic prices for such equipment will not be possible. (ABMA, No. 64 at p. 2)
Based on the foregoing, DOE adopts equipment classes for “very large” commercial packaged boilers in this final rule. However, as discussed in the March 2016 NOPR, an upper limit for the rated input for commercial packaged boilers regulated by DOE's standards would violate EPCA's anti-backsliding provisions set forth in 42 U.S.C. 6313(a)(6)(B)(iii)(I), as the existing standards apply to all equipment meeting the definition of commercial packaged boiler regardless of the rated input. Providing an upper limit for rated input above which standards do not apply would essentially be repealing the existing standards for that equipment, which is prohibited by the anti-backsliding clause. As such, DOE maintains the existing standards for very large commercial packaged boilers at the levels currently applicable to all commercial packaged boilers with rated input greater than or equal to 2,500 kBtu/h.
In summary, today's final rule adopts the following changes proposed in the March 2016 NOPR: (1) Separating the equipment classes for commercial packaged boilers that have rated input above 10,000 kBtu/h, and (2) consolidating the equipment classes for small and large gas-fired steam boilers that are currently divided based on draft type into equipment classes that are not divided based on draft type, thereby reducing the four draft-specific classes into two classes that are not draft specific. In addition, DOE has decided not to amend energy conservation standards for very large commercial packaged boilers. The current standards for large CPB equipment classes will remain applicable to the corresponding very large CPB equipment classes.
Thus, in total, DOE is adopting 12 equipment classes
As discussed previously, in the market assessment DOE uses qualitative and quantitative information to assess the past and present industry structure and market characteristics. In carrying out this assessment, DOE examines literature from a variety of sources, including industry publications, trade journals, government agencies, manufacturers, and trade organizations.
In the March 2016 NOPR, DOE compiled a database of commercial packaged boilers that was sourced from the AHRI's Directory of Certified Product Performance (AHRI database) for commercial packaged boilers and information gathered from manufacturer specifications of ABMA member manufacturers. In chapter 3 of the NOPR TSD, DOE presented histograms showing the distribution of commercial packaged boilers by efficiency and rated input for each equipment class. DOE used these distributions of models as inputs to the engineering analysis to calculate the incremental prices and identify intermediate and max-tech efficiency levels in each equipment class.
In response to using the distribution of models in the engineering analysis, AHRI provided comments requesting DOE to reconsider its approach. AHRI provided histograms of the distribution of the boiler models based on their directory of certified equipment performance and highlighted the differences with the histograms presented in the market and technology assessment (chapter 3 of the NOPR TSD). (AHRI, No. 76 at p. 12) Raypak also provided comments opposing the use of the distribution of CPB models available on the market in each equipment class, to conduct the engineering analysis. Raypak also added that DOE does not have equipment listings for 11 out of 45 manufacturers who are not represented by AHRI or ABMA. (Raypak, Public Meeting Transcript, No. 61 at pp. 57-58; Raypak, No. 72 at pp. 2-3)
In response, DOE notes that it created the equipment database for the March 2016 NOPR using the AHRI database (that was accessed in July 2015) and models of ABMA member manufacturers. The histograms that AHRI provided in their comments only include models from a more recent version of AHRI's directory of equipment performance. Therefore, the difference in the histograms is most likely due to the difference in the versions of the AHRI database considered in the March 2016 NOPR and in AHRI's comments; and due to the additional data from ABMA member manufacturer literature which is not accounted for in the histograms in AHRI's comments.
In this final rule, DOE has created an updated database, that includes commercial packaged boilers from several sources of information, including its own Compliance Certification Database,
In response to the March 2016 NOPR, AHRI provided aggregated shipments data for SGHW and LGHW equipment classes, broken down by efficiencies and rated input for the years 2014 and 2015. In a separate correspondence with DOE, AHRI has also provided aggregated annual shipment information for different non-condensing and condensing; and gas- and oil-fired commercial packaged boilers spanning the years from 2001 to 2015. (AHRI, No. 76 at p. 13)
DOE used the shipment data provided by AHRI in its rulemaking analyses for this final rule.
Chapter 3 of the final rule TSD, the market and technology assessment, contains a detailed discussion of the models in the analysis used and the distribution of CPB models by their efficiency and rated input, and other characteristics (
As part of the rulemaking analysis, DOE identifies technology options that are currently used in commercial packaged boilers at different efficiency levels available on the market. This helps DOE to assess the technology changes that would be required to increase the efficiency of a commercial packaged boiler from baseline to other higher efficiency levels. Initially, these technologies encompass all those DOE determines are technologically feasible.
As a starting point, DOE typically uses information from existing and past rulemakings as inputs to determine what technologies manufacturers use to attain higher performance levels. DOE also researches emerging technologies that have been demonstrated in prototype designs. DOE developed its list of design options for the considered equipment classes through consultation with manufacturers, including manufacturers of components and systems, and from trade publications and technical papers.
In the March 2016 NOPR, DOE presented a list of technologies for improving the efficiency of commercial packaged boilers: (1) Jacket insulation; (2) heat exchanger improvements (including condensing heat exchanger); (3) burner derating; (4) improved burner technology; (5) combustion air preheaters; (6) economizers; (7) blowdown waste heat recovery; (8) oxygen trim systems; and (9) integrated, high efficiency steam boiler. DOE also added in the March 2016 NOPR that it is considering “pulse combustion burners” as an option to achieve condensing operation and tentatively decided to categorize it under condensing boiler heat exchanger design. 81 FR 15853.
In response to the March 2016 NOPR, Lochinvar suggested that the benefits of the oxygen trim technology were overstated in the TSD and requested that DOE provide more details on the 1 to 2 percent efficiency improvement claim. Lochinvar noted that oxygen trim systems require electronically positioned valves and other controls that increase the cost of the boiler which must be factored into the analysis. Lochinvar added that oxygen trim systems incorporate oxygen sensors which require replacement every few years. (Lochinvar, No. 70 at p. 7)
In response, DOE notes that the efficiency increments specified in the NOPR TSD for oxygen trim systems are based on a possible reduction in combustion air and an estimated improvement in efficiency corresponding to that reduction in excess air. These efficiency improvements are sourced from publicly available literature.
DOE also received comments from Raypak in the NOPR public meeting recommending moving pulse combustion as a completely independent technology option rather than enlisting it under heat exchanger improvements. (Raypak, Public Meeting Transcript, No. 61 at p. 51)
DOE agrees with the comments and has decided to add pulse combustion as a separate technology option different from heat exchanger improvements or improved burner technology.
DOE did not receive any other comments on the technology options it considered in the March 2016 NOPR. Therefore, in this final rule, DOE has retained all the technology options that were identified in the March 2016 NOPR and has included “pulse combustion” as a separate technology option. The technology options that are identified for the final rule analysis are described in detail in chapter 3 of the final rule TSD.
After DOE identified the technologies that might improve the energy efficiency of commercial packaged boilers, DOE conducted a screening analysis. The goal of the screening analysis is to identify technology options that will be considered further, and those that will be eliminated from further consideration, in the rulemaking analyses. DOE applied the following set of screening criteria to each of the technologies identified in the technology assessment to determine which technology options are unsuitable for further consideration in the rulemaking:
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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. 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.
In the March 2016 NOPR, DOE applied the screening criteria to all technologies identified in the technology assessment (see section IV.A.5). Based on the screening criteria described previously, DOE removed “burner derating” from further consideration in the rulemaking analysis, noting that the technology option could lower the heating output to the consumer thereby reducing consumer utility. The remaining technology options passed the screening analysis. Out of the options that passed the screening analysis criteria, DOE further identified technology options that would have negligible impact on the efficiency as measured by DOE's test procedure set forth in 10 CFR 431.86. Specifically, DOE identified the following technologies as having a negligible impact on the rated energy efficiency: (1) Jacket insulation; (2) combustion air pre-heaters; (3) economizers; and (4) blowdown waste heat recovery. These technologies were removed from further consideration in the rulemaking analysis. The remaining technology options were found to have an impact on the measured energy efficiency of commercial packaged boilers: (1) Heat exchanger improvements (including condensing heat exchangers); (2) improvements in burner technology; and (3) oxygen trim systems. 81 FR 15853-15855.
As discussed in section IV.A.5 of this final rule, DOE has decided to add pulse combustion as a separate technology option. Previously DOE had included pulse combustion under heat exchanger technology options which passed the screening analysis in the March 2016 NOPR. Therefore, in this final rule, pulse combustion was included as a separate technology option in the list that passed the screening analysis.
DOE did not receive any comments on the technology options that were
The engineering analysis establishes the relationship between manufacturer selling prices (MSP) and energy-efficiency of commercial packaged boilers. This price-efficiency relationship serves as a basis for subsequent cost-benefit calculations for individual consumers, manufacturers, and the Nation.
To determine this price-efficiency relationship, DOE uses data from the market and technology assessment, publicly available equipment literature and research reports, and information from manufacturers, distributors, and contractors. For this rulemaking, DOE first used information from the market and technology assessment to identify efficiency levels and representative equipment for analysis (see section IV.A). In the engineering analysis, DOE collected CPB prices primarily from manufacturers, mechanical contractors, and equipment distributors. DOE tabulated all of the price data in a separate database, which is referred to as the “prices database.”
DOE has identified three basic methods for developing price-efficiency curves: (1) The design-option approach, which provides the incremental manufacturing costs of adding design options to a baseline model that will improve its efficiency; (2) the efficiency-level approach, which provides the incremental price of moving to higher efficiency levels without regard to any particular design option; (3) the reverse-engineering (or cost-assessment) approach, which provides “bottom-up” manufacturing cost assessments for achieving various levels of increased efficiency based on teardown analyses (or physical teardowns) providing detailed data on costs for parts and material, labor, shipping/packaging, and investment for models that operate at particular efficiency levels.
For this rulemaking, DOE has decided to use the efficiency-level approach to conduct the engineering analysis. This methodology generally involves calculating prices of commercial packaged boilers for a given rated input (representative capacity) for each manufacturer at different efficiency levels spanning from the minimum allowable standard (
As discussed previously, DOE classified commercial packaged boilers into twelve equipment classes based on rated input, heating medium (hot water or steam), and fuel type (gas or oil). For all equipment classes, except the very large CPB equipment classes (for which DOE is not amending energy conservation standards), DOE collected pricing data which it used to directly analyze the price-efficiency relationship of each equipment class. DOE did not analyze very large CPB equipment classes in this engineering analysis.
For each manufacturer selling price obtained, DOE first calculated the ratio of the price of the commercial packaged boiler with respect to its rated input to obtain all prices on a per-unit rated input basis (dollars per kBtu/h). The prices obtained were at various rated inputs, so DOE assigned weights to individual prices (on a per rated input basis) based on the distribution of rated inputs of either CPB shipments (where DOE had this data available) or CPB models available on the market. DOE gave more weight to the prices for equipment at input capacities that have higher representation in CPB shipments or CPB models on the market. For SGHW equipment class, AHRI provided shipment information that includes the distribution of CPB shipments by rated input and by efficiency. Therefore, for the engineering analysis for the SGHW equipment class, DOE used the information provided by AHRI to calculate the weights based on the distribution of shipments by rated input. For all other equipment classes, DOE did not have information on distribution of shipment by rated input. As a result, DOE used the numbers of models available on the market from the equipment database to calculate the weights to corresponding to the rated input of each CPB price. DOE applied these weights to calculate the weighted average price per rated input and the weighted average rated input for each efficiency level.
Next, DOE scaled the weighted average price (on a per rated input basis) at each efficiency level from the weighted average rated input (at which the price was calculated in the previous step) to the representative rated input for the respective equipment class. DOE used 800 kBtu/h and 3,000 kBtu/h as the representative rated input for the small and large equipment classes. To normalize the prices back to the representative capacity, DOE used non-linear regression to determine the equation that best represents the price on a per-unit input basis as a function of rated input. Through the non-linear regression, DOE noticed that for lower input capacities the price on a per input basis is higher, and as the rated input increases, the price per input decreases. In addition, the rate of change of the price on a per-unit input basis with respect to rated input also decreases considerably as the rated input increases. The result of this non-linear regression is a scatter plot that appears to resemble a decreasing exponential curve. This trend is expected, as CPB models will have certain fixed costs that are present regardless of the size, and other costs that will increase as the rated input increases. DOE applied the regression equation to determine the weighted average price per input at the representative rated input for each efficiency level analyzed.
Once DOE had determined the weighted average price per input at the representative capacity for all efficiency levels, DOE performed a regression analysis to deduce the equation that best represents the price-efficiency relationship. Using the regression equation, DOE calculated the predicted weighted average price per input at the representative capacity for all efficiency levels that were analyzed in each equipment class. DOE then multiplied the predicted weighted average price per input at the representative capacity by the representative capacity to get the manufacturer selling price at each efficiency level. As a final step, DOE calculated the incremental prices by subtracting the baseline price from the manufacturer selling price of each efficiency level above the baseline.
DOE used the methodology described above to analyze each equipment class (other than very large equipment classes). For the SGHW equipment classes DOE used the same methodology
For further details on the methodology and results are provided in the chapter 5 of the final rule TSD.
As discussed in section IV.C.2, DOE collected 584 CPB prices that covered all CPB equipment classes that are analyzed in this final rule. Out of the eight equipment classes analyzed, DOE received sufficient information to analyze five equipment classes at all efficiency levels without extrapolation of data from other equipment class. For three large equipment classes,
In response to this approach, DOE received comments from ABMA expressing concern about the extrapolation of prices from small boilers to address the lack of data for large boilers. ABMA stated that large boilers not only have a significantly different applications and features but also carry an exponentially higher cost for transportation, installation and start-up. (ABMA, No. 64 at p. 1) Phoenix Energy Management stated in the NOPR public meeting that there is no connection between a small and a large boiler and that there are multiple variables that come into play in establishing the price. (PEM, Public Meeting Transcript, No. 61 at p. 64) Raypak stated that the price of a 3,000 kBtu/h boiler is substantially different from a 10,000 kBtu/h boiler. (Raypak, Public Meeting Transcript, No. 61 at p. 65)
In response, DOE notes that the extrapolation of prices from the small to large equipment classes (for oil-fired hot water and steam; and gas-fired steam equipment classes) is based on actual pricing data that is available for commercial packaged boilers in each corresponding small and large equipment classes. DOE obtained 163 prices for large CPB models in the LOHW, LGST, and LOST equipment classes that were used in developing the price trend between small and large commercial packaged boilers in these classes. There are only a few efficiency levels in the three large equipment classes where DOE extrapolated data from the corresponding small classes. The trends in prices between the small and large classes show a smooth linear trend and are devoid of sudden changes in pricing structure. The r-squared values for the linear equations that fit the pricing data are 0.923, 0.982 and 0.967 for oil-fired hot water, gas-fired steam and oil-fired steam equipment classes, respectively, indicating a strong fit to the data. Considering the r-squared value of the plots, DOE is highly confident that the extrapolated prices used in the analysis are representative of the prices for larger commercial packaged boilers. Therefore, in this final rule, DOE continues to use this approach to estimate the prices at several efficiency levels for LOHW, LGST and LOST commercial packaged boilers.
The detailed methodology for the engineering analysis including the plots that show the variation of CPB price with rated input are included in chapter 5 of the final rule TSD.
As part of the engineering analysis, DOE collected 584 CPB prices from manufacturers, wholesalers, distributors and contractors.
A distributor or wholesaler is usually the first consumer in the distribution chain and typically receives a discount on the list price when purchasing equipment from the manufacturer. This discount varies by manufacturer and the equipment being sold, and also depends on the business relationship between the manufacturer and the purchaser (
In response to this, AHRI commented that the equipment costs were wrongly generated using estimated discounts from list prices. AHRI highlighted that the discount factors used in the analysis had a large range (15 to 40 percent) and were based on manufacturers or DOE's estimates rather than actual data. AHRI stated that even small errors in these factors would have a significant effect on the resulting relationships established by DOE for determining actual manufacturer selling prices. AHRI opposed DOE's use of a single price estimate for an assumption with known variability and suggested using distribution of the estimates. (AHRI, No. 76 at pp. 41-42)
DOE disagrees with AHRI's comment suggesting that it used its own estimates rather than actual data to determine the discounts from list pricing that are applicable to the pricing data. The range of discount rates specified in the chapter 5 of the NOPR TSD and mentioned in AHRI's comment, represent the typical rates offered by manufacturers. DOE gathered this
DOE collected the bulk of its prices for commercial packaged boilers from distributors and contractors. This price data was also supplemented by information gathered through manufacturer interviews. The prices cover a wide variety of commercial packaged boiler models. The models for which DOE obtained pricing include mechanical draft, natural (or atmospheric) draft, condensing boilers and non-condensing boilers, and cover all equipment classes that are analyzed in this rulemaking. The input capacities of boilers for which prices were obtained ranged from 300 kBtu/h to 9,500 kBtu/h.
In the March 2016 NOPR, DOE also described the approach it used in selecting the add-on features applicable to each commercial packaged boiler that is included in the price books. Most of the add-on features are related to control system that do not have an impact on the E
In response to the engineering analysis, ABMA stated that very large commercial packaged boilers are extremely difficult to price because these boilers are custom built to a specific set of requirements for a given installation. ABMA noted that the customization is primarily in the area of controls, instrumentation, interfacing with building energy management systems and meeting location specific emission requirements. ABMA noted that these add-ons carry a high price tag. However, ABMA suggested that while these units are custom built, they are built on a standard heat exchanger design and burner capacity and therefore energy efficiency should not be affected by the customizing features. (ABMA, No. 64 at p. 2) Raypak provided comments at the public meeting that DOE should be looking at the local code requirements that vary with jurisdiction, for installing commercial packaged boilers, stating that as the size increases the number of applicable controls and codes also increase. (Raypak, Public Meeting Transcript, No. 61 at pp. 62-63)
DOE agrees with ABMA that the customizing of certain optional features do not impact the efficiency of commercial packaged boilers. To ensure that the cost of added features (that do not improve the efficiency of the equipment) are not included in the prices used for the engineering analysis, DOE normalized the optional features applicable to each boiler model by selecting the same options for all CPB prices collected. For example, DOE noticed that in several CPB series, prices of control and safety features are listed separately which get added to the basic model trade price. For such cases, DOE chose the same type of control feature for all CPB models where a choice is offered. While selecting the prices DOE also encountered scenarios where (1) a feature that DOE has consistently selected for all CPB models is not offered for a particular series; and (2) a particular feature becomes inapplicable for commercial packaged boilers of higher capacity within the same CPB series. In such cases DOE selected a similar feature that would offer similar functionality. This approach helped to minimize the effects of optional auxiliary components.
In response to the engineering analysis presented in the NOPR public meeting, ABMA asked how much data was available and used for large sized boilers. (ABMA, Public Meeting Transcript, No. 61 at pp. 93-94)
In response, Table IV.2 shows the number of CPB prices that DOE used in the engineering analysis in each equipment class. This table was also presented in the March 2016 NOPR. 81 FR 15858. DOE did not collect additional price data for the final rule analysis.
As discussed previously, in response to DOE's requests for shipment data for conducting the rulemaking analyses, AHRI provided actual shipments data for SGHW and LGHW equipment classes for the years 2014 and 2015. The information received represents shipment data collected by AHRI from AHRI-member manufacturers in an aggregated form. The information includes distributions of shipments by rated input for the SGHW equipment class for the years 2014 and 2015, distribution of shipments by efficiency for SGHW and LGHW equipment classes for the years 2014 and 2015, and shipment weighted efficiency for all equipment classes. DOE used the information for the distribution of shipment by rated input to conduct the analysis for SGHW condensing and non-condensing efficiency levels. Further, this information is also used to conduct LCC and PBP analysis.
DOE selects baseline efficiency levels as reference points for each equipment class, against which DOE calculates potential changes in energy use, cost, and utility that could result from an amended energy conservation standard. Typically, a baseline unit is one that meets, but does not exceed, the required energy conservation standard, as applicable, and provides basic consumer utility. A CPB model that has a rated efficiency equal to its applicable baseline efficiency is referred to as a “baseline model.” DOE uses the baseline model for comparison in several phases of the analyses, including the engineering analysis, LCC analysis, PBP analysis and NIA. For the engineering analysis, DOE used the current energy conservation standards that are set forth in 10 CFR 431.87 as baseline efficiency levels.
As discussed previously in section IV.A.3 of this document, DOE has consolidated the equipment classes that are set forth in the current regulations
As part of its engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvement in energy efficiency for each equipment class of commercial packaged boilers. DOE surveyed the CPB market and the research literature relevant to commercial packaged boilers to determine the max-tech efficiency levels. Additionally, for each equipment class, DOE generally identifies several intermediate efficiency levels between the baseline efficiency level and max-tech efficiency level. These efficiency levels typically represent the most common efficiencies available on the market or a major design change (
During the market assessment, DOE conducted an extensive review of publicly available CPB equipment literature. DOE used the distribution of models in the equipment database compiled during the market assessment to identify intermediate and max-tech efficiency levels for analysis. DOE generally selected the efficiency levels with the most models or that represented a significant technology (
Bradford White commented that the prices of commercial packaged boilers will increase due to the effect of the proposed CPB test procedure changes. Bradford White noted that if DOE establishes an 85-percent E
In response, DOE conducts its analysis to evaluate the increase in manufacturer selling price or manufacturing cost to achieve the desired efficiency level selected as part of the engineering analysis. Although some manufacturers may choose to overdesign their equipment, DOE cannot assume that the models on the market today and rated at a given efficiency would not be representative of models at that efficiency under an amended standard, as such a decision would be made by individual manufacturers based on their business practices. Further, DOE notes that if tests on a small sample produce a mean sample efficiency that is lower than what a manufacturer believes to be the true mean across manufactured units, DOE's regulations for commercial packaged boilers at 10 CFR 429.60 would permit the manufacturer to enlarge the sample rather than overdesign the equipment. The mean of a larger sample would tend to have smaller departures from the population mean. Therefore, DOE has determined it would be inappropriate to assume that at a given standard level under consideration costs would be incurred to achieve an efficiency greater than that being analyzed.
The final results of the engineering analysis are a set of price-efficiency curves that represent the manufacturer selling price for higher efficiency models. DOE uses these results as inputs to the downstream analyses such as the life cycle cost analysis.
DOE received several comments on the incremental price results and the price-efficiency curves published in the NOPR analysis TSD.
Weil-McLain suggested that DOE's analysis did not adequately account for the additional costs related to additional components, venting materials, system engineering and design, manufacturing costs, installation costs and operating costs of higher efficiency mechanical draft equipment. (Weil-McLain, No. 67 at p. 2)
DOE does not agree with Weil-McLain, in that the engineering analysis conducted in this final rule is based on list prices that manufacturers and their representatives use to sell their equipment. These prices include the manufacturing cost and the relevant manufacturer markups (Markups analysis is discussed in section IV.D of this final rule). Other costs related to installation and venting are discussed in section IV.F of this final rule.
Table IV.5 shows the incremental manufacturer selling price results based on prices in 2015$ for all eight equipment classes along with the baseline prices.
The markups analysis develops appropriate markups in the distribution chain (
Four different markets exist for commercial packaged boilers: (1) New construction in the residential buildings sector, (2) new construction in the commercial buildings sector, (3) replacements in the residential buildings sector, and (4) replacements in the commercial buildings sector. In this rulemaking, DOE characterized eight distribution channels to address these four markets.
For both the residential and commercial buildings sectors, DOE characterizes the replacement distribution channels as follows:
DOE characterizes the new construction distribution channels for both the residential and commercial buildings sectors as follows:
In addition to these distribution channels, there are scenarios in which manufacturers sell commercial packaged boilers directly to a consumer through a national account via a manufacturer representative, and its associated markup (assumed as 12.5 percent of sales; other distribution channels previously discussed make up the remaining 87.5 percent of sales).
To develop markups for the parties involved in the distribution of the commercial packaged boilers, DOE utilized several sources, including (1) the Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) 2013 Profit Report
In the March 2016 NOPR, DOE requested information or insight that would better inform its markups analysis. Bradford White commented that for the CPB market most units are sold from the manufacturer to a buy/sell representative, also known as a specialty wholesaler, before being sold to the contractor and eventually the consumer. It is also Bradford White's experience that sales to national accounts still go through a wholesaler. (Bradford White, No. 68 at p. 4) Lochinvar stated that a distributor/wholesaler as the first consumer in the distribution chain does not adequately represent the primary commercial boiler market, noting 80 percent of small and large commercial packaged boilers typically follow the path of Manufacturer → Manufacturer Representative → Mechanical Contractor → General Contractor → Owner. (Lochinvar, No. 70 at p. 2) Raypak somewhat agreed with the distribution model used by DOE for commercial packaged boilers, noting that it uses manufacturer representatives almost exclusively, but also noting that DOE's model shows wholesalers and manufacturer representatives in the same category and that these should be handled separately, as their functions differ. Further, Raypak commented that DOE is underestimating the markups associated with manufacturer representatives in the distribution formula and other downstream analyses, and that it believes the estimated market segment and sector weights by CPB equipment class breakouts are not appropriate and that the assumption of 17.5 percent of commercial packaged boilers sold via national accounts is a considerable overstatement, noting it believes it should be closer to 5 percent. (Raypak, No. 72 at p. 4)
DOE appreciates the stakeholder inputs regarding distribution channels for commercial packaged boilers. DOE believes that there is a misunderstanding around the national account distribution channel. DOE wishes to clarify that the national account considered for commercial packaged boilers already includes a manufacturer representative tier whose markup is the same as a wholesale distributor in the regular channel and the equipment does not get sold to the consumers directly from the manufacturer but through the manufacturer representative. With respect to the estimated market segment and sector weights, while Raypak commented that 17.5 percent is an overestimation, Lochinvar's comment suggests that 20 percent of the market segment is handled through the national distribution channel. DOE considered these comments and adjusted the fraction of commercial packaged boilers sold via the national account distribution channel to 12.5 percent.
DOE also received comments regarding its use of incremental markups. BHI commented that DOE should eliminate the use of incremental markups, noting the varying supply chains and tremendous number of options, and recommends that DOE survey building owners to find out what they are actually paying for various classes of equipment, acknowledging that this has drawbacks but should result in more accurate costs. (BHI, No. 71 at pp. 17-18) AHRI continues to object to DOE's use of incremental markups, and reiterates that it has provided ample evidence that contractors do not use incremental markups. However, it understands that the markups in DOE's analysis are approximately accurate as average markups, also noting manufacturer's representatives have markups in the 10- to 15-percent range. (AHRI, No. 76 at pp. 41-42) NEEA commented that when they do similar analyses, the focus is on the costs that change based on the efficiency of the boiler, noting that in their experience it is when you change technology (
In response to these comments, DOE notes that incremental markups relate the change in manufacturer selling price of higher efficiency equipment to the change in the consumer purchase price. DOE develops markups based on data on costs incurred by various entities in the distribution chain and considers that certain costs incurred by these entities would not be expected to increase due to merely increasing the efficiency of equipment. For example, salaries, benefits, and operating expenses are among those costs that would not be expected to increase with higher costs of goods sold. With respect to BHI's and AHRI's comment that incremental markups are not typically used by contractors and manufacturers, DOE notes that it does not expect that an individual manufacturer or contractor would, in its general practice,
Chapter 6 of the final rule TSD provides details on DOE's development of markups for commercial packaged boilers.
The purpose of the energy use analysis is to determine the annual energy consumption of commercial packaged boilers in use in the United States and assess the energy savings potential of increases in efficiency (thermal efficiency (E
In its March 2016 NOPR, DOE estimated the energy consumption of commercial packaged boilers in commercial buildings and multi-family housing units by developing building samples for each of eight equipment classes examined based on the EIA's 2003 Commercial Building Energy Consumption Survey
DOE understands the stakeholders' comments and requests and recognizes there is benefit to the use of more current data that better represents the energy use of commercial packaged boilers that would be installed in 2020 and beyond. In this final rule DOE updated its LCC model to use the EIA's 2012 CBECS microdata
DOE's energy characterization modeling approach calculates CPB energy use based on rated thermal efficiency and building heat load (BHL), accounting for the conversion from combustion efficiency to thermal efficiency where applicable, part-load operation (in the case of multi-stage equipment), and cycling losses (for single-stage equipment), as well as return water temperature (RWT) and climate zones. In this rulemaking, DOE analyzed CPB annual energy use based on the building sample, equipment efficiency characteristics, and equipment performance at part-load conditions.
In determining building heat load, DOE adjusted the building heat load to reflect the expectation that buildings in 2020 would have a somewhat different building heat load than buildings in the CBECS 2012 and RECS 2009 building sample. The adjustment involved multiplying the calculated BHL for each CBECS 2012 or RECS 2009 building by the building shell efficiency index from
For this rulemaking, DOE adjusted the rated thermal efficiency of evaluated commercial packaged boilers based on RWT, cycling losses, and part-load operation. High RWT is applied to all non-condensing boiler installations. For condensing boiler installations, low RWT is applied to all commercial packaged boilers in the new construction market, 25 percent of replacement boilers in buildings built on or after 1990, and 5 percent of replacement boilers in buildings built before 1990. DOE assumed that all other
DOE received comments in the March 2016 NOPR regarding the energy modeling approach. Regarding DOE's approach to converting combustion efficiency to thermal efficiency in the LCC model, Lochinvar commented that it is inappropriate to correlate combustion efficiency and thermal efficiency, as they are derived by two totally different test methods. (Lochinvar, Public Meeting Transcript, No. 61 at p. 127) Lochinvar further objected to DOE's approach of removing data samples it considered nonsensical (
DOE appreciates the comments regarding its approach to convert combustion efficiency to thermal efficiency. DOE notes that, as AHRI and Lochinvar have stated, combustion and thermal efficiencies are determined by two different methods. DOE understands the concerns of the commenters and in the final rule has reverted to consider a relationship utilizing the entire dataset available where both combustion and thermal efficiencies are reported in establishing a combustion to thermal efficiency conversion factor for the LCC analysis, with no filtering of data applied.
DOE received various comments regarding its return water temperature assumptions in its analysis. Lochinvar commented that it is overly optimistic to assume 25 percent of buildings constructed after 1990 are condensing and 100 percent of new construction is low temperature hydronic systems. (Lochinvar, Public Meeting Transcript, No. 61 at pp. 128-129) In its written comments, however, Lochinvar clarified that DOE's assumption that 25 percent of buildings constructed after 1990 will allow for condensing boilers to condense for a significant part of the season does not correlate to true market conditions and that their experience suggests the actual percentage of buildings with low-temperature heating systems is much lower. (Lochinvar, No. 70 at p. 2) Similarly, Weil-McLain commented that DOE's heat load estimation methodology overestimates true energy savings associated with condensing boilers at high return water temperature and overestimates the number of low temperature systems in existence. (Weil-McLain, No. 67 at pp. 6-7) ASAP, however, questioned DOE's assumption that in new construction a condensing boiler system would not be capable of condensing a significant portion of the time and whether it is more representative for new construction to assume that the system is always operating with low enough return water temperatures to be always in condensing mode. (ASAP, Public Meeting Transcript, No. 61 at pp. 133-134) Crown, in response to ASAP's comment regarding condensing boilers in new construction, commented that it would not be assumed that, even in new construction, condensing boilers would condense all the time, especially so, for example, on the coldest day of the year, noting that the availability of condensing mode and corresponding reset schedules depends on what emitters are used. (Crown, Public Meeting Transcript, No. 61 at pp. 134-137) ASAP added that the amount of time equipment operates in condensing mode seems conservative. (ASAP, Public Meeting Transcript, No. 61 at p. 136) Raypak further commented that condensing mode is dependent on user comfort, and that a boiler may be designed for condensing mode but if users are uncomfortable they will raise the water temperature. (Raypak, Public Meeting Transcript, No. 61 at p. 137)
In response to the comments regarding return water temperature and the time a commercial packaged boiler operates in condensing mode, DOE points out that the LCC model does not establish a given amount of time a commercial packaged boiler will condense. The model develops a thermal efficiency adjustment that is an average based on various factors as described in appendix 7B of the final rule TSD. For condensing boilers, DOE does consider the fact that some commercial packaged boilers will be operating with low return water temperatures, and the rest will operate with high return water temperatures, in the field. DOE notes that in the field, depending on the heat load and system design, the commercial packaged boiler may be operating at higher efficiencies or lower efficiencies than those established as the average adjusted efficiency in the model, but it believes its approach adequately reflects the energy use of the commercial packaged boiler throughout the entire heating season. DOE does assume that all new construction scenarios in the model (25 percent of buildings constructed on or after 1990 and 5 percent of buildings constructed before 1990) would be designed to allow for low return water temperatures, on average, and that all other scenarios would operate with high return water temperatures, on average. Regarding Lochinvar's comment that these assumptions do not correlate to true market conditions, DOE notes that neither Lochinvar, nor any other commenter, provided any data regarding the actual number of installations it expects would use low-temperature heating systems in new construction or existing buildings, but notes that DOE received additional comment indicating that even the use low temperature distribution may change over the life of the building to meet occupant comfort.
Conversely, the Joint Advocates commented that DOE's return water temperature distributions for condensing boilers represent overly conservative scenarios. Further, they point out that the default outdoor reset schedules from manufacturers of condensing boilers and real-world implementations of condensing boilers replacing non-condensing boilers suggest that condensing boilers can operate a greater portion of the heating season in condensing mode than that assumed in DOE's analysis, and that this would increase the savings from condensing boilers relative to non-condensing boilers. In support of these assertions, they cited published reports of field replacements of boilers, manufacturer data showing defaults and the range of reset schedules for condensing boilers, and various strategies in new and existing buildings
DOE agrees with the comments from the Joint Advocates in that there is a significant potential for system retrofits and system redesigns in both new and in existing buildings that could provide for better use of low return water temperatures during a larger portion of the heating season; however, these may incur additional and unknown costs that DOE has no ability to represent on an aggregate basis. The experiences and input from other parties indicate that there is strong concern that even many current condensing boiler installations do not live up to their energy savings potential. DOE concludes that its analysis (which presumes a smaller fraction of older existing buildings, a larger fraction of newer existing buildings, and all new construction designs) will be able to support, on average, low return water temperature distribution and accurately reflects the performance of condensing commercial packaged boilers in new construction and existing building stock.
AHRI commented that the energy use analysis applies residential temperature bins to estimate the loading of commercial package boilers, which results in erroneous average annual energy use values, and AHRI provided a comparison of a typical commercial office building load profile and a residential load profile. (AHRI, No. 76 at pp. 14-15)
In response to AHRI's comment, DOE notes that the model assumes the heating load for a commercial building is zero above 50 °F. The model uses the percentage of time in a year that a given climate zone spends in each of four temperature bins that are considered for the purposes of establishing the return water temperature condition, which impacts the thermal efficiency of the boiler as installed. The temperature bins in Table 7B.2.4 in appendix 7B of the final rule TSD are only used in the development of the part-load adjustment factor for condensing boilers and not the building thermal loads. DOE, in addition, understands that the load profile shared by AHRI may reflect many larger office buildings with significant internal loading and tight thermal envelopes, such as used in the standard ASHRAE 90.1-2013 analysis for new construction. However, many existing commercial buildings will have heating loads above the 30 °F level suggested by AHRI.
For the reasons noted in this section, DOE retained its methodology for adjusting the thermal efficiencies of the commercial packaged boilers, based on return water temperature conditions, in this final rule.
During the March 2016 NOPR public meeting, Lochinvar commented that DOE should consider boilers used for purposes other than space heating in its analyses. (Lochinvar, No. 61 at pp. 124-125) Spire commented that DOE, for its analysis, should use a more robust data source, specifically referencing Jurisdiction Online
In response to Lochinvar's request to include in its analysis boilers that are used for purposes other than space heating, DOE retained its NOPR approach and did not include such CPB equipment in its final rule analysis because DOE was not able to obtain any data needed for the analyses. Regarding Spire's suggestion to use Jurisdiction Online, DOE investigated that data source and determined that its content is already captured in the EPA database used to inform shipments, and as such much of the available data are already taken into account in that context.
A more detailed description of the energy use characterization approach can be found in appendix 7B of the final rule TSD.
In its energy analysis for this rulemaking, DOE's estimation of the annual energy savings of commercial packaged boilers from higher efficiency equipment alternatives relied on building sample data from CBECS 2012 and RECS 2009. CBECS 2012 includes energy consumption and building characteristic data for 6,720 commercial buildings representing 5.6 million commercial buildings. RECS 2009 includes similar data from 12,083 housing units that represent almost 113.6 million residential households.
The subset of CBECS 2012 and RECS 2009 building records used in the analysis met the following criteria. The CPB application has the following characteristics:
• Used commercial packaged boiler(s) as one of the main heating equipment components in the building,
• used a heating fuel that is natural gas (including propane and LPG) or fuel oil or a dual fuel combination of natural gas and fuel oil,
• served a building with estimated design condition building heating load exceeding the lower limit of CPB qualifying size (300,000 Btu/h),
• had a non-trivial consumption of heating fuel allocable to the commercial packaged boiler.
DOE analyzed commercial packaged boilers in the qualifying building samples. DOE disaggregated the selected sample set of commercial packaged boilers into subsets based on the fuel types (gas or oil), rated input (small or large), heating medium (steam or hot water). DOE then used these CPB subsets to group the sample buildings equipped with the same class of equipment evaluated in this analysis. In the LCC analysis, DOE used the ratio of the weighted floor space of the groups of commercial and residential building samples associated with each equipment class to determine the respective sample weights for the commercial and residential sectors. DOE's new construction sample was based on the same selection algorithms as the replacement sample but included only buildings built on or after 1990, which DOE concluded would have building characteristics more similar to the new construction buildings in the start of the analysis period in 2020 (
To disaggregate a selected set of commercial packaged boilers into large and small equipment classes, DOE used a sizing methodology to determine the sizes of the commercial packaged boilers installed in the building. In this final rule, DOE's sizing methodology is essentially the same as that used in the March 2016 NOPR (
First, the total sizing of the heating equipment is determined from the heated square footage of the building, the percentage of area heated, a uniform heating load requirement of 30 Btu/h per square foot of heated area based on references for commercial building,
DOE computed the size of each commercial packaged boiler in each sample building by dividing the aggregate CPB sizing heating load (MBtu/h) by an estimated number of boilers of equal capacity. To estimate the number of commercial packaged boilers in a given sample building, DOE assigned a variable number of commercial packaged boilers to all the qualified sample buildings of 2012 CBECS based on a predetermined allocation table. In the final rule analysis, buildings constructed before 1990 were assigned a given number of boilers based on the allocation table developed in the March 2016 NOPR analysis. However, the remaining sample buildings, constructed on or after 1990, were assigned a given number of boilers based on a modified version of the allocation table where the percentage of building samples receiving a smaller number of boilers in a given CPB sizing load range was reduced, and the percentage of sample buildings receiving a larger number of boilers was increased, relative to their respective shares used at the March 2016 NOPR. Adjustments were made to this assignment of the number of commercial packaged boilers to maximize the utility of the sampled buildings used for this analysis with respect to the size range of boilers being analyzed.
Several interested parties commented on DOE's usage of a parameter value of 30 Btu/h per square foot for estimating the building heating load under design condition. While Spire commented that this is inappropriately high, Raypak noted that this may not be acceptable for the sizing of heating equipment for commercial buildings, although it is a decent metric for residential buildings. Raypak stated that they would normally use a value of 25 Btu/h per square foot for a commercial building in Los Angeles, California, and that they would typically use approximately 100 Btu/h per square foot for 0 ºF design outdoor conditions. (Spire, No. 73 at p. 25; Raypak, No. 72 at pp. 3-4) AHRI commented that the current value of this parameter at 30 Btu/h per square foot is unverified and possibly causing the LCC model to produce excessively high operating hours and distorting the LCC results. (AHRI, No. 76 at pp. 26, 32, 37-40)
For commercial buildings, DOE's methodology for estimating the design condition heating load is uniform across all outdoor conditions. It uses a uniform heating load requirement per square foot of heated area, assuming a 0 °F design outdoor condition, and then adjusts based on the outdoor design heating temperature for the building under consideration. In addition, DOE applies an oversizing factor on top of this. DOE recognizes there are simplifications in this approach; however, DOE's estimation of building heating loads stems from design data for commercial buildings taking into account the design climate conditions and adequately captures heating load design variations in the field. DOE has high confidence that its building load estimation is representative of the building loads in the field. Therefore, DOE retained its NOPR base heating load approach in its analysis for this final rule.
AHRI also commented that the energy use calculations did not incorporate the ASHRAE 90.1-2013 requirements of all boilers with an input rate of 1,000,000 Btu/h or more needed to have a turndown ratio of 3 to 1, and this will make the boilers more efficient. (AHRI, No. 76 at p. 15)
DOE points out that it did consider the 3:1 turndown ratio requirement from ASHRAE 90.1-2013 for systems greater than 1 MMBtu/h and notes that its understanding is that this requirement in ASHRAE 90.1-2013, as adopted into local building code, will not necessarily be extended to replacement boilers, and, in addition, can be met by using multiple boilers, which is already common in DOE's analysis for boiler systems with 1 MBtu/h or above combined rated input. As noted in the March 2016 NOPR, DOE assumed that all commercial packaged boilers installed in new buildings will be part of a system with at least a 3:1 turndown ratio, and DOE calculated the adjusted thermal efficiency of commercial packaged boilers in such systems accordingly. DOE concludes that its adjusted cycling loss factors designed to address multiple boiler systems will adequately represent the expected benefits to part-load performance for multi-stage boilers, as well as the ASHRAE 90.1-2013 requirement discussed.
The Joint Advocates further noted that DOE's energy use analysis is likely underestimating potential energy savings when compared to several cited studies of field installations, and that due to the impacts of high return water temperature operation and cycling, the operational efficiency of a non-condensing boiler is below that of its rated efficiency. (Joint Advocates, No. 74 at pp. 1-2, 8) Crown commented that non-condensing boilers are not only available as single-stage and that this is especially true for large boilers. (Crown, Public Meeting Transcript, No. 61 at pp. 130-131).
In response to the comments from the Joint Advocates regarding performance degradation of non-condensing boilers, DOE notes that it does consider this in its analysis by using a cycling loss adjustment factor that takes into account the impact of multiple sequenced boilers operation. With regard to Crown's comment, DOE understands that non-condensing boilers are available in other than single stage equipment, but DOE does not have data on the relative sales into the market and has insufficient data regarding their part-load performance. DOE, however, has accounted for reduced cycling losses in cases where multiple boilers may be utilized.
In the March 2016 NOPR, DOE requested for information on the extent to which hybrid configurations with both condensing and non-condensing commercial packaged boilers in a single system are prevalent in retrofit installations. Lochinvar believes that approximately 5 percent of the installations with condensing boilers are hybrid systems and urged DOE to consider this in its energy use analysis. (Lochinvar, No. 70 at p. 2) Weil-McLain commented that creating a baseline assumption about the current degree of adoption of hybrid boiler configurations in retrofit situations is unrealistic because it requires the analysis of many variables. (Weil-McLain, No. 67 at p. 7) Bradford White commented that hybrid configurations are difficult to implement because legacy installation venting systems are already established, possibly in an era before the market debut of condensing boilers. (Bradford White, No. 68 at p. 2)
In view of the uncertainty regarding the degree of adoption of hybrid configurations in retrofit situations and the difficulty in incorporating this in the energy use analysis due to the great number of variables that would need to be considered as well as the lack of data, DOE did not incorporate hybrid systems in its analysis.
Spire commented that DOE in its analysis should consider that the Federal purchase decisions are mandated by stringent and aggressive policy mandates and as such should not be included in the analysis as they would meet the stringent standards even if stringent standards are not adopted. (Spire, No. 73 at p. 13)
DOE understands that the Federal Energy Management Program (FEMP) provides acquisition guidance for commercial packaged boilers, but also provides exceptions to these Federal purchasing requirements where an agency demonstrates that selecting the FEMP recommended efficiency level may not be cost effective. DOE notes that data provided by AHRI support that a higher percentage of the gas-fired hot water CPB market is condensing equipment than was used in the March 2016 NOPR analysis and DOE has modified in the final rule its projections for the condensing boiler market into the future to show much higher adoption rates. This higher adoption rate will include many Federal buildings. However, for the remaining fraction of the market, DOE does not have sufficient information that would allow it to make comparisons between the market shares of non-condensing commercial packaged boilers purchased for Federal buildings versus commercial buildings. In addition, DOE notes that its analysis considers as potential standards levels, commercial packaged boilers with efficiencies above the FEMP guidance, and for these reasons, DOE considers Federal buildings in its analysis.
The Gas Associations commented that the energy use analysis needs to adjust potential energy savings and associated emissions for Federal buildings that will not be able to have fossil fuel-generated energy after 2030, per provisions in Section 433 of EPCA of 1975 as amended by EISA 2007. (Gas Associations, No. 69 at pp. 2-3)
DOE notes that the legislation establishing the fossil-fuel energy targets for Federal buildings has yet to be codified as a final rule in the Code of Federal Regulations at the time of this analysis. A NOPR, titled “Fossil Fuel-Generated Energy Consumption Reduction for New Federal Buildings and Major Renovations of Federal Buildings” was issued on October 15, 2010 and an SNOPR issued on October 15, 2014, addressing comments on the NOPR and noting that DOE has identified additional areas for clarification and consideration that would benefit from further public comment. The SNOPR particularly sought comment on additional approaches to the scope of the requirements in the context of major renovations, the potential use of renewable energy certificates for compliance, and a proposed streamlined process for agencies to seek a downward adjustment from the required reduction levels, particularly for major renovations. DOE notes that while providing for significant savings of fossil-fuel derived energy (including both on-site usage of fossil fuels and on-site usage of electricity generated from fossil fuels) in Federal buildings, the proposed rule will not likely provide a complete limitation of fossil fuel use in Federal buildings even in 2030. Federal agencies can and may be expected to petition for downward adjustments from the required reduction levels for certain buildings and building retrofits, particularly where other options to meet the requirements are technically impracticable, where these options have been considered in detail by these agencies, and where the agencies have demonstrated they have pursued other options. In addition, the SNOPR sought input on the use of renewable energy certificates as alternative options to meet the required reduction levels, which could be a more cost-effective approach to on-site fossil fuel reduction in certain situations.
Regarding regional use of commercial packaged boilers, PEM commented that the New York City area almost entirely uses field-constructed boilers except for new construction and schools. (PEM, Public Meeting Transcript, No. 61 at pp. 122-123) Similarly, AHRI commented that it could be useful to look at geographical regions represented in RECS data and that commercial packaged boilers are not typically used in New York's multi-family apartment buildings, and that including New York City and surrounding areas in the analysis inflates this rulemaking's energy savings. (AHRI, Public Meeting Transcript, No. 61 at pp. 122, 124).
In response to the comments on regional use of commercial packaged boilers, DOE inquired with the New York City Buildings Department regarding the prevalence of field constructed boilers used in heating applications in New York City (NYC). DOE was informed by the Buildings Department that based on their experience with inspections boiler installations, only about 10 percent of the commercial packaged boilers in NYC are field-constructed with a higher fraction of those (estimated as high as about 33 percent) in the large boiler category. It was also noted by the Buildings Department that a large portion of these field constructed boilers are steam boilers. Furthermore, as was noted by PEM, there are instances where commercial packaged boilers are used in the NYC area. Given both of these considerations, DOE cannot discount that commercial packaged boilers are being utilized, or newly selected, in other types of commercial buildings including multifamily buildings in NYC and surrounding areas. Given the shipment data that form the basis for DOE's overall national energy savings analysis are based on AHRI input and do not include field-constructed boilers, DOE disagrees with AHRI that including building sample data that may have come from NYC in its analysis inflates the energy savings calculations. For these reasons, DOE did not attempt to further identify or exclude any building observations specific to NYC in its analyses.
DOE has not modified the analysis to eliminate the use of commercial packaged boilers in Federal buildings after 2030, but understands that, presuming the establishment and implementation of a final rule addressing fossil fuel-generated energy consumption in Federal buildings, the likely impact of the rule will be a reduction in overall boiler shipments to commercial buildings and a consequent
Building sampling methodology is detailed in chapter 7 of the final rule TSD.
The annual energy used by commercial packaged boilers, in some cases, may include energy used for non-space heating use such as water heating. Based on comments received in the November 20, 2014 NODA and preliminary analysis, DOE assumed that if the CBECS data indicate that the CPB fuel is the same as the fuel used for water heating then in 20 percent of the sample buildings, the same commercial packaged boiler is also used for water heating in this final rule. 79 FR 69066.
Other associated energy consumption is due to electricity use by electrical components of commercial packaged boilers including circulating pump, draft inducer, igniter, and other auxiliary equipment such as condensate pumps. In evaluating electricity use, DOE considered electricity consumed by commercial packaged boilers both in active mode as well as in standby and off modes in the preliminary analysis.
BHI commented that the energy use analysis should consider that most condensing boiler installations require a minimum of two pumps: One to circulate water through the system, and a second to circulate water through the boiler itself. Further, BHI stated that if DOE were to adopt the 85-percent efficiency level and the test procedure as it was proposed in its NOPR, it would mean that there would be no Category I small or large hot water boilers on the market and therefore all such boilers would become mechanical draft and therefore require the associated power consumption. (BHI, No. 71 at p. 17)
As clarified in the March 2016 NOPR, DOE only considered the electricity use of pumps needed for proper operation of the commercial packaged boiler, but not the electricity use of additional pumps that may be necessary for distributing water throughout a system, since these pumps are not part of the commercial packaged boiler itself and the inclusion of distribution system pumping energy consumption would not be appropriate to the development of the standard. With respect to BHI's comment regarding the additional power consumption for mechanical draft equipment, DOE notes that the March 2016 NOPR analysis and the final rule analysis both include the additional electrical power consumption for both draft fans/blower, condensate pump, and controls, and that this power consumption is not included for natural draft commercial packaged boilers. Further, as noted previously, DOE has modified the CPB test procedure from that proposed in the 2016 CPB TP NOPR, and it is also adopting a different set of efficiency levels than was proposed in the March 2016 NOPR in this rulemaking. DOE's analysis adequately addresses the concerns expressed by BHI.
In its final rule analysis, DOE maintained the electricity use analysis method used in the March 2016 NOPR analysis.
DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for commercial packaged boilers. The effect of new or amended energy conservation standards on individual consumers usually involves a reduction in operating cost and an increase in purchase cost.
The LCC is the total consumer cost of owning and operating an appliance or equipment, generally over its lifetime. The LCC calculation includes total installed cost (equipment manufacturer selling price, distribution chain markups, sales tax, and installation costs), operating costs (energy, repair, and maintenance costs), equipment lifetime, and discount rate. Future operating costs are discounted to the time of purchase and summed over the lifetime of the appliance or equipment. The PBP is the amount of time (in years) it takes consumers to recover the assumed higher purchase price of more energy-efficient equipment through reduced operating costs. DOE calculates the PBP by dividing the change in total installed cost (normally higher) due to a standard by the change in annual operating cost (normally lower) that result from the standard.
For any given efficiency level, DOE measures the PBP and the change in LCC relative to an estimate of the no-new-standards case efficiency distribution. The no-new-standards estimate reflects the market in the absence of amended energy conservation standards, including market trends for equipment that exceed the current energy conservation standards.
DOE analyzed the net effect of potential amended CPB standards on consumers by calculating the LCC and PBP for each efficiency level of each sample building using the engineering performance data, the energy use data, and the markups. DOE performed the LCC and PBP analyses using a spreadsheet model combined with Crystal Ball
For each considered efficiency level, DOE determines the value of the first year's energy savings by calculating the quantity of those savings in accordance with the applicable DOE test procedure and then multiplying that amount by the average energy price forecast for the year in which compliance with the amended standards would be required.
DOE calculated the LCC and PBP for all consumers of commercial packaged boilers as if each were to purchase new equipment in the first year of required compliance with new or amended standards. The projected compliance date for amended standards is late 2019. Therefore, for purposes of its analysis, DOE used January 1, 2020 as the beginning of compliance with potential amended energy standards for commercial packaged boilers.
As noted in this section, DOE's LCC and PBP analysis generates values that calculate the payback period for consumers of potential energy conservation standards, which includes, but is not limited to, the 3-year payback period contemplated under the rebuttable presumption test. However, DOE routinely conducts a full economic
Inputs to the LCC and PBP analysis are categorized as (1) inputs for establishing the purchase cost, otherwise known as the total installed cost, and (2) inputs for calculating the operating cost (
For each distribution channel, DOE derived the consumer equipment cost for the baseline equipment by multiplying the baseline equipment manufacturer sale price and the baseline overall markup (including any applicable sales tax). For each efficiency level above the baseline, DOE derived the consumer equipment cost by adding baseline equipment consumer cost to the equipment of incremental manufacturer sale price and the appropriate incremental overall markup (including any applicable sales tax). This consumer equipment cost is reflective of the representative equipment size analyzed for each equipment class in the engineering analysis. Since the LCC analysis considers consumers whose CPB capacities vary from the representative equipment size, the consumer equipment cost is adjusted to account for this.
DOE examined whether CPB equipment prices changed over time. DOE determined that there is no clear historical price trend for CPB equipment and used costs established in the engineering analysis directly for determining 2020 equipment prices for the LCC and PBP analysis.
DOE notes that it received a comment from Bradford White that the cost to manufacture a given unit increases over time, noting the increase in labor and overhead rates over time due to healthcare, utility and fuel costs, etc. (Bradford White, No. 68 at p. 5) In response, DOE wishes to clarify that its price trend analysis reflects the real, inflation adjusted, examination of equipment price, and such factors identified by Bradford White would already be incorporated in the real equipment price.
The installation cost is the cost incurred by the consumer for installing the commercial packaged boiler. The cost of installation covers all labor and material costs associated with the replacement of an existing commercial packaged boiler or the installation of a commercial packaged boiler in a new building, removal of the existing boiler, and any applicable permit fees. DOE estimated the installation costs of the representative capacity boiler at each considered efficiency level using a variety of sources, including RS Means 2016 facilities construction cost data, manufacturer literature, and information from expert consultants.
With regard to installation costs, DOE received comments from stakeholders during the March 2016 NOPR in two general areas: (1) The general cost to install a boiler, including components, labor, and accessories needed; and (2) the cost and impacts with regard to venting materials and upgrades necessary. DOE addresses both groups of comments in the following paragraphs. In addition, certain general comments reflecting the impact of high installation costs are addressed in section IV.F.2.c of this document.
DOE received several comments regarding installation costs. AHRI expressed that the costing methods used by DOE are simplistic and inaccurate, resulting in incorrect estimates of consumer economics. AHRI commented that DOE's current process of building up costs from assumed installation situations is incorrect, as has been demonstrated through contractor survey data in other rulemakings, and misses much of the subtlety in installation and venting conditions. (AHRI, No. 76 at p. 27, 42-43)
DOE understands the comments from AHRI and notes that it has modified its venting logic and installation costs in this final rule to address specific concerns brought up by stakeholders. This is discussed in detail in section IV.F.2 of this document.
PEM commented that there is no correlation between boiler cost and installation cost. (PEM, Public Meeting Transcript, No. 61 at p. 98) Raypak commented that there is probably no incremental cost associated with installing a boiler at different efficiency levels, for example an 82 percent efficient boiler versus an 86 percent efficient boiler. However, there will be cost differential for replacement parts. (Raypak, Public Meeting Transcript, No. 61 at p. 101) ABMA commented that larger boilers not only have significantly different applications and features but also carry an exponentially higher cost for transportation, installation, and start-up. ABMA also commented that in attempting to develop installation costs, it is important that the magnitude of work involved in installing the large and very large boilers is greater than that for small and light weight boilers and may involve the use of fork lifts and delivery trucks, and that these are extra expenses and as such should not be based on extrapolating the installation cost of smaller boilers. (ABMA, No. 64 at pp. 1-2) ABMA expressed concerns regarding the extrapolation of RS Means data for small boilers into large boilers, and wonders if a more appropriate set of estimating data had been considered, noting Mechanical Contractors Association of America (MCAA) as a potential source. (ABMA, No. 64 at p. 1)
Regarding PEM's comment, DOE notes that the installation costs are derived directly from RS Means 2016 Mechanical Cost Data, which indicates a strong correlation between boiler size and its installation cost. With respect to Raypak's comment that there is no incremental cost for installing boilers at different efficiency levels, DOE's estimated basic installation costs for the commercial packaged boilers at different efficiency levels, within an equipment class, do not vary with efficiency, except for condensing boilers where additional costs are incurred specific to such installations. With respect to Raypak's comment about repair costs, DOE notes that its annualized repair cost estimates do increase with efficiency. Regarding ABMA's comment about very large boilers, DOE reiterates that very large boiler equipment classes (>10 MBtu/h) are not being analyzed in this rulemaking. With regard to installation cost differences because of transportation, magnitude of work, and use of extra equipment for large boilers, DOE notes that RS Means captures these costs in its estimation of basic installation costs and, as such, DOE is not changing the base installation cost
BHI commented that DOE has not considered that most condensing boilers require two pumps, an associated “primary-secondary” piping system, and “Y strainers” to keep out system sediment. BHI noted that only in some cases pump(s) are supplied with the boiler while the piping system upgrade is carried out by the installer. (BHI, No. 71 at p. 18)
In response to comments from BHI, DOE notes that such system costs may be incurred by a consumer as part of a heating system upgrade, which DOE understands could result in condensing commercial packaged boilers operating at higher efficiencies, on average. DOE considers in its analysis that many, if not most, boilers (
Crown commented that proposed standard levels for some boilers rule out Category I chimney venting and therefore make boiler installation in certain areas not cost effective. (Crown, No. 61 at p. 13) Other commenters noted that the proposed standards would eliminate the possibility of cheaper Category I venting. Weil-McLain noted that proposed standards will create the need to install new venting systems, essentially eliminate Category III boilers, operate higher power boiler pumps, and operate venting blowers/fans that are necessary for most condensing and near-condensing equipment to operate and safely vent flue gases. (Crown, No. 61 at p. 148; Raypak, No. 61 at p. 145-146; Weil-McLain, No. 67 at pp. 2, 6) AHRI noted that the installation codes that apply to gas and oil boilers today are significantly different from those that existed 50 or 60 years ago. The installation codes are currently more detailed and specific and recognize that boilers operating at steady state efficiencies in the mid-1980s represent the near condensing range of efficiency and that the venting requirements are determined accordingly. (AHRI, No. 76 at p. 15-16) Weil-McLain notes that DOE's own analysis shows very few equipment offerings at near-condensing efficiencies, and that this is because the market has determined that it is not economically feasible to install such commercial packaged boilers due to higher cost of venting. (Weil-McLain, No. 67 at p. 3) Raypak noted that even though boilers with 85-percent E
DOE understands the concerns from stakeholders and notes that the standards being adopted in this final rule, and more particularly the adopted standard for SGHW CPB equipment, are lower than that proposed during the March 2016 NOPR. Further, revisions made to the proposed test procedure (81 FR 89276, 89289-89290 (December 9, 2016)) address significant concerns raised by stakeholders regarding potential impact on ratings. Notwithstanding this, DOE recognizes that under the adopted standards, there may be migration between Category I boilers and other boiler categories. However, DOE does not believe that the standard being adopted eliminates all Category I equipment, based on their existence in the market at these efficiency levels. Furthermore, AHRI's own data demonstrates that, with regard to gas-fired hot water boilers, efficiencies between 85-percent and 86-percent E
DOE received multiple comments regarding its handling of venting costs, in particular those associated with 85-percent efficient boiler systems. Raypak commented that replacing existing boilers lower than 85-percent efficiency will require new venting and that DOE should take the associated costs into account. (Raypak, No. 61 at p. 153, 155) Crown commented that every commercial install at 85-percent efficiency will get a different venting system. (Crown, No. 61 at p. 152) NEEA noted that some existing boilers that have greater than 85-percent efficiency would already have venting that would not need replacing, and that the DOE's analysis takes that into account, to which Raypak agreed that systems with boilers of 85-percent efficiency and above would not require venting upgrades in such cases. (NEEA, No. 61 at p. 154; Raypak, No. 61 at p. 155) BHI commented that the costs of vent systems will increase far more than reflected in the cost estimates in the DOE models, as a result of a shift away from Category I vent systems. (BHI, No. 71 at p. 2, 7, 10, and 11) Weil-McLain
Relative to the March 2016 NOPR public meeting comments, DOE notes that in its analysis it does consider the potential for a boiler to be replaced that is already at or above the 85-percent efficiency level, and that the venting costs would be lower in such a scenario when compared with a similar scenario where the existing boiler being replaced is below 85-percent efficiency. Further, DOE has considered venting costs that would result in safe installation of commercial packaged boilers at all efficiency levels in its analysis, refining the LCC model to select materials for venting that represent the concerns of stakeholders.
BHI and AHRI commented on DOE's venting logic that allowed lower cost Category-I/III venting options for SGHW commercial packaged boilers at the 85-percent efficiency level proposed by DOE in the NOPR. BHI also noted that 85-percent efficiency non-condensing boilers may result in operation in the Category II/IV regime instead of Category I/III assumed by DOE. (BHI, No. 71 at p. 8-10; AHRI, No. 76 at p. 16) AHRI expressed similar concerns that a Category II/IV vent may be needed for gas boilers in the 83.5-percent to 85-percent efficiency levels. (AHRI, No. 76 at p. 16) BHI further commented that even some Category III boilers must be vented with expensive stainless steel option (
In response to comments received, DOE included upgrades to stainless steel venting materials, in some cases selecting AL29-4C, for non-condensing boilers at the 85-percent efficiency level and included, in the case of small gas-fired commercial packaged boilers, a cost transition at 84% efficiency which reflects the cost of mechanically vented CPB equipment where natural draft equipment remains available on the market. This latter approach is conservative with regard to overall installation costs. Analysis of the market efficiencies continues to show that there are Category I small gas-fired commercial packaged boilers at the 85-percent efficiency level, and not all equipment will transition to mechanically vented equipment. As noted previously, however, DOE is adopting in this final rule an 84-percent E
DOE received several comments regarding special situations that require consideration in DOE's venting logic. AHRI commented that the vent systems in older buildings may be of excessive length and convoluted configuration to properly vent by natural draft an 85-percent efficient gas fired commercial packaged boiler, or oil-fired hot water boiler at the 86-percent and 87-percent efficiency levels. (AHRI, No. 76 at p. 1, 15-16, and 26-27) Weil-McLain commented that retrofitting an existing building with a condensing commercial packaged boiler usually involves running venting over extended lengths and usually becomes prohibitively expensive. Weil-McLain further expressed doubts whether DOE's installation cost model has captured all costs, including additional components, venting materials and system engineering/design costs. (Weil-McLain, No. 67 at p. 2, 7) BHI noted that multiple-boiler installations requiring Category III or IV venting are required to have dedicated venting for each boiler, effectively multiplying the cost several times. (BHI, No. 71 at p. 13) In the same note, Lochinvar commented that CPB installations with condensing boilers often require the vent system to be engineered and noted that DOE in its cost model should include custom engineering fees for these systems. (Lochinvar, No. 70 at p. 3) Crown commented that there are terra-cotta lined chimneys that are allowed to use Category I equipment, but the modeling assumption assumes they will need a B-vent. (Crown, No. 61 at p. 148) Spire commented that the effect of the proposed standard would be to eliminate natural vent gas-fired boilers, which can impose substantial additional costs. (Spire, No. 73 at p. 24) BHI cites various requirements and restrictions regarding horizontal venting that may make it difficult to horizontally vent Category III or IV gas-fired commercial packaged boilers in many cases. (BHI, No. 71 at p. 12-13)
In response to comments about common venting, DOE notes that, while model does not explicitly address common venting, DOE has not received any data on the relative prevalence of common vented Category I boilers on the market. In addition, DOE notes that its analysis, which presumes individually vented boilers, also presumes that in the case of boiler replacements, where needed a venting replacement is done for each boiler in the building individually—a cost which may, in effect, exceed that of replacing a single common vent in a multiple boiler installation. Given the lack of detail in the relative frequency of common venting and the potential additional costs that DOE's method incurs, DOE feels that its approach is adequate for its analysis. With respect to the comments about terra-cotta lined chimneys, DOE concludes that due to the relative costs of lining chimney with terra-cotta liners, as opposed to metal liners, the latter would be much more reflective of the option selected in the current replacement boiler market. More broadly, the general comments noted herein have been mitigated by DOE's adoption of an 84-percent level for SGHW CPB equipment, which is lower than that presented at the March 2016 NOPR.
BHI commented that DOE needs to include the additional installation costs associated with complete replacement
DOE notes that it does not have data on the relevant frequency of boiler vent systems that are also used to vent water heaters, but received comment at the preliminary analysis stage on this issue. DOE notes that the primary application of common venting is with category I equipment. Comments on the frequency were inconsistent; however, AHRI stated that they believed that common venting of commercial boilers and commercial water heaters may in fact be relatively rare given the size mismatch between commercial boilers and commercial water heaters, such that common venting would be more than problematic because the common vent size would be so large that when the boiler wasn't firing there would be venting problems on the water heater. (AHRI, Public Meeting Transcript, No. 39 at pp. 140-141). Based on input from AHRI, common venting with water heaters would be negligible for large CPB equipment and would be uncommon for small CPB equipment. For small CPB equipment, to the extent that common venting with water heaters does occur, the standards adopted in this final rule and the revisions made to and adopted in DOE's CPB test procedure final rule will allow the continued use of Category I commercial packaged boilers in many commonly vented systems and thus remove concerns with orphaned water heaters in common vented systems.
DOE received various comments regarding the safety of venting options used in the NOPR analysis. AHRI commented that a variety of venting installation issues arise as potential standards are at, or near, condensing levels and noted that both manufacturers and installers use caution in their venting installation (AHRI, No. 76 at p. 42-43) BHI commented that DOE's proposed standards for SGHW and LGHW boilers demonstrates insufficient consideration for the safety consequences of attempting to vent gas-fired boilers at this efficiency level into some chimneys in full compliance with nationally recognized safety standards, such as the National Fuel Gas Code. Further, BHI commented that DOE needs to weigh carefully the levels at which it sets minimum efficiency standards so that it does not inadvertently tip across a technology divide, creating: Serious increased costs to the consumer, the application of marginal technology (which is beyond the control of the manufacturer), utility issues, and even safety issues. (BHI, No. 71 at p. 2, 7, 10, and 11) BHI posits that many of the same issues regarding venting of gas-fired boilers apply to oil-fired boilers at the efficiency levels proposed, and that it is unaware of any analysis performed by DOE to evaluate the effect of the proposed levels for oil-fired hot water and steam commercial packaged boilers to safely and cost-effectively vent oil boilers into existing chimneys. (BHI, No. 71 at p. 16) BHI commented that with an 85-percent gas-fired hot water boiler standard there are too many potential installations which breach acceptable safety levels (
With respect to the comments from AHRI, DOE concludes that CPB equipment manufacturers will provide adequate guidance for installers to ensure that the venting system is safe, and that the installers used to install commercial packaged boilers and their associated vent systems will follow such guidance, and leverage their expertise, to mitigate the dangers of potential corrosion issues. With respect to venting costs, DOE notes that it reviewed and updated the venting costs in the LCC model based on comments and data received from stakeholders and believes that its analysis is now more representative of the costs associated with near-condensing and condensing CPB equipment. Regarding BHI's comments that DOE needs to weigh carefully the levels at which it sets its minimum efficiency standards, DOE's analysis weighs carefully the costs and other issues associated with setting a minimum efficiency standard in this rulemaking, and has been conducted in an open and transparent manner, incorporating input from interested parties throughout this rulemaking. Furthermore, because there are manufacturers actively manufacturing and marketing equipment within the efficiency range in question, both natural draft and mechanical draft, DOE must evaluate and consider such efficiency levels as options within the analysis. Manufacturers are not required to provide equipment at any specific efficiency level, only that equipment must meet or exceed the minimum efficiency level for the equipment class under consideration. Relative to BHI's comment about oil-fired boilers having similar venting issues as gas boilers at the efficiency levels proposed and not being aware of any analysis by DOE to ensure safe and cost-effective venting of oil boilers into existing chimneys, DOE points out that it has considered the cost to remove and replace a chimney with adequate venting for both gas-fired and oil-fired boilers when necessary. As such, it has considered the economic cost to the consumer to ensure safe venting of the commercial packaged boilers.
Several commenters noted the impact of building codes on type of venting allowed in the installation of condensing units. Bradford White expressed reservation that DOE's installation cost model may not address strict installation codes for CPB installations of high rise buildings in New York, Boston and Chicago. (Bradford White, No. 68 at p. 3) BHI commented that many manufacturers and installers do not view practices that are technically possible and may meet the letter of some building codes as safe. While these margins of safety can evolve as manufacturers and installers gain more experience, there will always be a point where a manufacturer will set installation requirements or installers will set practices such that a “technically compliant” installation will not be allowed. (BHI, No. 71 at p. 7) In addition, DOE received comment from Raypak that until regulations regarding boiler maintenance in the United States achieve a level of sophistication and stringency similar to those in Europe to ensure that the boilers will operate properly, safely and efficiently, the minimum efficiency levels proposed could result in unsafe and dangerous installations. (Raypak, No. 72 at p. 3) Lochinvar noted that some jurisdictions have enacted rules that prevent installation of non-metallic vents and estimates that the installation costs for approximately 5 percent of installations nationwide that would have selected PVC venting should be recalculated to needing to select AL29-4C instead, as a result. (Lochinvar, No. 70 at p. 3)
With regard to the impact of building codes on the installation of new and replacement boilers, DOE understands that local building codes can have specific and unique requirements regarding termination of venting, both for condensing and for non-condensing CPB equipment that can affect costs. However, due to the localized and building-specific aspects of these
AHRI urged DOE to avoid standards that would require difficult and costly installations, or that would remove equipment technologies that are used in the market place to meet consumer requirements, until it has a clear understanding of installation issues via a survey of buildings. (AHRI, No. 76 at p. 44). Spire stated that the end result of the proposed standards would skew the market in favor of electrical equipment over gas-fired equipment based on what Spire referred to as “an apparent and unrealistic theory” that these electric boilers will be powered by renewable energy in the distant future. Spire added that “this does not just lessen competition; it eliminates competition by eliminating the main alternative to electricity.” (Spire, No. 73 at p. 30)
Regarding AHRI's comment, DOE understands the potential for difficult and costly installations at all efficiency levels, and accounts for a wide variation in costs in installations through consideration of varying vent lengths and base case conditions in its Monte Carlo analysis. DOE disagrees with Spire's contention that revised standards, such as those proposed during the March 2016 NOPR, eliminate competition by eliminating use of the main alternative to electricity. The standards adopted in this final rule are readily available on the market through most, if not all, CPB manufacturers, and higher efficiency levels are in fact being readily incorporated in the existing market. This standard will not eliminate the use of gas in commercial buildings.
See chapter 8 and appendix 8D of the final rule TSD for details on DOE's analysis of installation costs including venting costs.
DOE estimated annual natural gas, fuel oil, and electricity consumed by each class of CPB equipment, at each considered efficiency level, based on the energy use analysis described in section IV.E of this document and in chapter 7 of the final rule TSD.
DOE conducted a literature review on the direct rebound effect in commercial buildings, and found very few studies, especially with regard to space heating and cooling. In a paper from 1993, Nadel describes several studies on takeback in the wake of utility lighting efficiency programs in the commercial and industrial sectors.
During the March 2016 NOPR, DOE requested comments and data on the assumption that a rebound effect is unlikely to occur for these commercial applications. ASAP, Bradford White, Lochinvar, the Joint Utilities, SoCalGas, and Weil-McLain agreed with DOE's findings that a rebound effect is unlikely to occur for commercial packaged boilers. Weil-McLain added that even if it did occur, it would be at insignificant levels. (ASAP, Public Meeting Transcript, No. 61 at p. 178; Bradford White, No. 68 at p. 2; Lochinvar, No. 70 at p. 3; Joint Utilities, No. 65 at p. 2; SoCalGas, No. 77 at pp. 5-6; Weil-McLain, No. 67 at p. 8)
DOE appreciates the comments provided by stakeholders with respect to rebound effect for CPB equipment, and notes that it has not applied a rebound effect in this final rule.
DOE derived average monthly energy prices for a number of geographic areas in the United States using the latest data from EIA and monthly energy price factors that it develops. The process then assigned an appropriate energy
To arrive at prices in future years, DOE multiplied the marginal fuel prices by the projection of annual average price changes in
DOE received comments on marginal prices and, in particular, on the accuracy of the tariff rates paid by larger load consumers. The Gas Associations commented that the analysis should adjust the energy price calculation methodology using marginal prices to a use a tariff-based approach to make the analysis more robust. (Gas Associations, No. 69 at p. 3) Spire commented that DOE used erroneous utility marginal energy pricing and forecasts in its analysis resulting in overstated benefits. (Spire, No. 73 at pp. 17-19) AHRI asked if consumers with large loads pay the same marginal rates as an average commercial consumer, and Spire responded that they do not and referenced their comment submission in the Residential Furnaces NOPR. (AHRI, Public Meeting Transcript, No. 61 at p. 171; Spire/Laclede, Public Meeting Transcript, No. 61 at p. 171) PG&E agreed with Spire that larger consumers pay less for utilities. (PG&E, Public Meeting Transcript, No. 61 at p. 172) AHRI commented that the marginal gas rates do not accurately reflect what larger consumers pay. (AHRI, Public Meeting Transcript, No. 61 at p. 172) Spire commented that EIA data is completely inaccurate for its largest consumers and that transport rates are typically used. (Spire/Laclede, Public Meeting Transcript, No. 61 at p. 172) PEM commented that the largest consumers also hedge gas prices by buying and selling futures and noted that it is extremely difficult to figure out what the true cost of the energy is, also pointing out that there are consumers utilizing interruptible service accounts. (PEM, Public Meeting Transcript, No. 61 at p. 173) Spire commented that DOE could accurately reflect the marginal prices large consumers pay by looking at the incremental cost per therm
DOE appreciates the stakeholders comments on the energy prices used in the economic analysis. EIA historical energy prices and
Lastly, AHRI commented that the exclusion of dual-fuel capable boilers overstates the effective prices for natural gas since consumers can make use of interruptible natural gas rates. (AHRI, No. 76 at p. 42)
With regard to consumers who may be on interruptible rates, DOE examined CBECS 2012 “consumption and expenditure” data and observed that the weighted average cost of natural gas for buildings with commercial packaged boilers using both natural gas and fuel oil is lower by about 6.5 percent compared to the average natural gas price for “gas only” buildings. This compares well with a similar statistic referenced by AHRI, who posited that the use of “interruptible supply” contracts by consumers would result in rates that result in a 7-percent savings versus “uninterruptible supply” rates. Since 95 percent of these observations had gas as the principal fuel, and given that no separate equipment class exists for dual fuel boilers, DOE counted them as gas boilers. However these boilers contribute only 3.5 percent to the total gas boiler sample weights used in the LCC analysis. DOE also noted that nearly 67 percent of the sample buildings using both gas and oil continue to use significant quantities of the higher cost fuel oil, which more than offsets a 7-percent reduction in the natural gas price paid. Further, DOE used gas price data from EIA in its LCC analysis and notes that these prices are based on aggregate revenue and sales, which already include sales for both interruptible and uninterruptible supply. In view of the above, DOE did not pursue development of separate gas price estimates for consumers using dual fuel boilers.
Appendix 8C of the final rule TSD includes more details on energy prices and trends.
The maintenance cost is the routine cost incurred by the consumer for maintaining equipment operation. The maintenance cost depends on CPB capacity and heating medium (hot water or steam). DOE used the most recent RS Means Facility Maintenance and Repair Cost Data to determine labor and materials costs and maintenance frequency associated with each maintenance task for each CPB equipment class analyzed.
Raypak commented that their Service Department has estimated that approximately 5 percent of current technicians are capable of servicing new technology, higher efficiency equipment, and that DOE should account for this in its rulemaking process. (Raypak, No. 72 at p. 3) DOE notes that in comments received in the November 20, 2014 NODA and preliminary analysis, Raypak commented that although they do not have specific data, they believe that the vast majority of maintenance/service is performed by manufacturer factory-trained personnel due to the specialized equipment and expertise required to properly diagnose and repair current commercial packaged boilers. (Raypak,
DOE understands that with any change in technology, there will be an adjustment time needed to develop the skills and expertise within the workforce to adequately service and maintain such technology. However, the comments received at preliminary analysis indicated that the maintenance and service markets were already in transition and DOE does not believe that there is basis for presuming that the service market would not adapt under a new standard scenario at any of the efficiency levels considered.
ABMA commented that the maintenance tasks for large boilers may be more involved and may need to be performed from a ladder or catwalk and as such, the maintenance cost should not be based on extrapolating the maintenance cost for smaller boilers. (ABMA, No. 64 at pp. 2-3)
DOE's LCC model does attempt to develop a maintenance cost for large boilers using data for multiple size categories found in the RS Means Facilities Maintenance and Repair Data manual, recognizing that some tasks may be more involved for larger boilers, as noted by ABMA. The largest size category referenced did not have an upper size limit, but DOE believes that the DOE developed costs, which extrapolates costs for commercial packaged boilers beyond the largest size category available from RS Means, are likely more appropriate for the large CPB equipment classes. However, DOE notes that there is no difference in maintenance cost for a given size boiler based on its efficiency, with the exception that condensing boilers have a slight incremental cost due to condensate neutralizer replacement and thus the magnitude of the maintenance cost would not play a significant role in the LCC savings analysis. DOE concludes that its maintenance approach and costs for larger boilers is appropriate for this rulemaking.
Appendix 8E of the final rule TSD includes more details on maintenance costs.
The repair cost is the cost to the commercial consumer for replacing or repairing components that have failed in the commercial packaged boiler (such as the ignition, controls, heat exchanger, mechanical vent damper, or power vent blower). DOE used the latest version of the RS Means Facility Maintenance and Repair Cost Data to determine labor and materials costs associated with repairing each CPB equipment class analyzed.
DOE sought input from manufacturers regarding the representativeness of using 1-year as warranty for parts and labor and 10-years as warranty for the heat exchanger and received comments from interested parties. Crown commented that manufacturer warranties are a good metric for equipment lifetime and suggested condensing and non-condensing boilers have very different warranties. Further, Crown noted that many warranties are prorated so that a 10-year warranty might actually be a 5-year warranty with 5 years of pro-rated warranty coverage. (Crown, Public Meeting Transcript, No. 61 at pp. 165-166) Raypak commented that many manufacturers do not include labor as part of their warranties, and that a 1-year warranty on the heat-exchanger might be more appropriate. (Raypak, Public Meeting Transcript, No. 61 at p. 163) However, ABMA commented that 5-years may be a better warranty period for heat exchangers especially for larger sizes (ABMA, Public Meeting Transcript, No. 61 at pp. 162-163) and both Bradford White and Lochinvar agreed with DOE's assumptions regarding warranties, adding that the heat exchanger warranty can be prorated for a period of time beyond the non-prorated warranty period. (Bradford White, No. 68 at p. 2, Lochinvar, No. 70 at p. 3)
DOE reviewed the warranty terms of various manufacturers and determined that the vast majority of manufacturers offer at least ten years of coverage for heat exchangers and that both condensing and non-condensing warranties may use prorating as part of their terms. Based on this observation and comments received, DOE determined a 10-year warranty is representative for parts coverage. This review also found that labor is generally called out as not being covered by manufacturer warranties. However, DOE considered that other players in the distribution chain may provide such labor cost coverage within the first year of operation. DOE performed a sensitivity analysis of the LCC model where the consumer would cover labor costs for any instances of heat exchanger failure within the first year and determined that there is no impact to the results and has retained the assumption of parts and labor coverage within one year of installation. With respect to the comments suggesting warranties as an indicator of lifetime, DOE encountered similar warranty terms for condensing and non-condensing boilers and did not attempt to extrapolate lifetime differences from warranty terms. Further, as noted during the CPB NODA and availability of Preliminary Analysis TSD, DOE agreed with commenters that it is difficult to estimate lifetime of a technology that has only been broadly available on the market for about 15 years, and DOE concludes that the values captured in survey results may be more representative of early experience based on new technology or installation issues. DOE expects that, as condensing boiler technology matures and installers become better trained at installing and maintaining condensing boilers, lifetime of condensing commercial packaged boilers sold and installed in 2020 and beyond would be expected to be similar to their non-condensing counterparts.
Crown commented that condensing boilers would be more susceptible to poor water-quality related failures due to their smaller piping, and that warranties take that into account. (Crown, Public Meeting Transcript, No. 61 at pp. 166-167) ASAP and the Joint Advocates commented that DOE is overestimating the repair costs for condensing boilers and that DOE should assume the same heat exchanger failure rates for condensing and non-condensing boilers in the absence of data to the contrary. (ASAP, Public Meeting Transcript, No. 61 at p. 164, Joint Advocates, No. 74 at p. 1, 7)
DOE notes that it considered the potential failures and failure probabilities particular to condensing commercial package boilers in the estimates of repair and maintenance costs, in particular assigning the heat exchanger, a major component of the boiler system, a higher probability of failure than for a non-condensing commercial packaged boiler. DOE appreciates ASAP's and the Joint Advocates' comment positing that DOE should use the same heat exchanger failure rates for condensing and non-condensing boilers in the absence of data to the contrary. However, DOE concludes it is a reasonable assumption given the level of maturity of condensing CPB technology relative to non-condensing commercial packaged boilers and the level of exposure a condensing heat exchanger has to potentially damaging condensate. DOE's assumption provides for a more conservative approach to the calculation of benefits relative to the proposed method suggested by ASAP and the Joint Advocates.
DOE used the latest RS Means Facility Maintenance and Repair Cost Data to determine labor and materials costs associated with repairing each CPB equipment class analyzed. DOE
Equipment lifetime is defined as the age at which equipment is retired from service. DOE used national survey data, published studies, and projections based on manufacturer shipment data to calculate the distribution of CPB lifetimes. DOE based equipment lifetime on a retirement function, which was based on the use of a Weibull probability distribution, with a resulting mean lifetime of 24.8 years. DOE assumed that the lifetime of a commercial packaged boiler is the same across the different equipment classes and efficiency levels. For a detailed discussion of CPB lifetime, see appendix 8F of the final rule TSD. In its March 2016 NOPR, DOE considered the potential impact of condensate on heat exchangers in commercial packaged boilers that operate in condensing mode and established a higher likelihood and sooner time-to-failure for CPB heat exchangers that are exposed to such condensate.
DOE received various comments regarding CPB equipment lifetime. Bradford White commented that while 24.8 years is a fair estimate for copper and cast iron commercial packaged boilers, it was unsure if it is also a fair estimate for newer, high efficiency condensing models, noting that this equipment has not been around long enough to understand what is typical versus where local adverse conditions may have prematurely caused the boiler to fail. (Bradford White, No. 68 at p. 4) PEM commented that the average life of the New York City field constructed boiler is about 25 years with a maximum of 30 years. (PEM, Public Meeting Transcript, No. 61 at p. 123) ABMA expressed concern regarding the use of EPA-DEFRA reference in the analysis that states that with proper maintenance condensing and non-condensing boilers should have similar life expectancy, and inquired whether the difference in maintenance standards between the two countries was ever considered. (ABMA, No. 64 at p. 1) BHI commented that the life expectancy of condensing and non-condensing boilers is different and that DOE needs to look at warranty information for different commercial boilers to get some evidence in this regard. (BHI, No. 71 at p. 17) Similarly, Crown noted that manufacturer warranties are a good, impartial metric of boiler lifetimes, and that DOE will find there are pretty stark differences between those warranties for condensing and non-condensing boilers. (Crown, Public Meeting Transcript, No. 61 at p. 165) Also commenting on warranties, ABMA commented that a 10-year warranty on the heat exchanger for steam boilers would be foolhardy since the equipment is usually poorly maintained and the life of the boilers are highly dependent upon prevailing operating and maintenance conditions. (ABMA, No. 64 at p. 3)
After carefully considering these comments, DOE has concluded that there is not enough data available to accurately distinguish the lifetime of condensing boilers because, as Bradford White stated, they have not been around long enough to understand what is typical versus where local adverse conditions may cause premature boiler failure. In addition, condensing boiler technologies have been improving since their introduction to the U.S. market; therefore, the lifetime of the earliest condensing boilers, and thus the perception by those surveyed, may not be representative of current or future condensing boiler designs. However, DOE did retain its additional repair costs for condensing boilers by assuming different service lifetimes for heat exchangers for condensing boilers and non-condensing boilers, and this is intended to capture all factors that may lead to shorter heat exchanger life for condensing boilers. Regarding ABMA's comment about 10-year warranties on heat exchangers for steam boilers, DOE reviewed manufacturer warranties and determined that some steam boilers warranties cover the heat exchanger for 10 years.
Details on how DOE adjusted the repair costs for heat exchangers may be found in appendix 8E of the final rule TSD. For more details on how DOE derived the CPB lifetime, see appendix 8F of the final rule TSD.
The discount rate is the rate at which future expenditures and savings are discounted to establish their present value. DOE estimated discount rates separately for commercial and residential end users.
For residential consumers, DOE applies weighted average discount rates calculated from consumer debt and asset data, rather than marginal or implicit discount rates.
To establish residential discount rates for the LCC analysis, DOE identified all relevant household debt or asset classes in order to approximate a consumer's opportunity cost of funds related to appliance energy cost savings. It estimated the average percentage shares of the various types of debt and equity by household income group using data from the Federal Reserve Board's Survey of Consumer Finances
For commercial end users, DOE calculated commercial discount rates as the weighted average cost of capital (WACC), using the Capital Asset Pricing Model (CAPM). DOE derived the discount rates by estimating the cost of capital of individual companies that purchase commercial packaged boilers. Damodaran Online is a widely used source of information about company debt and equity financing for most types of firms and was the primary source of
See chapter 8 of the final rule TSD for further details on the development of consumer discount rates.
DOE received several comments regarding its use of discount rates in this rulemaking. Raypak and Spire commented that residential discount rates should not be used and that using commercial discount rates would be better for the residential sector, noting that the discount rate that should apply is that of the debt and equity of the owner of the buildings, not of the people that live in them. (Raypak, Public Meeting Transcript, No. 61 at pp. 176-177; Spire/Laclede, Public Meeting Transcript, No. 61 at p. 176; Spire, No. 73 at p. 27) AHRI agreed with comments from Raypak and Spire, and added that commercial packaged boilers used in residential settings are typically used in large apartment buildings or complexes where heating costs are included in the rent and associated fees. (AHRI, No. 76 at p. 41) However, AHRI commented that consumer discount rates used in the LCC analysis are incorrectly computed and used due to the use of average rather than marginal discount rates, while also noting that previous rulemaking comments that DOE should use marginal discount rates for consumers have little actual relevance in this rulemaking, since AHRI finds that the average and marginal discount rates may be approximately the same. (AHRI, No. 76 at p. 40) NEEA commented that energy bills have no influence on rent prices for multi-family housing, reflecting a similar concern in how costs are transferred in the multi-family housing market. (NEEA, Public Meeting Transcript, No. 61 at pp. 182-183)
With respect to the use of residential discount rates in its analysis, DOE considered the question whether a commercial discount rate should be used for residential, multi-family buildings. DOE understands that a commercial discount rate might apply in some cases, but in other cases, while the upfront purchase is funded by a building owner or entity, ultimately income from the renters pay for the CPB equipment through rent paid to the owner or entity and additionally ultimately pay for the operating and maintenance cost of the CPB equipment. Further, the discount rate is not used in conjunction with the purchase of the equipment, but is used to determine a present value for a future stream of ongoing operating and maintenance costs and benefits. DOE understands that the principal time a commercial discount rate would apply is when an owner or entity can exert market power and claim the financial benefits as excess profits. Such rental markets do exist, but not for the long run. Either new rental units get built until supply and demand are in balance, or some external shock upsets the owner's or entity's ability to reap excess profits. As such, for this final rule analysis, DOE is using updated residential discount rates for the CPB equipment used in the residential sector.
More details regarding DOE's estimates of consumer discount rates are provided in chapter 8 of the final rule TSD.
To accurately estimate the share of consumers that would be affected by a potential energy conservation standard at a particular efficiency level, DOE analyzed the considered efficiency levels relative to a no-new-standards case (
Regarding DOE's use of the AHRI database to establish the no-new-standards case efficiency distribution in its NOPR analysis, AHRI commented that the analysis should consider the number of basic models and their distribution by efficiency level, which differs from the number of listings, for its economic analysis. (AHRI, No. 76 at pp. 12, 17-24) In written and oral comments, manufacturers stated that the distribution of CPB equipment models, based on efficiency, is not a fair assessment on how the market shipments are distributed. (Lochinvar, No. 70 at p. 6; BHI, No. 71 at p. 17; Raypak, No. 72 at p. 2) Manufacturers expressed that the scope of available equipment is covered by the AHRI database, however, the distribution of equipment is not representative of the volume of sales as actual shipments will be more biased toward high efficiency equipment than is indicated by available models.
DOE requested shipment information from stakeholders at the NOPR phase. In response, AHRI submitted shipment information for SGHW and LGHW equipment classes that was broken down by efficiency and rated input (for SGHW only). AHRI also submitted historical annual shipment information for gas-fired hot water (including condensing boilers), gas-fired steam, oil-fired hot water and oil-fired steam equipment classes. DOE used the AHRI database and equipment shipment data by efficiency provided by AHRI to analyze trends within equipment classes, as it relates to efficiency levels, to determine the anticipated no-new-standards case efficiency distribution in 2020, the assumed compliance year for amended standards. The trends show the market moving toward higher efficiency commercial packaged boilers, as noted by stakeholders, and DOE accounted for these trends in its no-new-standards case projection. DOE used this information for updating the final rule analysis. For equipment classes that lacked shipment information, DOE used publicly available modeling listing and efficiency information in its analysis. In the absence of shipment information, the distribution of model listings provides a reasonable proxy for shipments for each equipment class. In general, manufacturers are likely to offer models with rated inputs and efficiencies where demand is highest, therefore DOE assumed modeling listing and efficiency information would hold as a proxy for efficiency distribution of shipments.
Regarding AHRI's comment that DOE use basic models only in its analysis, as opposed to the entire database, DOE does not filter the AHRI directory to capture only basic models and notes that the AHRI database does not facilitate the differentiation between basic models within their model listings. DOE is concerned with attempting to infer which models in the database represent basic models, using only the data available in the AHRI database. However, DOE did perform an analysis of the distribution of efficiency levels, and it showed only a minimal difference between DOE's distributions, as captured in 2016 (
Also providing comment, Spire stated that there is no basis to assume that purchases of higher-efficiency commercial packaged boilers that would provide net economic benefits to the purchaser would not occur even in the absence of the proposed standard. (Spire, No. 73 at p. 15) DOE makes no such assertion, but notes that its analysis assesses the impact of standards on consumers, but does not further assess the net economic impacts on consumers who voluntarily select higher efficiency equipment in the absence of standards.
Table IV.6 presents the estimated no-new-standards case efficiency market shares for each analyzed CPB equipment class in 2020. Appendix 8H of the final rule TSD contains more information regarding DOE's development of the efficiency distributions in the no-new-standards case.
DOE calculated the LCC and PBP for all consumers as if each were to purchase new equipment in the year that compliance with amended standards is required. EPCA directs DOE to publish a final rule amending the standard for the equipment not later than 2 years after a notice of proposed rulemaking is issued. (42 U.S.C. 6313(a)(6)(C)(iii)) As discussed previously in section III.A of this document, for purposes of its analysis, DOE used 2020 as the first year of compliance with amended standards.
The payback period is the amount of time it takes the consumer to recover the additional installed cost of more-efficient equipment, compared to baseline equipment, through energy cost savings. Payback periods are expressed in years. Payback periods that exceed the life of the equipment mean that the increased total installed cost is not recovered in reduced operating expenses.
The inputs to the PBP calculation are the total installed cost of the equipment to the consumer for each efficiency level and the average annual operating expenditures for each efficiency level. The PBP calculation uses the same inputs as the LCC analysis, except that discount rates are not needed.
Lochinvar commented that DOE should not consider a payback period over 7 years as acceptable in this
DOE notes that, in general, rulemakings have selected levels with payback periods within the lifetime of the equipment. However, DOE's LCC analysis and development of full life-cycle-cost and life-cycle-cost savings values considers additional detail and economic factors and DOE considers it a more robust assessment of the economic impact on consumers.
DOE received several comments regarding complexity of the LCC Model. AHRI, through its consultant Shorey Consulting, Inc., commented that the use of distributions, and not single point values, makes the model more complex and less transparent and suggested that DOE should have a dialogue with key stakeholders to determine whether the apparent sophistication that comes from the Monte Carlo process is worth the loss in transparency. In addition, they suggest that DOE should also engage stakeholders to determine whether the assumptions inside the LCC model are either necessary or correct. (AHRI, No. 76 at pp. 28-29) In particular, AHRI expressed concern that the random no-new-standards case assignment of efficiencies is thoroughly embedded in DOE's model logic and is not reflective of a functioning marketplace. (AHRI, No. 76 at p. 31 and 45) Spire similarly commented that DOE overstated benefits by assuming purchasing decisions that do not make economic sense will occur. (Spire, No. 73 at p. 16) AHRI suggested a need for a more straightforward, less complex and more understandable approach to modeling. They assert that a core issue is the use of the Monte Carlo simulation approach, and while recognizing that many inputs are distributions rather than single point values, assert that gaining the ability to use distributions has come at the cost of clarity and traceability and the ability to audit the model. (AHRI, No. 76 at p 28) AHRI, through its consultant, provides an example as an illustrative modeling approach that is deterministic, as opposed to using Monte Carlo analysis, utilizes a narrower set of assumptions, and whose implementation resulted in substantively different economic results. Specific aspects of these results are presented in AHRI's comment. AHRI emphasizes that this model is an alternative working model, but states it is in no way suggested as a direct substitute for DOE's LCC, but rather represents a pathway towards a more effective model. (AHRI, No. 76 at pp. 2-3). Spire also commented that DOE's spreadsheets and Monte Carlo software were unreasonably complicated and prone to errors and lacks transparency. (Spire, No. 73 at p. 26).
In response to the comments on the LCC model complexity, DOE welcomes feedback and data supporting modeling changes in its analysis, but, in general believes that it is valuable to capture variation in inputs to help establish variation in LCC and LCC savings in the output. DOE has found that the examination of the fraction of a user base which is negatively impacted by possible standards is an important consideration in setting new standards. DOE notes that the LCC model using the Crystal Ball software can output the assumed values and results of each assumption and provide forecasted results for each iteration in the Monte Carlo simulation if desired by stakeholders to review or trace the output. In addition, it is possible to modify directly the assumption cells in the model to examine impacts of changes to assumptions on the LCC and in fact DOE relies both of these techniques for model testing. DOE notes that the model provided as an example by AHRI limited in many important ways the scope of the market being examined, including omission of any use of RECS data, ignoring new construction, assumes all condensing boilers operate in the high return water temperature scenario, ordering the efficiency distribution in the no-new-standards case as a function of calculated payback, and excluding the incremental costs of venting or maintenance and repair. In addition, a fundamental difference was in the base case assumption where the AHRI model presumed that where the analysis showed the shortest paybacks, consumers were presumed to purchase the highest efficiency boilers in the no-new-standards case distribution. (AHRI, No. 76 at p. 31) This reflects an overly optimistic and unrealistic working market, presumes information that may not be available to all purchasers and, while informative, may unreasonably bias the results as presented by AHRI. While DOE appreciates the feedback from AHRI and recognizes the value of clarity and traceability, it has not deviated from the use of the Monte Carlo approach for the final rule. DOE addresses specific modeling assumptions in the discussion surrounding those variables in the LCC inputs discussion that follows.
AHRI posited that either due to DOE's sizing assumption and/or due to the use of the CBECS energy use data in the sample itself, the energy use model produced excessively high operating hours in some instances and that these distort the economic results. (AHRI, No. 76 at pp. 37-40) AHRI's consultant suggest that a more logical approach for estimating may be to use directly measured data or estimated load data (AHRI, No. 76 at p. 40). DOE has not identified a source of comprehensive burner operating hour (BOH) data for commercial boilers that could be used for such an analysis nor was such identified to DOE by stakeholders. Estimated BOH data from other sources, such as whole building simulation modeling of commercial buildings is another approach that has been considered by DOE, but could result in the need to resolve an even larger number of building-level modeling details and assumptions. DOE received no early guidance from stakeholders and accordingly did not propose the use of whole building simulation at the November 2014 NODA and preliminary analysis or March 2016 NOPR stages. Consequently, DOE has updated the model to use the most recent CBECS 2012 data and made other adjustments, but has not abandoned the use of CBECS energy data nor its sizing methodology. DOE also notes that certain results that are presented by AHRI for the SGHW class reflect the removal of the upper 10 percent of the calculated BOH. DOE concludes that while there is value in reviewing the BOH results, there is no basis to assume that the very highest level of BOH seen in the buildings examined should be simply removed from the LCC analysis.
AHRI also commented that combining the results for natural and mechanical draft commercial packaged boilers, particularly for SGHW boilers, disguises the effects of market adoption of higher efficiency equipment and demonstrates this with the results obtained with their modeling approach and assumptions. (AHRI, No. 76 at pp. 32-33) DOE, however, notes that it considers that there is variation in equipment design, including draft type, in the market. However, as has been noted by DOE in this rulemaking, draft type does not define a unique utility for commercial packaged boilers and consequently there is only one equipment class for the SGHW CPB equipment class. Thus, DOE's LCC analysis aggregates sample selection both for consumers using natural draft equipment and mechanical draft equipment.
AHRI and BHI commented that the random assignment of no-new-standards case efficiencies in the LCC model is not correct, as this inherently assumes that
In response, DOE notes that development of a complete consumer choice model, to support an alternative to random assignment in the no-new-standards case, for boiler efficiency would require data that are not currently available, as well as recognition of the various factors that impact the purchasing decision, such as incentives, the value that some consumers place on efficiency apart from economics (
In its shipments analysis, DOE developed shipment projections for commercial packaged boilers and, in turn, calculated equipment stock over the course of the analysis period. DOE used the shipments projection and the equipment stock to calculate the national impacts of potential amended or new energy conservation standards on energy use, NPV, and future manufacturer cash flows. DOE developed shipment projections based on estimated historical shipment and an analysis of key market drivers for each kind of equipment. DOE did not find any evidence nor was provided any data during the public comment period that indicates fuel switching from oil or gas-fired commercial packaged boilers to electric commercial packaged boilers occurred in the market for these products. Therefore DOE did not modify the shipments analysis to include fuel switching beyond what the historical shipments trend might imply. Furthermore, CBECS 2012 data indicate that 7 percent of commercial buildings use electric boilers (not necessarily packaged boilers) for primary space heating.
In the final rule DOE revised its estimates of historical shipments and shipment projections as additional data became available. The additional data include public use microdata files on the “Consumption and Expenditure” segment of EIA's CBECS 2012. AHRI also provided confidential historical shipment data to DOE's contractors under confidentiality arrangement. DOE estimated historical shipments from stock estimates based on the CBECS data series from 1979 to 2012. Since no CBECS survey was conducted prior to 1979, DOE used the trends in historical shipment data for residential boilers to estimate the historical shipments for the 1960-1978 time period. For estimation of stocks of gas and oil boilers, DOE used the data on growth of commercial building floor space for nine building types from
To project equipment class shipments for new construction, DOE relied on building stock and floor space data obtained from the
DOE estimated the percent share of different efficiency bins across the equipment classes as detailed in chapter 9 of the final rule TSD.
Commercial consumer purchase decisions are influenced by the purchase price and operating cost of the equipment, and therefore may be different across standards levels. To estimate the impact of the increase in relative price from a particular standard level on CPB shipments, DOE assumed that a portion of affected consumers are more price-sensitive and would repair equipment purchased prior to enactment of the standard rather than replace it, extending the life of the equipment by 6 years. DOE modeled this impact using a relative price elasticity approach. When the extended repaired units fail after 6 more years, DOE assumed they will be replaced with new ones. A detailed description of the extended repair calculations is provided in chapter 9 of the final rule TSD.
In the March 2016 NOPR, DOE sought feedback on the assumptions used to develop historical and projected shipments of commercial packaged boilers and the representativeness of its estimates of projected shipments. DOE also requested information on historical shipments of commercial packaged boilers including shipments by equipment class for small, large, and very large commercial packaged boilers. In the March 2016 NOPR analysis, as a required input to the NIA model, DOE had estimated historical shipments of commercial packaged boilers for over 50 years through 2012. AHRI commented that DOE's estimates of historical shipments are lower than the actual historical shipments and furnished confidential historical shipment data for a limited period to DOE's contractors in support of its assertion. (AHRI, No. 76 at p. 13) DOE appreciates the efforts of AHRI and its members to help better inform this rulemaking. The data provided were used to calibrate and refine DOE's shipments model for estimation of historical shipments.
Several commenters further pointed out that the projected shipments of commercial packaged boilers show an unrealistic growth trend that could not be observed in DOE's historical shipment estimates from 1960 through 2012. (AHRI, Public Meeting Transcript, No. 61 at p. 191; Raypak, Public Meeting Transcript, No. 61 at p. 193; Raypak, No. 72 at p. 2; Lochinvar, No. 70 at p. 4; Crown, Public Meeting Transcript, No. 61 at pp. 191-192) NEEA, however, pointed out that the growth in DOE's projected shipments could be attributed to replacements of existing boiler stock and growth in commercial building stock, which should track the trends of new construction of commercial floor space captured in the economic models of the EIA. (NEEA, Public Meeting Transcript, No. 61 at pp. 192-194)
In response to the comments received on projected shipments, DOE updated its shipments model, the results of which display lower growth of projected shipments. In particular, for the March 2016 NOPR, DOE used constant values for percent floor space heated by boiler and CPB saturation (
Lochinvar commented that DOE should consider publishing all the data and model parameters of the shipment model. (Lochinvar, No. 70 at p. 4)
In light of shipment data having been received under confidentiality agreement, DOE is unable to publish the shipment data furnished by AHRI. However, DOE has provided an updated version of the shipments model description and the model parameters in chapter 9 and appendix 9A of the TSD, and shipments data from DOE's calibrated model may be found in the NIA model.
DOE also received various general comments regarding its March 2016 NOPR shipments approach and shipments by efficiency level. BHI commented that DOE should rely on models sold, and not model availability, in its analyses. (BHI, No. 71 at p. 17) Similarly, Lochinvar commented that equipment databases are not representative of the distribution of sales. (Lochinvar, Public Meeting Transcript, No. 61 at p. 208) Bradford White noted that distribution of models based on efficiency is not a fair assessment of how CPB shipments are distributed, and further questions whether standards are truly necessary if, as DOE's own shipments projections show for condensing boilers, the market is already moving towards these higher efficiency equipment on its own. (Bradford White, No. 68 at p. 2) Weil-McLain commented that DOE should look at actual shipments to get a realistic idea of the distribution of boilers installed today based on efficiency levels, rather than total number of models available in each category. (Weil-McLain, No. 67 at p. 8) Raypak commented that it takes exception with the DOE's use of the number of models listed in the AHRI directory as representing the actual shipments of commercial packaged boilers as no such correlation existed and recommended that DOE use data that is more reflective of the marketplace. (Raypak, No. 72 at p. 2) Lochinvar commented that DOE has consistently projected shipments that exceed industry expectations and seem unjustified by existing market data, and that DOE underestimated market trends toward condensing boilers. (Lochinvar, No. 70 at pp. 4, 8) Weil-McLain expressed their belief that the impact of the proposed efficiency standards on natural draft and steam boiler shipments could be significant and that consumers will often decide to repair the existing boiler and delay replacement, creating an unintended consequent reduction in energy savings. (Weil-McLain, No. 67 at pp. 4, 8)
DOE notes that while models throughout most of this rulemaking had relied to some degree on indirect methods to estimate historical and projected shipments, in this final rule the shipments model has been calibrated utilizing shipments data provided to inform the analysis. Based on the availability of these shipments data and the calibration of the shipments model to better reflect the marketplace, DOE concludes that it has adequately addressed the stakeholders' concerns in this final rule. Regarding Bradford White's comments whether standards are truly necessary, DOE notes that the shipments data it received allowed DOE to better inform its analysis and to make that determination based on a more accurate assessment of the national energy savings potential, among other factors it considered. With regard to Weil-McLain's comment about repair versus replace under new standards, DOE assumed that a portion of affected consumers are more price-sensitive and would repair equipment purchased prior to enactment of the standard (in 2019) rather than replace it, extending the life of the equipment by 6 years. DOE modeled this impact using a relative price elasticity approach. When the extended repaired units fail after 6 more years, DOE assumed they will be replaced with new ones. Regarding Weil-McLain's specific comment about natural draft boilers, DOE notes that the standards for small gas-fired hot water commercial packaged boilers in the final rule are lower than proposed at March 2016 NOPR and should alleviate the impact on natural draft shipments. Regarding steam boilers, while DOE understands the observation voiced by Weil-McLain, no new data was provided as to the driving force or likely significance of the impact on the overall steam boiler shipments. Consequently, DOE was not able to further calibrate the shipments
The projected shipments at 5 year intervals during the analysis period starting from 2020 and a few key years are shown in Table IV.8.
Given the comments regarding the impact of increased repairs on shipments, DOE determined that use of price elasticity to model the extended repair option should be maintained in this final rule. DOE used the price elasticity from a residential product study to use sales and price data for commercial unitary air conditioners
Because the estimated energy usage of CPB equipment differs by commercial and residential setting, the NIA employed the same fractions of shipments (or sales) to consumers as is used in the LCC analysis. The fraction of shipments by type of commercial consumer is shown in Table IV.9.
The NIA assesses the national energy savings (NES) and the national net present value (NPV) from a national perspective of total consumer costs and savings that would be expected to result from new or amended standards at specific efficiency levels.
To make the analysis more accessible and transparent to all interested parties, DOE uses a computer spreadsheet model to calculate the energy savings and the national consumer costs and savings from each TSL.
DOE evaluates the impacts of new or amended standards for commercial packaged boilers by comparing no-new-standards-case projections with standards-case projections. The no-new-standards-case projections characterize energy use and consumer costs for each equipment class in the absence of new
Unlike the LCC analysis, the NIA analysis does not use distributions for inputs or outputs, but relies on national average equipment costs and energy costs. DOE used the NES spreadsheet to perform calculations of energy savings and NPV using the annual energy consumption, maintenance and repair costs, and total installed cost data from the LCC analysis. The NIA also uses projections of energy prices and building stock and additions consistent with various
Table IV.10 summarizes the inputs and methods DOE used for the NIA for the final rule. Discussion of these inputs and methods follows the table. See chapter 10 of the final rule TSD for further details.
As described in section IV.F.9 of this document, DOE used a no-new-standards-case distribution of efficiency levels to project what the CPB equipment market would look like in the absence of amended standards. DOE applied the percentages of models within each efficiency range to the total unit shipments for a given equipment class to estimate the distribution of shipments for the no-new-standards case. Then, from those market shares and projections of shipments by equipment class, DOE extrapolated future equipment efficiency trends both for a no-new-standards-case scenario and for standards-case scenarios.
For the standards cases, DOE used a “roll-up” scenario to establish the shipment-weighted efficiency for the year that standards are assumed to require compliance (2020). In this scenario, the market of equipment in the no-new-standards case that do not meet the standard under consideration would “roll up” to meet the new standard level, and the market share of equipment above the standard would remain unchanged.
Lochinvar commented that Tables 10.3.1 and 10.3.2 in the March 2016 NOPR TSD contain clerical errors and provided corrections in written comments. (Lochinvar, No. 70 at p. 4) Furthermore, Lochinvar commented that the roll-up analysis does not show any reduction in the sales of commercial packaged boilers as the minimum efficiency levels are increased, and that reduced sales would be expected since as the price of baseline boilers increase, some projects will no longer be affordable and that would impact the number of boilers shipped. (Lochinvar, No. 70 at pp. 5-6) BHI expressed concern that DOE's roll-up assumption that shipments of equipment at efficiencies above the proposed standard would be unaffected is inconsistent with how SGHW boilers are used. Further, BHI noted that if DOE were to adopt the 85-percent level for SGHW commercial packaged boilers, there is reason to believe that most of the “substandard” SGHW sales would move to the condensing level due to the inability to use Category I venting and the added cost of venting materials, citing the disappearance of sales of SGHW models at efficiencies between 85 percent and 90 percent. (BHI, No. 71 at p. 14)
After reviewing the tables identified by Lochinvar, DOE determined that those tables were a close match to the tables from the preliminary analysis TSD, and not the March 2016 NOPR TSD. The March 2016 NOPR TSD does not contain Table 10.3.1 or Table 10.3.2, nor does it have no-new-standards case and standards case efficiency distribution tables for equipment classes separated by draft type as noted in comments from Lochinvar. However, DOE carefully examined the tables that were the closest match in the March 2016 NOPR TSD, and it was unable to identify any discrepancies. With respect to Lochinvar's comments regarding the roll-up scenario and accounting for reductions in boiler sales, DOE notes that the roll-up tables represent percentages of the market for each efficiency level, with the entire market for a given equipment class defined as 100 percent. DOE does account for reductions in boiler sales that may result from amended standards by considering a price elasticity factor, hence already accounting for shipment impacts due to increased equipment prices. Regarding BHI's comments on roll-up, DOE appreciates the insight into BHI's experience regarding historical sales of SGHW commercial packaged boilers in the 85 percent to 90 percent E
The estimated efficiency trends in the no-new-standards case and standards
The national energy savings analysis involves a comparison of national energy consumption of the considered equipment between each potential standards case also known as Trial Standard Level (TSL) and the case with no new or amended energy conservation standards. DOE calculated the national energy consumption by multiplying the number of units (stock) of each equipment (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 (
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
The inputs for determining the NPV of the total costs and benefits experienced by consumers of the considered equipment are (1) total annual installed cost, (2) total annual savings in operating costs (energy costs and repair and maintenance costs), and (3) a discount factor. DOE calculates the lifetime net savings for equipment shipped each year as the difference between the no-new-standards case and each standards case in terms of total operating cost savings and increases in total installed costs. DOE calculates lifetime operating cost savings over the life of each commercial packaged boiler shipped during the projection period.
DOE determined the difference between the equipment costs under the standard-level case and the no-new-standards case in order to obtain the net equipment cost increase resulting from the higher standard level. As noted in section IV.F.1 of this document, DOE used a constant real price assumption as the default price projection; the cost to manufacture a given unit of higher efficiency neither increases nor decreases over time.
The operating cost savings are energy cost savings, which are calculated using the estimated energy savings in each year and the projected price of the appropriate form of energy. To estimate energy prices in future years, DOE multiplied the average regional energy prices by the projection of annual national-average commercial energy price changes consistent with the projections found on page E-8 in
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.
In analyzing the potential impacts of new or amended standards on consumers, DOE evaluates impacts on identifiable groups (
With regard to its subgroup analysis, DOE received comments regarding the appropriateness of the use of residential discount rates to analyze the impact of the amended standard on the “low income households for residential” subgroup. Raypak commented that the LCC results in the subgroup analysis and the National level results are being significantly overstated due to the use of residential discount rates for the residential installations, since the equipment under consideration is installed in a commercial setting. (Raypak, Public Meeting Transcript, No. 61 at p. 188) Spire commented that some subgroups would be
With respect to Raypak's comment, DOE has addressed the appropriateness of the use of residential discount rates for the residential sector in the national level LCC analysis in this final rule, and notes that the same reasoning for use of residential discount rates applies to the subgroup analysis as well. As such, DOE is retaining the same residential sector discount rate methodology used during the March 2016 NOPR in this final rule. With respect to the comment from Spire, DOE undertook this analysis to evaluate the impacts to subgroups that may be disproportionately affected by a new or amended national standard, and sought comments from stakeholders throughout this rulemaking to help identify potential subgroups. DOE has concluded that the identified subgroups will not be significantly impacted by the new standards.
The consumer subgroup analysis is discussed in detail in chapter 11 of the final rule TSD.
DOE performed an MIA to estimate the financial impacts of amended energy conservation standards on manufacturers of CPB equipment 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 determine how amended 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 Government Regulatory Impact Model (GRIM), an industry cash flow model with inputs specific to this rulemaking. The key GRIM inputs include data on the industry cost structure, unit production costs, equipment shipments, manufacturer markups, and investments in R&D and manufacturing capital required to produce compliant equipment. The key GRIM 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 trial standards cases (TSLs). To capture the uncertainty relating to manufacturer pricing strategies following amended standards, the GRIM estimates a range of possible impacts under different markup scenarios.
The qualitative part of the MIA addresses manufacturer characteristics and market trends. Specifically, the MIA considers such factors as a potential standard's impact on manufacturing capacity, competition within the industry, the cumulative impact of equipment-specific Federal 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 CPB manufacturing industry based on the market and technology assessment, preliminary manufacturer interviews, and publicly available information. This included a top-down analysis of CPB manufacturers that DOE used to derive preliminary financial inputs for the GRIM (
In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis to quantify the potential impacts of amended energy conservation standards. 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 commercial packaged boilers 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, 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 largely 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 VI.B, “Review under the Regulatory Flexibility Act,” and in chapter 12 of the final rule TSD.
DOE uses the GRIM to analyze the financial impacts of amended energy conservation standards on the CPB industry. Standards will potentially require additional investments, raise production costs, and affect revenue through higher prices and, possibly, lower sales. The GRIM is designed to take into account several factors as it calculates a series of annual cash flows for the year standards take effect and for several years after implementation. These factors include annual expected revenues, costs of sales, increases in labor and assembly expenditures, selling and general administration costs, and taxes, as well as capital expenditures, depreciation and maintenance related to new standards. Inputs to the GRIM include manufacturing costs, shipments forecasts, and price forecasts developed in other analyses. DOE also uses industry financial parameters as inputs
After calculating industry cash flows and INPV, DOE compared changes in INPV between the no-new-standards case and each standard level. The difference in INPV between the no-new-standards case and a standards case represents the financial impact of the amended energy conservation standard on manufacturers at a particular TSL. As discussed previously, DOE collected this information on GRIM inputs from a number of sources, including publicly available data and confidential interviews with a number of manufacturers. GRIM inputs are discussed in more detail in the next section. The GRIM results are discussed in section V.B.2. Additional details about the GRIM, discount rate, and other financial parameters can be found in chapter 12 of the final rule TSD.
Manufacturing higher-efficiency equipment is typically more expensive than manufacturing baseline equipment due to the use of more complex components, which are typically more costly 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.
In the MIA, DOE used the MSPs for each considered efficiency level that were calculated in the engineering analysis, (section IV.C.5 of this final rule) and further detailed in chapter 5 of the final rule TSD. To determine the manufacturer selling price-efficiency relationship, DOE used the equipment database from the market and technology assessment, and pricing data received from manufacturers, distributors, and contractors. Using these inputs, DOE used the methodology described in section IV.C.1 of this final rule, to calculate manufacturer selling prices of commercial packaged boilers for a given rated input (representative capacity) for each equipment class at different efficiency levels spanning from the minimum allowable standard (
The GRIM estimates manufacturer revenues based on total unit shipment projections and the distribution of these values 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 2049. The shipments model divides the shipments of commercial packaged boilers 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 equipment stock, broken down by age or vintage, in each year of the analysis period. In addition, the equipment 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 equipment in the no-new-standards case that does not meet the standard under consideration would “roll up” to meet the amended standard beginning in the compliance year of 2020. In this scenario, the market share of equipment above the standard would remain unchanged. See section VI.G of this document and chapter 9 of the final rule TSD for additional details.
Amended energy conservation standards would cause manufacturers to incur one-time 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 equipment class. For the MIA, DOE classified these conversion costs into two major groups: (1) Capital conversion costs; and (2) product conversion costs. Capital conversion costs are one-time 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. Product conversion costs are one-time investments in research, development, testing, marketing, and other non-capitalized costs necessary to make product designs comply with amended energy conservation standards.
To evaluate the level of capital conversion expenditures, manufacturers would likely incur to comply with amended 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 (
In general, DOE assumes that all conversion-related investments occur between the year of publication of the final rule and the year by which manufacturers must comply with the amended standards. The conversion cost figures used in the GRIM can be found in section V.B.2 of this document. DOE received limited information on the conversion costs for oil-fired equipment in interviews. Using equipment listing counts, DOE scaled the feedback on gas-fired equipment to estimate the conversion cost for oil-fired
As discussed in the previous section, MSPs include direct manufacturing production costs (
Under the preservation of gross margin percentage markup scenario, DOE applied a single uniform “gross margin percentage” manufacturer markup across all efficiency levels, which assumes that following amended standards, manufacturers would be able to maintain the same amount of profit as a percentage of revenue at all efficiency levels within an equipment class. As production costs increase with efficiency, this scenario implies that the absolute dollar markup will increase as well. Based on publicly available financial information for manufacturers of commercial packaged boilers, as well as comments from manufacturer interviews, DOE assumed the average manufacturer markup—which includes SG&A expenses, R&D expenses, interest, and profit—to be 1.41 for small gas-fired hot water, small gas-fired steam boilers, large gas-fired hot water boilers, and large oil-fired hot water boilers; 1.40 for small oil-fired hot water boilers; 1.38 for small oil-fired steam boilers; and 1.37 for large gas-fired and oil-fired steam boilers. During manufacturer interviews, manufacturers noted that they would not expect to maintain their current margins under a stringent energy conservation standard. Thus, this manufacturer markup scenario represents the upper bound of the CPB industry's profitability in the standards case.
DOE includes the preservation of per-unit operating profit scenario in its analysis to reflect manufacturer concern that would not be able to maintain current markups in the standards case, given the highly competitive nature of the CPB market. In this scenario, manufacturer markups are set so that operating profit one year after the compliance date of amended energy conservation standards is the same as in the no-new-standards case on a per-unit basis. In other words, manufacturers are not able to garner additional operating profit from the higher production costs and the investments that are required to comply with the amended standards; however, they are able to maintain the same per-unit operating profit in the standards case that was earned in the no-new-standards case. Therefore, operating margin in percentage terms is reduced between the no-new-standards case and standards case. DOE adjusted the manufacturer markups in the GRIM at each TSL to yield approximately the same earnings before interest and taxes in the standards case as in the no-new-standards case. The preservation of per-unit operating profit markup scenario represents the lower bound of industry profitability in the standards case. In this scenario, similar to the preservation of gross margin percentage markup scenario, manufacturers are not able to fully pass through to consumers the additional costs necessitated by CPB standards.
During the notice of proposed rulemaking public meetings, and in written comments in the response to the March 2016 NOPR, interested parties commented on the assumptions and results of the manufacturer impact analysis. Oral and written comments addressed several topics, including concerns regarding the elimination of natural draft equipment, impacts on employment, conversion costs, cumulative regulatory burden, impacts on small businesses, equipment distribution, and the lessening of competition. Comments regarding the impacts on small businesses are discussed in section V.B.2, all other MIA-related comments are discussed below.
Several stakeholders expressed concern that setting a standard at or near condensing levels would force the obsolescence of certain types of commercial packaged boilers. One manufacturer commented that if a condensing level is adopted by DOE, it is possible that natural draft boilers and steam boilers will become obsolete in the CPB industry. (Spire, No. 73, at pp. 23-24) Spire stated that purchasers would be limited to mechanical draft boilers using condensing combustion technology, which are significantly more costly to purchase, maintain and install. BHI commented that in the small gas hot water equipment class in particular, it is possible that a stringent standard will result in large scale obsolescence of existing cast iron boilers since there are many technical constraints for marginal gains in efficiency, such as venting restrictions. (BHI, No. 71 at p. 20) To limit significantly negative industry impacts on manufacturers and equipment offerings, Lochinvar recommended that DOE does not set a standard that requires condensing technology. (Lochinvar, No. 31 at p. 6)
Additionally, during the preliminary stage, Lochinvar stated that a majority of heat exchangers for condensing technology are imported. Lochinvar believes overhead and equipment used to produce non-condensing heat exchangers may become obsolete if condensing technology is effectively mandated. (Lochinvar, Public Meeting Transcript, No. 39 at p. 205)
DOE understands that a stringent standard, specifically condensing technology, may negatively impact INPV and limit industry equipment offerings. The adopted standards do not mandate condensing technology for any equipment class. This final rule adopts a standard lower than the proposed levels in the NOPR for small gas hot water, in part to mitigate the potential for negative impacts on manufacturers and end-users.
AHRI and ABMA asserted concerns about DOE's direct employment estimates being too low. Two stakeholders, representing industry trade associations, representing industry trade associations, stated that the amended rule will decrease employment, contrary to DOE's analysis. (AHRI, Public Meeting Transcript, No. 61 at p. 220) (ABMA, Public Meeting Transcript, No. 61 at p. 222) In written comments, AHRI submitted estimates for HVAC manufacturing employment but did not present employment impacts specific to the covered equipment, commercial packaged boilers. (AHRI, No. 78 at p. 12)
At the NOPR stage, DOE estimated production employment to be 464 production workers in the no-new-standards case for the CPB industry in 2019. 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 594 production and 360 non-production workers in the no-new-standards case in 2020. The final rule analysis presents an updated set of direct employment impacts that range from a potential net loss of 484 jobs to a potential net gain of 7 at the amended level. Therefore, DOE's analysis agrees with statements from the industry that there is a risk of decreasing the number of manufacturing jobs related to the covered equipment.
In terms of estimating manufacturing jobs, DOE's direct employment analysis is based on three primary inputs: CPB shipments in the standards year from the shipments analysis, labor content of the covered equipment from the engineering analysis, and an average production worker wage level based on U.S. Census Bureau's 2014 Annual Survey of Manufacturers (ASM)
This estimated number of domestic production workers only accounts for the labor required to manufacture the most basic equipment that meets the applicable standard—it does not take into account additional features that manufacturers use to differentiate premium equipment, add-ons, or components that do not contribute to heating function. Additional detail on the direct employment analysis can be found in chapter 12 of the final rule TSD.
Furthermore, AHRI stated, “DOE notes that `if a CPB manufacturer chose to keep their current production in the U.S., domestic employment could increase at each TSL.' 81 FR 15899. Given the current issues with outsourcing, including that DOE in past rules has concluded manufacturers may move production abroad in response to increased production costs, this is a huge assumption for which DOE provides no basis in fact.” (AHRI, No. 78 at p. 7)
DOE presents a range of results for direct employment. At the upper bound, DOE presents direct employment based on current production locations, estimated sales figures from the shipments analysis, labor expenditures from the GRIM, and production labor wage rates from the U.S. Census Annual Survey of Manufacturers. Currently, the vast majority of CPB equipment sold into the domestic market is manufactured in the United States and Canada. While some components are imported, the CPB industry has not seen the dramatic shift to overseas manufacturing associated with many consumer appliances. At the adopted level, the production worker skills and the capital equipment necessary to produce minimally compliant equipment does not vary significantly from the no-new-standards case. At the lower bound, DOE presents a loss of employment where job losses scale with the portion of equipment that does not meet the standard. Additional information and full calculations are presented in section V.B.2 of this document.
Additionally, BHI stated in a written comment that the standard will shift the market away from cast iron commercial boilers, which will ultimately reduce the production volume at Casting Solutions, a cast iron foundry and subsidiary of BHI. The amended standard would result in job losses, including eliminating 80 union manufacturing jobs and 20 managerial jobs at Casting Solutions. (BHI, No. 71 at p. 20)
In response, DOE's direct employment analysis presents a range of potential impacts and includes the potential for job loss. The lower bound shows a loss of 484 jobs, including both production and non-production workers, at TSL 2 for manufacturers of the covered equipment. However, these job impacts do not include employment from suppliers or distributors. DOE's production worker analysis focuses on direct employment, as defined in section V.B.2.b of this document and chapter 12 of the final rule TSD.
AHRI notes that while it supports the use of alternative efficiency determination methods (AEDMs) for certification, the creation, validation, and maintenance of AEDMs is an additional burden and cost to manufacturers. They believe the additional burden and cost should be included in DOE's analysis. (AHRI, No. 76 at p. 8)
At this time, DOE does not include AEDMs as an additional cumulative burden or cost to manufacturers in its analysis. For certain consumer products and commercial equipment, DOE's existing testing regulations include allowing the use of an AEDM, in lieu of action testing, to simulate the energy consumption or efficiency of certain basic models of covered equipment under DOE's test procedure conditions. The use of AEDMs is optional and, for compliance certification purposes, reduces the need for sample units and the overall testing burden for manufacturers of expensive or highly custom basic models.
With regard to the rulemakings DOE identified under cumulative regulatory burden, AHRI states that five of the nine identified rulemakings do not have known expected conversion costs. (AHRI, No. 76 at p. 8) Furthermore Weil-McLain commented that DOE's simultaneous and cumulative rulemaking creates a significant burden for consumers and the industry. (Weil-McLain, No. 67 at p. 4)
In response, DOE has performed an analysis of cumulative regulatory burden (CRB) in section V.B.2.e of this document. Cumulative burden is a factor DOE considers in its weighting of costs and benefits. The five rules identified by AHRI do not yet have a published NOPR. Any estimation of burdens before a standard level is proposed would be speculative. Consumer burden is discussed in section IV.H.3.
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 CO
The analysis of power sector emissions uses marginal emissions factors that were derived from data in
Combustion emissions of CH
The emissions intensity factors are expressed in terms of physical units per MWh or MBtu of site energy savings. Total emissions reductions are estimated using the energy savings calculated in the national impact analysis.
For CH
Because the on-site operation of commercial packaged boilers requires combustion of fossil fuels and results in emissions of CO
The
SO
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 SO
Beginning in 2016, however, SO
CSAPR established a cap on NO
The MATS limit mercury emissions from power plants, but they do not include emissions caps and, as such, DOE's energy conservation standards would likely reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on
The
Spire questioned DOE's benefit analyses period and argues that DOE calculates benefits over an unreasonably long period of time. Spire asserts that DOE's approach assumes that the proposed standard—once adopted—would remain unaltered once it is adopted, and believes that this assumption is not credible, and further states that DOE assumes that there will be no material advance in efficiency over the next 30 years, and that DOE will not be triggered to review the standard in the future due to a 6-year review or an ASHRAE 90.1 update trigger over the next 30 years. Further, Spire questions DOE's ability to make predictions regarding items such as energy prices or equipment sales 30 years from now, and thus it believes the analysis cannot be described as clear and convincing evidence of the benefits of the proposed standards. Spire states that DOE should focus not just on the projected life of the equipment, but on the projected life of the standard it proposes. (Spire, No. 73 at pp. 19-21) AHRI commented that DOE violates EPCA requirements for the benefits of a proposed standard to exceed its burden by giving emissions savings disproportionate weight over other factors, noting that there is nothing in the statute that indicates that Congress indicated that this be anything other than an equal weighting of factors, and that the global indirect emissions and SCC reductions extend well beyond the life of the equipment and the relevant period for measuring benefits relative to costs, thus implying disproportionate weighting for these benefits. (AHRI, No. 76 at pp. 11-12) AHRI specifically points out that the benefits from SCC extend through 2300, and that benefits to consumers accrue after 2050 for equipment purchased in 2019-2048, and that incremental variable and fixed costs incurred by manufacturers are included in earlier years in preparation for the rule. AHRI states that DOE provides no justification for the exclusion of many costs that manufacturers might incur after 2050, in harmony with the time period DOE uses to measure benefits. (AHRI, No. 76 at p. 11)
In response, DOE considers the impacts over the life of the commercial packaged boiler equipment units shipped in the 30-year analysis period. With respect to energy cost savings, impacts continue to be accumulated until all of the equipment shipped in the 30-year analysis period is retired from service. Regarding the statement that there would be no material advance over the next 30 years, DOE's no-new-standards case assumptions shows a continued improvement in efficiency over the analysis period. In addition, if DOE is triggered to review, and if it ultimately amends standards, the benefits calculated are based only on the additional improvements in efficiency since the previous standards were established. Hence, DOE does not over-estimate the benefits as implied by Spire in this regard. DOE understands the difficulty in projecting energy prices or markets and relies on the best available information, as well as the input of stakeholders, during the rulemaking process. As noted in this response to Spire's comments, DOE already does consider the projected life of the standard within its 30-year analysis period, and any further increases in future rulemakings are dealt with and accounted for correctly in those rulemakings, in essence using the efficiency standards established in this rule as the baseline levels for any new no-new-standards case analysis for those rulemakings. With regard to AHRI's comments, emissions impacts from purchased equipment continue until the emissions produced by the boilers shipped during the analysis period are essentially eliminated from the atmosphere. CO
As part of the development of this final rule, DOE considered the estimated monetary benefits from the reduced emissions of CO
For this final rule, DOE relied on a set of values for the social cost of carbon
The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) climate-change-related changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services. Estimates of the SCC are provided in dollars per metric ton of CO
Under section 1(b)(6) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. The purpose of the SCC estimates presented here is to allow agencies to incorporate the monetized social benefits of reducing CO
As part of the interagency process that developed the SCC estimates, technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. The main objective of this process was to develop a range of SCC values using a defensible set of input assumptions grounded in the existing scientific and economic literatures. In this way, key uncertainties and model differences transparently and consistently inform the range of SCC estimates used in the rulemaking process.
When attempting to assess the incremental economic impacts of CO
Despite the limits of both quantification and monetization, SCC estimates can be useful in estimating the social benefits of reducing CO
It is important to emphasize that the current SCC values reflect the IWG's best assessment, based on current data, of the societal effect of CO
In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing CO
After the release of the interim values, the interagency group reconvened on a regular basis to generate improved SCC estimates. Specifically, the group considered public comments and further explored the technical literature in relevant fields. The interagency group relied on three integrated assessment models commonly used to estimate the SCC—the FUND, DICE, and PAGE models.
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
In 2010, the interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th-percentile SCC estimate across all three models at a 3-percent discount rate, was included to represent higher than expected impacts from climate change further out in the tails of the SCC distribution. The values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects,
In 2013 the IWG released an update (which was revised in July 2015) that contained SCC values that were generated using the most recent versions of the three integrated assessment models that have been published in the peer-reviewed literature.
Table IV.12 shows the updated sets of SCC estimates from the latest interagency update in 5-year increments from 2010 through 2050. The full set of annual SCC estimates from 2010 through 2050 is reported in appendix 14B of the final rule TSD. The central value that emerges is the average SCC across models at a 3-percent discount rate. However, for purposes of capturing the uncertainties involved in regulatory impact analysis, the interagency group emphasizes the importance of including all four sets of SCC values.
Regarding the use of discount rates in the development of SCC, AHRI commented that DOE should use discount rates in the analysis consistently, noting that DOE groups results from its analysis of different factors using different discount rates into one overall result that does not portray an accurate representation of true cost to manufacturers and to consumers. Further, AHRI asserts that DOE is deviating from the guidance of OMB Circular No. A-94 to utilize a 7-percent discount rate, but goes on to say that if a different discount rate is appropriate, DOE should clearly present its reasoning so that stakeholders can understand the basis and provide comment. (AHRI, No. 76 at p. 8)
For the purposes of the development of the National NPV, DOE uses the guidance provided by OMB Circular No. A-94; however, in response to the concern raised regarding the use of different discount rates in different portions of the analysis, DOE notes that it used the specific discount rates as recommended by the interagency group that developed the SCC values for the monetization of emissions. A full discussion of these discount rates is provided in Appendix 14A of the final rule TSD.
It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable since they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Research Council report mentioned 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 analytic challenges that are being addressed by the research community, including research programs housed in many of the Federal agencies participating in the interagency process to estimate the SCC. The interagency group intends to periodically review and reconsider those estimates to reflect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling.
In summary, in considering the potential global benefits resulting from reduced CO
DOE multiplied the CO
As noted previously, DOE has estimated how the considered energy conservation standards would reduce site NO
DOE estimated the monetized value of NO
DOE estimated the monetized value of NO
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 received various comments regarding its use of SCC in this rulemaking.
AHRI disputed DOE's assumption that SCC values will increase over time, because AHRI reasons that the more economic development that occurs, the more adaptation and mitigation efforts that will be undertaken. (AHRI, No. 76 at p. 11) In response, the SCC increases over time because future emissions are expected to produce larger incremental damages as physical and economic systems become more stressed in response to greater climatic change (see appendix 14A of the final rule TSD). The approach used by the Interagency Working Group allowed estimation of the growth rate of the SCC directly using the three integrated assessment models (IAMs), which help to ensure that the estimates are internally consistent with other modeling assumptions. Adaptation and mitigation efforts, while necessary and important, are not without cost, particularly if their implementation is delayed.
AHRI, IECA, Spire, and the Cato Institute (Cato) criticized DOE's use of SCC estimates that DOE has acknowledged are subject to considerable uncertainty. (AHRI, No. 76 at p. 9; IECA, No. 63 at p. 3; Spire, No. 73 at p. 21; Cato, No. 62 at pp. 1-27) Cato stated that until the IAMs are made consistent with mainstream climate science, the SCC should be barred from use in this and all other Federal rulemakings. Cato criticized several aspects of the determination of the SCC values by the Interagency Working Group as being discordant with the best climate science and not reflective of climate change impacts. (Cato, No. 62 at pp. 1-2, 4-22) AHRI, IECA, and The Associations also criticized the determination of the SCC values. (AHRI, No.76 at p. 12; IECA, No. 63 at pp. 4-5; The Associations, No. 65 at p. 4)
In conducting the interagency process that developed the SCC values, technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. Key uncertainties and model differences transparently and consistently inform the range of SCC estimates. These uncertainties and model differences are discussed in the interagency working group's reports, which are reproduced in appendices 14A and 14B of the final rule TSD, as are the major assumptions. Specifically, uncertainties in the assumptions regarding climate sensitivity, as well as other model inputs such as economic growth and emissions trajectories, are discussed and the reasons for the specific input assumptions chosen are explained. However, the three IAMs used to estimate the SCC are frequently cited in the peer-reviewed literature and were used in the last assessment of the IPCC. In addition, new versions of the models that were used in 2013 to estimate revised SCC values were published in the peer-reviewed literature (see appendix 14B of the final rule TSD for discussion). Although uncertainties remain, the revised estimates that were issued in November 2013 are based on the best available scientific information on the impacts of climate change. The current estimates of the SCC have been developed over many years, using the best science available, and with input from the public. In November 2013, OMB announced a new opportunity for public comment on the interagency technical support document underlying the revised SCC estimates. 78 FR 70586 (Nov. 26, 2013). In July 2015, OMB published a detailed summary and formal response to the many comments that were received. OMB also stated its intention to seek independent expert advice on opportunities to improve the estimates, including many of the approaches suggested by commenters. DOE stands ready to work with OMB and the other members of the Interagency Working Group on further review and revision of the SCC estimates as appropriate.
AHRI, IECA, The Associations, and Cato criticized DOE's use of global rather than domestic SCC values, pointing out that EPCA references weighing of the need for national energy conservation. Cato recommended reporting the results of the domestic SCC calculation in the main body of the proposed regulation. (AHRI, No. 76 at pp. 10-12; IECA, No. 63 at pp. 1-3; The Associations, No. 65 at p. 4; Cato, No. 62 at pp. 2-3)
In response, DOE's analysis estimates both global and domestic benefits of CO
IECA commented that the economic models used to determine the SCC did not consider industrial GHG and economic leakage. Furthermore, IECA commented that the higher SCC cost drives manufacturing companies offshore and increases imports of more carbon-intensive manufactured goods, thereby increasing global GHG emissions and that the SCC does not consider this. (IECA, No. 63 at p. 2)
The SCC, as developed in the referenced three models, represents damage assessment and expresses this in terms of dollars per ton of emissions. DOE agrees that the industrial GHG and economic leakage discussed by the commenters is not desirable, but disagrees that it should be part of the SCC calculations. Rather, it reflects the impact of potential offshore production of manufactured goods. The commenter's concern appears to be that the use of the SCC in a regulatory context may increase economic leakage and result in additional carbon emissions not captured in the analysis. DOE understands that this is a possibility, but does not have a tool to confidently assess the amount of production that may move overseas,
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.
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
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 potential new or amended energy conservation standards.
DOE received comments on its utility impact analysis. The Gas Associations commented that DOE only assessed the impacts on the electric power industry in its utility impact analysis, and that Process Rule requires it to “[estimate] marginal impacts on electric and gas utility costs and revenues.” (Gas Associations, No. 69 at p. 3)
Historically, DOE's approach to the utility impact analysis, based on NEMS, has been to evaluate the impact of standards only on utility energy sales. NEMS is not suited to characterizing impacts of standards on gas utilities other than those measured by sales, and DOE is unaware of any analytical tools that would enable an analysis of financial impacts on utilities' costs and revenues at a national level. Thus, DOE was not able to perform any further evaluation of the gas utility impacts for the commercial packaged boiler standards rulemaking beyond what is described in this section.
See chapter 15 of the final rule TSD for further details regarding the utility 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 equipment subject to standards, their suppliers, and related service firms; the MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more efficient equipment. Indirect employment impacts from standards consist of the 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 purchase of new equipment 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).
DOE estimated indirect national employment impacts for the standard levels considered in this final rule using an input/output model of the U.S. economy called Impact of Sector Energy Technologies, version 3.1.1 (ImSET).
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. Therefore, DOE used ImSET only to generate results for near-term timeframes (
For more details on the employment impact analysis, see chapter 16 of the final rule TSD.
The following section addresses the results from DOE's analyses with respect to the considered energy conservation standards for commercial packaged boilers. It addresses the TSLs examined by DOE, the projected
DOE analyzed the benefits and burdens of five TSLs for CPB equipment. 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 and Table V.2 present the TSLs analyzed and the corresponding efficiency levels that DOE identified for potential amended energy conservation standards for each equipment class. The efficiency levels in each TSL can be characterized as follows:
• TSL 5 corresponds to the max-tech efficiency level for each equipment class.
• TSL 4 is composed of the efficiency levels corresponding to the maximum NPV at a 7-percent discount rate for each equipment class.
• TSL 3 is composed of a mixture of condensing and non-condensing efficiency levels.
• TSL 2 and TSL 1 are each composed of a mixture of non-condensing efficiency levels only.
A more detailed description of TSLs may be found in appendix 10C of the final rule TSD.
DOE analyzed the economic impacts on CPB consumers by looking at the effects potential amended standards at each TSL will have on the LCC and PBP. DOE also examined the impacts of potential standards on selected consumer subgroups. These analyses are discussed below.
In general, higher-efficiency equipment will affect consumers in two ways: (1) Purchase price increases, and (2) annual operating costs decrease. LCC and PBP include total installed costs (
Table V.3 through Table V.18 show the LCC and PBP results for the TSLs considered for each equipment class. In the first of each pair of tables, the simple payback is measured relative to the baseline equipment. In the second table, the impacts are measured relative to the efficiency distribution in the no-new-standards case in the compliance year (see section IV.H.1 of this document). Because some consumers purchase equipment with higher efficiency in the no-new-standards case, the average savings are less than the difference between the average LCC of EL 0 (efficiency level 0) and the average LCC at each TSL. The savings refer only to consumers who are affected by a standard at a given TSL. Those who already purchase equipment with efficiency at or above a given TSL are not affected. Consumers for whom the LCC increases at a given TSL experience a net cost.
In the consumer subgroup analysis, DOE estimated the impacts of the considered TSLs on low-income (
As discussed in section III.E.2 of this document, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for equipment that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. In calculating a rebuttable presumption payback period for each of the considered TSLs, DOE used discrete values, and, as required by EPCA, based the energy use calculation on the DOE test procedures for commercial packaged boilers. In contrast, the PBPs presented in section V.B.1 were calculated using distributions that reflect the range of energy use in the field.
Table V.27 presents the rebuttable-presumption PBPs for the considered TSLs. While DOE examined the rebuttable-presumption criterion, it considered whether the standard levels considered for this rule are economically justified through a more detailed analysis of the economic impacts of those levels, pursuant to 42 U.S.C. 6295(o)(2)(B)(i), that considers the full range of impacts to the consumer, manufacturer, Nation, and environment. The results of that analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification. The results of that analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification.
DOE performed an MIA to estimate the impact of amended energy conservation standards on manufacturers of commercial packaged boilers. The next section describes the expected impacts on manufacturers at each TSL. Chapter 12 of the final rule TSD explains the analysis in further detail.
In this section, DOE provides GRIM results from the analysis, which examines changes in the industry that would result from a standard. Table V.28 and Table V.29 depict the estimated financial impacts (represented by changes in INPV) of potential amended energy conservation standards on manufacturers of commercial packaged boilers, as well as the conversion costs that DOE expects manufacturers of commercial packaged boilers will incur for all equipment classes at each TSL. As discussed in
To assess the less severe end of the range of potential impacts on industry profitability, DOE modeled a preservation of gross margin percentage markup scenario, in which a uniform “gross margin percentage” markup is applied across all potential efficiency levels. In this scenario, DOE assumed that a manufacturer's absolute dollar markup will increase as production costs increase in the standards case.
To assess the more severe end of the range of potential impacts on industry profitability, DOE modeled the preservation of operating profit markup scenario, which assumes that manufacturers will not be able to generate greater operating profit on a per-unit basis in the standards case as compared to the no-new-standards case. Rather, as manufacturers make the necessary investments required to convert their facilities to produce new standards-compliant equipment and incur higher costs of goods sold, their percentage markup decreases. Operating profit does not change in absolute dollars and decreases as a percentage of revenue.
Each of the markup scenarios results in a unique set of cash flows and corresponding industry values at each TSL. In the following discussion, the INPV results refer to the difference in industry value between the no-new-standards case and each standards case that result from the sum of discounted cash flows from the reference year (2016) through the end of the analysis period (2049). 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 amended standards would take effect. This figure provides an understanding of the magnitude of required conversion costs relative to cash flows calculated by the industry in the no-new-standards case.
The results in Table V.28 and Table V.29 show potential INPV impacts for CPB manufacturers; Table V.28 reflects the upper bound of impacts and Table V.29 represents the lower bound.
TSL 1 represents EL 3 (84 percent) for small gas-fired hot water boilers, EL 2 (84 percent) for large gas-fired hot water boilers, EL 4 (87 percent) for small oil-fired hot water boilers, EL 1 (86 percent) for large oil-fired hot water boilers, EL 3 (80 percent) for small gas-fired steam boilers, EL 4 (81 percent) for large gas-fired steam boilers, EL 1 (83 percent) for small oil-fired steam boilers, and EL 1 (83 percent) for large oil-fired steam boilers. At TSL 1, DOE estimates
At TSL 1, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit increases by 4.6 percent relative to the no-new-standards case price per unit in the year of compliance (2020). This slight price increase would mitigate a portion of the $13.5 million in conversion costs estimated at TSL 1, resulting in slightly negative INPV impacts under this scenario. Under the preservation of operating profit markup scenario, products at higher efficiency levels command a lower markup to maintain the same operating profit per unit in the no-new-standards case. At TSL 1, this markup scenario results in a weighted average price increase of 4.2 percent. This relatively modest price increase in outweighed by the expected conversion costs and slight decrease in total shipments, resulting in more severe INPV impacts.
TSL 2 sets the efficiency level at EL 3 (84 percent) for small gas-fired hot water boilers, EL 3 (85 percent) for large gas-fired hot water boilers, EL 4 (87 percent) for small oil-fired hot water boilers, EL 2 (88 percent) for large oil-fired hot water, EL 4 (81 percent) for small gas-fired steam boilers, EL 5 (82 percent) for large gas-fired steam boilers, EL 2 (84 percent) for small oil-fired steam boilers, and EL 2 (85 percent) for large oil-fired steam boilers. At TSL 2, DOE estimates impacts on INPV for CPB manufacturers to range from −6.7 percent to −3.7 percent, or a change in INPV of −$18.5 million to −$10.3 million. At this potential standard level, industry free cash flow will be estimated to decrease by approximately 41.2 percent to $11.4 million, compared to the no-new-standards case value of $19.3 million in 2019, the year before the compliance date. Overall, DOE estimates manufactures will incur product conversion costs of $13.4 million and capital conversion costs of $7.8 million at this standard level. At TSL 2, DOE also projects higher unit prices will result in a slight decrease in total shipments in the compliance year (2020). DOE estimates a change in shipments of −0.03 percent relative to the no-new-standards case.
At TSL 2, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit increases by 5.3 percent relative to the no-new-standards case price per unit in the year of compliance (2020). In this scenario, manufacturers are able to fully pass on the increase in MPC to consumers. However, this price increase in outweighed by the $21.2 million in conversion costs estimated at TSL 2, resulting in slightly negative INPV impacts under this scenario. Under the preservation of operating profit markup scenario, the weighted average price per unit increases by 4.9 percent. This price increase is offset by the expected conversion costs and slight decrease in total shipments, resulting in more severe INPV impacts.
TSL 3 represents EL 6 (95 percent) for small gas-fired hot water boilers, EL 3 (85 percent) for large gas-fired hot water boilers, EL 4 (87 percent) for small oil-fired hot water boilers, EL 2 (88 percent) for large oil-fired hot water boilers, EL 4 (81 percent) for small gas-fired steam boilers, EL 5 (82 percent) for large gas-fired steam boilers, EL 2 (84 percent) for small oil-fired steam boilers, and EL 2 (85 percent) for large oil-fired steam boilers. At TSL 3, DOE estimates impacts on INPV for CPB manufacturers to range from −18.0 percent to −9.2 percent, or a change in INPV of −$50.0 million to −$25.5 million. At this potential standard level, industry free cash flow will be estimated to decrease by approximately 83.4 percent in 2019, the year before compliance to $3.2 million compared to the no-new-standards case value of $19.3 million. DOE estimates manufactures will incur product conversion costs of $17.7 million and capital conversion costs of $22.8 million to reach this standard level. At TSL 3, DOE also projects higher unit prices will result in a slight decrease in total shipments in the compliance year (2020). DOE estimates a change in shipments of −0.12 percent relative to the no-new-standards case.
At TSL 3, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit increases by 19.1 percent relative to the no-new-standards case price per unit in the year of compliance (2020). In this scenario, manufacturers are able to fully pass on the increase in MPC to consumers. However, this price increase in outweighed by the $40.5 million in conversion costs estimated at TSL 3, resulting in slightly negative INPV impacts under this scenario. Under the preservation of operating profit markup scenario, the weighted average price per unit increases by 18.0 percent. This price increase is offset by the expected conversion costs and slight decrease in total shipments, resulting in more severe INPV impacts.
TSL 4 represents EL 7 (99 percent) for small gas-fired hot water boilers, EL 5 (97 percent) for large gas-fired hot water boilers, EL 6 (97 percent) for small oil-fired hot water boilers, EL 3 (89 percent) for large oil-fired hot water boilers, EL 5 (83 percent) for small gas-fired steam boilers, EL 6 (84 percent) for large gas-fired steam boilers, EL 3 (86 percent) for small oil-fired steam boilers, and EL 3 (87 percent) for large oil-fired steam boilers. At TSL 4, DOE estimates impacts on INPV for CPB manufacturers to range from −42.0 percent to −15.2 percent, or a change in INPV of −$116.7 million to −$42.3 million. At this potential standard level, industry free cash flow will be estimated to decrease by approximately 116.6 percent in the year before compliance (2019) to −$3.2 million relative to the no-new-standards case value of $19.3 million. DOE estimates that manufacturers will incur product conversion costs of $19.4 million and capital conversion costs of $35.8 million to reach this standard level. At TSL 4, DOE also projects higher unit prices will result in a slight decrease in total shipments in the compliance year (2020). DOE estimates a change in shipments of −0. 24 percent relative to the no-new-standards case.
At TSL 4, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit increases by 39.3 percent relative to the no-new-standards case price per unit in the year of compliance (2020). In this scenario, manufacturers are able to fully pass on the increase in MPC to consumers. However, this price increase in outweighed by the $55.2 million in conversion costs estimated at TSL 4, resulting in slightly negative INPV impacts under this scenario. Under the preservation of operating profit markup scenario, the weighted average price per unit increases by 36.1 percent. This price increase is offset by the expected conversion costs and slight decrease in total shipments, resulting in more severe INPV impacts.
TSL 5 represents EL 7 (99 percent) for small gas-fired hot water boilers, EL 5 (97 percent) for large gas-fired hot water
At TSL 5, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit increases by 40.3 percent relative to the no-new-standards case price per unit in the year of compliance (2020). In this scenario, manufacturers are able to fully pass on the increase in MPC to consumers. However, this price increase in outweighed by the $56.4 million in conversion costs estimated at TSL 5, resulting in slightly negative INPV impacts under this scenario. Under the preservation of operating profit markup scenario, the weighted average price per unit increases by 37.0 percent. This price increase is offset by the expected conversion costs and slight decrease in total shipments, resulting in more severe INPV impacts.
To quantitatively assess the impacts of amended energy conservation standards on direct employment in the CPB 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 in 2020. In its analysis, DOE assumed that the ratio of production workers to non-production workers remains constant. The sum of domestic production and non-production workers represent total domestic direct employment. 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 product are a function of the labor intensity of the product, the sales volume, and an assumption that wages remain fixed in real terms over time. The total labor expenditures in each year are calculated by multiplying the MPCs by the labor percentage of MPCs.
The total labor expenditures in the GRIM are converted to domestic production employment levels by dividing production labor expenditures by the annual payment per production worker (production worker hours times the labor rate found in the U.S. Census Bureau's 2014 ASM). The estimates of production workers in this section cover workers, including line-supervisors who are directly involved in fabricating and assembling a unit within the manufacturing facility. Workers performing services that are closely associated with production operations, such as materials handling tasks using forklifts, are also included as production labor.
To calculate non-production workers, the GRIM assumed non-production workers account for 38 percent of total direct employment, which is a ratio derived from 2014 ASM Census data. The total 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 amended energy conservation standards for CPBs, as compared to the no-new-standards case. In general, more-efficient CPBs are more complex and more labor intensive. Per-unit labor requirements and production time requirements increase with higher energy conservation standards.
DOE estimates that in the absence of amended energy conservation standards, there will be 954 domestic production and non-production workers in the CPB industry in 2020, the year of compliance. DOE estimates that approximately 80 percent of commercial packaged boilers sold in the United States are manufactured domestically. Table V.30 shows the range of the impacts of potential amended energy conservation standards on U.S. production and non-production workers of commercial packaged boilers.
At the upper end of the range, all examined TSLs show positive impacts on domestic employment levels. Producing more-efficient CPBs tends to require more labor, and DOE estimates that if CPB manufacturers chose to keep their current production in the U.S., domestic employment could increase at each TSL. In interviews, some manufacturers who produce high-efficiency boiler equipment stated that a standard that went to condensing levels could cause them to hire more employees to increase their production capacity.
To establish a lower bound end of production worker employment, DOE assumes no manufacturer chooses to invest in redesign of equipment that does not meet the standard. Production worker employment drops in proportion with the percentage of equipment that is retired. Since this is a lower bound, DOE does not account for additional production labor needed for higher efficiency equipment. During interviews, several manufacturers expressed that they could lose a significant number of employees at TSL 3, TSL 4 and TSL 5, due to the fact that these TSLs contain condensing efficiency levels for the gas-fired hot water boiler equipment classes and oil-fired hot water boiler equipment classes. These manufacturers have employees who work on production lines that produce cast iron sections and carbon steel or copper heat exchangers for lower to mid-efficiency equipment. If amended energy conservation standards were to require condensing efficiency levels, these employees will no longer be needed for that function, and manufacturers will have to decide whether to develop their own condensing heat exchanger production, source heat exchangers from Asia or Europe and assemble higher efficiency equipment, or leave the market entirely.
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.
In manufacturer interviews, most CPB manufacturers stated that their current production is only running at 50-percent to 75-percent capacity and that any standard that does not propose efficiency levels where manufacturers will use condensing technology for hot water boilers will not have a large effect on capacity. The impacts of a condensing standard on manufacturer capacity are difficult to quantify. Some manufacturers who are already making condensing equipment with a sourced heat exchanger said they will likely be able to increase production using the equipment they already have by utilizing a second shift. Others said a condensing standard will idle a large portion of their business, causing stranded assets and decreased capacity. These manufacturers will have to determine how to best increase their condensing boiler production capacity. DOE believes that some larger domestic manufacturers may choose to add production capacity for a condensing heat exchanger production line.
Manufacturers stated that in a scenario where a potential standard would require efficiency levels at which manufacturers would use condensing technology, there is concern about the level of technical resources required to redesign and test all equipment. The engineering analysis shows that increasingly complex components and control strategies are required as standard levels increase. Manufacturers commented in interviews that the industry would need to add electrical engineering and control systems engineering talent beyond current staffing to meet the redesign requirements of higher TSLs. Additional training might be needed for manufacturing engineers, laboratory technicians, and service personnel if condensing equipment was broadly adopted. However, because TSL 2 (the adopted level) will not require condensing standards, DOE does not expect manufacturers to face long-term capacity constraints due to the standard levels adopted in this final rule.
Small manufacturers, niche equipment manufacturers, and manufacturers exhibiting a cost structure substantially different from the industry average could be affected disproportionately. Using average cost assumptions developed for an industry cash-flow estimate is inadequate to assess differential impacts among manufacturer subgroups.
For the CPB industry, DOE identified and evaluated the impact of amended energy conservation standards on one subgroup—small manufacturers. The SBA defines a “small business” as having 500 employees or less for NAICS 333414, “Heating Equipment (except Warm Air Furnaces) Manufacturing.” Based on this definition, DOE identified 33 manufacturers in the CPB industry that qualify as small businesses. For a discussion of the impacts on the small manufacturer subgroup, see the regulatory flexibility analysis in section VI.B of this document and chapter 12 of the final rule TSD.
One aspect of assessing manufacturer burden involves looking at the cumulative impact of multiple DOE standards and 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 equipment lines or markets with lower expected future returns than competing equipment. For these reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings pertaining to equipment efficiency.
For the cumulative regulatory burden analysis, DOE looks at other regulations that could affect CPB manufacturers during the compliance period, from 2017 to 2020, or those that take effect within three years of the 2020 compliance date of amended energy conservation standards for this equipment. In interviews, manufacturers cited Federal regulations on equipment other than commercial packaged boilers that contribute to their cumulative regulatory burden. The compliance years and expected industry conversion costs of relevant amended energy conservation standards are indicated in Table V.31. Included in the table are Federal regulations that have compliance dates beyond the six year range of DOE's analysis.
In addition to the Federal energy conservation standards listed in Table V.31, there are multiple appliance standards that do not have published NOPRs, including residential water heaters and residential pool heaters. DOE also identified other regulatory burdens that will affect manufacturers of commercial packaged boilers:
DOE will continue to evaluate its approach to assessing cumulative regulatory burden for use in future rulemakings to ensure that it is effectively capturing the overlapping impacts of its regulations. DOE plans to seek public comment on the approaches it has used here (
The amended standard that DOE adopted will also impose accompanying CC&E requirements for manufacturers of CPB equipment. DOE conducted a rulemaking to expand AEDM coverage to commercial HVAC, including commercial packaged boilers and issued a final rule on December 31, 2013. (78 FR 79579). An AEDM is a computer modeling or mathematical tool that predicts the performance of non-tested basic models. For this final rule, DOE permits manufacturers of commercial packaged boilers to rate basic models using AEDMs for compliance certification purposes, reducing the need for sample units and reducing burden on manufacturers. The final rule establishes revised verification tolerances CPB manufacturers. More information can be found at
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 amended standards.
To estimate the energy savings attributable to potential amended standards for commercial packaged boilers, 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 equipment purchased in the 30-year period that begins in the year of anticipated compliance with amended standards (2020-2049). Table V.32 presents DOE's projections of the national energy savings for each TSL
Circular A-4 requires agencies to present analytical results, including separate schedules of the monetized benefits and costs that show the type and timing of benefits and costs.
DOE estimated the cumulative NPV of the total costs and savings for consumers that will result from the TSLs considered for commercial packaged boilers. In accordance with OMB's guidelines on regulatory analysis,
Table V.34 shows the consumer NPV results at 3-percent and 7-percent discount rates respectively for each TSL considered for commercial packaged boilers covered in this rulemaking. In each case, the impacts cover the lifetime of equipment purchased in 2020-2049.
The NPV results based on the aforementioned 9-year analytical period are presented in Table V.35. The impacts are counted over the lifetime of commercial packaged boilers purchased in 2020-2028. As mentioned previously, such results are presented for informational purposes only and are not indicative of any change in DOE's analytical methodology or decision criteria.
DOE expects that amended energy conservation standards for commercial packaged boilers would reduce energy expenditures for consumers of the equipment, with the resulting net savings being redirected to other forms of economic activity. These expected shifts in spending and economic activity could affect the demand for labor. As described in section IV.N of this document, DOE used an input/output model of the U.S. economy to estimate indirect employment impacts of the TSLs that DOE considered in this rulemaking. DOE understands that there are uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Therefore, DOE generated results for near-term timeframes (2020-2025), where these uncertainties are reduced.
The results suggest that the adopted standards are likely to have negligible impact on the net demand for labor in the economy. The net change in jobs is so small that it will 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.
As discussed in section III.E.1.d of this final rule, DOE has concluded that the standards adopted in this final rule will not reduce the utility or performance of commercial packaged boilers under consideration in this rulemaking. Manufacturers of the equipment currently offer units that meet or exceed the adopted standards.
DOE considered any lessening of competition that would be likely to result from new or amended standards. As discussed in section III.E.1.e, the Attorney General of the United States (Attorney General) determines the impact, if any, of any lessening of competition likely to result from an adopted standard and transmits 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 such impact.
To assist the Attorney General in making this determination, DOE provided the Department of Justice (DOJ) with copies of the 2016 CPB NOPR and the NOPR TSD for review. In its assessment letter responding to DOE, DOJ concluded that the proposed energy conservation standards for commercial packaged boilers 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.
Enhanced energy efficiency, where economically justified, improves the Nation's energy security, strengthens the economy, and reduces the environmental impacts (costs) of energy production. Reduced electricity demand due to energy conservation standards is also likely to reduce the cost of maintaining the reliability of the electricity system, particularly during peak-load periods. As a measure of this reduced demand, chapter 15 in the final rule TSD presents the estimated reduction in generating capacity, relative to the no-new-standards case, for the TSLs that DOE considered in this rulemaking.
Energy conservation resulting from amended standards for commercial packaged boilers is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and greenhouse gases. Table V.36 provides DOE's estimate of cumulative emissions reductions expected to result from the TSLs considered in this rulemaking. The table includes both power sector emissions and upstream emissions. The emissions were calculated using the multipliers discussed in section IV.K of this document. DOE reports annual emissions reductions for each TSL in chapter 13 of the final rule TSD.
As part of the analysis for this final rule, DOE estimated monetary benefits likely to result from the reduced emissions of CO
Table V.37 presents the global value of CO
DOE is well aware that scientific and economic knowledge about the contribution of CO
DOE also estimated the cumulative monetary value of the economic benefits associated with NO
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. 6313(a)(6)(B)(ii)(VII)) No other factors were considered in this analysis.
The NPV of the monetized benefits associated with emissions reductions can be viewed as a complement to the NPV of the consumer savings calculated for each TSL considered in this rulemaking. Table V.39 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced CO
In considering the results in Table V.39, two issues are relevant. First, the national operating cost savings are domestic U.S. monetary savings that occur as a result of purchasing the covered commercial packaged boilers. The national operating cost savings is measured for the lifetime of units shipped in 2020-2049. The CO
When considering new or amended energy conservation standards for commercial packaged boilers, the standards that DOE adopts must be designed to achieve significant improvement in energy efficiency and be technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii) and (C)(i)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII) and (C)(i))
For this final rule, DOE considered the impacts of amended standards for commercial packaged boilers 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 TSL 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.
Table V.40, Table V.41, and Table V.42 summarize the quantitative impacts estimated for each TSL for commercial packaged boilers. The national impacts are measured over the lifetime of commercial packaged boilers
DOE first considered TSL 5, which represents the max-tech level for all the equipment classes and offers the potential for the highest cumulative energy savings through the analysis period from 2020 through 2049. The estimated energy savings from TSL 5 are 2.11 quads of energy. TSL 5 has an estimated NPV of consumer benefit of $1.966 billion using a 7-percent discount rate, and $9.36 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 5 are 119 million metric tons of CO
At TSL 5, the average LCC savings range from $945 to $70,909 depending on equipment class. The fraction of consumers incurring a net cost ranges from 3 percent for the large oil-fired steam CPB equipment class to 57 percent for the large oil-fired hot water CPB equipment class.
At TSL 5, the projected change in INPV ranges from a decrease of $118.5 million to a decrease of $42.3 million, which corresponds to a change in INPV of −42.7 percent to −15.2 percent, respectively. The industry is expected to incur $56.4 million in total conversion costs at this level. Approximately 98.6 percent of industry equipment listings require redesign to meet this standard level today. At this level, manufacturers stated they will require additional engineering expertise and production lines, or possibly source parts from other manufacturers.
Accordingly, the Secretary concludes that at TSL 5 for commercial packaged boilers, the benefits of energy savings, NPV of consumer benefits, emission reductions, and the estimated monetary value of the CO
DOE then considered TSL 4, which corresponds to the efficiency level within each equipment class that provides the highest consumer NPV at a 7-percent discount rate over the analysis period from 2020 through 2049. The estimated energy savings from TSL 4 are 2.096 quad of energy. TSL 4 has an estimated NPV of consumer benefit of $2.0 billion using a 7-percent discount rate, and $9.35 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 4 are 118 million metric tons of CO
At TSL 4, the average LCC savings range from −$2,267 to $70,909 depending on equipment class. The fraction of consumers incurring a net cost ranges from 3 percent for the large oil-fired steam CPB equipment class to 54 percent for the small gas-fired steam CPB equipment class.
At TSL 4, the projected change in INPV ranges from a decrease of $116.7 million to a decrease in $42.3 million, which corresponds to a change of −42.0 percent to −15.2 percent, respectively. The industry is expected to incur $55.2 million in total conversion costs at this level. Approximately 88.3 percent of industry equipment listings require redesign to meet this standard level today.
Accordingly, the Secretary concludes that at TSL 4 for commercial packaged boilers, the benefits of energy savings, NPV of consumer benefits, emission reductions, and the estimated monetary value of the CO
DOE then considered TSL 3, which corresponds to the intermediate level with both condensing and high efficiency non-condensing standard levels, depending on equipment class, and offers the potential for significant cumulative energy savings over the analysis period from 2020 through 2049. The estimated energy savings from TSL 3 are 0.80 quad of energy. TSL 3 has an estimated NPV of consumer benefit of $0.61 billion using a 7-percent discount rate, and $3.32 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 3 are 45 million metric tons of CO
At TSL 3, the average LCC savings range from −$2,267 to $36,832, depending on equipment class. The fraction of consumers incurring a net cost ranges from 1 percent for the large oil-fired steam CPB equipment class to 41 percent for the small gas-fired steam CPB equipment class.
At TSL 3, the projected INPV ranges from a decrease of $50.0 million to a decrease of $25.5 million, which corresponds to a change of −18.0 percent to −9.2 percent, respectively. The industry is expected to incur $40.5 million in total conversion costs at this level. Approximately 70.5 percent of industry equipment listings require redesign to meet this standard level today.
Accordingly, the Secretary concludes that at TSL 3 for commercial packaged boilers, the benefits of energy savings, NPV of consumer benefits, emission reductions, and the estimated monetary value of the CO
TSL 2 corresponds to the intermediate level with only non-condensing standard levels and offers the potential for significant cumulative energy savings over the analysis period from 2020 through 2049. The estimated energy savings from TSL 2 are 0.27 quad of energy. TSL 2 has an estimated NPV of consumer benefit of $0.56 billion using a 7-percent discount rate, and $1.98 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 2 are 16 million metric tons of CO
At TSL 2, the average LCC savings range from $212 to $36,832, depending on equipment class. The fraction of consumers incurring a net cost ranges from 1 percent for the large oil-fired steam CPB equipment class to 41 percent for the small gas-fired steam CPB equipment class.
At TSL 2, the projected INPV ranges from a decrease of $18.5 million to a decrease of $10.3 million, which corresponds to a change of −6.7 percent to −3.7 percent, respectively. The industry is expected to incur $21.2 million in total conversion costs at this level. Approximately 45.7 percent of industry equipment listings require redesign to meet this standard level today.
Accordingly, the Secretary concludes that at TSL 2 for commercial packaged boilers, the benefits of energy savings, NPV of consumer benefits, emission reductions, and the estimated monetary value of the CO
After carefully considering the analysis results and weighing the benefits and burdens of TSL 2, and based on clear and convincing evidence, setting the standards for commercial packaged boilers at TSL 2 represents a significant improvement in energy efficiency that is technologically feasible and economically justified, as defined under EPCA at 42 U.S.C. 6313(a). TSL 2 is technologically feasible because the technologies required to achieve these levels already exist in the current market and are available from multiple manufacturers. TSL 2 is economically justified because the benefits to the Nation in the form of energy savings, consumer NPV at 3-percent and 7-percent discount rates, and emissions reductions outweigh the costs associated with reduced INPV. This is the case for each of the low, primary and high economic cases examined, indicating even under the conservative estimations used in the low economic case the standards are still economically justified. Therefore, DOE adopts amended energy conservation standards for commercial packaged boilers at the levels established by TSL 2 and presented in Table V.43.
The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The annualized net benefit is the sum of (1) the annualized national economic value (expressed in 2015$) of the benefits from consumer operation of equipment that meets the adopted standards (consisting primarily of operating cost savings from using less energy, minus increases in equipment purchase and installation costs), and (2) the annualized monetary value of the CO
Table V.44 shows the annualized values for commercial packaged boilers 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 CO
Using a 3-percent discount rate for all benefits and costs and the average SCC series corresponding to a value of $40.6/t in 2015 (in 2015$), the estimated cost of the adopted standards for commercial packaged boilers is $34 million per year in increased equipment costs, while the estimated annual benefits are $144 million in reduced operating costs, $27 million in CO
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 this standards address are as follows:
(1) Insufficient information and the high costs of gathering and analyzing relevant information leads some consumers to miss opportunities to make cost-effective investments in energy efficiency.
(2) In some cases the benefits of more efficient equipment are not realized due to misaligned incentives between purchasers and users. An example of such a case is when the equipment purchase decision is made by a building contractor or building owner who does not pay the energy costs.
(3) There are external benefits resulting from improved energy efficiency of commercial packaged boilers that are not captured by the users of such equipment. These benefits include externalities related to public health, environmental protection and national energy security that are not reflected in energy prices, such as reduced emissions of air pollutants and greenhouse gases that impact human health and global warming. DOE attempts to qualify some of the external benefits through use of social cost of carbon values.
The Administrator of the Office of Information and Regulatory Affairs (OIRA) in the OMB has determined that the regulatory action in this document is a significant regulatory action under Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of the Order, DOE has provided to OIRA: (i) The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; and (ii) An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate. DOE has included these documents in the rulemaking record.
In addition, the Administrator of OIRA has determined that the regulatory action is an “economically significant regulatory action” under section (3)(f)(1) of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(C) of the Order, DOE has provided to OIRA an assessment, including the underlying analysis, of benefits and costs anticipated from the regulatory action, together with, to the extent feasible, a quantification of those costs; and an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, and an explanation why the planned regulatory action is preferable
DOE has also reviewed this regulation pursuant to Executive Order 13563. 76 FR 3281 (Jan. 21, 2011). Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the 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 concludes that this final rule is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs.
The Regulatory Flexibility Act (5 U.S.C. 601
A statement of the need for, objectives of, and legal basis for, the rule is stated in section II.A and not repeated here.
As part of the IRFA, DOE requested comment on financial, sales, and market share data from small manufacturers. In response to the request for comment, ABMA stated that it believes that the proposed standards included in the March 2016 NOPR, if adopted, will have an adverse effect on the financial well-being of all boiler manufacturing companies, with a proportionally greater impact on the smaller companies, operating in what is a very competitive marketplace. (ABMA, No. 64 at p. 3) However, ABMA did not provide any additional data regarding the finances, sales, or market share of small manufacturers that would allow DOE to refine its analysis. Lochinvar recommended DOE consult with AHRI on whether or not small manufacturers are accurately covered by its directory or other available sources. (Lochinvar, No. 70 at p. 6) DOE used AHRI's equipment directory and discussions with the manufacturers of the equipment as a resources to compile its small manufacturer list for the IRFA. Additionally, DOE asked all participants at the NOPR public meeting, including AHRI, for additional information on small manufacturers. Raypak noted that the 11 small manufacturers that are not part of AHRI or ABMA comprise 25 percent of the total marketplace. (Raypak, No. 72 at p. 3)
During the NOPR stage DOE used equipment listings from AHRI, information from the ABMA trade association website, company websites, and market research tools to identify small manufacturers. For the final rule analysis, DOE did not rely on AHRI data for the quantitative analysis behind this FRFA. Rather, DOE based its analysis on listings in the Compliance Certification Database,
AHRI commented that utility data on rebate programs would be useful for the Regulatory Impact Analysis (RIA). (AHRI, Public Meeting Transcript, No. 61 at p. 215) PG&E commented that they could provide data on the effectiveness of utility rebate programs. (PG&E, Public Meeting Transcript, No. 61 at p. 215) Raypak noted that rebates on high efficiency boilers might encourage people to use them even in applications where such boilers are not operating at the high efficiency. (Raypak, Public Meeting Transcript, No. 61 at pp. 216-217)
DOE notes that it does consider rebate programs as an alternative to amended standards in its RIA. While it did not receive data on the effectiveness of utility rebates programs, rebates are still considered in this final rule among other alternatives evaluated. More information regarding the RIA may be found in chapter 17 of the final rule TSD. DOE also notes that the method of evaluating the impact of these non-regulatory alternatives considers that certain purchases of high efficiency/condensing boilers may not operate at, or near, their rated efficiencies.
For manufacturers of CPB equipment, 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
To identify and estimate the total number of companies that could be small business manufacturers of equipment covered by this rulemaking, DOE conducted a market survey using publicly available information to identify potential small manufacturers. DOE's research involved its Compliance Certification Database, the AHRI Directory,
DOE identified 45 manufacturers of CPBs affected by this rulemaking. Of these, DOE identified 21 as small manufacturers that met the screening requirements.
DOE attempted to contact all the small business manufacturers of CPB equipment it had identified. Five of the 21 identified small businesses agreed to take part in an MIA interview. DOE also obtained information about small business impacts while interviewing large manufacturers.
The Compliance Certification Database, which provided quantitative data for the basis of this FRFA, contained equipment information for only 8 small manufacturers of CPBs in the market. The equipment distribution in the Compliance Certification Database is representative of the all CPB equipment legally sold in the United States and is the basis for the quantitative analysis of small businesses.
At higher trial standard levels, an increasing number of small manufacturer have no models that are able to meet the evaluated levels. Table VI.1 shows the number of small business manufacturers that have equipment on the market today that could meet the trial standard levels. Table VI.1 illustrates that as the standard level increases, smaller manufacturers, as a group, may have a harder time meeting the energy conservation standard.
Additionally, DOE performed a more detail examination of impacts by equipment class. Table VI.2 shows the number of manufacturers in each equipment class able to meet trial standard levels with existing equipment offerings.
At TSL 5, there are multiple equipment classes where no small manufacturers currently offer equipment that meets the efficiency level. Specifically, no small manufacturers have designs that could meet TSL in the small gas hot water, large gas hot water, small oil hot water, large gas steam, small oil steam, or large oil steam equipment classes. Similarly at TSL 4, small manufacturers do not currently have product offerings meeting the levels for most equipment classes. At TSL 3, TSL 2, and TSL 1, the number of small manufacturers that currently have compliant listings is reduced, but there are small manufacturers with existing equipment offerings meeting the efficiency level for every equipment class analyzed.
To estimate the maximum potential costs to the industry, DOE's conversion cost model assumes manufacturers will choose to redesign all non-compliant models. Manufacturers, including small manufacturers, with no equipment compliant with the amended standard would redesign all models to offer a full suite of equipment. DOE used model counts to disaggregate conversion costs for the small manufacturers in the Compliance Certification Database. Small manufacturers accounted for 21 percent of models. At the adopted standard, small manufacturers in the Compliance Certification Database would have conversion costs totaling $4.5 million. This averages out to $0.56 million in conversion costs per small manufacturer. Using publicly available information from Hoovers, Manta, and Glassdoor, DOE estimated revenues for small manufacturers listed in the Compliance Certification Database. The average annual revenue was $29.6 million. Based on this information, DOE estimated conversion costs to be 0.63 percent of revenue over the three-year conversion period.
For gas-fired commercial packaged boilers, DOE's engineering analysis concludes that no proprietary technology is required to meet today's amended standard level. Manufacturers would likely need to adopt one or a combination of different technology options: (1) Heat exchanger
DOE notes that the market for oil-fired commercial packaged boilers is shrinking. Some manufacturers, both small and large, may choose not to invest in equipment redesign given the small market size and projected decline in shipments. For manufacturers that do stay in the oil-fired market, DOE's analysis indicates that there are no proprietary technologies required to meet TSL 2. Manufacturers would likely need to adopt one or a combination of different technology options: (1) Heat exchanger improvements (including upgrading to mechanical draft heat exchangers); (2) improvements in burner technology; or (3) using oxygen trim systems.
The discussion above analyzes impacts on small businesses that would result from the adopted standards. In addition to considering other TSLs in this rulemaking, DOE considered several policy alternatives in lieu of standards that could potentially result in energy savings while reducing burdens on small businesses. DOE considered the following policy alternatives: (1) No change in standard; (2) commercial consumer rebates; (3) commercial consumer tax credits; (4) voluntary energy efficiency targets; and (5) early replacement. While these alternatives may mitigate to some varying extent the economic impacts on small entities compared to the standards, DOE determined that the energy savings of these alternatives are significantly smaller than those that would be expected to result from the adopted standard levels. Accordingly, DOE is declining to adopt any of these alternatives and is adopting the standards set forth in this rulemaking. (See chapter 17 of the final rule TSD for further detail on the policy alternatives DOE considered.)
In reviewing alternatives to the final rule, DOE examined energy conservation standards set at other trial standard levels. At levels above TSL 2, the impacts to small manufacturers would be more severe. While TSL 1 would reduce the impacts on small business manufacturers, it would come at the expense of a reduction in energy savings. DOE concludes that establishing standards at TSL 2 balances the benefits of the energy savings at TSL 2 with the potential burdens placed on commercial packaged boiler manufacturers, including small business manufacturers.
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.
Manufacturers of commercial packaged boilers must certify to DOE that their equipment comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their equipment according to the DOE test procedures for commercial packaged boilers, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer equipment and commercial equipment, including commercial packaged boilers. 76 FR 12422 (March 7, 2011). 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. DOE requested OMB approval of an extension of this information collection for three years, specifically including the collection of information proposed in the present rulemaking, and estimated that the annual number of burden hours under this extension is 30 hours per company. In response to DOE's request, OMB approved DOE's information collection requirements covered under OMB control number 1910-1400 through November 30, 2017. 80 FR 5099 (January 30, 2015).
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.
Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has determined that this rule fits within the category of actions included in Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. (See 10 CFR part 1021, App. B, B5.1(b); 1021.410(b) and Appendix B, B(1)-(5).) The rule fits within the category of actions because it is a rulemaking that establishes energy conservation standards for consumer equipment or industrial equipment, and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX determination for this rulemaking, and DOE does not need to prepare an Environmental Assessment or Environmental Impact Statement for this rule. DOE's CX determination for this rule is available at
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 equipment that is 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
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity, (2) write regulations to minimize litigation, and (3) provide a clear legal standard for affected conduct rather than a general standard and 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.
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
DOE has concluded that this final rule may require expenditures of $100 million or more by the private sector. Such expenditures may include (1) investment in research and development and in capital expenditures by commercial packaged boilers manufacturers in the years between the final rule and the compliance date for the new standards, and (2) incremental additional expenditures by consumers to purchase higher-efficiency commercial packaged boilers, starting at the compliance date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the final rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The
Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. As required by EPCA in 42 U.S.C. 6313(a), this final rule establishes amended energy conservation standards for commercial packaged boilers that are designed to achieve a significant improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified. A full discussion of the alternatives considered by DOE is presented in chapter 17 of the TSD for this final rule.
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.
DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (Mar. 15, 1988), that this regulation would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.
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 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.
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
DOE has concluded that this regulatory action, which sets forth amended energy conservation standards for commercial packaged boilers, 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 the final rule.
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.”
In response to OMB's Bulletin, DOE conducted formal peer reviews of the energy conservation standards development process and the analyses that are typically used and prepared a report describing that peer review.
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).
The Secretary of Energy has approved publication of this final rule.
Administrative practice and procedure, Confidential business information, Energy conservation, Test procedures, and Reporting and recordkeeping requirements.
DOE is publishing this document concerning commercial packaged boilers to comply with an order from the U.S. District Court for the Northern District of California in the consolidated cases of
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 part 431 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, to read as set forth below:
42 U.S.C. 6291-6317; 28 U.S.C. 2461 note.
(a) Each commercial packaged boiler listed in Table 1 to § 431.87 and manufactured on or after March 2, 2012 and prior to January 10, 2023, must meet the applicable energy conservation standard levels as follows:
(b) Each commercial packaged boiler listed in Table 2 to § 431.87 and manufactured on or after January 10, 2023, must meet the applicable energy conservation standard levels as follows:
Council on Environmental Quality.
Notice of proposed rulemaking.
In this action, the Council on Environmental Quality (CEQ) is proposing to update its regulations for implementing the procedural provisions of the National Environmental Policy Act (NEPA). CEQ has not comprehensively updated its regulations since their promulgation in 1978, more than four decades ago. This proposed rule would modernize and clarify the regulations to facilitate more efficient, effective, and timely NEPA reviews by Federal agencies in connection with proposals for agency action. The proposed amendments would advance the original goals of the CEQ regulations to reduce paperwork and delays, and promote better decisions consistent with the national environmental policy set forth in section 101 of NEPA. If finalized, the proposed rule would comprehensively update and substantially revise the 1978 regulations. CEQ invites comments on the proposed revisions.
CEQ must receive comments by March 10, 2020. CEQ will hold public hearings on the following dates:
1. February 11, 2020, U.S. Environmental Protection Agency Region 8, 1595 Wynkoop Street, Denver, CO.
2. February 25, 2020, U.S. Department of the Interior, Yates Auditorium, 1849 C Street NW, Washington, DC.
All attendees or speakers must register in advance. Details concerning the hearings and information on additional outreach may be found at
You may submit comments, identified by docket number CEQ-2019-0003, by any of the following methods:
Edward A. Boling, Associate Director for the National Environmental Policy Act, or Viktoria Z. Seale, Chief of Staff and General Counsel, 202-395-5750,
The National Environmental Policy Act of 1969, 42 U.S.C. 4321
Since their promulgation, however, there has been a need for clarification of the regulations, and CEQ has issued over 30 guidance documents to assist
The background section below summarizes NEPA, the CEQ regulations, and developments since CEQ issued those regulations. Specifically, section I.A provides a brief summary of the NEPA statute. Section I.B describes the history of CEQ's regulations implementing NEPA and provides an overview of CEQ's numerous guidance documents and reports issued subsequent to the regulations. Section I.C discusses the role of the courts in interpreting NEPA. Section I.D provides a brief overview of Congress's efforts, and section I.E describes the initiatives of multiple administrations to reduce delays and improve implementation of NEPA. Finally, section I.F provides the background on this rulemaking, including the advance notice of proposed rulemaking (ANPRM).
In section II, CEQ provides a summary of the proposed rule, which, if finalized, would comprehensively update and substantially revise CEQ's current regulations. This proposed rule would modernize and clarify the CEQ regulations to facilitate more efficient, effective, and timely NEPA reviews by Federal agencies by simplifying regulatory requirements, codifying certain guidance and case law relevant to these proposed regulations, revising the regulations to reflect current technologies and agency practices, eliminating obsolete provisions, and improving the format and readability of the regulations. CEQ's proposed revisions include provisions intended to promote timely submission of relevant information to ensure consideration of such information by agencies. CEQ's proposed revisions also are intended to provide greater clarity for Federal agencies, States, Tribes, localities, and the public, and to advance the original goals of the CEQ regulations to reduce paperwork and delays and to promote better decisions consistent with the national environmental policy set forth in section 101 of NEPA.
Congress enacted NEPA to establish a national policy for the environment, provide for the establishment of CEQ, and for other purposes. Section 101 of NEPA sets forth a national policy “to use all practicable means and measures, including financial and technical assistance, in a manner calculated to foster and promote the general welfare, to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans.” 42 U.S.C. 4331(a). Section 102 of NEPA establishes procedural requirements, applying that national policy to proposals for major Federal actions significantly affecting the quality of the human environment by requiring Federal agencies to prepare a detailed statement on: (1) The environmental impact of the proposed action; (2) any adverse effects that cannot be avoided; (3) alternatives to the proposed action; (4) the relationship between local short-term uses of man's environment and the maintenance and enhancement of long-term productivity; and (5) any irreversible and irretrievable commitments of resources that would be involved in the proposed action. 42 U.S.C. 4332(2)(C). NEPA also established CEQ as an agency within the Executive Office of the President to administer Federal agency implementation of NEPA. 42 U.S.C. 4342, 4344;
NEPA does not mandate particular results or substantive outcomes. Rather, NEPA requires Federal agencies to consider environmental impacts of proposed actions as part of agencies' decision-making processes. Additionally, NEPA does not include a private right of action and specifies no remedies. Challenges to agency action alleging non-compliance with NEPA procedures are brought under the Administrative Procedure Act (APA). 5 U.S.C. 551
In 1970, President Nixon issued Executive Order (E.O.) 11514, titled “Protection and Enhancement of Environmental Quality,” which directed CEQ to “[i]ssue guidelines to Federal agencies for the preparation of detailed statements on proposals for legislation and other Federal actions affecting the environment, as required by section 102(2)(C) of the Act.”
In 1977, President Carter issued E.O. 11991, titled “Relating to Protection and Enhancement of Environmental Quality.”
In 1978, CEQ promulgated its “Regulations for Implementing the Procedural Provisions of the National Environmental Policy Act,” 40 CFR parts 1500-1508 (“CEQ regulations” or “NEPA regulations”), “[t]o reduce paperwork, to reduce delays, and at the same time to produce better decisions [that] further the national policy to protect and enhance the quality of the human environment.”
The Supreme Court has held that NEPA is a procedural statute that serves the twin aims of ensuring that agencies consider the significant environmental consequences of their proposed actions and inform the public about their decision making.
CEQ has substantively amended its NEPA regulations only once, at 40 CFR 1502.22, to replace the “worst case” analysis requirement with a provision for the consideration of incomplete or unavailable information regarding reasonably foreseeable significant adverse effects.
The CEQ regulations direct Federal agencies to adopt their own implementing procedures to supplement the NEPA regulations. 40 CFR 1507.3. Under this regulation, agencies across the Federal Government have developed such procedures.
Over the past four decades, numerous questions have been raised regarding appropriate implementation of NEPA and the CEQ regulations. Soon after the issuance of the CEQ regulations and in response to CEQ's review of NEPA implementation and feedback from Federal, State, and local officials, including NEPA practitioners, CEQ issued the “Forty Most Asked Questions Concerning CEQ's National Environmental Policy Act Regulations”
In January 1997, CEQ issued “The National Environmental Policy Act: A Study of Its Effectiveness After Twenty-five Years.”
In 2002, the Chairman of CEQ established a NEPA task force, composed of Federal agency officials, to examine NEPA implementation by focusing on (1) technology and information management and security; (2) Federal and intergovernmental collaboration; (3) programmatic analyses and tiering; (4) adaptive management and monitoring; (5) categorical exclusions (CEs); and (6) environmental assessments (EAs). In 2003, the task force issued a report
Over the past 4 decades, CEQ has issued over 30 documents to provide guidance and clarifications to assist Federal agencies to more efficiently and effectively implement NEPA. CEQ has issued guidance on such topics as CEs,
Despite CEQ guidance and regulations providing for concise, timely documents, the documentation and timelines for completing environmental reviews can be very lengthy, and the process can be complex and costly. In 2018, CEQ and the Office of Management and Budget (OMB) issued a memorandum titled “One Federal Decision Framework for the Environmental Review and Authorization Process for Major Infrastructure Projects under E.O. 13807” (“OFD Framework Guidance”).
CEQ also has conducted reviews and prepared reports on the length of time it takes for agencies to prepare EISs and the length of these documents. These reviews found that the process for preparing EISs is taking much longer than CEQ advised, and that the documents are far longer than the CEQ regulations and guidance recommended. In December 2018, CEQ issued a report compiling information relating to the timelines for preparing EISs during the period of 2010-2017. While CEQ's Forty Questions states that the time for an EIS, even for a complex project, should not exceed 1 year,
As reflected in that report, the period from publication of a notice of intent (NOI) to prepare an EIS to the notice of availability of the draft EIS took, on average, 58 percent of the total time, while preparing the final EIS, including addressing comments received on the draft EIS, took, on average, 32 percent of the total time. The period from the final EIS to publication of the ROD took, on average, 10 percent of the total time. This report recognized that EIS timelines vary widely, and many factors may influence the timing of the document, including variations in the scope and complexity of the actions, variations in the extent of work done prior to issuance of the NOI, and suspension of EIS activities due to external factors.
Additionally, in July 2019, CEQ issued a report on the length, by page
With respect to final EISs, CEQ found that approximately 7 percent were 150 pages or shorter, and 25 percent were 300 pages or shorter. Similar to the conclusions of its EIS timelines study, CEQ noted that a number of factors may influence the length of EISs, including variation in scope and complexity of the decisions that the EIS is designed to inform, the degree to which NEPA documentation is used to document compliance with other statutes, and considerations relating to potential legal challenges. Moreover, variation in EIS length may reflect differences in management, oversight, and contracting practices among agencies that could result in longer documents.
While there can be many factors affecting the timelines and length of EISs, CEQ has concluded that revisions to the CEQ regulations to advance more timely reviews and reduce unnecessary paperwork are warranted. CEQ has determined that improvements to agency processes, such as improved coordination in the development of EISs, can achieve more useful and timely documents to support agency decision making.
Over the past 50 years, Federal courts have issued an extensive body of case law interpreting NEPA and the CEQ regulations. The Supreme Court has directly addressed NEPA in 17 decisions, and the U.S. district and appellate courts issue approximately 100 to 140 decisions each year interpreting NEPA. The Supreme Court has construed NEPA and the CEQ regulations in light of a “rule of reason,” which ensures that agencies determine whether and to what extent to prepare an EIS based on the usefulness of information to the decision-making process.
Following enactment of NEPA in 1970 and over the past four decades, Congress has amended or enacted a large number of substantive environmental statutes. These have included significant amendments to the Clean Water Act and Clean Air Act, establishment of new Federal land management standards and planning processes for National forests, public lands, and coastal zones, and statutory requirements to conserve fish, wildlife, and plant species.
Over the past two decades and multiple administrations, Congress has also undertaken efforts to facilitate more efficient environmental reviews by Federal agencies, and has enacted a number of statutes aimed at improving the implementation of NEPA, including in the context of infrastructure projects. In particular, Congress enacted legislation to improve coordination among agencies, integrate NEPA with other environmental reviews, and bring more transparency to the NEPA process.
In 2005, Congress enacted 23 U.S.C. 139, “Efficient environmental reviews for project decisionmaking,” a streamlined environmental review process for highway, transit, and multimodal transportation projects (the “section 139 process”), in the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), Public Law 109-59, section 6002(a), 119 Stat. 1144, 1857. Congress amended section 139 with additional provisions designed to improve the NEPA process in the 2012 Moving Ahead for Progress in the 21st Century Act (MAP-21), Public Law 112-141, sections 1305-1309, 126 Stat. 405, and the 2015 Fixing America's Surface Transportation (FAST) Act, Public Law 114-94, section 1304, 129 Stat. 1312, 1378. Section 139 provides for an environmental review process that is based on the NEPA regulations and codifies many aspects of the regulations, including provisions relating to lead and cooperating agencies, concurrent environmental reviews in a single NEPA document, coordination on the development of the purpose and need statement and reasonable alternatives, and adoption of environmental documents. Further, section 139 provides for referral to CEQ for issue resolution, similar to part 1504 of the NEPA regulations, and allows for the use of errata sheets, consistent with 40 CFR 1503.4(c).
When Congress enacted section 2045 of the Water Resources Development Act of 2007, Public Law 110-114, 121 Stat. 1041, 1103, it created a similar environmental review provision for water resources development projects by the U.S. Army Corps of Engineers. 33 U.S.C. 2348.
Most recently, in 2015 Congress enacted Title 41 of the FAST Act (FAST-41), to provide for a more efficient environmental review and permitting process for “covered projects.”
To ensure a timely NEPA process so that important infrastructure projects can move forward, Congress has also established shorter statutes of limitations for challenges to certain types of projects. SAFETEA-LU created a 180-day statute of limitations for highway or public transportation capital projects, which MAP-21 later reduced to 150 days. 23 U.S.C. 139(
There are a number of additional instances where Congress has enacted legislation to facilitate more timely environmental reviews. For example, similar to the provisions described above, there are other statutes where Congress has called for a coordinated and concurrent environmental review.
Additionally, Congress has established or directed agencies to establish CEs to facilitate NEPA compliance.
Further, in the context of emergency response, Congress has directed the use or development of alternative arrangements in accordance with 40 CFR 1506.11 for reconstruction of transportation facilities damaged in an emergency (FAST Act, Pub. L. 114-94, 1432, 129 Stat. 1429) and for projects by the Departments of the Interior and Commerce to address invasive species (Water Infrastructure Improvements for the Nation Act, Pub. L. 114-322, 4010(e)(3), 130 Stat. 1628, 1877). In 2013, Congress also enacted section 429 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“Stafford Act”), 42 U.S.C. 5189g, which directed the President, in consultation with CEQ and the Advisory Council on Historic Preservation, to “establish an expedited and unified interagency review process to ensure compliance with environmental and historic requirements under Federal law relating to disaster recovery projects, in order to expedite the recovery process, consistent with applicable law.” Sandy Recovery Improvement Act of 2013, Public Law 113-2, 1106, 127 Stat. 4, 45. This unified Federal environmental and historic preservation review (UFR) process is a framework for coordinating Federal agency environmental and historic preservation reviews for disaster recovery projects associated with Presidentially declared disasters under the Stafford Act. The goal of the UFR process is to enhance the ability of the Federal environmental review and authorization processes to inform and expedite disaster recovery decisions for grant applicants and other potential beneficiaries of disaster assistance by improving coordination and consistency across Federal agencies, and assisting agencies in better leveraging their resources and tools.
These statutes demonstrate that Congress has recognized that the
Over the past two decades and multiple administrations, Presidents also have recognized the need to improve the environmental review process to make it more timely and efficient, and have directed agencies, through Executive Orders and Presidential memoranda, to undertake various initiatives to address these issues. In 2002, President Bush issued E.O. 13274, titled “Environmental Stewardship and Transportation Infrastructure Project Reviews,”
In 2011, President Obama's memorandum titled “Speeding Infrastructure Development through More Efficient and Effective Permitting and Environmental Review”
In 2012, E.O. 13604, titled “Improving Performance of Federal Permitting and Review of Infrastructure Projects,”
A 2013 Presidential Memorandum titled “Modernizing Federal Infrastructure Review and Permitting Regulations, Policies, and Procedures”
On August 15, 2017, President Trump issued E.O. 13807 titled, “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure.”
Consistent with E.O. 13807 and CEQ's initial list of actions, and given the length of time since CEQ issued its regulations, on June 20, 2018, CEQ published an advance notice of proposed rulemaking (ANPRM) titled “Update to the Regulations for Implementing the Procedural Provisions of the National Environmental Policy Act.”
The ANPRM requested comment on potential revisions to update and clarify the NEPA regulations, and included a list of questions on specific aspects of the regulations. For example, with respect to the NEPA process, the ANPRM asked whether there are provisions that CEQ could revise to ensure more efficient environmental reviews and authorization decisions, such as facilitating agency use of existing environmental studies, analyses and decisions, as well as improving interagency coordination. The ANPRM also requested comments on the scope of NEPA reviews, including whether CEQ should revise, clarify, or add definitions. The ANPRM also asked whether additional revisions relating to environmental documentation issued pursuant to NEPA, including CEs, EAs, EISs, and other documents, would be appropriate. Finally, the ANPRM requested general comments, including
In response to the ANPRM, CEQ received over 12,500 comments, which are available for public review.
In this proposed rule, CEQ would revise and modernize its NEPA regulations to facilitate more efficient, effective, and timely NEPA reviews by Federal agencies. The proposed updates and clarifications to its regulations are based on CEQ's record evaluating the implementation of its NEPA regulations and on comments provided in response to the ANPRM. The proposed updates and clarifications seek to advance the stated objectives of the current regulations, as adopted in 1978, “[t]o reduce paperwork, to reduce delays, and at the same time to produce better decisions [that] further the national policy to protect and enhance the quality of the human environment.”
CEQ specifically proposes various revisions to align the regulations with the text of the NEPA statute, including revisions to reflect the procedural nature of section 102(2) of NEPA. CEQ also proposes revisions to ensure that environmental documents prepared pursuant to NEPA are concise and serve their purpose of informing decision makers regarding the significant potential environmental effects of proposed major Federal actions and the public of the environmental issues in the pending decision-making process. CEQ also proposes revisions to ensure that the regulations reflect changes in technology, increase public participation in the process, and facilitate the use of existing studies, analyses and environmental documents prepared by States, Tribes, and local governments.
CEQ also proposes revisions to its regulations consistent with the One Federal Decision policy (“OFD policy”) established by E.O. 13807 for multi-agency review and related permitting and other authorization decisions. The E.O. specifically instructed CEQ to take steps to ensure optimal interagency coordination, including through a concurrent, synchronized, timely, and efficient process for environmental reviews and authorization decisions. In response to the ANPRM, CEQ received many suggestions to codify key aspects of the OFD policy in the NEPA regulations, including by providing greater specificity on the roles and responsibilities of lead and cooperating agencies. Commenters also suggested that the regulations require agencies to establish and adhere to timetables for the completion of reviews, another key element of the OFD policy. In response to these comments and to promote interagency coordination and more timely and efficient reviews, CEQ proposes to codify and make generally applicable a number of key elements from expedited procedures and the OFD policy, including development by the lead agency of a joint schedule, procedures to elevate delays or disputes, preparation of a single EIS and joint ROD to the extent practicable, and a two-year goal for completion of environmental reviews. Consistent with section 104 of NEPA (42 U.S.C. 4334), codification of these policies will not limit or affect the authority or legal responsibilities of agencies under other statutory mandates that may be covered by joint schedules, and CEQ proposes language to that effect in § 1500.6.
CEQ also proposes revisions to clarify the process and documentation required for complying with NEPA by amending part 1501 to add sections on threshold considerations and determining the appropriate level of review; add a section on CEs; and revise sections on EAs, FONSIs, and EISs in part 1502. CEQ further proposes a number of revisions to promote more efficient and timely environmental reviews, including revisions to promote interagency coordination by amending sections of parts 1501, 1506, and 1507 relating to lead, cooperating agencies, timing of agency action, scoping, and agency NEPA procedures. CEQ proposes additional revisions to promote a more efficient and timely NEPA process by amending parts 1501, 1506, and 1507 relating to applying NEPA early in the process, scoping, tiering, adoption, use of current technologies, and avoiding duplication of State, Tribal, and local environmental reviews; revisions to parts 1501 and 1502 to provide for presumptive time and page limits; and revisions to clarify the definitions by amending part 1508.
CEQ also includes provisions to promote informed decision making and to inform the public about the decision-making process. In parts 1500, 1501, 1502, and 1503, CEQ proposes amendments to ensure agencies solicit and consider relevant information early in the development of the draft EIS. In particular, CEQ proposes to direct agencies in the notice of intent (NOI) to request public comment on potential alternatives and impacts, and identification of any relevant information and analyses concerning impacts affecting the quality of the human environment. Additionally, CEQ proposes to direct agencies to include a new section in the draft and final EIS summarizing all alternatives, information, and analyses submitted by the public and to request comment on the completeness of the summary included in the draft EIS.
CEQ further proposes to make revisions to part 1503 to ensure that comments are timely submitted on the draft EIS and on the completeness of the summary of information submitted by the public, and that comments are as specific as possible. Additionally, CEQ proposes a provision in § 1502.18 to require that, based on the summary of the alternatives, information, and analyses section, the decision maker for the lead agency certify that the agency has considered such information. This will advance the purposes of the directive in E.O. 11991 to ensure that EISs are supported by evidence that agencies have made the necessary environmental analyses.
Finally, CEQ proposes changes to make the regulations easier to understand and apply. This includes proposed revisions to simplify and clarify key definitions in § 1508.1. CEQ also proposes certain changes to move and consolidate operative language from the definitions to the relevant regulatory provisions, while leaving the definitional language in the definitions section. In the existing regulations, provisions on certain topics are scattered throughout, making it unnecessarily difficult to navigate the requirements. In some cases, the NEPA regulations address topics in multiple sections and sometimes multiple parts. CEQ proposes to revise the regulations to consolidate provisions and reduce duplication. Such consolidation, reordering, or reorganizing also would promote greater clarity and ease of use.
CEQ proposes several revisions throughout parts 1500-1508 to provide consistency, improve clarity, and correct grammatical errors. CEQ proposes to make certain grammatical corrections in the regulations where it proposes other changes to the regulations to achieve the goals of this rulemaking, or where CEQ determined the changes are necessary for the reader to understand fully the meaning of the sentence. CEQ proposes to revise sentences from passive voice to active voice where it is helpful to identify the responsible parties. CEQ also proposes to replace the word “insure” with “ensure,” consistent with modern usage. Finally, CEQ proposes to add paragraph letters or numbers to certain introductory paragraphs where it would improve clarity. CEQ invites comment on whether it should make these types of changes throughout the rule or if there are additional specific instances where CEQ should make these types of changes.
CEQ proposes to add “Tribal” to the phrase “State and local” throughout the rule to ensure consultation with Tribal entities and to reflect existing NEPA practice to coordinate or consult with affected Tribal governments and agencies, as necessary and appropriate for a proposed action. This proposed change is also in response to comments on the ANPRM supporting expansion of the recognition of the sovereign rights, interests, and expertise of Tribes. CEQ proposes to eliminate the provisions in the current regulations that limit Tribal interest to reservations.
CEQ proposes several changes for consistent use of certain terms. In particular, CEQ proposes to change “entitlements” to the defined term “authorizations” throughout the proposed regulation and added “authorizations” where appropriate to reflect the mandate in E.O. 13807 for better integration and coordination of authorization decisions and related environmental reviews. CEQ proposes conforming edits to add or change “entitlements” to “authorizations” in proposed §§ 1501.2(a), 1501.7(i), 1501.9(d)(4) and (f)(4), 1502.13, 1502.25(b), 1503.3(d), 1506.2, and the definitions of authorization and participating agency in § 1508.1(c) and (w).
CEQ proposes to use the term “decision maker” to refer to an individual responsible for making decisions on agency actions and to define the term “senior agency official” to refer to an individual with responsibilities for NEPA compliance. Under the proposed rule, the senior agency official would be an official of assistant secretary rank or higher who is responsible for agency compliance. The responsibilities of this position in the proposed regulations would be consistent with the responsibilities of senior agency officials in E.O. 13807 to whom anticipated missed or extended permitting timetable milestones are elevated. The proposed regulations would set forth a variety of responsibilities for senior agency officials, such as approval to exceed page or time limits.
CEQ proposes to replace “circulate” or “circulation” with “publish” or “publication” throughout the rule and make “publish” a defined term that provides agencies with the flexibility to make environmental review and information available to the public by electronic means not available at the time of promulgation of the CEQ regulations in 1978. Historically, the practice of circulation included mailing of hard copies or providing electronic copies on disks or CDs. While it may be necessary to provide a hard copy or copy on physical media in limited circumstances, agencies now provide most documents in an electronic format by posting them online and using email or other electronic forms of communication to notify interested or affected parties. This change would help reduce paperwork and delays, and modernize the NEPA process to be more accessible to the public. CEQ proposes these changes in proposed §§ 1500.4(o), 1501.2(b)(2), 1502.9, 1502.20, 1502.21, 1503.4(c), 1506.3, and 1506.8(c)(2).
CEQ proposes to change the term “possible” to “practicable” in proposed §§ 1501.7(h)(1) and (2), 1501.9(b)(1), 1502.5, 1502.9(b), 1504.2, and 1506.2(b) and (c). “Practicable” is the more commonly used term in regulations to convey the ability for something to be done, considering the cost, including time required, technical and economic feasibility, and the purpose and need for agency action. Similarly, CEQ proposes to change “no later than immediately” to “as soon as practicable” in § 1502.5(b). Finally, CEQ proposes to refer to the procedures required in § 1507.3 using the term “agency NEPA procedures” throughout.
CEQ proposes to eliminate obsolete references and provisions in several sections of the CEQ regulations. In particular, CEQ proposes to remove references to the 102 Monitor in 40 CFR 1506.6(b)(2) and 1506.7(c) because the publication no longer exists, and OMB Circular A-95, which was revoked pursuant to section 7 of E.O. 12372 (47 FR 30959, July 16, 1982), including the requirement to use State and area-wide clearinghouses in 40 CFR 1501.4(e)(2), 1503.1(a)(2)(iii), 1505.2, and 1506.6(b)(3)(i).
Finally, CEQ proposes changes to citations and authorities. CEQ would update the authorities sections for each part to correct the format. CEQ also proposes to remove cross-references to the sections of part 1508, “Definitions,” and to update or insert new cross-references throughout the rule to reflect revised or new sections.
In part 1500, CEQ proposes several revisions to update the policy and mandate sections of the regulations to reflect statutory, judicial, policy, and other developments since the CEQ regulations were issued in 1978.
CEQ specifically proposes to retitle and revise § 1500.1, “Purpose and Policy” to align this section with the statutory text of NEPA and certain case law and reflect the procedural requirements of section 102(2) (42 U.S.C. 4332(2)). In particular, the proposed revisions would provide that NEPA is a procedural statute intended to ensure Federal agencies consider the environmental impacts of their actions in the decision-making process. The Supreme Court has made clear that NEPA is a procedural statute that does not mandate particular results; “[r]ather, NEPA imposes only procedural requirements on [F]ederal agencies with a particular focus on requiring agencies to undertake analyses of the environmental impact of their proposals and actions.”
CEQ proposes to revise § 1500.1(a) to summarize section 101 of the Act (42 U.S.C. 4331). CEQ further proposes to revise § 1500.1(a) to reflect that section 102(2) establishes the procedural requirements to carry out the policy stated in section 101. Additionally, CEQ proposes to revise § 1500.1(a) to reflect, consistent with the case law, that the purpose and function of NEPA is satisfied if Federal agencies have considered relevant environmental information, that the public has been informed regarding the decision-making process, and that NEPA does not mandate particular results or substantive outcomes. These proposed revisions would revise paragraph (a) in § 1500.1 to replace the vague reference to “action-forcing” provisions ensuring that Federal agencies act “according to the letter and spirit of the Act” with a more specific reference to the consideration of environmental impacts of their actions in agency decisions. These changes would codify the Supreme Court's interpretation of section 102 as serving NEPA's “action-forcing” purpose in two important respects: Section 102 “ensures that the agency, in reaching its decision, will have available, and will carefully consider, detailed information concerning significant environmental impacts; it also guarantees that the relevant information will be made available to the larger audience that may also play a role in both the decision[-]making process and the implementation of that decision.”
CEQ proposes to revise § 1500.1(b) to describe the regulations that follow consistent with the proposed revisions. In particular, CEQ proposes to revise this paragraph to reflect that the regulations include direction to Federal agencies to determine what actions are subject to NEPA's procedural requirements and the level of NEPA review, where applicable. The proposed revisions also reflect that the regulations are intended to ensure that relevant environmental information is identified and considered early in the process in order to ensure informed decision making by Federal agencies. The proposed revisions reflect that, consistent with E.O. 13807 and the purposes of the regulations as originally promulgated in 1978, the regulations are intended to reduce unnecessary burdens and delays. These proposed revisions are supported by many comments submitted in response to the ANPRM requesting revisions to promote more efficient and timely reviews under NEPA. These proposed amendments emphasize that the policy of integrating NEPA with other environmental reviews is to promote concurrent and timely reviews and decision making consistent with statutes, Executive Orders, and CEQ guidance.
CEQ proposes to make a number of revisions and additions, to § 1500.3, “NEPA compliance,” and to provide paragraph headings to improve readability. CEQ proposes to amend the discussion of paragraph (a), “Mandate,” to clarify that agency NEPA procedures to implement the CEQ regulations, as provided for in § 1507.3, shall not impose additional procedures or requirements beyond those set forth in the CEQ regulations except as otherwise provided by law or for agency efficiency. CEQ intends that this provision will prevent agencies from designing additional procedures that will result in increased costs or delays.
CEQ proposes to add a new § 1500.3(b), “Exhaustion,” which would provide that agencies must request comments on potential alternatives and impacts and identification of any relevant information, studies, or analyses of any kind concerning impacts affecting the quality of the human environment in the notice of intent to prepare an EIS. It would provide that comments on draft EISs and any information on environmental impacts or alternatives to a proposed action must be timely submitted to ensure informed decision making by Federal agencies. CEQ further proposes to provide that comments not timely raised and information not provided shall be deemed unexhausted and forfeited. This reinforces that parties may not raise claims based on issues they did not raise during the public comment period.
It also would provide that agencies must include in the EIS a summary of comments received, and any objections to that summary must be submitted within 30 days of the publication of the notice of availability of the final EIS. Based on the summary, the decision maker must certify in the record of decision that the agency has considered all of the alternatives, information, and analyses submitted by public commenters.
In addition, CEQ proposes to add a new § 1500.3(c), “Actions regarding NEPA compliance,” to reflect the development of case law since the promulgation of the CEQ regulations. Specifically, CEQ proposes to revise the sentence regarding timing of judicial review to strike references to the filing of an EIS or FONSI and replace it with the issuance of a signed ROD or the taking of another final agency action. Under the APA, judicial review does not occur until an agency has taken final agency action.
The CEQ regulations create no presumption that violation of NEPA is a basis for injunctive relief or for a finding of irreparable harm. As the Supreme Court has held, the irreparable harm requirement, as a prerequisite to the issuance of preliminary or permanent injunctive relief, is neither eliminated nor diminished in NEPA cases. A showing of a NEPA violation alone does not warrant injunctive relief and does not satisfy the irreparable harm requirement.
CEQ proposes to clarify that NEPA and the APA allow agencies the flexibility to structure their decision-making processes to allow opportunities for affected parties to seek a stay of an agency's final decision from the agency pending judicial review of the decision. Such stays are authorized by the APA, are expressly contemplated by Fed. R. App. P. 18, and are analogous in key respects to stays of district court judgments available under Fed. R. Civ. P. 62(b) and (d).
In addition to the authority provided by 5 U.S.C. 705 and by agencies' various organic statutes, agency stays of their decisions and appropriate conditions on such stays may further the purposes of NEPA, which provides that all Federal agencies shall identify and develop methods and procedures, in consultation with CEQ, to ensure that environmental amenities and values are given appropriate consideration in decision making along with economic and technical considerations. 42 U.S.C. 4332(B). Agency procedures that allow for agencies to stay their decisions, including appropriate conditions on stays, can contribute to an orderly process whereby judicial review of agency decisions may occur, furthering NEPA's mandate to agencies to develop methods and procedures to ensure the appropriate consideration of environmental, economic, and technical factors in agency decision making. CEQ invites comment on how agencies can structure their processes to ensure appropriate consideration of these factors.
CEQ proposes to add a new § 1500.3(d), “Remedies.” CEQ proposes to state explicitly that harm from the failure to comply with NEPA can be remedied by compliance with NEPA's procedural requirements, and that CEQ's regulations do not create a cause of action for violation of NEPA. The statute does not create any such cause of action, and agencies may not create private rights of action by regulation; “[l]ike substantive [F]ederal law itself, private rights of action to enforce [F]ederal law must be created by Congress.”
CEQ also proposes to state that minor, non-substantive errors that have no effect on agency decision making shall be considered harmless and shall not invalidate an agency action. This would replace and update 40 CFR 1500.3, which provides that trivial violations should not give rise to an independent cause of action. Invalidating actions due to minor errors does not advance the goals of the statute and adds delays and costs.
Finally, CEQ proposes to add a new § 1500.3(e), “Severability,” to address the possibility that this rule, or portions of this rule, may be challenged in litigation. It is CEQ's intent that the individual sections of this rule be severable from each other, and that if any sections or portions of the regulations are stayed or invalidated, the validity of the remainder of the sections shall not be affected and shall continue to be operative.
CEQ proposes to reorder the paragraphs in § 1500.4, “Reducing paperwork,” and § 1500.5, “Reducing delay,” for a more logical ordering, consistent with the three levels of NEPA review. Finally, CEQ proposes edits to § 1500.4 and § 1500.5 for consistency with proposed edits to the cross-referenced sections.
Finally, as noted above, CEQ proposes to add a savings clause to § 1500.6, “Agency authority,” to clarify that the CEQ regulations do not limit an agency's other authorities or legal responsibilities. This clarification is consistent with section 104 of NEPA (42 U.S.C. 4334) and the current regulations, but acknowledges the possibility of different statutory authorities that may set forth different requirements, such as timeframes.
CEQ invites comment on the proposed changes to part 1500, particularly proposed § 1500.3 and whether CEQ should include any additional changes or provisions to advance timely resolution of disputes related to NEPA compliance to ensure a
CEQ proposes significant changes to part 1501. CEQ proposes to replace the current 40 CFR 1501.1, “Purpose,” because it is unnecessary and duplicative, with a new section to address threshold considerations. CEQ proposes to add additional sections to address the level of NEPA review and CEs. CEQ further proposes to consolidate and clarify provisions on EAs and FONSIs, and relocate from part 1502 the provisions on tiering and incorporation by reference. CEQ also proposes to set presumptive time limits for the completion of NEPA reviews, and clarify the roles of lead and cooperating agencies to further the OFD policy and encourage more efficient and timely NEPA reviews.
Since the enactment of NEPA, courts have examined the applicability of NEPA based on a variety of considerations. For example, courts have found that NEPA is inapplicable where an agency is carrying out a non-discretionary duty or obligation, where an agency's statutory obligations clearly or fundamentally conflict with NEPA compliance, where Congress has established requirements under another statute that displaces NEPA compliance, and where environmental review and public participation procedures under another statute are functionally equivalent to those required by NEPA.
CEQ proposes a new § 1501.1, “NEPA threshold applicability analysis,” to provide a series of considerations to assist agencies in a threshold analysis for determining whether NEPA applies. CEQ also proposes related changes in § 1507.3(c) to provide that agencies may identify actions that are not subject to NEPA in their agency NEPA procedures. Paragraph (b) of § 1501.1 would clarify that agencies can also make this determination on a case-by-case basis.
CEQ proposes to amend the introductory paragraph of § 1501.2, “Apply NEPA early in the process,” to change “shall” to “should” and “possible” to “reasonable.” Agencies need the discretion to structure the timing of their NEPA processes to align with their decision-making processes, consistent with their statutory authorities. Agencies need flexibility to determine the appropriate time to start the NEPA process, based on the context of the particular proposed action and governed by the rule of reason, so that the NEPA analysis meaningfully informs the agency's decision. The appropriate time to begin the NEPA process is dependent on when the agency has sufficient information and how it can most effectively integrate the NEPA review into the agency's decision-making process. Further, some have viewed this provision as a legally enforceable standard, rather than an opportunity for agencies to integrate NEPA into their decision-making programs and processes. CEQ's view is that agencies should have discretion with respect to timing, consistent with its regulatory provisions for deferring NEPA analysis to appropriate points in the decision-making process.
CEQ also proposes to amend § 1501.2(b)(2) to clarify that agencies should consider economic and technical analyses along with environmental effects. Finally, CEQ proposes to amend paragraph (b)(4)(ii) to change “agencies” to “governments” consistent with and in support of government-to-government consultation pursuant to E.O. 13175
NEPA requires a “detailed statement” for “major Federal actions significantly affecting the quality of the human environment.” 42 U.S.C. 4332(2)(C). To determine whether an action requires such a detailed statement, the CEQ regulations provide three levels of review for Federal agencies to assess proposals for agency action. Specifically, the CEQ regulations allow agencies to review expeditiously those actions that normally do not have significant effects by using CEs or, for actions that are not likely to have significant effects, by preparing an EA. Through the use of CEs and EAs, agencies then can focus their limited resources on those actions that are likely to have significant effects and require the “detailed statement,” or EIS, required by NEPA.
While the existing CEQ regulations provide for these three levels of NEPA review, they do not clearly set out the decisional framework by which agencies should assess their proposed actions and select the appropriate level of review. To provide this direction and clarity, the proposed rule would add two additional sections to part 1501, renumber the remaining sections, and retitle two sections. The proposed § 1501.3, “Determine the appropriate level of NEPA review,” would describe the three levels of NEPA review and the basis upon which an agency makes a determination regarding the appropriate level of review for a proposed action. While this section would supplement the existing regulations, these concepts exist in the current 40 CFR 1501.4 (whether to prepare an EIS), 1508.4 (CEs), and 1508.9 (EAs).
Additionally, paragraph (b) would address the consideration of significance, which is central to determining the appropriate level of review. CEQ proposes to move and simplify the operative language from 40 CFR 1508.27, “Significantly.” CEQ proposes to change “context” to “potentially affected environment” and “intensity” to “degree” to provide greater clarity as to what agencies should consider in assessing potential significant effects. CEQ did not include a consideration regarding controversy (40 CFR 1508.27(b)(4)) because this has been interpreted to mean scientific controversy. Additionally, CEQ did not include a consideration regarding the reference in 40 CFR 1508.27(b)(7) to “[s]ignificance cannot be avoided by terming an action temporary or by breaking it down into small component parts” because this is addressed in the criteria for scope in § 1501.9(e) and § 1502.4(a), which would provide that agencies evaluate in a single EIS proposals or parts of proposals that are related closely enough to be, in effect, a single course of action.
Under the CEQ regulations, agencies can categorically exclude actions from detailed review where the agency has found in its agency NEPA procedures that the action normally would not have
In response to the ANPRM, many commenters requested that CEQ update the NEPA regulations to provide more detailed direction on the application of CEs. To provide greater clarity, CEQ proposes to add a new section on CEs. The proposed § 1501.4, “Categorical exclusions,” would address in more detail the process by which an agency considers whether a proposed action is categorically excluded under NEPA. This proposed provision is consistent with the definition of categorical exclusion in 40 CFR 1508.4, which is a category of actions that the agency has found normally do not have a significant effect and listed in its agency NEPA procedures.
The proposed CE section would provide additional clarity on the process that agencies follow in applying a CE. In particular, paragraph (a) would provide that agencies identify CEs in their NEPA procedures, consistent with the requirement to establish CEs in agency NEPA procedures currently set forth in 40 CFR 1507.3(b)(2)(ii). The proposed regulations would move the requirement that agency NEPA procedures provide for extraordinary circumstances from the current 40 CFR 1508.4 to the proposed § 1507.3(d)(2)(ii) to consolidate all the requirements for establishing CEs in that regulation, while providing in the proposed § 1501.4 the procedure for evaluation of a proposed action for extraordinary circumstances. The definition of categorical exclusion only applies to those CEs created by an administrative determination in its agency NEPA procedures and does not apply to “legislative categorical exclusions” created by Congress, which are governed by the terms of the specific statute and statutory interpretation of the agency charged with the implementation of the statute.
Paragraph (b) of proposed § 1501.4 would set forth the requirement for consideration of extraordinary circumstances once an agency determines that a CE covers a proposed action, consistent with the current requirement in 40 CFR 1508.4. Finally, paragraph (b)(1) would provide that, when extraordinary circumstances are present, agencies may consider whether mitigating circumstances, such as the design of the proposed action to avoid effects that create extraordinary circumstances, are sufficient to allow the proposed action to be categorically excluded. The change would clarify that the mere presence of extraordinary circumstances does not preclude the application of a CE. Rather, the agency may consider whether there is a close causal relationship between a proposed action and the potential effect on the conditions identified as extraordinary circumstances, and if such a relationship exists, the potential effect of a proposed action on these conditions. Accordingly, the agency could modify the proposed action to avoid the extraordinary circumstances so that the action fits in the categorical exclusion. While this reflects current practice for some agencies,
CEQ invites comment on these proposed revisions and on whether there are any other aspects of CEs that CEQ should address in its regulations. Specifically, CEQ invites comment on whether it should establish government-wide CEs in its regulations to address routine administrative activities, for example, internal orders or directives regarding agency operations, procurement of office supplies and travel, and rulemakings to establish administrative processes such as those established under the Freedom of Information Act or Privacy Act. Alternatively, CEQ invites comment on whether and how CEQ should revise the definition of major Federal action to exclude these categories from the definition, and if so, suggestions on how it should be addressed.
Under the current CEQ regulations, when an agency has not categorically excluded a proposed action, the agency can prepare an EA to document its effects analysis. If the analysis in the EA demonstrates that the action's effects would not be significant, the agency documents its reasoning in a FONSI, which completes the NEPA process; otherwise, the agency uses the EA to help prepare an EIS.
The current CEQ regulations address the requirements for EAs in a few provisions, and, in response to the ANPRM, some commenters requested that the regulations provide more detailed direction related to EAs. Currently, 40 CFR 1508.9 defines an EA as a “concise public document” that agencies may use to comply with NEPA and determine whether to prepare an EIS or a FONSI. This section also sets forth the basic requirements for an EA's contents. Current 40 CFR 1501.4(b) provides the public involvement requirements for EAs. These essential requirements of an EA would remain under the proposed regulations, but CEQ proposes to consolidate them into a single section to improve readability.
Under the current regulations, the format for an EA is flexible and responsive to agency decision-making needs and the circumstances of the particular proposal for agency action. The proposed CEQ regulations would continue to provide that an EA may be prepared by and with other agencies, applicants, and the public. Modern information technology can help facilitate this collaborative EA preparation, allowing the agency to make a coordinated but independent evaluation of the environmental issues and assume responsibility for the scope and content of the EA.
CEQ proposes to revise paragraph (a) of proposed § 1501.5 (current 40 CFR 1501.3) to clarify that an agency must prepare an EA when necessary to determine whether a proposed action would have a significant effect or the significance of the effects is unknown, unless a CE applies to the proposed action or the agency decides to prepare an EIS. CEQ proposes to move the operative language relating to an EA
Under the proposed CEQ regulations, requirements for documenting the proposed action and alternatives in an EA would continue to be more limited than EIS requirements. Under the existing and proposed regulations, an agency must briefly describe the need for the proposed action. Agencies can do this by briefly describing the existing conditions, projected future conditions, and statutory obligations and authorities that may relate to the proposed agency action with cross-references to supporting documents. The proposed CEQ regulations would continue to require agencies to describe briefly the proposed action and any alternatives it is considering that would meet the need of the proposed agency action. For actions to protect or restore the environment, without unresolved conflicts concerning alternative uses of available resources, CEQ expects agencies to examine a narrower range of alternatives to the proposed action. When the project may have significant impacts, the agency should consider reasonable alternatives that would avoid those impacts or otherwise mitigate those impacts to less than significant levels.
An agency does not need to include a detailed discussion of each alternative in an EA, nor does it need to include any detailed discussion of alternatives that it eliminated from study. While agencies have discretion to include more information in their EAs than is required to determine whether to prepare an EIS or a FONSI, they should carefully consider their reasons and have a clear rationale for doing so. Agencies should focus on analyzing material effects and alternatives, rather than marginal details that may unnecessarily delay the environmental review process.
Under both the current and proposed regulations, an agency must describe the environmental impacts of its proposed action and alternatives, providing enough information to support a determination to prepare either a FONSI or an EIS. The EA should focus on whether the proposed action (including mitigation) would “significantly” affect the quality of the human environment and tailor the length of the discussion to the relevant effects. The agency may contrast the impacts of the proposed action and alternatives with the current and expected future conditions of the affected environment in the absence of the action, which constitutes consideration of a no-action alternative.
Under both the current and proposed regulations, an agency should list the “agencies, applicants, and the public” involved in preparing the EA to document agency compliance with the requirement to “involve environmental agencies, applicants, and the public, to the extent practicable, in preparing assessments.” 40 CFR 1501.4(b);
CEQ proposes to move the public involvement requirements for EAs from the current 40 CFR 1501.4(b) to proposed § 1501.5(d) and change “environmental” to “relevant” agencies to include all agencies that may contribute information that is relevant to the development of an EA. Consistent with the current CEQ regulations, the proposed rule would not specifically require publication of a draft EA for public review and comment. The proposed CEQ regulations would continue to require that agencies reasonably involve relevant agencies, the applicant, and the public prior to completion of the EA, so that they may provide meaningful input on those subject areas that the agency must consider in preparing the EA.
Paragraph (e) would establish a presumptive 75-page limit for EAs, but allow a senior agency official to approve a longer length and establish a new page limit in writing. While CEQ has stated in Question 36a of the Forty Questions,
The proposed presumptive page limit for EAs will promote more readable documents, but also provide agencies flexibility to prepare longer documents, where necessary, to support the agency's analysis. The proposed presumptive page limit is consistent with CEQ's guidance on EAs, which advises agencies to avoid preparing lengthy EAs except in unusual cases where a proposal is so complex that a concise document cannot meet the goals of an EA and where it is extremely difficult to determine whether the proposal could cause significant effects. Question 36a and 36b, Forty Questions,
CEQ believes that page limits will encourage agencies to identify the relevant issues, focus on significant environmental impacts, and prepare concise readable documents that will inform decision makers as well as the public. Voluminous, unfocused environmental documents do not advance the goals of informed decision making or protection of the environment.
CEQ proposes conforming edits to § 1500.4(c) to broaden the paragraph to include EAs by changing “environmental impact statements” to “environmental documents” and changing “setting” to “meeting” since page limits would be required for both EAs and EISs. CEQ invites comment on the appropriate presumptive page limit for EAs, the means of managing their level of detail, and their role in agency decision making.
CEQ proposes a new paragraph (f) to clarify that agencies may also apply certain provisions in part 1502 regarding incomplete or unavailable information, methodology and scientific accuracy, and coordination of environmental review and consultation requirements to EAs. CEQ also proposes to add EAs to § 1501.11, “Tiering,” to codify current agency practice of using EAs where the effects of a proposed agency action are not likely to be significant. These include program decisions that may facilitate later site-specific EISs as well as the typical use of EAs as a second-tier document tiered from an EIS.
In addition to the new § 1501.5, CEQ proposes to add EAs to other sections of the regulations to codify existing agency practice where it would make the NEPA process more efficient and effective. As
CEQ invites comment on these proposed revisions and on whether there are any other aspects of EAs that CEQ should address in its regulations.
When an agency determines in its EA that an EIS is not required, it typically prepares a FONSI. The FONSI reflects that the agency has engaged in the necessary review of environmental impacts under NEPA. The FONSI shows that the agency examined the relevant data and explained the agency findings by providing a rational connection between the facts presented in the EA and the conclusions drawn in the finding. Any finding should clearly identify the facts found and the conclusions drawn by the agency based on those facts.
In response to the ANPRM, CEQ received comments requesting that CEQ update its regulations to consolidate and provide more detailed direction relating to FONSIs. CEQ proposes to consolidate the operative language of 40 CFR 1508.13, “Finding of no significant impact,” with 40 CFR 1501.4, “Whether to prepare an environmental impact statement,” in the proposed § 1501.6, “Findings of no significant impact.” CEQ proposes to strike paragraph (a) as these requirements are addressed in § 1507.3(d)(2). As noted above, paragraph (b) would move to the proposed § 1501.5, “Environmental assessments.” This proposed EA section also addresses paragraph (c), so CEQ proposes to strike it from the proposed FONSI section. Similarly, CEQ proposes to strike paragraph (d) because this requirement is addressed in § 1501.9, “Scoping” (current 40 CFR 1501.7).
CEQ proposes to make the current 40 CFR 1501.4(e) the new § 1501.6(a), and revise the language to clarify that an agency must prepare a FONSI when it determines that a proposed action will not have significant effects based on the analysis in the EA. CEQ would revise proposed paragraph (a)(2) to clarify that the circumstances listed in paragraph (i) and (ii) are the situations where the agency must make a FONSI available for public review.
CEQ proposes to move the substantive requirement that a FONSI include the EA or a summary from the definition of FONSI (currently 40 CFR 1508.13) to a new paragraph (b). Additionally, CEQ proposes the addition of a new paragraph (c) to address mitigation. Specifically, where mitigation is required under another statute or where an agency is issuing a mitigated FONSI, it would require the agency to include the legal basis for any mitigation adopted.
In response to the ANPRM, CEQ received comments requesting that CEQ update its regulations to clarify the roles of lead and cooperating agencies. The 1978 CEQ regulations created the roles of lead agency and cooperating agencies for NEPA reviews, which are critical for actions, such as non-Federal projects, requiring the approval or authorization of multiple agencies. Agencies need to coordinate and synchronize their NEPA processes to ensure an efficient environmental review that does not cause delays. In recent years, Congress and several administrations have worked to establish a more synchronized procedure for multi-agency NEPA reviews and related authorizations, including through the development of expedited procedures such as the section 139 process and FAST-41.
CEQ proposes a number of modifications to § 1501.7, “Lead agencies,” (current 40 CFR 1501.5), and § 1501.8, “Cooperating agencies,” (current 40 CFR 1501.6), to improve interagency coordination, make development of NEPA documents more efficient, and facilitate implementation of the OFD policy. CEQ intends these modifications to improve the efficiency and outcomes of the NEPA process—including cost reduction, improved relationships, and better outcomes that avoid litigation—by promoting environmental collaboration.
Proposed § 1501.7(i) and (j) and § 1501.8(b)(6) and (7) also would require development and adherence to a schedule for the environmental review and any authorizations required for a proposed action, and resolution of disputes and other issues that may cause delays in the schedule. These proposed provisions are consistent with current practices at agencies that have adopted elevation procedures pursuant to various statutes and guidance, including 23 U.S.C. 139, FAST-41, and E.O. 13807.
Proposed paragraph (a) of § 1501.8 would clarify that lead agencies may invite State, Tribal, and local agencies to serve as cooperating agencies by changing “Federal agency” to “agency,” and moving the operative language from the definition of cooperating agency (40 CFR 1508.5). Non-Federal agencies should participate in the environmental review process to ensure early collaboration on proposed actions where such entities have jurisdiction by law or special expertise. Paragraph (a) would also codify current practice to allow a Federal agency to appeal to CEQ a lead agency's denial of a request to serve as cooperating agency. Resolving disputes among agencies early in the process furthers the OFD policy and the goal of more efficient and timely NEPA reviews. Finally, CEQ proposes edits throughout § 1501.8 to provide further clarity.
In response to the ANPRM, CEQ received comments requesting that CEQ update its regulations related to scoping, including comments requesting that agencies have greater flexibility in how to conduct scoping. Rather than requiring publication of a NOI as a precondition to the scoping process, CEQ proposes to modify the current 40 CFR 1501.7, “Scoping,” in the proposed § 1501.9 so that agencies can begin the scoping process as soon as the proposed action is sufficiently developed for meaningful agency consideration. Some agencies refer to this as pre-scoping under the existing regulations to capture scoping work done before publication of the NOI. Rather than tying the start of scoping to the agency's decision to publish an NOI to prepare an EIS, the timing and content of the NOI would instead become an important step in the scoping process itself, thereby obviating the artificial distinction between scoping and pre-scoping. However, agencies should not unduly delay publication of the NOI.
CEQ also proposes to consolidate all the requirements for the NOI and the scoping process into the same section, reorganize it to discuss the scoping process in chronological order, and add paragraph headings to improve clarity. CEQ proposes to add “likely” to proposed paragraph (b) to capture the reality that at the scoping stage, agencies may not know the identities of all affected parties and that one of the purposes of scoping is to identify affected parties. Paragraph (c) would provide agencies additional flexibility in how to reach interested or affected parties in the scoping process. Paragraph (d) would provide a list of what agencies must include in an NOI to standardize NOI format and achieve greater consistency across agencies. This will provide the public with more transparency and ensure that agencies conduct the scoping process in a manner that facilitates implementation of the OFD policy for multi-agency actions, including by proactively soliciting comments on alternatives, impacts, and relevant information to better inform agency decision making. CEQ proposes to move the criteria for determining scope from the definition of scope, 40 CFR 1508.25, to paragraph (e) and to strike the paragraph on “cumulative actions” for consistency with the proposed revisions to the definition of “effects” discussed below. CEQ also proposes to use the term “most effective” rather than “best” in § 1501.9(e)(1)(ii) for clarity.
In response to the ANPRM, CEQ received many comments on the lengthy timelines and costs of environmental reviews, and many suggestions for more meaningful time limits for the completion of the NEPA process. Accordingly, and to promote timely reviews, CEQ proposes to establish presumptive time limits for EAs and EISs consistent with E.O. 13807 and prior CEQ guidance. In Question 35 of the Forty Questions,
Based on agency experience with the implementation of the regulations, CEQ is proposing in § 1501.10, “Time limits,” (current 40 CFR 1501.8) to add a new paragraph (b) to establish a presumptive time limit for EAs of 1 year and a presumptive time limit for EISs of 2 years. CEQ further proposes to provide that a senior agency official may approve in writing a longer time period. These paragraphs would also define the start and end dates of the time period consistent with E.O. 13807. Consistent with CEQ and OMB guidance, agencies should begin scoping and development of a schedule for timely completion of an EIS prior to issuing an NOI and commit to cooperate, communicate, share information, and resolve conflicts that could prevent meeting milestones.
CEQ also proposes conforming edits to § 1500.5(g) to change “setting” to “meeting” time limits and add “environmental assessment.” CEQ invites comment on these sections, including on the proposed presumptive timeframes for EAs and EISs, the provisions for management of time limits, and whether the regulations should specify shorter timeframes.
CEQ proposes to move 40 CFR 1502.21, “Tiering,” and 40 CFR 1502.22, “Incorporation by reference,” to proposed new §§ 1501.11 and 1501.12, respectively, because these provisions are generally applicable. Specifically, CEQ proposes a number of revisions in § 1501.11 and other paragraphs to clarify when agencies can use existing
In addition, CEQ proposes consistency edits to change “broad” and “program” to “programmatic” in §§ 1500.4(k), 1502.4(b), (c), and (d), and 1506.1(c). Further revisions to § 1502.4(b), including eliminating reference to programmatic EISs that “are sometimes required,” are intended to focus the provision on the discretionary use of programmatic EISs in support of clearly defined decision-making purposes. As CEQ stated in its 2014 guidance, programmatic NEPA reviews “should result in clearer and more transparent decision[ ]making, as well as provide a better defined and more expeditious path toward decisions on proposed actions.”
The most extensive level of NEPA analysis is an EIS, which is the “detailed statement” required under section 102(2)(C) of NEPA. When an agency prepares an EIS, it typically issues a ROD at the conclusion of the NEPA review. 40 CFR 1505.2. Based on the Environmental Protection Agency (EPA) weekly Notices of Availability published in the
In response to the ANPRM, CEQ received many comments on the length, complexity, and readability of environmental documents, and many suggestions for more meaningful page limits. The core purpose of page limits from the original regulations remains—documents must be a reasonable length in a readable format so that it is practicable for the decision maker to read and understand the document in a reasonable period of time. Therefore, CEQ proposes to reinforce the page limits for EISs set forth in § 1502.7, while allowing a senior agency official to approve a statement exceeding 300 pages when it is useful to the decision-making process. As captured in CEQ's report on the length of final EISs, these documents average over 600 pages.
CEQ intends for senior agency officials to take responsibility for the quantity, quality, and timelines of environmental analyses developed in support of the decisions of their agencies. Therefore, the senior agency official approving an EA or EIS in excess of the page limits should ensure that the final environmental document meets the informational needs of the agency's decision maker. For example, the agency decision makers may have varying levels of capacity to consider the information presented in the environmental document. In ensuring that the agency provides the resources necessary to implement NEPA, in accordance with 40 CFR 1507.2, senior agency officials should ensure that agency staff have the resources and competencies necessary to produce timely, concise, and effective environmental documents.
CEQ proposes to include sub-headings in § 1502.9, “Draft, final, and supplemental statements,” to improve readability. CEQ proposes edits to paragraph (b) for clarity, replacing “revised draft” with “supplemental draft.”
CEQ also received many comments requesting clarification regarding when supplemental statements are required. CEQ proposes revisions to § 1502.9(d)(1) to clarify that agencies need to update environmental documents when there is new information or a change in the proposed action only if a major Federal action remains to occur and other requirements are met. This proposed revision is consistent with Supreme Court case law holding that a supplemental EIS is required only “[i]f there remains `major Federal actio[n]' to occur, and if the new information is sufficient to show that the remaining action will `affec[t] the quality of the human environment' in a significant manner or to a significant extent not already considered . . . .”
In order to determine whether a supplemental analysis is required, a new paragraph (c)(4) would provide that an agency may document its determination of whether a supplemental analysis is required consistent with its agency NEPA procedures or may, although it is not required, do so in an EA. This provision would codify the existing practice of several Federal agencies, such as the
CEQ proposes to revise § 1502.10, “Recommended format,” to provide agencies with more flexibility in formatting an EIS given that most EISs are prepared and distributed electronically. Specifically, CEQ proposes to eliminate the requirement to have a list of agencies, organizations and persons to whom copies of the EIS are sent since EISs are published online, and an index, as this is no longer necessary when most documents are produced in an electronically searchable format. This section would also allow agencies to use a different format so that they may customize EISs to address the particular proposed action and better integrate environmental considerations into agency decision-making processes.
CEQ proposes to amend § 1502.11, “Cover,” to remove the reference to a “sheet” since agencies prepare EISs electronically. CEQ also proposes to add a requirement to include the estimated cost of preparing the EIS to the cover in new paragraph (g) to provide transparency to the public on the costs of EIS-level NEPA reviews. To track costs, agencies must prepare an estimate of environmental review costs, including costs of the agency's full-time equivalent (FTE) personnel hours, contractor costs, and other direct costs related to the environmental review of the proposed action.
This amendment will address the concerns raised by the U.S. Government Accountability Office that agencies are not tracking the costs of NEPA analyses, as well as the many comments CEQ received from stakeholders regarding the costs associated with development of NEPA analyses.
CEQ received a number of comments in response to the ANPRM recommending that CEQ better define the requirements for purpose and need statements. The current CEQ regulations require that an EIS “briefly specify the underlying purpose and need to which the agency is responding in proposing the alternatives including the proposed action.” 40 CFR 1502.13.
The focus of the purpose and need statement is the purpose and need for the proposed action, and agencies should develop it based on consideration of the relevant statutory authority for the proposed action. The purpose and need statement also provides the framework in which “reasonable alternatives” to the proposed action will be identified. CEQ has advised that this discussion of purpose and need should be concise (typically one or two paragraphs long) and that the lead agency is responsible for its definition.
Consistent with CEQ guidance and in response to comments, CEQ proposes to revise § 1502.13, “Purpose and need,” to clarify that the statement should focus on the purpose and need for the proposed action. In particular, CEQ proposes to strike “to which the agency is responding in proposing the alternatives including” to focus on the proposed action. CEQ further proposes, as discussed below, to address the relationship between the proposed action and alternatives in the definition of reasonable alternatives and other sections that refer to alternatives. Additionally, CEQ proposes to add a sentence to clarify that when an agency is responsible for reviewing applications for authorizations, the agency shall base the purpose and need on the applicant's goals and the agency's statutory authority. This addition is consistent with the proposed definition of reasonable alternatives, which must meet the goals of the applicant, where applicable.
CEQ also received many comments requesting clarification regarding “alternatives” under the regulations. This section of an EIS should describe the proposed action and alternatives in comparative form, including their environmental impacts, such that the decision maker and the public can understand the basis for choice. However, as explained in § 1502.16 and reinforced by Question 7 of the Forty Questions,
In paragraph (a), CEQ proposes to delete “all” before “reasonable
It is CEQ's view that NEPA's policy goals are satisfied when an agency analyzes reasonable alternatives, and that an EIS need not include every available alternative where the consideration of a spectrum of alternatives allows for the selection of any alternative within that spectrum. The reasonableness of the analysis of alternatives in a final EIS is resolved not by any particular number of alternatives considered, but by the nature of the underlying agency action. The discussion of environmental effects of alternatives need not be exhaustive, but must provide information sufficient to permit a reasoned choice of alternatives for the agency to evaluate available reasonable alternatives, 40 CFR 1502.14(a), including significant alternatives that are called to its attention by other agencies, organizations, communities, or a member of the public. Analysis of alternatives also may serve purposes other than NEPA compliance, such as evaluation of the least environmentally damaging practicable alternative for the discharge of dredged or fill material under section 404(b)(1) of the Clean Water Act, 33 U.S.C. 1344(b)(1).
The number of alternatives that is appropriate for an agency to consider will vary. For some actions, such as where the Federal agency's authority to consider alternatives is limited by statute, the range of alternatives may be limited to the proposed action and the no action alternative. For actions where the Federal authority to consider a range of alternatives is broad, the final EIS itself should consider a broader range of reasonable alternatives. However, a process of narrowing alternatives is in accord with NEPA's “rule of reason” and common sense—agencies need not reanalyze alternatives previously rejected, particularly when an earlier analysis of numerous reasonable alternatives was incorporated into the final analysis and the agency has considered and responded to public comment favoring other alternatives.
For consistency with this change, CEQ proposes to strike “the” before “reasonable alternatives” in § 1502.1, and amend § 1502.16, “Environmental consequences,” to clarify in proposed paragraph (a)(1) that the discussion must include the environmental impacts of the “proposed action and reasonable alternatives.”
In response to CEQ's ANPRM, some commenters urged that the regulations should not require agencies to account for impacts over which the agency has no control, including those resulting from alternatives outside its jurisdiction. CEQ proposes to strike paragraph (c) of 40 CFR 1502.14 as a requirement for all EISs because it is not efficient or reasonable to require agencies to develop detailed analyses relating to alternatives outside the jurisdiction of the lead agency. This change is consistent with proposed § 1501.1(a)(2). Further, the proposed definition of “reasonable alternatives” would preclude alternatives outside the agency's jurisdiction because they would not be technically feasible due to the agency's lack of statutory authority to implement that alternative. However, an agency may discuss reasonable alternatives not within their jurisdiction when necessary for the agency's decision-making process such as when preparing an EIS to address legislative EIS requirements pursuant to § 1506.8 and to specific Congressional directives.
A concern raised by many commenters is that agencies have limited resources and that it is important that agencies use those resources effectively. Analyzing a large number of alternatives, particularly where it is clear that only a few alternatives would be economically and technically feasible and realistically implemented by the applicant, can divert limited agency resources. CEQ invites comment on whether the regulations should establish a presumptive maximum number of alternatives for evaluation of a proposed action, or alternatively for certain categories of proposed actions. CEQ seeks comment on (1) specific categories of actions, if any, that should be identified for the presumption or for exceptions to the presumption; and (2) what the presumptive number of alternatives should be (
CEQ proposes in § 1502.15, “Affected environment,” to explicitly allow for combining of affected environment and environmental consequences sections to adopt what has become a common practice in some agencies. This revision would ensure that the description of the affected environment is focused on those aspects of the environment that are affected by the proposed action. In proposed paragraph (a)(1) of § 1502.16, “Environmental consequences,” CEQ proposes to consolidate into one paragraph the requirement to include a discussion of the effects of the proposed action and reasonable alternatives. The combined discussion should focus on those effects that are reasonably foreseeable and have a close causal relationship to the proposed action, consistent with the proposed revised definition of effects addressed in § 1508.1(g). To align with the statute, CEQ also proposes to add a new § 1502.16(a)(10) to provide that discussion of environmental consequences should include, where applicable, economic and technical considerations consistent with section 102(2)(B) of NEPA.
Further, CEQ proposes to move the operative language that addresses when agencies need to consider economic and social effects in EISs from the definition of human environment in 40 CFR 1508.14 to proposed § 1502.16(b). CEQ also proposes to amend the language for clarity, explain that the agency makes the determination of when consideration of economic and social effects are interrelated with natural or physical environmental effects at which point the agency should give appropriate consideration to those effects, and strike “all of” as unnecessary.
To ensure agencies have considered all alternatives, information, and analyses submitted by the public, including State, Tribal, and local governments as well as individuals and organizations, CEQ is proposing to add a requirement in § 1502.17 to include a new section in draft and final EISs. This section, called the “Submitted alternatives, information and analyses” section, would include a summary of all alternatives, information, and analyses submitted by the public for consideration by the lead and
To improve the scoping process, CEQ proposes revisions to ensure agencies solicit and consider relevant information early in the development of the draft EIS. As discussed above, CEQ proposes to direct agencies to include a request for identification of alternatives, information, and analyses in the notice of intent (§ 1501.9(d)(7)) and require agencies to summarize all relevant alternatives, information, and analyses submitted by public commenters in the draft and final EIS. CEQ also proposes in § 1502.18, “Certification of alternatives, information, and analyses section,” that, based on the alternatives, information, and analyses section required under § 1502.17, the decision maker for the lead agency certify that the agency has considered such information and include the certification in the ROD under § 1505.2(d). In addition, CEQ proposes a conclusive presumption that the agency has considered information summarized in that section because, where agencies have followed the process outlined above, and identified and described information submitted by the public, it is reasonable to presume the agency has considered such information.
CEQ proposes to eliminate the option to circulate the summary of an EIS in § 1502.21, “Publication of the environmental impact statement,” given the change from circulation to publication and the reality that most EISs are produced electronically. CEQ proposes to strike the word “always” from § 1502.22(a) as unnecessarily limiting and eliminate 40 CFR 1502.22(c) addressing the applicability of the 1986 amendments to 40 CFR 1502.22, “Incomplete or unavailable information,” because this paragraph is obsolete. CEQ reiterates, as it stated in the promulgation of this regulation, that the term “overall cost” as used in § 1502.22 includes “financial costs and other costs such as costs in terms of time (delay) and personnel.”
A proposed revision to § 1502.24, “Methodology and scientific accuracy,” would clarify that agencies should use reliable existing information and resources and are not required to undertake new scientific and technical research to inform their analyses. The phrase “new scientific and technical research” is intended to distinguish separate and additional research that extends beyond existing scientific and technical information available in the public record or in publicly available academic or professional sources. This phrase is consistent with the requirement in § 1502.22 to obtain incomplete or unavailable information regarding significant adverse effects if the means of obtaining the information is known and the cost to the decision-making process is not unreasonable. Agencies should use their experience and expertise to determine what scientific and technical information is needed to inform their analyses and decision making. CEQ also proposes to revise § 1502.24 to allow agencies to draw on any source of information (such as remote sensing and statistical modeling) that the agency finds reliable and useful to the decision-making process. These changes would promote the use of reliable data, including information gathered using current technologies. Finally, CEQ proposes to revise § 1502.25, “Environmental review and consultation requirements,” to clarify that agencies must, to the fullest extent possible, integrate their NEPA analysis with all other applicable Federal environmental review laws and Executive Orders in furtherance of the OFD policy and to make the environmental review process more efficient.
CEQ proposes to modernize part 1503 given the existence of current technologies not available at the time of the 1978 regulations. In particular, the proposed regulations would encourage agencies to use the current methods of electronic communication both to publish important environmental information and to structure public participation for greater efficiency and inclusion of interested persons. CEQ proposes to revise § 1503.1, “Inviting comments and requesting information and analyses,” in proposed paragraph (a)(2)(v) to give agencies flexibility in the public involvement process to solicit comments “in a manner designed to inform” parties interested or affected “by the proposed action.” CEQ also proposes a new paragraph (a)(3) that requires agencies to specifically invite comment on the completeness of the submitted alternatives, information and analyses section (§ 1502.17). Because interested parties have an affirmative duty to comment during the public review period in order for the agency to consider their positions,
CEQ also proposes a revision to § 1503.2, “Duty to comment,” to clarify that when a cooperating agency with jurisdiction by law specifies measures it considers necessary for a regulatory approval, it should cite its applicable statutory authority to ensure this information is made known to the lead agency.
Further, CEQ proposes to revise paragraph (a) of § 1503.3, “Specificity of comments and information,” to explain that the purposes of comments is to promote informed decision making and further clarify that comments should provide sufficient detail for the agency to consider the comment in its decision-making process.
Finally, section 102(2)(C) of NEPA requires that agencies obtain views of Federal agencies with jurisdiction by law or expertise with respect to any environmental impact, and also directs that agencies make copies of the environmental impact statement and the comments and views of appropriate Federal, State, and local agencies available to the President, CEQ and the public. 42 U.S.C. 4332(2)(C). Part 1503 of the CEQ regulations include provisions relating to inviting and responding to comments. In practice, the processing of comments can require substantial time and resources. CEQ proposes to amend § 1503.4, “Response to comments,” to simplify and clarify in paragraph (a) that agencies are required to consider substantive comments timely submitted during the public comment period. CEQ also proposes to clarify that an agency may respond to comments individually or collectively. Consistent with this revision, CEQ proposes additionally to clarify that in the final EIS, agencies may respond by a variety of means, and to strike the detailed language in paragraph (a)(5) relating to comments that do not warrant further agency response.
CEQ also proposes to clarify in paragraph (b) that agencies must append comment responses to EISs rather than including them in the body of the EIS, or otherwise publish them. Under current practice, some agencies include these comment responses in the EISs themselves, which can contribute to excessive length.
Section 309 of the Clean Air Act (42 U.S.C. 7609) requires the Environmental Protection Agency (EPA) to review and comment on certain proposed actions of other Federal agencies and to make those comments public. Where appropriate, EPA may exercise its authority under section 309(b) of the Clean Air Act and refer the matter to CEQ. CEQ's regulations addressing this referral process are set forth in part 1504.
CEQ proposes edits to part 1504, “Pre-decisional Referrals to the Council of Proposed Federal Actions Determined to be Environmentally Unsatisfactory,” to improve clarity and to add EAs. Though infrequent, CEQ has received referrals on EAs and proposes to capture this practice in the regulations.
CEQ proposes additional revisions to ensure a more timely and efficient process. Consistent with the statute, CEQ proposes to add economic and technical considerations to paragraph (g) of § 1504.2, “Criteria for referrals.” In § 1504.3, “Procedure for referrals and response,” CEQ proposes changes to simplify and modernize the process. CEQ also proposes a minor revision to the title of part 1504, striking “Predecision” and inserting “Pre-decisional.”
CEQ proposes minor edits to part 1505 for clarity. CEQ proposes to move 40 CFR 1505.1, “Agency decisionmaking procedures,” to § 1507.3(b), as discussed further below. CEQ proposes to clarify in the introductory paragraph of § 1505.2, “Record of decision in cases requiring environmental impact statements,” in cases requiring EISs, that agencies must “timely publish” their RODs. This paragraph also would clarify that “joint” RODs by two or more Federal agencies are permitted; this change is also consistent with the OFD policy and E.O. 13807. Finally, CEQ proposes edits in paragraph (c) to change from passive to active voice for clarity.
CEQ proposes a number of edits to part 1506 to improve the NEPA process to make it more efficient and flexible, especially where actions involve third-party applicants. CEQ also proposes several edits for clarity.
In particular, CEQ proposes to add FONSIs to paragraph (a) of § 1506.1, “Limitations on actions during NEPA process,” to clarify existing practice and judicial determinations that the limitation on actions applies when an agency is preparing an EA as well as an EIS. CEQ proposes to consolidate paragraph (d) with paragraph (b) and revise the language to provide additional clarity on what activities are allowable during the NEPA process. Specifically, CEQ proposes to eliminate reference to a specific agency in paragraph (d), and provide in paragraph (b) that this section does not preclude certain activities by an applicant to support an application of Federal, State, Tribal or local permits or assistance. As an example of activities an applicant may undertake, CEQ proposes to add “acquisition of interests in land,” which would include acquisitions of rights-of-way and conservation easements. CEQ invites comment on whether it should make any additional changes to § 1506.1, including whether there are circumstances under which an agency may authorize irreversible and irretrievable commitments of resources.
A revision to § 1506.2, “Elimination of duplication with State, Tribal, and local procedures,” would acknowledge the increasing number of State, Tribal, and local governments conducting NEPA reviews pursuant to assignment from Federal agencies.
Consistent with current practice by many agencies, the proposed regulations would expand § 1506.3, “Adoption,” to expressly cover EAs as well as EISs. CEQ also proposes edits throughout to clarify the process for documenting adoption and the subsequent decision. Finally, paragraph (f) would allow an agency to adopt another agency's determination to apply a CE to a proposed action if the adopting agency's proposed action is substantially the same action. To allow agencies to use
CEQ also proposes to amend § 1506.4, “Combining documents,” to encourage agencies “to the fullest extent practicable” to combine their environmental documents with other agency documents to reduce duplication and paperwork. For example, the U.S. Forest Service routinely combines EISs with forest management plans, and agencies may use their NEPA documents to satisfy compliance with section 106 of the National Historic Preservation Act under 36 CFR 800.8.
In response to the ANPRM, commenters urged CEQ to allow greater flexibility for the project sponsor (including private entities) to participate in the preparation of the NEPA documents under the supervision of the lead agency. An update to § 1506.5, “Agency responsibility for environmental documents,” would give agencies more flexibility with respect to the preparation of environmental documents while continuing to require agencies to independently evaluate and take responsibility for those documents. Applicants and contractors would be able to assume a greater role in contributing information and material to the preparation of environmental documents, subject to the supervision of the agency. However, agencies would remain responsible for taking reasonable steps to ensure the accuracy of information prepared by applicants and contractors. If a contractor or applicant prepares the document, paragraph (c)(1) would require the decision-making agency official to provide guidance, participate in the preparation, independently evaluate the statement, and take responsibility for its content. These changes are intended to improve communication between proponents of a proposal for agency action and the officials tasked with evaluating the effects of the action and reasonable alternatives, to improve the quality of NEPA documents and efficiency of the NEPA process.
CEQ also proposes to update § 1506.6, “Public involvement,” to give agencies greater flexibility to design and customize public involvement to best meet the specific circumstances of their proposed actions. Proposed revisions to paragraph (b)(2) would clarify that agencies may notify any organizations that have requested regular notice. Proposed paragraph (b)(3)(x) would provide for notice through electronic media, but clarify that agencies may not limit public notification to solely electronic methods for actions occurring in whole or in part in areas without high-speed internet access, such as rural locations. CEQ also proposes to amend paragraph (f), which requires that EISs, comments received, and any underlying documents be made available to the public pursuant to the Freedom of Information Act (FOIA) by updating the reference to FOIA, which has been amended numerous times since the enactment of NEPA, mostly recently by the FOIA Improvement Act of 2016, Public Law 114-185. Further, CEQ proposes to strike the remaining text to align paragraph (f) with the text of section 102(2)(C) of NEPA, including with regard to fees. CEQ also proposes to update and modernize § 1506.7, “Further guidance,” to state that CEQ may provide further guidance concerning NEPA and its procedures consistent with applicable Executive Orders.
CEQ proposes to consolidate the legislative EIS requirements from the definition of legislation in the current 40 CFR 1508.17 into § 1506.8, “Proposals for legislation,” and revise the provision for clarity. Agencies prepare legislative EISs for Congress when they are proposing specific actions such as a legislative proposal for the withdrawal of public lands for military use.
CEQ also invites comment on whether the legislative EIS requirement should be eliminated or modified because the President proposes legislation, and therefore it is inconsistent with the Recommendations Clause of the U.S. Constitution, which provides the President shall recommend for Congress' consideration “such [m]easures as he shall judge necessary and expedient . . . .” U.S. Constitution, Art. II, § 3. The President is not a Federal agency, 40 CFR 1508.12, and the proposal of legislation by the President is not an agency action.
CEQ also proposes to add a new § 1506.9, “Proposals for regulations,” to address the analyses required for rulemakings. This section would clarify that analyses prepared pursuant to other statutory or Executive Order requirements may serve as the functional equivalent of the EIS and be sufficient to comply with NEPA. CEQ proposes in § 1507.3(b)(6) to allow agencies to identify in their agency NEPA procedures documents prepared pursuant to other statutory requirements or Executive Orders that meet the requirements of NEPA.
For some rulemakings, agencies conduct a regulatory impact analysis (RIA), pursuant to E.O. 12866, “Regulatory Planning and Review,”
The analyses must address the detailed statement requirements specified in section 102(2)(C) of NEPA. More specifically, when those analyses address environmental effects, alternatives, the relationship between short-term uses and long-term productivity, and any irreversible commitments of resources, these analyses may serve as functional equivalents for an EIS. Further, these analyses must balance a clear and express environmental protection purpose with any other variables under consideration, such as economic needs. Finally, that balance must anticipate the advantages and disadvantages of the preparation of a separate EIS.
CEQ invites comments on additional analyses agencies are already conducting that, in whole or when aggregated, can serve as the functional equivalent of the EIS. Aspects of the E.O. 12866 cost benefit analysis may naturally overlap with aspects of the EIS.
CEQ also proposes to update § 1506.10, “Filing requirements,” to remove the obsolete process for filing paper copies of EISs with EPA and EPA's delivery of a copy to CEQ, and instead provide for electronic filing, consistent with EPA's procedures. This proposed change would provide flexibility to adapt as EPA changes its processes.
A proposed clause in paragraph (b) would acknowledge the statutory requirement of some agencies to issue a combined final EIS and ROD.
Over the last 40 years, CEQ has developed significant experience with NEPA in the context of emergencies and disaster recoveries. Actions following Hurricanes Katrina, Harvey, and Michael, as well as catastrophic wildfires, have given CEQ the opportunity to explore a variety of circumstances where alternative arrangements for complying with NEPA are necessary. CEQ proposes to amend § 1506.12, “Emergencies,” to clarify that alternative arrangements are still meant to comply with section 102(2)(C)'s requirement for a “detailed statement.” This amendment is consistent with CEQ's longstanding position that it has no authority to exempt Federal agencies from compliance with NEPA, but that CEQ can appropriately provide for exceptions to specific requirements of CEQ's regulations implementing the procedural provisions of NEPA to address extraordinary circumstances that are not addressed by agency implementing procedures previously approved by CEQ.
Finally, CEQ proposes to modify § 1506.13, “Effective date,” to clarify that this regulation would apply to all NEPA processes begun after the effective date, but agencies have the discretion to apply it to ongoing reviews. CEQ also proposes to remove the 1979 effective date of the current regulations and the reference to the 1973 guidance in the current paragraph (a) and strike the current paragraph (b) regarding actions begun before January 1, 1970 because they are obsolete.
CEQ proposes modifications to part 1507, which addresses agency compliance with NEPA. The proposed changes would consolidate provisions relating to agency procedures from elsewhere in the CEQ regulations, and add a new section to address the dissemination of information about agency NEPA programs. A proposed change to § 1507.1, “Compliance,” would strike the second sentence for consistency with changes to the provisions for agency NEPA procedures at § 1507.3. A proposed change to paragraph (a) of § 1507.2, “Agency capability to comply,” would make the senior agency official responsible for coordination, communication, and compliance with NEPA, including resolving implementation issues and representing the agency analysis of the effects of agency actions on the human environment in agency decision-making processes. The proposed § 1507.2(a) would make the senior agency official responsible for addressing disputes among lead and cooperating agencies and enforcing page and time limits. The senior agency official would be responsible for ensuring all environmental documents—even exceptionally lengthy ones—are provided to Federal agency decision makers in a timely, readable, and useful format. CEQ also proposes to clarify in the introductory paragraph that in NEPA compliance an agency may use the “the resources of other agencies, applicants, and other participants in the NEPA process,” for which the agency should account. CEQ proposes to amend paragraph (c) to emphasize agency cooperation, which would include commenting. Finally, CEQ proposes to add references to E.O. 11991, which amended E.O. 11514, and E.O. 13807 in paragraph (f) to codify agencies' responsibility to comply with the Order.
In developing their procedures, agencies should strive to identify and apply efficiencies, such as use of applicable CEs, adoption of prior NEPA analyses, and incorporation by reference to prior relevant Federal, State, Tribal, and local analyses, wherever practicable. To facilitate effective and efficient procedures, CEQ proposes to consolidate all of the requirements for agency NEPA procedures in § 1507.3 and add a new § 1507.4 to provide the means of publishing information on ongoing NEPA reviews and agency records relating to NEPA reviews. This includes moving the provisions in § 1505.1, “Agency decision making procedures,” to proposed § 1507.3(b); moving the requirement to provide for extraordinary circumstances currently in 40 CFR 1508.4 to proposed § 1507.3(d)(2)(ii); moving the requirement to adopt procedures for introducing a supplement into the agency's administrative record from 40 CFR 1502.9(d)(3) to proposed § 1507.3(d)(3); and moving the allowance to combine the agency's EA process with its scoping process from 40 CFR 1501.7(b)(3) to proposed § 1507.3(e)(4).
CEQ also proposes several revisions to § 1507.3. Revised paragraph (a) would provide agencies the later of 1 year after publication of the final rule or 9 months after the establishment of an agency to develop or revise proposed agency NEPA procedures, as necessary, to implement the CEQ regulations. CEQ also proposes to eliminate the limitations on paraphrasing the CEQ regulations. Agency NEPA procedures should set forth the process by which agencies will comply with NEPA and the CEQ regulations in the context of their particular programs and processes. In addition, CEQ proposes to clarify that except as otherwise provided by law or for agency efficiency, agency NEPA procedures shall not impose additional procedures or requirements beyond those set forth in the CEQ regulations.
CEQ proposes to subdivide paragraph (a) into subparagraphs (1) and (2) for additional clarity because each of these is an independent requirement. CEQ proposes to eliminate the recommendation to agencies to issue explanatory guidance and the requirement to review their policies and procedures because the responsibility to revise procedures would be addressed in paragraph (a).
Consistent with the proposed edits to § 1500.1, CEQ proposes to revise paragraph (b) to clarify that agencies should ensure decisions are made in accordance with the Act's procedural requirements and policy of integrating NEPA with other environmental reviews to promote efficient and timely decision making. CEQ proposes a new paragraph (b)(6) to encourage agencies to set forth in their NEPA procedures requirements to combine their NEPA documents with other agency documents, especially where the same or similar analyses are required for compliance with other requirements. Many agencies implement statutes that call for consideration of alternatives to the agency proposal, including the no action alternative, the effects of the agencies' proposal and alternatives, and public involvement. Agencies can use their NEPA procedures to align compliance with NEPA and these other statutory authorities, including provisions for page and time limits that integrate NEPA's goals for informed decision making with agencies' specific statutory requirements. This approach is consistent with some agency practice, but more agencies could use it to achieve greater efficiency and reduce unnecessary duplication.
Under the proposed § 1507.3(b)(6), agencies may document any agency determination that compliance with the environmental review requirements of other statutes or Executive Orders serves as the functional equivalent of NEPA compliance by identifying that (1) there are substantive and procedural
Furthermore, CEQ proposes to add a new paragraph (c), which would provide that agencies may identify actions that are not subject to NEPA in their agency NEPA procedures, including (1) non-major Federal actions; (2) non-discretionary actions, in whole or in part; (3) actions expressly exempt from NEPA under another statute; (4) actions for which compliance with NEPA would clearly and fundamentally conflict with the requirements of another statute; and (5) actions for which compliance with NEPA would be inconsistent with Congressional intent due to the requirements of another statute. These changes would conform to the new § 1501.1, “NEPA threshold applicability analysis,” section, which provides five considerations in determining whether NEPA applies to a proposed action.
CEQ proposes to amend paragraph (d)(2)(ii) to require agencies to identify in their procedures when documentation of a CE determination is required. CEQ proposes to add language to paragraph (e)(3) to codify existing agency practice to publish notices when it pauses an EIS or withdraws an NOI. Finally, CEQ proposes to add a new paragraph (e)(5) that would allow agencies to establish a process in their agency NEPA procedures whereby the agency may apply a CE listed in another agency's NEPA procedures. Such procedure would set forth the process by which the agency would consult with the agency that listed the CE in its NEPA procedures to ensure that the application of the CE is consistent with the originating agency's intent and practice.
CEQ invites comment on whether it should specifically allow an agency to apply a categorical exclusion established in another agency's NEPA procedures to its proposed action. CEQ invites comment on any process its regulations should include to ensure the appropriate application of an agency's CE to another agency's action.
Finally, the proposed § 1507.4, “Agency NEPA program information,” would require agencies in their NEPA implementing procedures to provide for a website or other means of publishing certain information on ongoing NEPA reviews and maintaining and permitting public access to agency records relating to NEPA reviews. This provision would promote transparency and efficiency in the NEPA process, and improve interagency coordination by ensuring that information is more readily available to other agencies and the public.
Opportunities exist for agencies to combine existing geospatial data, including remotely sensed images, and analyses to streamline environmental review and better coordinate development of environmental documents for multi-agency projects, consistent with the OFD policy. One option involves creating a single NEPA application that facilitates consolidation of existing datasets and can run several relevant geographic information system (GIS) analyses to help standardize the production of robust analytical results. This application could have a public-facing component modeled along the lines of EPA's NEPAssist,
CEQ proposes significant revisions to part 1508. CEQ proposes to clarify the definitions of a number of key NEPA terms in order to reduce ambiguity, both through modification of existing definitions and the addition of new definitions. CEQ also proposes to eliminate individual section numbers for each term in favor of an alphabetical list of defined terms in the revised § 1508.1. CEQ proposes conforming edits to remove citations to the specific definition sections throughout the proposed rule. Finally, CEQ proposes to move the operative language included throughout the definitions sections to the relevant substantive sections of the regulations.
While NEPA refers to environmental impacts and environmental effects, it does not subdivide the terms into direct, indirect, or cumulative. To address commenters' concerns and reduce confusion and unnecessary litigation,
In particular, CEQ proposes to amend the definition of effects to provide clarity on the bounds of effects consistent with the Supreme Court's holding in
CEQ proposes to strike the definition of cumulative impacts and strike the terms “direct” and “indirect” in order to focus agency time and resources on considering whether an effect is caused by the proposed action rather than on categorizing the type of effect. CEQ's proposed revisions to simplify the definition are intended to focus agencies on consideration of effects that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action. In practice, substantial resources have been devoted to categorizing effects as direct, indirect, and cumulative, which, as noted above, are not terms referenced in the NEPA statute.
In addition, CEQ proposes a change in position to state that analysis of cumulative effects, as defined in CEQ's current regulations, is not required under NEPA. While CEQ has issued detailed guidance on considering cumulative effects, categorizing and determining the geographic and temporal scope of such effects has been difficult and can divert agencies from focusing their time and resources on the most significant effects. Excessively lengthy documentation that does not focus on the most meaningful issues for the decision maker's consideration can lead to encyclopedic documents that include information that is irrelevant or inconsequential to the decision-making process. Instead, agencies should focus their efforts on analyzing effects that are most likely to be potentially significant and be effects that would occur as a result of the agency's decision. Agencies are not expected to conduct exhaustive research on identifying and categorizing actions beyond the agency's control. With this proposed change and the proposed elimination of the definition of cumulative impacts, it is CEQ's intent to focus agencies on analysis of effects that are reasonably foreseeable and have a reasonably close causal relationship to the proposed action.
To further assist agencies in their assessment of significant effects, CEQ also proposes to clarify that effects should not be considered significant if they are remote in time, geographically remote, or the result of a lengthy causal chain.
Further, CEQ proposes to codify a key holding of
CEQ invites comment on the proposed revisions to the definition of effects, including whether CEQ should affirmatively state that consideration of indirect effects is not required.
CEQ proposes to amend the first sentence of the definition to clarify that an action meets the definition if it is subject to Federal control and responsibility, and it has effects that may be significant. CEQ proposes to replace “major” effects with “significant” in this sentence to align with the NEPA statute.
CEQ proposes to strike the second sentence of the definition, which provides “Major reinforces but does not have a meaning independent of significantly.” This is a change in position as compared to CEQ's earlier interpretation of NEPA. In the statute, Congress refers to “major Federal actions significantly affecting the quality of the human environment.” 42 U.S.C. 4332(2)(C). Under the current
CEQ proposes to strike the sentence because all words of a statute must be given meaning consistent with longstanding principles of statutory interpretation.
To clarify that these activities are non-major Federal actions, CEQ proposes to add two sentences to the definition to make clear that this term does not include non-Federal projects with minimal Federal funding or minimal Federal involvement such that the agency cannot control the outcome on the project. In such circumstances, there is no practical reason for an agency to conduct a NEPA analysis because the agency could not influence the outcome of its action to address the effects of the project. For example, this might include a very small percentage of Federal funding provided only to help design an infrastructure project that is otherwise funded through private or local funds. This change would help to reduce costs and delays by more clearly defining the kinds of actions that are appropriately within the scope of NEPA.
CEQ also proposes to strike the third sentence of the definition, which includes a failure to act in the definition of a major Federal action, and exclude activities that do not result in final agency action under the APA. NEPA applies when agencies are considering a proposal for decision. In the circumstance described in this sentence, there is no proposed action and therefore no alternatives that the agency may consider.
CEQ also proposes to strike the specific reference to the State and Local Fiscal Assistance Act of 1972 from paragraph (a). The proposed revisions to the definition clarify that general revenue sharing funds would not meet the definition of major Federal action. In particular, CEQ proposes to exclude as non-major Federal actions the farm ownership and operating loan guarantees provided by the Farm Service Agency (FSA) of the U.S. Department of Agriculture pursuant to 7 U.S.C. 1925 and 1941 through 1949, and the business loan guarantee programs of the Small Business Administration (SBA), 15 U.S.C. 636(a), 636(m), and 695 through 697f. Under the farm ownership and operating loan programs, FSA does not control the bank, or the borrower; the agency does not control the subsequent use of such funds and does not operate any facilities. In the event of a default, properties are sold, and FSA never takes physical possession of, operates, or manages any facility. SBA's business loan programs operate in similar fashion. Further, under those programs no Federal funds are expended unless there is a default by the borrower paying the loan.
CEQ invites comment on whether it should make any further changes to this paragraph, including changing “partly” to “predominantly” for consistency with the edits to the introductory paragraph regarding “minimal Federal funding.” CEQ also invites comment whether there should be a threshold (percentage or dollar figure) for “minimal Federal funding,” and if so, what would be an appropriate threshold and the basis for such a threshold. CEQ also invites comment on whether any types of financial instruments, including loans and loan guarantees, should be considered non-major Federal actions and the basis for such exclusion.
Additionally, as a general matter, CEQ invites comment on whether the definition of “major Federal action” should be further revised to exclude other
CEQ also proposes to insert “implementation of” before “treaties” in paragraph (b)(1) to clarify that the major Federal action is not the treaty itself, but rather an agency's action to implement that treaty. Further, CEQ proposes to strike “guide” from paragraph (b)(2) because guidance is non-binding.
CEQ also invites comment on whether the regulations should clarify that NEPA does not apply extraterritorially, consistent with
CEQ also proposes to amend the definition of “mitigation” to make clear that mitigation must have a nexus to the effects of the proposed action, is limited to those actions that have an effect on the environment, and does not include actions that do not have an effect on the environment. This would make the NEPA process more effective by clarifying that mitigation measures must actually be designed to mitigate the effects of the proposed action. This amended definition is consistent with CEQ's Mitigation Guidance,
Under that guidance, if an agency believes that the proposed action will provide net environmental benefits through use of compensatory mitigation, the agency should incorporate by
Finally, CEQ proposes to clarify that a reasonable alternative must also consider the goals of the applicant when the agency's action involves a non-Federal entity. These changes would help reduce paperwork and delays by helping to clarify the range of alternatives that agencies must consider. Where the agency action is in response to an application for permit or other authorization, the agency should consider the applicant's goals based on the agency's statutory authorization to act, as well as in other congressional directives, in defining the proposed action's purpose and need.
This proposed rule, if adopted as a final rule, would supersede any previous CEQ NEPA guidance. If CEQ finalizes the proposed rule, CEQ anticipates withdrawing all of the CEQ NEPA guidance that is currently in effect and issuing new guidance as consistent with Presidential directives.
Based on comments received and CEQ's experience in implementing NEPA, the final rule may include amendments to any provisions in parts 1500 to 1508 of the CEQ regulations. CEQ invites comments recommending, opposing, or providing feedback on specific changes to any provisions in parts 1500 to 1508 of the CEQ regulations, including revising or adopting as regulations existing CEQ guidance or handbooks.
Further, CEQ received comments requesting that the regulations address analysis of greenhouse gas emissions and potential climate change impacts. CEQ has proposed guidance titled “Draft National Environmental Policy Act Guidance on Consideration of Greenhouse Gas Emissions”
If proposed changes to the CEQ regulations provided in comments on the ANPRM, or on the proposed GHG guidance, are not reflected in this proposal, and the commenter would like to advance those proposals in comments to the NPRM, CEQ requests that the commenter specifically identify and reference to the prior comment.
Finally, CEQ invites comment on whether to update references to “Council” in the regulation to “CEQ” throughout the rule.
This proposed rule is a significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. The docket for this rulemaking documents any changes made in response to OMB recommendations as required by section 6 of E.O. 12866.
The Regulatory Flexibility Act, as amended, (RFA), 5 U.S.C. 601
This proposed rule, if finalized, would assist agencies in fulfilling their responsibilities under NEPA, but would not make any final determination of what level of NEPA analysis is required for particular actions. The CEQ regulations do not require agencies to prepare a NEPA analysis before establishing or updating agency procedures for implementing NEPA. While CEQ prepared environmental assessments for its promulgation of the CEQ regulations in 1978 and its amendments to 40 CFR 1502.22 in 1986, in the development of this proposed rule, CEQ has determined that the proposed rule would not have a significant effect on the environment because it would not authorize any activity or commit resources to a project that may affect the environment. Therefore, CEQ does not intend to conduct a NEPA analysis of this proposed rule for the same reason that CEQ does not require any Federal agency to conduct NEPA analysis for the development of agency procedures for the implementation of NEPA and the CEQ regulations.
E.O. 13132 requires agencies to develop an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.
E.O. 13175 requires agencies to have a process to ensure meaningful and timely input by Tribal officials in the development of policies that have Tribal implications.
In its ANPRM, CEQ included a specific question regarding the representation of Tribal governments in the NEPA process.
E.O. 12898 requires agencies to make achieving environmental justice part of its mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations.
Agencies must prepare a Statement of Energy Effects for significant energy actions under E.O. 13211.
Under section 3(a) E.O. 12988,
Section 201 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531) requires Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, and the private sector to the extent that such regulations incorporate requirements specifically set forth in law. Before promulgating a rule that may result in the expenditure by a State, local, or Tribal government, in the aggregate, or by the private sector of $100 million, adjusted annually for inflation, in any 1 year, an agency must prepare a written statement that assesses the effects on State, local, and Tribal governments and the private sector. 2 U.S.C. 1532. This proposed rule applies to Federal agencies and would not result in expenditures of $100 million or more for State, local, and Tribal governments, in the aggregate, or the private sector in any 1 year. This action also does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of 2 U.S.C. 1531-1538.
This proposed rule does not impose any new information collection burden that would require additional review or approval by OMB under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501
Administrative practice and procedure; Environmental impact statements; Environmental protection; Natural resources.
For the reasons discussed in the preamble, the Council on Environmental Quality proposes to amend parts 1500 through 1508 in title 40 of the Code of Federal Regulations to read as follows:
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
(a) The National Environmental Policy Act (NEPA) is a procedural statute intended to ensure Federal agencies consider the environmental impacts of their actions in the decision-making process. Section 101 of NEPA establishes the national environmental policy of the Federal Government to use all practicable means and measures to foster and promote the general welfare, create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans. Section 102(2) of NEPA establishes the procedural requirements to carry out the policy stated in section 101 of NEPA. In particular, it requires Federal agencies to provide a detailed statement on proposals for major Federal actions significantly affecting the quality of the human environment. The purpose and function of NEPA is satisfied if Federal agencies have considered relevant environmental information and the public has been informed regarding the decision making process. NEPA does not mandate particular results or substantive outcomes. NEPA's purpose is not to generate paperwork or litigation, but to provide for informed decision making and foster excellent action.
(b) The regulations in parts 1500 through 1508 implement section 102(2) of NEPA. They provide direction to Federal agencies to determine what actions are subject to NEPA's procedural requirements and the level of NEPA review where applicable. These regulations are intended to ensure that relevant environmental information is identified and considered early in the process in order to ensure informed decision making by Federal agencies. The regulations are also intended to ensure that Federal agencies conduct environmental reviews in a coordinated, consistent, predictable and timely manner, and to reduce unnecessary burdens and delays. Finally, the regulations promote concurrent environmental reviews to ensure timely and efficient decision making.
(a)
(b)
(2) The environmental impact statement shall include a summary of the comments received, including all alternatives, information, and analyses submitted by public commenters for consideration by the lead and cooperating agencies in developing the environmental impact statement (§ 1502.17).
(3) For consideration by the lead and cooperating agencies, comments must be submitted within the comment periods provided and shall be as specific as possible (§§ 1503.1 and 1503.3). Comments or objections not submitted shall be deemed unexhausted and forfeited. Any objections to the submitted alternatives, information, and analyses section (§ 1502.17) shall be submitted within 30 days of the notice of availability of the final environmental impact statement.
(4) Based on the summary of the submitted alternatives, information, and analyses section, the decision maker for the lead agency shall certify in the record of decision that the agency considered all of the alternatives, information, and analyses submitted by public commenters for consideration by the lead and cooperating agencies in developing the environmental impact statement (§ 1502.18).
(c)
(d)
(e)
Agencies shall reduce excessive paperwork by:
(a) Using categorical exclusions to define categories of actions which do not have a significant effect on the human environment and which are therefore exempt from requirements to prepare an environmental impact statement (§ 1501.4).
(b) Using a finding of no significant impact when an action not otherwise excluded will not have a significant effect on the human environment and is therefore exempt from requirements to prepare an environmental impact statement (§ 1501.6).
(c) Reducing the length of environmental documents by means such as meeting appropriate page limits (§§ 1501.5(e) and 1502.7).
(d) Preparing analytic and concise environmental impact statements (§ 1502.2).
(e) Discussing only briefly issues other than significant ones (§ 1502.2(b)).
(f) Writing environmental impact statements in plain language (§ 1502.8).
(g) Following a clear format for environmental impact statements (§ 1502.10).
(h) Emphasizing the portions of the environmental impact statement that are useful to decision makers and the public (§§ 1502.14 and 1502.15) and reducing emphasis on background material (§ 1502.16).
(i) Using the scoping process, not only to identify significant environmental issues deserving of study, but also to deemphasize insignificant issues, narrowing the scope of the environmental impact statement process accordingly (§ 1501.9).
(j) Summarizing the environmental impact statement (§ 1502.12).
(k) Using programmatic, policy, or plan environmental impact statements and tiering from statements of broad scope to those of narrower scope, to eliminate repetitive discussions of the same issues (§§ 1502.4 and 1501.11).
(l) Incorporating by reference (§ 1501.12).
(m) Integrating NEPA requirements with other environmental review and consultation requirements (§ 1502.25).
(n) Requiring comments to be as specific as possible (§ 1503.3).
(o) Attaching and publishing only changes to the draft environmental impact statement, rather than rewriting and publishing the entire statement when changes are minor (§ 1503.4(c)).
(p) Eliminating duplication with State, Tribal, and local procedures, by providing for joint preparation of environmental documents where practicable (§ 1506.2), and with other Federal procedures, by providing that an agency may adopt appropriate environmental documents prepared by another agency (§ 1506.3).
(q) Combining environmental documents with other documents (§ 1506.4).
Agencies shall reduce delay by:
(a) Using categorical exclusions to define categories of actions which do not have a significant effect on the human environment (§ 1501.4) and which are therefore exempt from requirements to prepare an environmental impact statement.
(b) Using a finding of no significant impact when an action not otherwise excluded will not have a significant effect on the human environment (§ 1501.6) and is therefore exempt from requirements to prepare an environmental impact statement.
(c) Integrating the NEPA process into early planning (§ 1501.2).
(d) Engaging in interagency cooperation before the environmental assessment or environmental impact statement is prepared, rather than submission of comments on a completed document (§ 1501.8).
(e) Ensuring the swift and fair resolution of lead agency disputes (§ 1501.7).
(f) Using the scoping process for an early identification of what are and what are not the real issues (§ 1501.9).
(g) Meeting appropriate time limits for the environmental assessment and environmental impact statement processes (§ 1501.10).
(h) Preparing environmental impact statements early in the process (§ 1502.5).
(i) Integrating NEPA requirements with other environmental review and consultation requirements (§ 1502.25).
(j) Eliminating duplication with State, Tribal, and local procedures by providing for joint preparation of environmental documents where practicable (§ 1506.2) and with other Federal procedures by providing that agencies may jointly prepare or adopt appropriate environmental documents prepared by another agency (§ 1506.3).
(k) Combining environmental documents with other documents (§ 1506.4).
(l) Using accelerated procedures for proposals for legislation (§ 1506.8).
Each agency shall interpret the provisions of the Act as a supplement to its existing authority and as a mandate to view policies and missions in the light of the Act's national environmental objectives. Agencies shall review their policies, procedures, and regulations accordingly and revise them as necessary to ensure full compliance with the purposes and provisions of the Act as interpreted by the regulations in parts 1500 through 1508. The phrase “to the fullest extent possible” in section 102 of NEPA means that each agency of the Federal Government shall comply with that section unless existing law applicable to the agency's operations expressly prohibits or makes compliance impossible. Nothing contained in the regulations in parts 1500 through 1508 is intended or should be construed to limit an agency's other authorities or legal responsibilities.
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
(a) In assessing whether NEPA applies, Federal agencies should determine:
(1) Whether the proposed action is a major Federal action.
(2) Whether the proposed action, in whole or in part, is a non-discretionary action for which the agency lacks authority to consider environmental effects as part of its decision-making process.
(3) Whether the proposed action is an action for which compliance with NEPA would clearly and fundamentally conflict with the requirements of another statute.
(4) Whether the proposed action is an action for which compliance with NEPA would be inconsistent with Congressional intent due to the requirements of another statute.
(5) Whether the proposed action is an action for which the agency has determined that other analyses or processes under other statutes serve the function of agency compliance with NEPA.
(b) Federal agencies may make these determinations in their agency NEPA procedures (§ 1507.3(c)) or on an individual basis.
(a) Agencies should integrate the NEPA process with other planning and authorization processes at the earliest reasonable time to ensure that agencies consider environmental impacts in their planning and decisions, to avoid delays later in the process, and to head off potential conflicts.
(b) Each agency shall:
(1) Comply with the mandate of section 102(2)(A) of NEPA to “utilize a systematic, interdisciplinary approach which will [e]nsure the integrated use of the natural and social sciences and the environmental design arts in planning and in decision making which may have an impact on man's environment,” as specified by § 1507.2.
(2) Identify environmental effects and values in adequate detail so they can be appropriately considered along with economic and technical analyses. Agencies shall review and publish environmental documents and appropriate analyses at the same time as other planning documents.
(3) Study, develop, and describe appropriate alternatives to recommended courses of action in any proposal which involves unresolved conflicts concerning alternative uses of available resources as provided by section 102(2)(E) of NEPA.
(4) Provide for cases where actions that are subject to NEPA are planned by private applicants or other non-Federal entities before Federal involvement so that:
(i) Policies or designated staff are available to advise potential applicants of studies or other information foreseeably required for later Federal action.
(ii) The Federal agency consults early with appropriate State, Tribal, and local governments and with interested private persons and organizations when its own involvement is reasonably foreseeable.
(iii) The Federal agency commences its NEPA process at the earliest reasonable time.
(a) In assessing the appropriate level of NEPA review, Federal agencies should determine whether the proposed action:
(1) Normally does not have significant effects and is categorically excluded (§ 1501.4);
(2) Is not likely to have significant effects or the significance of the effects is unknown and is therefore appropriate for an environmental assessment (§ 1501.5); or
(3) Is likely to have significant effects and is therefore appropriate for an environmental impact statement (part 1502).
(b) In considering whether the effects of the proposed action are significant, agencies shall analyze the potentially affected environment and degree of the effects of the action.
(1) In considering the potentially affected environment, agencies may consider, as appropriate, the affected area (national, regional, or local). Significance varies with the setting of the proposed action. For instance, in the case of a site-specific action, significance would usually depend upon the effects in the locale rather than in the Nation as a whole. Both short- and long-term effects are relevant.
(2) In considering the degree of the effects, agencies should consider the
(i) Effects may be both beneficial and adverse.
(ii) Effects on public health and safety.
(iii) Effects that would violate Federal, State, Tribal, or local law protecting the environment.
(a) For efficiency, agencies identify in their agency NEPA procedures (§ 1507.3(d)(2)(ii)) categories of actions that normally do not have a significant effect on the human environment, and therefore do not require preparation of an environmental assessment or environmental impact statement.
(b) If an agency determines that a proposed action is covered by a categorical exclusion identified in its agency NEPA procedures, the agency shall evaluate the action for extraordinary circumstances in which a normally excluded action may have a significant effect.
(1) If extraordinary circumstances are present for a proposed action, the agency should consider whether mitigating circumstances or other conditions are sufficient to avoid significant effects and therefore categorically exclude the proposed action.
(2) If the proposed action cannot be categorically excluded, the agency shall prepare an environmental assessment or environmental impact statement.
(a) An agency shall prepare an environmental assessment for a proposed action that is not likely to have significant effects or when the significance of the effects is unknown unless the agency finds that a categorical exclusion (§ 1501.4) is applicable or has decided to prepare an environmental impact statement.
(b) An agency may prepare an environmental assessment on any action in order to assist agency planning and decision making.
(c) An environmental assessment shall:
(1) Briefly provide sufficient evidence and analysis for determining whether to prepare an environmental impact statement or a finding of no significant impact; and
(2) Briefly discuss the purpose and need for the proposed action, alternatives as required by section 102(2)(E) of NEPA, the environmental impacts of the proposed action and alternatives, and a listing of agencies and persons consulted.
(d) Agencies shall involve relevant agencies, applicants, and the public, to the extent practicable in preparing environmental assessments.
(e) The text of an environmental assessment shall be no more than 75 pages, not including appendices, unless a senior agency official approves in writing an assessment to exceed 75 pages and establishes a new page limit.
(f) Agencies may apply the following provisions to environmental assessments:
(1) Section 1502.22 Incomplete or unavailable information;
(2) Section 1502.24 Methodology and scientific accuracy; and
(3) Section 1502.25 Environmental review and consultation requirements.
(a) An agency shall prepare a finding of no significant impact if the agency determines, based on the environmental assessment, not to prepare an environmental impact statement because the proposed action is not likely to have significant effects.
(1) The agency shall make the finding of no significant impact available to the affected public as specified in § 1506.6.
(2) In the following circumstances, the agency shall make the finding of no significant impact available for public review for 30 days before the agency makes its final determination whether to prepare an environmental impact statement and before the action may begin:
(i) The proposed action is, or is closely similar to, one which normally requires the preparation of an environmental impact statement under the procedures adopted by the agency pursuant to § 1507.3, or
(ii) The nature of the proposed action is one without precedent.
(b) The finding of no significant impact shall include the environmental assessment or incorporate it by reference and shall note any other environmental documents related to it (§ 1501.9(f)(3)). If the assessment is included, the finding need not repeat any of the discussion in the assessment but may incorporate it by reference.
(c) The finding of no significant impact shall state the means of and authority for any mitigation that the agency has adopted, and any applicable monitoring or enforcement provisions. If the agency finds no significant impacts based on mitigation, the mitigated finding of no significant impact shall state any enforceable mitigation requirements or commitments that will be undertaken to avoid significant impacts.
(a) A lead agency shall supervise the preparation of an environmental impact statement or environmental assessment if more than one Federal agency either:
(1) Proposes or is involved in the same action; or
(2) Is involved in a group of actions directly related to each other because of their functional interdependence or geographical proximity.
(b) Federal, State, Tribal, or local agencies, including at least one Federal agency, may act as joint lead agencies to prepare an environmental impact statement or environmental assessment (§ 1506.2).
(c) If an action falls within the provisions of paragraph (a) of this section, the potential lead agencies shall determine, by letter or memorandum, which agency shall be the lead agency and which shall be cooperating agencies. The agencies shall resolve the lead agency question so as not to cause delay. If there is disagreement among the agencies, the following factors (which are listed in order of descending importance) shall determine lead agency designation:
(1) Magnitude of agency's involvement.
(2) Project approval/disapproval authority.
(3) Expertise concerning the action's environmental effects.
(4) Duration of agency's involvement.
(5) Sequence of agency's involvement.
(d) Any Federal agency, or any State, Tribal, or local agency or private person substantially affected by the absence of lead agency designation, may make a written request to the senior agency officials of the potential lead agencies that a lead agency be designated.
(e) If Federal agencies are unable to agree on which agency will be the lead agency or if the procedure described in paragraph (c) of this section has not resulted within 45 days in a lead agency designation, any of the agencies or persons concerned may file a request with the Council asking it to determine which Federal agency shall be the lead agency. A copy of the request shall be transmitted to each potential lead agency. The request shall consist of:
(1) A precise description of the nature and extent of the proposed action.
(2) A detailed statement of why each potential lead agency should or should not be the lead agency under the criteria specified in paragraph (c) of this section.
(f) A response may be filed by any potential lead agency concerned within 20 days after a request is filed with the Council. The Council shall determine as soon as possible but not later than 20 days after receiving the request and all responses to it which Federal agency shall be the lead agency and which
(g) To the extent practicable, if a proposal will require action by more than one Federal agency and the lead agency determines that it requires preparation of an environmental impact statement, the lead and cooperating agencies shall evaluate the proposal in a single environmental impact statement and issue a joint record of decision. To the extent practicable, if the lead agency determines that the proposed action should be evaluated in an environmental assessment, the lead and cooperating agencies should evaluate the proposal in a single environmental assessment and, where appropriate, issue a joint finding of no significant impact.
(h) With respect to cooperating agencies, the lead agency shall:
(1) Request the participation of each cooperating agency in the NEPA process at the earliest practicable time.
(2) Use the environmental analysis and proposals of cooperating agencies with jurisdiction by law or special expertise, to the maximum extent practicable, consistent with its responsibility as lead agency.
(3) Meet with a cooperating agency at the latter's request.
(4) Determine the purpose and need, and alternatives in consultation with any cooperating agency.
(i) The lead agency shall develop a schedule, setting milestones for all environmental reviews and authorizations required for implementation of the action, in consultation with any applicant and all joint lead, cooperating, and participating agencies, as soon as practicable.
(j) If the lead agency anticipates that a milestone will be missed, it shall notify appropriate officials at the responsible agencies. The responsible agencies shall elevate, as soon as practicable, to the appropriate officials of the responsible agencies, the issue for timely resolution.
(a) The purpose of this section is to emphasize agency cooperation early in the NEPA process. Any Federal agency with jurisdiction by law shall be a cooperating agency upon request of the lead agency. In addition, any other Federal agency with special expertise with respect to any environmental issue may be a cooperating agency upon request of the lead agency. A State, Tribal, or local agency of similar qualifications may, by agreement with the lead agency, become a cooperating agency. An agency may request the lead agency to designate it a cooperating agency, and a Federal agency may appeal a denial of its request to the Council, in accordance with § 1501.7(e).
(b) Each cooperating agency shall:
(1) Participate in the NEPA process at the earliest practicable time.
(2) Participate in the scoping process (described in § 1501.9).
(3) Assume, on request of the lead agency, responsibility for developing information and preparing environmental analyses, including portions of the environmental impact statement or environmental assessment concerning which the cooperating agency has special expertise.
(4) Make available staff support at the lead agency's request to enhance the latter's interdisciplinary capability.
(5) Normally use its own funds. To the extent available funds permit, the lead agency shall fund those major activities or analyses it requests from cooperating agencies. Potential lead agencies shall include such funding requirements in their budget requests.
(6) Consult with the lead agency in developing the schedule (§ 1501.7(i)), meet the schedule, and elevate, as soon as practicable, to the senior agency official of the lead agency relating to purpose and need, alternatives or any other issues any issues that may affect that agency's ability to meet the schedule.
(7) Meet the lead agency's schedule for providing comments and limit its comments to those matters for which it has jurisdiction by law or special expertise with respect to any environmental issue consistent with § 1503.2.
(c) In response to a lead agency's request for assistance in preparing the environmental documents (described in paragraph (b)(3), (4), or (5) of this section), a cooperating agency may reply that other program commitments preclude any involvement or the degree of involvement requested in the action that is the subject of the environmental impact statement or environmental assessment. The cooperating agency shall submit a copy of this reply to the Council and the senior agency official of the lead agency.
(a)
(b)
(c)
(d)
(1) The purpose and need for the proposed action;
(2) A preliminary description of the proposed action and alternatives to be considered;
(3) A brief summary of expected impacts;
(4) Anticipated permits and other authorizations;
(5) A schedule for the decision-making process;
(6) A description of the public scoping process, including any scoping meeting(s);
(7) A request for comments on potential alternatives and impacts, and identification of any relevant information, studies, or analyses of any kind concerning impacts affecting the quality of the human environment (§§ 1503.1 and 1503.3); and
(8) Contact information for a person within the agency who can answer questions about the proposed action and the environmental impact statement.
(e)
(1) Actions (other than unconnected single actions) that may be:
(i) Connected actions, which means that they are closely related and therefore should be discussed in the same impact statement. Actions are connected if they:
(A) Automatically trigger other actions that may require environmental impact statements;
(B) Cannot or will not proceed unless other actions are taken previously or simultaneously; or
(C) Are interdependent parts of a larger action and depend on the larger action for their justification.
(ii) Similar actions, which when viewed with other reasonably foreseeable or proposed agency actions, have similarities that provide a basis for evaluating their environmental consequences together, such as common timing or geography. An agency may wish to analyze these actions in the same impact statement. It should do so when the most effective way to assess adequately the combined impacts of similar actions or reasonable alternatives to such actions is to treat them in a single impact statement.
(2) Alternatives, which include the no action alternative; other reasonable courses of action; and mitigation measures (not in the proposed action).
(3) Impacts.
(f)
(1) Identify and eliminate from detailed study the issues which are not significant or which have been covered by prior environmental review (§ 1506.3), narrowing the discussion of these issues in the statement to a brief presentation of why they will not have a significant effect on the human environment or providing a reference to their coverage elsewhere.
(2) Allocate assignments for preparation of the environmental impact statement among the lead and cooperating agencies, with the lead agency retaining responsibility for the statement.
(3) Indicate any public environmental assessments and other environmental impact statements which are being or will be prepared that are related to but are not part of the scope of the impact statement under consideration.
(4) Identify other environmental review, authorization, and consultation requirements so the lead and cooperating agencies may prepare other required analyses and studies concurrently with, and integrated with, the environmental impact statement as provided in § 1502.25.
(5) Indicate the relationship between the timing of the preparation of environmental analyses and the agencies' tentative planning and decision-making schedule.
(g)
(a) To ensure that agencies conduct NEPA reviews as efficiently and expeditiously as practicable, Federal agencies should set time limits appropriate to individual actions or types of actions (consistent with the time intervals required by § 1506.11). When multiple agencies are involved the reference to agency below means lead agency.
(b) To ensure timely decision making, agencies shall complete:
(1) Environmental assessments within 1 year unless a senior agency official of the lead agency approves a longer period in writing and establishes a new time limit. One year is measured from the date of decision to prepare an environmental assessment to the publication of a final environmental assessment.
(2) Environmental impact statements within 2 years unless a senior agency official of the lead agency approves a longer period in writing and establishes a new time limit. Two years is measured from the date of the issuance of the notice of intent to the date a record of decision is signed.
(c) The senior agency official may consider the following factors in determining time limits:
(1) Potential for environmental harm.
(2) Size of the proposed action.
(3) State of the art of analytic techniques.
(4) Degree of public need for the proposed action, including the consequences of delay.
(5) Number of persons and agencies affected.
(6) Availability of relevant information.
(7) Other time limits imposed on the agency by law, regulations, or Executive order.
(d) The senior agency official may set overall time limits or limits for each constituent part of the NEPA process, which may include:
(1) Decision on whether to prepare an environmental impact statement (if not already decided).
(2) Determination of the scope of the environmental impact statement.
(3) Preparation of the draft environmental impact statement.
(4) Review of any comments on the draft environmental impact statement from the public and agencies.
(5) Preparation of the final environmental impact statement.
(6) Review of any comments on the final environmental impact statement.
(7) Decision on the action based in part on the environmental impact statement.
(e) The agency may designate a person (such as the project manager or a person in the agency's office with NEPA responsibilities) to expedite the NEPA process.
(f) State, Tribal, or local agencies or members of the public may request a Federal agency to set time limits.
(a) Agencies are encouraged to tier their environmental impact statements and environmental assessments where it would eliminate repetitive discussions of the same issues, focus on the actual issues ripe for decision, and exclude from consideration issues already decided or not yet ripe at each level of environmental review. Whenever an agency has prepared an environmental impact statement or environmental assessment for a program or policy and then prepares a subsequent statement or environmental assessment on an action included within the entire program or policy (such as a project- or site-specific action), the subsequent statement or environmental assessment need only summarize the issues discussed in the broader statement and incorporate discussions from the broader statement by reference and shall concentrate on the issues specific to the subsequent action. The subsequent document shall state where the earlier document is available. Tiering may also be appropriate for different stages of actions.
(b) Tiering is appropriate when the sequence from an environmental impact statement or environmental assessment is:
(1) From a programmatic, plan, or policy environmental impact statement or environmental assessment to a program, plan, or policy statement or assessment of lesser or narrower scope or to a site-specific statement or assessment.
(2) From an environmental impact statement or environmental assessment on a specific action at an early stage (such as need and site selection) to a supplement (which is preferred) or a subsequent statement or assessment at a
Agencies shall incorporate material into environmental documents by reference when the effect will be to cut down on bulk without impeding agency and public review of the action. The incorporated material shall be cited in the document and its content briefly described. No material may be incorporated by reference unless it is reasonably available for inspection by potentially interested persons within the time allowed for comment. Material based on proprietary data which is itself not available for review and comment shall not be incorporated by reference.
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
The primary purpose of an environmental impact statement prepared pursuant to 102(2)(c) is to ensure agencies consider the environmental impacts of their actions in decision making. It shall provide full and fair discussion of significant environmental impacts and shall inform decision makers and the public of reasonable alternatives which would avoid or minimize adverse impacts or enhance the quality of the human environment. Agencies shall focus on significant environmental issues and alternatives and shall reduce paperwork and the accumulation of extraneous background data. Statements shall be concise, clear, and to the point, and shall be supported by evidence that the agency has made the necessary environmental analyses. An environmental impact statement is a document that informs. Federal agency decision making.
(a) Environmental impact statements shall not be encyclopedic.
(b) Impacts shall be discussed in proportion to their significance. There shall be only brief discussion of other than significant issues. As in a finding of no significant impact, there should be only enough discussion to show why more study is not warranted.
(c) Environmental impact statements shall be analytic, concise, and no longer than necessary to comply with NEPA and with the regulations in parts 1500 through 1508. Length should be proportional to potential environmental effects and project size.
(d) Environmental impact statements shall state how alternatives considered in it and decisions based on it will or will not achieve the requirements of sections 101 and 102(1) of NEPA and other environmental laws and policies.
(e) The range of alternatives discussed in environmental impact statements shall encompass those to be considered by the ultimate agency decision maker.
(f) Agencies shall not commit resources prejudicing selection of alternatives before making a final decision (§ 1506.1).
(g) Environmental impact statements shall serve as the means of assessing the environmental impact of proposed agency actions, rather than justifying decisions already made.
As required by section 102(2)(C) of NEPA, environmental impact statements are to be included in every Federal agency recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment.
(a) Agencies shall define the proposal that is the subject of an environmental impact statement based on the statutory authorities for the proposed action. Agencies shall use the criteria for scope (§ 1501.9) to determine which proposal(s) shall be the subject of a particular statement. Agencies shall evaluate in a single environmental impact statement proposals or parts of proposals that are related to each other closely enough to be, in effect, a single course of action.
(b) Environmental impact statements may be prepared for programmatic Federal actions such as the adoption of new agency programs. Agencies shall prepare statements on programmatic actions so that they are relevant to the program decision and time them to coincide with meaningful points in agency planning and decision making.
(c) When preparing statements on programmatic actions (including proposals by more than one agency), agencies may find it useful to evaluate the proposal(s) in one of the following ways:
(1) Geographically, including actions occurring in the same general location, such as body of water, region, or metropolitan area.
(2) Generically, including actions which have relevant similarities, such as common timing, impacts, alternatives, methods of implementation, media, or subject matter.
(3) By stage of technological development including Federal or federally assisted research, development or demonstration programs for new technologies which, if applied, could significantly affect the quality of the human environment. Statements on such programs should be available before the program has reached a stage of investment or commitment to implementation likely to determine subsequent development or restrict later alternatives.
(d) Agencies shall as appropriate employ scoping (§ 1501.9), tiering (§ 1501.11), and other methods listed in §§ 1500.4 and 1500.5 to relate programmatic and narrow actions and to avoid duplication and delay. Agencies may tier their environmental analyses to defer detailed analysis of environmental impacts of specific program elements until such program elements are ripe for
An agency should commence preparation of an environmental impact statement as close as practicable to the time the agency is developing or is presented with a proposal so that preparation can be completed in time for the final statement to be included in any recommendation or report on the proposal. The statement shall be prepared early enough so that it can serve practically as an important contribution to the decision-making process and will not be used to rationalize or justify decisions already made (§§ 1501.2 and 1502.2). For instance:
(a) For projects directly undertaken by Federal agencies the environmental impact statement shall be prepared at the feasibility analysis (go-no go) stage and may be supplemented at a later stage if necessary.
(b) For applications to the agency, appropriate environmental assessments or statements shall be commenced as soon as practicable after the application is received. Federal agencies should work with potential applicants and applicable State, Tribal, and local agencies prior to receipt of the application.
(c) For adjudication, the final environmental impact statement shall normally precede the final staff recommendation and that portion of the public hearing related to the impact study. In appropriate circumstances the statement may follow preliminary hearings designed to gather information for use in the statements.
(d) For informal rulemaking the draft environmental impact statement shall normally accompany the proposed rule.
Environmental impact statements shall be prepared using an interdisciplinary approach which will ensure the integrated use of the natural and social sciences and the environmental design arts (section 102(2)(A) of NEPA). The disciplines of the preparers shall be appropriate to the scope and issues identified in the scoping process (§ 1501.9).
The text of final environmental impact statements (
Environmental impact statements shall be written in plain language and may use appropriate graphics so that decision makers and the public can readily understand them. Agencies should employ writers of clear prose or editors to write, review, or edit statements, which will be based upon the analysis and supporting data from the natural and social sciences and the environmental design arts.
(a)
(b)
(c)
(d)
(1) Shall prepare supplements to either draft or final environmental impact statements if a major Federal action remains to occur, and:
(i) The agency makes substantial changes in the proposed action that are relevant to environmental concerns; or
(ii) There are significant new circumstances or information relevant to environmental concerns and bearing on the proposed action or its impacts.
(2) May also prepare supplements when the agency determines that the purposes of the Act will be furthered by doing so.
(3) Shall prepare, publish, and file a supplement to a statement in the same fashion (exclusive of scoping) as a draft and final statement unless alternative procedures are approved by the Council.
(4) May find that changes to the proposed action or new circumstances or information relevant to environmental concerns are not significant and therefore do not require a supplement. The agency should document the finding consistent with its agency NEPA procedures (§ 1507.3), or, if necessary, in a finding of no significant impact supported by an environmental assessment.
(a) Agencies shall use a format for environmental impact statements which will encourage good analysis and clear presentation of the alternatives including the proposed action. Agencies should use the following standard format for environmental impact statements unless the agency determines that there is a more effective format for communication:
(1) Cover.
(2) Summary.
(3) Table of contents.
(4) Purpose of and need for action.
(5) Alternatives including proposed action (sections 102(2)(C)(iii) and 102(2)(E) of NEPA).
(6) Affected environment and environmental consequences (especially sections 102(2)(C)(i), (ii), (iv), and (v) of NEPA).
(7) Submitted, alternatives, information, and analyses.
(8) List of preparers.
(9) Appendices (if any).
(b) If an agency uses a different format, it shall include paragraphs (a), (b), (c), (d), (e), (f), (g) and (h) of this section, as further described in §§ 1502.11 through 1502.20, in any appropriate format.
The cover shall not exceed one page and include:
(a) A list of the responsible agencies, including the lead agency and any cooperating agencies.
(b) The title of the proposed action that is the subject of the statement (and, if appropriate, the titles of related cooperating agency actions), together with the State(s) and county(ies) (or other jurisdiction, if applicable) where the action is located.
(c) The name, address, and telephone number of the person at the agency who can supply further information.
(d) A designation of the statement as a draft, final, or draft or final supplement.
(e) A one-paragraph abstract of the statement.
(f) The date by which comments must be received (computed in cooperation with EPA under § 1506.11).
(g) The estimated total cost of preparing the environmental impact statement, including the costs of agency full-time equivalent (FTE) personnel hours, contractor costs, and other direct costs.
Each environmental impact statement shall contain a summary which adequately and accurately summarizes the statement. The summary shall stress the major conclusions, areas of disputed issues raised by agencies and the public), and the issues to be resolved (including the choice among alternatives). The summary will normally not exceed 15 pages.
The statement shall briefly specify the underlying purpose and need for the proposed action. When an agency's statutory duty is to review an application for authorization, the agency shall base the purpose and need on the goals of the applicant and the agency's authority.
This section should present the environmental impacts of the proposed action and the alternatives in comparative form based on the information and analysis presented in the sections on the Affected Environment (§ 1502.15) and the Environmental Consequences (§ 1502.16). In this section, agencies shall:
(a) Evaluate reasonable alternatives to the proposed action, and for alternatives which were eliminated from detailed study, briefly discuss the reasons for their having been eliminated.
(b) Discuss each alternative considered in detail including the proposed action so that reviewers may evaluate their comparative merits.
(c) Include the no action alternative.
(d) Identify the agency's preferred alternative or alternatives, if one or more exists, in the draft statement and identify such alternative in the final statement unless another law prohibits the expression of such a preference.
(e) Include appropriate mitigation measures not already included in the proposed action or alternatives.
The environmental impact statement shall succinctly describe the environment of the area(s) to be affected or created by the alternatives under consideration. The description may be combined with evaluation of the environmental consequences (§ 1502.16) and shall be no longer than is necessary to understand the effects of the alternatives. Data and analyses in a statement shall be commensurate with the importance of the impact, with less important material summarized, consolidated, or simply referenced. Agencies shall avoid useless bulk in statements and shall concentrate effort and attention on important issues. Verbose descriptions of the affected environment are themselves no measure of the adequacy of an environmental impact statement.
(a) This section forms the scientific and analytic basis for the comparisons under § 1502.14. It shall consolidate the discussions of those elements required by sections 102(2)(C)(i), (ii), (iv), and (v) of NEPA which are within the scope of the statement and as much of section 102(2)(C)(iii) of NEPA as is necessary to support the comparisons. This section should not duplicate discussions in § 1502.14. The discussion shall include:
(1) The environmental impacts of the proposed action and reasonable alternatives to the proposed action and their significance. The comparison of the proposed action and reasonable alternatives shall be based on this discussion of the impacts.
(2) Any adverse environmental effects which cannot be avoided should the proposal be implemented.
(3) The relationship between short-term uses of man's environment and the maintenance and enhancement of long-term productivity.
(4) Any irreversible or irretrievable commitments of resources which would be involved in the proposal should it be implemented.
(5) Possible conflicts between the proposed action and the objectives of Federal, regional, State, Tribal, and local land use plans, policies and controls for the area concerned. (§ 1506.2(d))
(6) Energy requirements and conservation potential of various alternatives and mitigation measures.
(7) Natural or depletable resource requirements and conservation potential of various alternatives and mitigation measures.
(8) Urban quality, historic and cultural resources, and the design of the built environment, including the reuse and conservation potential of various alternatives and mitigation measures.
(9) Means to mitigate adverse environmental impacts (if not fully covered under § 1502.14(e)).
(10) Where applicable, economic and technical considerations, including the economic benefits of the proposed action.
(b) Economic or social effects by themselves do not require preparation of an environmental impact statement. However, when the agency determines that economic or social and natural or physical environmental effects are interrelated, then the environmental impact statement will discuss and give appropriate consideration to these effects on the human environment.
The environmental impact statement shall include a summary of all alternatives, information, and analyses submitted by public commenters for consideration by the lead and cooperating agencies in developing the environmental impact statement. Consistent with § 1503.1(a)(3), the lead agency shall invite comment on the completeness of the summary in the draft environmental impact statement.
Based on the summary of the submitted alternatives, information, and analyses section, the decision maker for the lead agency shall certify in the record of decision that the agency has considered all of the alternatives, information, and analyses submitted by public commenters for consideration by the lead and cooperating agencies in developing the environmental impact statement. Agency environmental impact statements certified in accordance with this section are entitled to a conclusive presumption that the agency has considered the information included in the submitted alternatives, information, and analyses section.
The environmental impact statement shall list the names, together with their qualifications (expertise, experience, professional disciplines), of the persons who were primarily responsible for preparing the environmental impact statement or significant background papers, including basic components of the statement (§§ 1502.6 and 1502.8). Where possible the persons who are responsible for a particular analysis,
If an agency prepares an appendix, it shall be published with the environmental impact statement and shall consist of material:
(a) Prepared in connection with an environmental impact statement (as distinct from material which is not so prepared and which is incorporated by reference (§ 1501.12)).
(b) Substantiating any analysis fundamental to the impact statement.
(c) Relevant to the decision to be made.
Agencies shall publish the entire draft and final environmental impact statements and unchanged statements as provided in § 1503.4(c). The agency shall transmit the entire statement electronically (or in paper copy, if so requested due to economic or other hardship) to:
(a) Any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved and any appropriate Federal, State, Tribal, or local agency authorized to develop and enforce environmental standards.
(b) The applicant, if any.
(c) Any person, organization, or agency requesting the entire environmental impact statement.
(d) In the case of a final environmental impact statement any person, organization, or agency which submitted substantive comments on the draft.
(a) When an agency is evaluating reasonably foreseeable significant adverse effects on the human environment in an environmental impact statement and there is incomplete or unavailable information, the agency shall make clear that such information is lacking.
(b) If the incomplete information relevant to reasonably foreseeable significant adverse impacts is essential to a reasoned choice among alternatives and the overall costs of obtaining it are not unreasonable, the agency shall include the information in the environmental impact statement.
(c) If the information relevant to reasonably foreseeable significant adverse impacts cannot be obtained because the overall costs of obtaining it are unreasonable or the means to obtain it are not known, the agency shall include within the environmental impact statement:
(1) A statement that such information is incomplete or unavailable;
(2) A statement of the relevance of the incomplete or unavailable information to evaluating reasonably foreseeable significant adverse impacts on the human environment;
(3) A summary of existing credible scientific evidence which is relevant to evaluating the reasonably foreseeable significant adverse impacts on the human environment; and
(4) The agency's evaluation of such impacts based upon theoretical approaches or research methods generally accepted in the scientific community.
(d) For the purposes of this section, “reasonably foreseeable” includes impacts which have catastrophic consequences, even if their probability of occurrence is low, provided that the analysis of the impacts is supported by credible scientific evidence, is not based on pure conjecture, and is within the rule of reason.
If a cost-benefit analysis relevant to the choice among environmentally different alternatives is being considered for the proposed action, it shall be incorporated by reference or appended to the statement as an aid in evaluating the environmental consequences. To assess the adequacy of compliance with section 102(2)(B) of NEPA the statement shall, when a cost-benefit analysis is prepared, discuss the relationship between that analysis and any analyses of unquantified environmental impacts, values, and amenities. For purposes of complying with the Act, the weighing of the merits and drawbacks of the various alternatives need not be displayed in a monetary cost-benefit analysis and should not be when there are important qualitative considerations. In any event, an environmental impact statement should at least indicate those considerations, including factors not related to environmental quality, which are likely to be relevant and important to a decision.
Agencies shall ensure the professional integrity, including scientific integrity, of the discussions and analyses in environmental documents. Agencies shall make use of reliable existing data and resources and are not required to undertake new scientific and technical research to inform their analyses. Agencies may make use of any reliable data sources, such as remotely gathered information or statistical models. They shall identify any methodologies used and shall make explicit reference to the scientific and other sources relied upon for conclusions in the statement. An agency may place discussion of methodology in an appendix.
(a) To the fullest extent possible, agencies shall prepare draft environmental impact statements concurrent and integrated with environmental impact analyses and related surveys and studies required by all other Federal environmental review laws and Executive orders applicable to the proposed action, including the Fish and Wildlife Coordination Act (16 U.S.C. 661
(b) The draft environmental impact statement shall list all Federal permits, licenses, and other authorizations which must be obtained in implementing the proposal. If it is uncertain whether a Federal permit, license, or other authorization is necessary, the draft environmental impact statement shall so indicate.
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; and E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977.
(a) After preparing a draft environmental impact statement and before preparing a final environmental impact statement the agency shall:
(1) Obtain the comments of any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved or which is authorized to develop and enforce environmental standards.
(2) Request the comments of:
(i) Appropriate State, Tribal, and local agencies which are authorized to develop and enforce environmental standards;
(ii) State, Tribal, or local governments that may be affected by the proposed action;
(iii) Any agency which has requested that it receive statements on actions of the kind proposed;
(iv) The applicant, if any; and
(v) The public, affirmatively soliciting comments in a manner designed to inform those persons or organizations who may be interested in or affected by the proposed action.
(3) Invite comment specifically on the completeness of the submitted alternatives, information, and analyses section (§ 1502.17).
(b) An agency may request comments on a final environmental impact statement before the final decision. An agency shall request comments and provide a 30-day comment period on the final environmental impact statement's submitted alternatives, information, and analyses section (§ 1502.17). Other agencies or persons may make comments consistent with the time periods provided for under § 1506.11.
(c) An agency shall provide for electronic submission of public comments, with reasonable measures to ensure the comment process is accessible to affected persons.
Cooperating agencies and agencies that are authorized to develop and enforce environmental standards shall comment on statements within their jurisdiction, expertise, or authority within the time period specified for comment in § 1506.11. A Federal agency may reply that it has no comment. If a cooperating agency is satisfied that its views are adequately reflected in the environmental impact statement, it should reply that it has no comment.
(a) To promote informed decision making, comments on an environmental impact statement or on a proposed action shall be as specific as possible, may address either the adequacy of the statement or the merits of the alternatives discussed or both, and shall provide as much detail as necessary to meaningfully participate and fully inform the agency of the commenter's position. Comments should explain why the issue raised is significant to the consideration of potential environmental impacts and alternatives to the proposed action, as well as economic and employment impacts, and other impacts affecting the quality of the human environment. Comments should reference the corresponding section or page number of the draft environmental impact statement, propose specific changes to those parts of the statement, where possible, and include or describe the data sources and methodologies supporting the proposed changes.
(b) Comments on the submitted alternatives, information, and analyses section (§ 1502.17) should identify any additional alternatives, information, or analyses not included in the draft environmental impact statement, and shall be as specific as possible. Comments on and objections to this section shall be raised within 30 days of the publication of the notice of availability of the final environmental impact statement. Comments not provided within 30 days shall be considered exhausted and forfeited, consistent with § 1500.3(b).
(c) When a participating agency criticizes a lead agency's predictive methodology, the participating agency should describe the alternative methodology which it prefers and why.
(d) A cooperating agency shall specify in its comments whether it needs additional information to fulfill other applicable environmental reviews or consultation requirements and what information it needs. In particular, it shall specify any additional information it needs to comment adequately on the draft statement's analysis of significant site-specific effects associated with the granting or approving by that cooperating agency of necessary Federal permits, licenses, or authorizations.
(e) When a cooperating agency with jurisdiction by law specifies mitigation measures it considers necessary to allow the agency to grant or approve applicable permit, license, or related requirements or concurrences, the cooperating agency shall cite to its applicable statutory authority.
(a) An agency preparing a final environmental impact statement shall consider substantive comments timely submitted during the public comment period and may respond individually and collectively. In the final environmental impact statement, the agency may:
(1) Modify alternatives including the proposed action.
(2) Develop and evaluate alternatives not previously given serious consideration by the agency.
(3) Supplement, improve, or modify its analyses.
(4) Make factual corrections.
(5) Explain why the comments do not warrant further agency response.
(b) All substantive comments received on the draft statement (or summaries thereof where the response has been exceptionally voluminous), shall be appended to the final statement or otherwise published.
(c) If changes in response to comments are minor and are confined to the responses described in paragraphs (a)(4) and (5) of this section, agencies may write the changes on errata sheets and attach the responses to the statement instead of rewriting the draft statement. In such cases only the comments, the responses, and the changes and not the final statement need be published (§ 1502.20). The entire document with a new cover sheet shall be filed with the Environmental Protection Agency as the final statement (§ 1506.10).
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; and E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977.
(a) This part establishes procedures for referring to the Council Federal interagency disagreements concerning proposed major Federal actions that might cause unsatisfactory environmental effects. It provides means for early resolution of such disagreements.
(b) Under section 309 of the Clean Air Act (42 U.S.C. 7609), the Administrator of the Environmental Protection Agency is directed to review and comment publicly on the environmental impacts of Federal activities, including actions for which environmental impact statements are prepared. If after this review the Administrator determines that the matter is “unsatisfactory from the standpoint of public health or welfare or environmental quality,” section 309 directs that the matter be referred to the Council (hereafter “environmental referrals”).
(c) Under section 102(2)(C) of NEPA (42 U.S.C. 4332(2)(C)), other Federal agencies may produce similar reviews of environmental impact statements, including judgments on the acceptability of anticipated environmental impacts. These reviews must be made available to the President, the Council and the public.
Environmental referrals should be made to the Council only after concerted, timely (as early as practicable in the process), but unsuccessful attempts to resolve differences with the lead agency. In determining what environmental objections to the matter are appropriate to refer to the Council, an agency should weigh potential adverse environmental impacts, considering:
(a) Possible violation of national environmental standards or policies.
(b) Severity.
(c) Geographical scope.
(d) Duration.
(e) Importance as precedents.
(f) Availability of environmentally preferable alternatives.
(g) Economic and technical considerations, including the economic costs of delaying or impeding the decision making of the agencies involved in the action.
(a) A Federal agency making the referral to the Council shall:
(1) Advise the lead agency at the earliest possible time that it intends to refer a matter to the Council unless a satisfactory agreement is reached.
(2) Include such advice whenever practicable in the referring agency's comments on the environmental assessment or draft environmental impact statement.
(3) Identify any essential information that is lacking and request that the lead agency make it available at the earliest possible time.
(4) Send copies of such advice to the Council.
(b) The referring agency shall deliver its referral to the Council no later than 25 days after the lead agency has made the final environmental impact statement available to the Environmental Protection Agency, participating agencies, and the public, and in the case of an environmental assessment, no later than 25 days after the lead agency makes it available. Except when the lead agency grants an extension of this period, the Council will not accept a referral after that date.
(c) The referral shall consist of:
(1) A copy of the letter signed by the head of the referring agency and delivered to the lead agency informing the lead agency of the referral and the reasons for it.
(2) A statement supported by factual evidence leading to the conclusion that the matter is unsatisfactory from the standpoint of public health or welfare or environmental quality. The statement shall:
(i) Identify any disputed material facts and incorporate (by reference if appropriate) agreed upon facts;
(ii) Identify any existing environmental requirements or policies which would be violated by the matter;
(iii) Present the reasons for the referral;
(ii) Contain a finding by the agency whether the issue raised is of national importance because of the threat to national environmental resources or policies or for some other reason;
(iii) Review the steps taken by the referring agency to bring its concerns to the attention of the lead agency at the earliest possible time; and
(iv) Give the referring agency's recommendations as to what mitigation alternative, further study, or other course of action (including abandonment of the matter) are necessary to remedy the situation.
(d) No later than 25 days after the referral to the Council, the lead agency may deliver a response to the Council and the referring agency. If the lead agency requests more time and gives assurance that the matter will not go forward in the interim, the Council may grant an extension. The response shall:
(1) Address fully the issues raised in the referral.
(2) Be supported by evidence and explanations, as appropriate.
(3) Give the lead agency's response to the referring agency's recommendations.
(e) Applicants may provide views in writing to the Council no later than the response.
(f) No later than 25 days after receipt of both the referral and any response or upon being informed that there will be no response (unless the lead agency agrees to a longer time), the Council may take one or more of the following actions:
(1) Conclude that the process of referral and response has successfully resolved the problem.
(2) Initiate discussions with the agencies with the objective of mediation with referring and lead agencies.
(3) Obtain additional views and information.
(4) Determine that the issue is not one of national importance and request the referring and lead agencies to pursue their decision process.
(5) Determine that the issue should be further negotiated by the referring and lead agencies and is not appropriate for Council consideration until one or more heads of agencies report to the Council that the agencies' disagreements are irreconcilable.
(6) Publish its findings and recommendations (including where appropriate a finding that the submitted evidence does not support the position of an agency).
(7) When appropriate, submit the referral and the response together with the Council's recommendation to the President for action.
(g) The Council shall take no longer than 60 days to complete the actions specified in paragraph (f)(2), (3), or (5) of this section.
(h) The referral process is not intended to create any private rights of action or to be judicially reviewable because any voluntary resolutions by the agency parties do not represent final agency action and instead are only provisional and dependent on later consistent action by the action agencies.
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
At the time of its decision (§ 1506.11) or, if appropriate, its recommendation to Congress, each agency shall prepare and timely publish a concise public record of decision or joint record of decision. The record, which each agency may integrate into any other record it prepares, shall:
(a) State the decision.
(b) Identify all alternatives considered by the agency in reaching its decision, specifying the alternative or alternatives which were considered to be environmentally preferable. An agency may discuss preferences among alternatives based on relevant factors including economic and technical considerations and agency statutory missions. An agency shall identify and discuss all such factors, including any essential considerations of national policy which were balanced by the agency in making its decision and state how those considerations entered into its decision.
(c) State whether the agency has adopted all practicable means to avoid or minimize environmental harm from the alternative selected, and if not, why the agency did not. The agency shall adopt and summarize, where applicable, a monitoring and enforcement program
(d) Address any comments or objections received on the final environmental impact statement's submitted alternatives, information, and analyses section.
(e) Include the decision maker's certification regarding the agency's consideration of the submitted alternatives, information, and analyses submitted by public commenters (§§ 1502.17 and 1502.18).
Agencies may provide for monitoring to assure that their decisions are carried out and should do so in important cases. Mitigation (§ 1505.2(c)) and other conditions established in the environmental impact statement or during its review and committed as part of the decision shall be implemented by the lead agency or other appropriate consenting agency. The lead agency shall:
(a) Include appropriate conditions in grants, permits or other approvals.
(b) Condition funding of actions on mitigation.
(c) Upon request, inform cooperating or participating agencies on progress in carrying out mitigation measures which they have proposed and which were adopted by the agency making the decision.
(d) Upon request, publish the results of relevant monitoring.
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
(a) Except as provided in paragraphs (b) and (c) of this section, until an agency issues a finding of no significant impact, as provided in § 1501.6, or record of decision, as provided in § 1505.2, no action concerning the proposal may be taken which would:
(1) Have an adverse environmental impact; or
(2) Limit the choice of reasonable alternatives.
(b) If any agency is considering an application from a non-Federal entity, and is aware that the applicant is about to take an action within the agency's jurisdiction that would meet either of the criteria in paragraph (a) of this section, then the agency shall promptly notify the applicant that the agency will take appropriate action to ensure that the objectives and procedures of NEPA are achieved. This section does not preclude development by applicants of plans or designs or performance of other activities necessary to support an application for Federal, State, Tribal, or local permits or assistance. An agency considering a proposed action for Federal funding may authorize such activities, including, but not limited to, acquisition of interests in land (
(c) While work on a required programmatic environmental impact statement or environmental assessment is in progress and the action is not covered by an existing programmatic statement, agencies shall not undertake in the interim any major Federal action covered by the program which may significantly affect the quality of the human environment unless such action:
(1) Is justified independently of the program;
(2) Is itself accompanied by an adequate environmental impact statement; and
(3) Will not prejudice the ultimate decision on the program. Interim action prejudices the ultimate decision on the program when it tends to determine subsequent development or limit alternatives.
(a) Federal agencies are authorized to cooperate with State, Tribal, and local agencies that are responsible for preparing environmental documents, including those prepared pursuant to section 102(2)(D) of NEPA.
(b) Agencies shall cooperate with State, Tribal, and local agencies to the fullest extent practicable to reduce duplication between NEPA and State, Tribal, and local requirements, including through use of environmental studies, analysis, and decisions conducted in support of Federal, State, Tribal, or local environmental reviews or authorization decisions, unless the agencies are specifically barred from doing so by some other law. Except for cases covered by paragraph (a) of this section, such cooperation shall to the fullest extent practicable include:
(1) Joint planning processes.
(2) Joint environmental research and studies.
(3) Joint public hearings (except where otherwise provided by statute).
(4) Joint environmental assessments.
(c) Agencies shall cooperate with State, Tribal, and local agencies to the fullest extent practicable to reduce duplication between NEPA and comparable State, Tribal, and local requirements, unless the agencies are specifically barred from doing so by some other law. Except for cases covered by paragraph (a) of this section, such cooperation shall include, to the fullest extent practicable, joint environmental impact statements. In such cases one or more Federal agencies and one or more State, Tribal, or local agencies shall be joint lead agencies. Where State or Tribal laws or local ordinances have environmental impact statement or similar requirements in addition to but not in conflict with those in NEPA, Federal agencies may cooperate in fulfilling these requirements, as well as those of Federal laws, so that one document will comply with all applicable laws.
(d) To better integrate environmental impact statements into State, Tribal, or local planning processes, environmental impact statements shall discuss any inconsistency of a proposed action with any approved State, Tribal, or local plan or law (whether or not federally sanctioned). Where an inconsistency exists, the statement should describe the extent to which the agency would reconcile its proposed action with the plan or law. While the statement should discuss any inconsistencies, NEPA does not require reconciliation.
(a) An agency may adopt a Federal environmental assessment, draft or final environmental impact statement, or portion thereof, provided that the assessment, statement, or portion thereof meets the standards for an adequate assessment or statement under the regulations in parts 1500 through 1508.
(b) If the actions covered by the original environmental impact statement and the proposed action are substantially the same, the agency adopting another agency's statement shall republish it as a final statement.
(c) A cooperating agency may adopt in its record of decision without republishing the environmental impact statement of a lead agency when, after an independent review of the statement, the cooperating agency concludes that its comments and suggestions have been satisfied.
(d) If the actions covered by the original environmental assessment and the proposed action are substantially the same, an agency may adopt another agency's environmental assessment in its finding of no significant impact and provide notice consistent with § 1501.6.
(e) The adopting agency shall specify if one of the following circumstances are present:
(1) The agency is adopting an assessment or statement that is not final within the agency that prepared it.
(2) The action assessed in the assessment or statement is the subject of a referral under part 1504.
(3) The assessment or statement's adequacy is the subject of a judicial action that is not final.
(f) An agency may adopt another agency's determination that a categorical exclusion applies to a proposed action if the adopting agency's proposed action is substantially the same.
Agencies should combine, to the fullest extent practicable, any environmental document with any other agency document to reduce duplication and paperwork.
(a)
(b)
(c)
(1) If a contractor or applicant prepares the document, the responsible Federal official shall provide guidance, participate in its preparation, independently evaluate it prior to its approval, and take responsibility for its scope and contents.
(2) Nothing in this section is intended to prohibit any agency from requesting any person, including the applicant, to submit information to it or to prohibit any person from submitting information to any agency for use in preparing environmental documents.
Agencies shall:
(a) Make diligent efforts to involve the public in preparing and implementing their NEPA procedures (§ 1507.3).
(b) Provide public notice of NEPA-related hearings, public meetings, and other opportunities for public engagement, and the availability of environmental documents so as to inform those persons and agencies who may be interested or affected by their proposed actions.
(1) In all cases, the agency shall notify those who have requested notice on an individual action.
(2) In the case of an action with effects of national concern, notice shall include publication in the
(3) In the case of an action with effects primarily of local concern, the notice may include:
(i) Notice to State and local agencies that may be interested or affected by the proposed action.
(ii) Notice to affected Tribal governments.
(iii) Following the affected State or Tribe's public notice procedures for comparable actions.
(iv) Publication in local newspapers (in papers of general circulation rather than legal papers).
(v) Notice through other local media.
(vi) Notice to potentially interested community organizations including small business associations.
(vii) Publication in newsletters that may be expected to reach potentially interested persons.
(viii) Direct mailing to owners and occupants of nearby or affected property.
(ix) Posting of notice on and off site in the area where the action is to be located.
(x) Notice through electronic media (
(c) Hold or sponsor public hearings, public meetings, or other opportunities for public engagement whenever appropriate or in accordance with statutory requirements applicable to the agency. Agencies may conduct public hearings and public meetings by means of electronic communication except where another format is required by law.
(d) Solicit appropriate information from the public.
(e) Explain in its procedures where interested persons can get information or status reports on environmental impact statements and other elements of the NEPA process.
(f) Make environmental impact statements, the comments received, and any underlying documents available to the public pursuant to the provisions of the Freedom of Information Act, as amended (5 U.S.C. 552).
The Council may provide further guidance concerning NEPA and its procedures consistent with Executive Order 13807, Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects (August 5, 2017), Executive Order 13891, Promoting the Rule of Law Through Improved Agency Guidance Documents (October 9, 2019), and any other applicable Executive orders.
(a) When developing or providing significant cooperation and support in the development of legislation, agencies shall integrate the NEPA process for proposals for legislation significantly affecting the quality of the human environment with the legislative process of the Congress. The test for significant cooperation is whether the proposal is in fact predominantly that of the agency rather than another source. Drafting
(b) A legislative environmental impact statement is the detailed statement required by law to be included in a recommendation or report on a legislative proposal to Congress. A legislative environmental impact statement shall be considered part of the formal transmittal of a legislative proposal to Congress; however, it may be transmitted to Congress up to 30 days later in order to allow time for completion of an accurate statement that can serve as the basis for public and Congressional debate. The statement must be available in time for Congressional hearings and deliberations.
(c) Preparation of a legislative environmental impact statement shall conform to the requirements of the regulations in parts 1500 through 1508, except as follows:
(1) There need not be a scoping process.
(2) Agencies shall prepare the legislative statement in the same manner as a draft environmental impact statement and need not prepare a final statement unless any of the following conditions exist. In such cases, the agency shall prepare and publish the statements consistent with §§ 1503.1 and 1506.11:
(i) A Congressional committee with jurisdiction over the proposal has a rule requiring both draft and final environmental impact statements.
(ii) The proposal results from a study process required by statute (such as those required by the Wild and Scenic Rivers Act (16 U.S.C. 1271
(iii) Legislative approval is sought for Federal or federally assisted construction or other projects which the agency recommends be located at specific geographic locations. For proposals requiring an environmental impact statement for the acquisition of space by the General Services Administration, a draft statement shall accompany the Prospectus or the 11(b) Report of Building Project Surveys to the Congress, and a final statement shall be completed before site acquisition.
(iv) The agency decides to prepare draft and final statements.
(d) Comments on the legislative statement shall be given to the lead agency which shall forward them along with its own responses to the Congressional committees with jurisdiction.
(a) Where the proposal for major Federal action is the promulgation of a rule or regulation, analyses prepared pursuant to other statutory or Executive order requirements may serve as the functional equivalent of the EIS and be sufficient to comply with NEPA.
(b) To determine that an analysis serves as the functional equivalent of an EIS, an agency shall find that:
(1) There are substantive and procedural standards that ensure full and adequate consideration of environmental issues;
(2) There is public participation before a final alternative is selected; and
(3) A purpose of the analysis that the agency is conducting is to examine environmental issues.
(a) Environmental impact statements together with comments and responses shall be filed with the Environmental Protection Agency, Office of Federal Activities, consistent with EPA's procedures.
(b) Statements shall be filed with the EPA no earlier than they are also transmitted to participating agencies and made available to the public. EPA may issue guidelines to agencies to implement its responsibilities under this section and § 1506.11.
(a) The Environmental Protection Agency shall publish a notice in the
(b) Unless otherwise provided by law, including statutory provisions for combining a final environmental impact statement and record of decision, Federal agencies may not make or issue a record of decision under § 1505.2 for the proposed action until the later of the following dates:
(1) 90 days after publication of the notice described above in paragraph (a) of this section for a draft environmental impact statement.
(2) 30 days after publication of the notice described above in paragraph (a) of this section for a final environmental impact statement.
(c) An agency may make an exception to the rule on timing set forth in paragraph (b) of this section for a proposed action in the following circumstances.
(1) Some agencies have a formally established appeal process which allows other agencies or the public to take appeals on a decision and make their views known, after publication of the final environmental impact statement. In such cases, where a real opportunity exists to alter the decision, the decision may be made and recorded at the same time the environmental impact statement is published. This means that the period for appeal of the decision and the 30-day period set forth in paragraph (b)(2) of this section may run concurrently. In such cases, the environmental impact statement shall explain the timing and the public's right of appeal and provide notification consistent with § 1506.10.
(2) An agency engaged in rulemaking under the Administrative Procedure Act or other statute for the purpose of protecting the public health or safety may waive the time period in paragraph (b)(2) of this section, publish a decision on the final rule simultaneously with publication of the notice of the availability of the final environmental impact statement and provide notification consistent with § 1506.10, as described in paragraph (a) of this section.
(d) If an agency files the final environmental impact statement within 90 days of the filing of the draft environmental impact statement with the Environmental Protection Agency, the decision-making period and the 90-day period may run concurrently. However, subject to paragraph (e) of this section, agencies shall allow at least 45 days for comments on draft statements.
(e) The lead agency may extend the minimum periods in paragraph (b) of this section and provide notification consistent with § 1506.10. The Environmental Protection Agency may upon a showing by the lead agency of compelling reasons of national policy reduce the minimum periods and may upon a showing by any other Federal agency of compelling reasons of national policy also extend the minimum periods, but only after consultation with the lead agency. The lead agency may modify the minimum periods when necessary to comply with other specific statutory requirements. (§ 1507.3(e)(2)) Failure to file timely comments shall not be a sufficient reason for extending a period. If the lead agency does not concur with the extension of time, EPA may not extend it for more than 30 days. When the Environmental Protection Agency reduces or extends any period of time it shall notify the Council.
Where emergency circumstances make it necessary to take an action with significant environmental impact without observing the provisions of the regulations in parts 1500 through 1508, the Federal agency taking the action should consult with the Council about alternative arrangements for compliance with section 102(2)(C) of NEPA. Agencies and the Council will limit such arrangements to actions necessary to control the immediate impacts of the emergency. Other actions remain subject to NEPA review.
The regulations in parts 1500 through 1508 apply to any NEPA process begun after [EFFECTIVE DATE OF FINAL RULE]. An agency may apply these regulations to ongoing activities and environmental documents begun before [EFFECTIVE DATE OF FINAL RULE].
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
All agencies of the Federal Government shall comply with the regulations in parts 1500 through 1508.
Each agency shall be capable (in terms of personnel and other resources) of complying with the requirements of NEPA and the regulations in parts 1500 through 1508. Such compliance may include use of the resources of other agencies, applicants, and other participants in the NEPA process, but the using agency shall itself have sufficient capability to evaluate what others do for it and account for the contributions of others. Agencies shall:
(a) Fulfill the requirements of section 102(2)(A) of NEPA to utilize a systematic, interdisciplinary approach which will ensure the integrated use of the natural and social sciences and the environmental design arts in planning and in decision making which may have an impact on the human environment. Agencies shall designate a senior agency official to be responsible for overall review of agency NEPA compliance.
(b) Identify methods and procedures required by section 102(2)(B) of NEPA to ensure that presently unquantified environmental amenities and values may be given appropriate consideration.
(c) Prepare adequate environmental impact statements pursuant to section 102(2)(C) of NEPA and cooperate on the development of statements in the areas where the agency has jurisdiction by law or special expertise or is authorized to develop and enforce environmental standards.
(d) Study, develop, and describe alternatives to recommended courses of action in any proposal which involves unresolved conflicts concerning alternative uses of available resources. This requirement of section 102(2)(E) of NEPA extends to all such proposals, not just the more limited scope of section 102(2)(C)(iii) of NEPA where the discussion of alternatives is confined to impact statements.
(e) Comply with the requirements of section 102(2)(H) of NEPA that the agency initiate and utilize ecological information in the planning and development of resource-oriented projects.
(f) Fulfill the requirements of sections 102(2)(F), 102(2)(G), and 102(2)(I), of NEPA, Executive Order 11514, Protection and Enhancement of Environmental Quality, section 2, as amended by Executive Order 11991, Relating to Protection and Enhancement of Environmental Quality, and Executive Order 13807, Establishing Discipline and Accountability in the Environmental Review and Permitting for Infrastructure Projects.
(a) No more than 12 months after [PUBLICATION DATE OF FINAL RULE] in the
(1) Each agency shall consult with the Council while developing or revising its proposed procedures and before publishing them in the
(2) Agencies shall provide an opportunity for public review and review by the Council for conformity with the Act and the regulations in parts 1500 through 1508 before adopting their final procedures. The Council shall complete its review within 30 days of the receipt of the proposed final procedures. Once in effect, the agency shall publish its NEPA procedures and ensure that they are readily available to the public.
(b) Agencies shall adopt, as necessary, agency NEPA procedures to improve agency efficiency and ensure that decisions are made in accordance with the Act's procedural requirements. Such procedures shall include, but not be limited to:
(1) Implementing procedures under section 102(2) of NEPA to achieve the requirements of sections 101 and 102(1).
(2) Designating the major decision points for the agency's principal programs likely to have a significant effect on the human environment and assuring that the NEPA process corresponds with them.
(3) Requiring that relevant environmental documents, comments, and responses be part of the record in formal rulemaking or adjudicatory proceedings.
(4) Requiring that relevant environmental documents, comments, and responses accompany the proposal through existing agency review processes so that decision makers use the statement in making decisions.
(5) Requiring that the alternatives considered by the decision maker are encompassed by the range of alternatives discussed in the relevant environmental documents and that the decision maker consider the alternatives described in the environmental impact statement. If another decision document accompanies the relevant environmental documents to the decision maker, agencies are encouraged to make available to the public before the decision is made any part of that document that relates to the comparison of alternatives.
(6) Requiring the combination of environmental documents with other agency documents, and may include designation of analyses or processes that shall serve the function of agency compliance with NEPA and the regulations in parts 1500 through 1508. To determine that an analysis individually or analyses in the aggregate serve as the functional equivalent of an EIS, an agency shall find that:
(i) There are substantive and procedural standards that ensure full and adequate consideration of environmental issues;
(ii) There is public participation before a final alternative is selected; and
(iii) A purpose of the analysis that the agency is conducting is to examine environmental issues.
(c) Agency procedures may include identification of actions that are not subject to NEPA, including:
(1) Non-major Federal actions;
(2) Actions that are non-discretionary actions, in whole or in part;
(3) Actions expressly exempt from NEPA under another statute;
(4) Actions for which compliance with NEPA would clearly and fundamentally conflict with the requirements of another statute; and
(5) Actions for which compliance with NEPA would be inconsistent with Congressional intent due to the requirements of another statute.
(d) Agency procedures shall comply with the regulations in parts 1500 through 1508 except where compliance would be inconsistent with statutory requirements and shall include:
(1) Those procedures required by §§ 1501.2(b)(4) (assistance to applicants), and 1506.6(e) (status information).
(2) Specific criteria for and identification of those typical classes of action:
(i) Which normally do require environmental impact statements.
(ii) Which normally do not require either an environmental impact statement or an environmental assessment and do not have a significant effect on the human environment (categorical exclusions (§ 1501.4)). Any procedures under this section shall provide for extraordinary circumstances in which a normally excluded action may have a significant environmental effect. Agency NEPA procedures shall identify where documentation of a categorical exclusion determination is required.
(iii) Which normally require environmental assessments but not necessarily environmental impact statements.
(3) Procedures for introducing a supplement to an environmental assessment or environmental impact statement into its formal administrative record, if such a record exists.
(e) Agency procedures may:
(1) Include specific criteria for providing limited exceptions to the provisions of the regulations in parts 1500 through 1508 for classified proposals. These are proposed actions that are specifically authorized under criteria established by an Executive Order or statute to be kept secret in the interest of national defense or foreign policy and are in fact properly classified pursuant to such Executive Order or statute. Agencies may safeguard and restrict from public dissemination environmental assessments and environmental impact statements that address classified proposals in accordance with agencies' own regulations applicable to classified information. Agencies should organize these documents so that classified portions are included as annexes, so that the agencies can make the unclassified portions available to the public.
(2) Provide for periods of time other than those presented in § 1506.11 when necessary to comply with other specific statutory requirements.
(3) Provide that where there is a lengthy period between the agency's decision to prepare an environmental impact statement and the time of actual preparation, the agency may publish the notice of intent required by § 1501.9 at a reasonable time in advance of preparation of the draft statement. Agency procedures shall provide for publication of supplemental notices to inform the public of a pause in its preparation of an environmental impact statement and for any agency decision to withdraw its notice of intent to prepare an environmental impact statement.
(4) Adopt procedures to combine its environmental assessment process with its scoping process.
(5) Provide for a process where the agency may consult with and apply a categorical exclusion listed in another agency's NEPA procedures to its proposed action by establishing a process that ensures application of the categorical exclusion is appropriate.
(a) To allow agencies and the public to efficiently and effectively access information about NEPA reviews, agencies shall provide for agency websites or other means to make available environmental documents, relevant notices, and other relevant information for use by agencies, applicants, and interested persons. Such means of publication may include:
(1) Agency planning and environmental documents that guide agency management and provide for public involvement in agency planning processes;
(2) A directory of pending and final environmental documents;
(3) Agency policy documents, orders, terminology, and explanatory materials regarding agency decision-making processes;
(4) Agency planning program information, plans, and planning tools; and
(5) A database searchable by geographic information, document status, document type, and project type.
(b) Agencies shall provide for efficient and effective interagency coordination of their environmental program websites, including use of shared databases or application programming interface, in their implementation of NEPA and related authorities.
42 U.S.C. 4321-4347; 42 U.S.C. 4371-4375; 42 U.S.C. 7609; E.O. 11514, 35 FR 4247, Mar. 7, 1970, as amended by E.O. 11991, 42 FR 26967, May 25, 1977; and E.O. 13807, 82 FR 40463, Aug. 24, 2017.
The following definitions apply to the regulations in parts 1500 through 1508. Federal agencies shall use these terms uniformly throughout the Federal Government.
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(1) Effects include ecological (such as the effects on natural resources and on the components, structures, and functioning of affected ecosystems), aesthetic, historic, cultural, economic (such as the effects on employment), social, or health effects. Effects may also include those resulting from actions that may have both beneficial and detrimental effects, even if on balance the agency believes that the effect will be beneficial.
(2) A “but for” causal relationship is insufficient to make an agency responsible for a particular effect under NEPA. Effects should not be considered significant if they are remote in time, geographically remote, or the product of a lengthy causal chain. Effects do not include effects that the agency has no ability to prevent due to its limited statutory authority or would occur regardless of the proposed action. Analysis of cumulative effects is not required.
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
(1) Major Federal actions may include new and continuing activities, including projects and programs entirely or partly financed, assisted, conducted, regulated, or approved by Federal agencies; new or revised agency rules, regulations, plans, policies, or procedures; and legislative proposals (§ 1506.8). Actions do not include funding assistance solely in the form of general revenue sharing funds with no Federal agency control over the subsequent use of such funds. Actions do not include loans, loan guarantees, or other forms of financial assistance where the Federal agency does not exercise sufficient control and responsibility over the effects of the action. Actions do not include farm ownership and operating loan guarantees by the Farm Service Agency pursuant to 7 U.S.C. 1925 and 1941 through 1949 and business loan guarantees by the Small Business Administration pursuant to 15 U.S.C. 636(a), 636(m), and 695 through 697f. Actions do not include bringing judicial or administrative civil or criminal enforcement actions.
(2) Major Federal actions tend to fall within one of the following categories:
(i) Adoption of official policy, such as rules, regulations, and interpretations adopted pursuant to the Administrative Procedure Act, 5 U.S.C. 551
(ii) Adoption of formal plans, such as official documents prepared or approved by Federal agencies which prescribe alternative uses of Federal resources, upon which future agency actions will be based.
(iii) Adoption of programs, such as a group of concerted actions to implement a specific policy or plan; systematic and connected agency decisions allocating agency resources to implement a specific statutory program or executive directive.
(iv) Approval of specific projects, such as construction or management activities located in a defined geographic area. Projects include actions approved by permit or other regulatory decision as well as Federal and federally assisted activities.
(r)
(1) With respect to the Environmental Protection Agency, any proposed legislation, project, action or regulation as those terms are used in section 309(a) of the Clean Air Act (42 U.S.C. 7609).
(2) With respect to all other agencies, any proposed major Federal action to which section 102(2)(C) of NEPA applies.
(s)
(1) Avoiding the impact altogether by not taking a certain action or parts of an action.
(2) Minimizing impacts by limiting the degree or magnitude of the action and its implementation.
(3) Rectifying the impact by repairing, rehabilitating, or restoring the affected environment.
(4) Reducing or eliminating the impact over time by preservation and maintenance operations during the life of the action.
(5) Compensating for the impact by replacing or providing substitute resources or environments.
(t)
(u)
(v)
(w)
(x)
(y)
(z)
(aa)
(bb)
(cc)
(dd)
(ee)
(ff)