[Federal Register Volume 88, Number 105 (Thursday, June 1, 2023)]
[Rules and Regulations]
[Pages 36066-36152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-10019]



[[Page 36065]]

Vol. 88

Thursday,

No. 105

June 1, 2023

Part III





Department of Energy





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10 CFR Part 431





Energy Conservation Program: Energy Conservation Standards for Electric 
Motor; Final Rule

  Federal Register / Vol. 88 , No. 105 / Thursday, June 1, 2023 / Rules 
and Regulations  

[[Page 36066]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[EERE-2020-BT-STD-0007]
RIN 1904-AE63


Energy Conservation Program: Energy Conservation Standards for 
Electric Motors

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

ACTION: Direct final rule.

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SUMMARY: The Energy Policy and Conservation Act, as amended (``EPCA''), 
prescribes energy conservation standards for various consumer products 
and certain commercial and industrial equipment, including electric 
motors. 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 result 
in significant energy savings. In this direct final rule, DOE is 
adopting new and amended energy conservation standards for electric 
motors. It has determined that the new and amended energy conservation 
standards for these products would result in significant conservation 
of energy, and are technologically feasible and economically justified.

DATES: The effective date of this rule is September 29, 2023, unless 
adverse comment is received by September 19, 2023. If adverse comments 
are received that DOE determines may provide a reasonable basis for 
withdrawal of the direct final rule, a timely withdrawal of this rule 
will be published in the Federal Register. If no such adverse comments 
are received, compliance with the new and amended standards established 
for electric motors in this direct final rule is required on and after 
June 1, 2027.

ADDRESSES: The docket for this rulemaking, which includes Federal 
Register notices, public meeting attendee lists and transcripts, 
comments, and other supporting documents/materials, is available for 
review at www.regulations.gov. All documents in the docket are listed 
in the www.regulations.gov index. However, not all documents listed in 
the index may be publicly available, such as information that is exempt 
from public disclosure.
    The docket web page can be found www.regulations.gov/docket/EERE-2020-BT-STD-0007. The docket web page contains instructions on how to 
access all documents, including public comments, in the docket.
    For further information on how to submit a comment or review other 
public comments and the docket, contact the Appliance and Equipment 
Standards Program staff at (202) 287-1445 or by email: 
[email protected].

FOR FURTHER INFORMATION CONTACT: 
    Mr. 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. Email: 
[email protected].
    Mr. Matthew Ring, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. 
Telephone: (202) 586-2555; Email: [email protected].
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact the Appliance and Equipment Standards Program staff at (202) 
287-1445 or by email: [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Direct Final Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Electric Motors
    3. Electric Motors Working Group Recommended Standard Levels
III. General Discussion
    A. General Comments
    B. Scope of Coverage and Equipment Classes
    C. Test Procedure
    D. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    E. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    F. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price (LCC 
and PBP)
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Scope of Coverage
    a. Motor Used as a Component of a Covered Product or Equipment
    b. Air-Over Electric Motors
    c. AC Induction Electric Motors Greater Than 500 Horsepower
    d. AC Induction Inverter-Only and Synchronous Electric Motors
    e. Submersible Electric Motors
    2. Test Procedure and Metric
    3. Equipment Classes
    4. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Efficiency Analysis
    a. Representative Units Analyzed
    b. Baseline Efficiency
    c. Higher Efficiency Levels
    2. Cost Analysis
    3. Cost-Efficiency Results
    4. Scaling Methodology
    D. Markups Analysis
    E. Energy Use Analysis
    1. Consumer Sample
    2. Motor Input Power
    3. Annual Operating Hours
    4. Impact of Electric Motor Speed
    F. Life-Cycle Cost and Payback Period Analysis
    1. Equipment Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Maintenance and Repair Costs
    6. Equipment Lifetime
    7. Discount Rates
    8. Energy Efficiency Distribution in the No-New-Standards Case
    9. Payback Period Analysis
    G. Shipments Analysis
    H. National Impact Analysis
    1. Equipment Efficiency Trends
    2. National Energy Savings
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model and Key Inputs
    a. Manufacturer Production Costs
    b. Shipments Projections
    c. Product and Capital Conversion Costs
    d. Markup Scenarios
    3. Manufacturer Interviews
    K. Emissions Analysis
    1. Air Quality Regulations Incorporated in DOE's Analysis
    L. Monetizing Emissions Impacts
    1. Monetization of Greenhouse Gas Emissions
    a. Social Cost of Carbon
    b. Social Cost of Methane and Nitrous Oxide
    2. Monetization of Other Emissions Impacts
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results and Conclusions

[[Page 36067]]

    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash Flow Analysis Results
    b. Direct Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    8. Summary of Economic Impacts
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Electric Motors 
Standards
    2. Annualized Benefits and Costs of the Standards
    D. Reporting, Certification, and Sampling Plan
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Information Quality
    M. Congressional Notification
VII. Approval of the Office of the Secretary

I. Synopsis of the Direct Final Rule

    The Energy Policy and Conservation Act, Public Law 94-163, as 
amended (``EPCA''),\1\ authorizes DOE to regulate the energy efficiency 
of a number of consumer products and certain industrial equipment. (42 
U.S.C. 6291-6317) Title III, Part C \2\ of EPCA established the Energy 
Conservation Program for Certain Industrial Equipment. (42 U.S.C. 6311-
6317). Such equipment includes electric motors, the subject of this 
rulemaking.
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    \1\ All references to EPCA in this document refer to the statute 
as amended through the Energy Act of 2020, Public Law 116-260 (Dec. 
27, 2020), which reflect the last statutory amendments that impact 
Parts A and A-1 of EPCA.
    \2\ For editorial reasons, upon codification in the U.S. Code, 
Part C was re-designated Part A-1.
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    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that DOE determines is technologically feasible and 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 6295(o)(2)(A)) 
Furthermore, the new or amended standard must result in a significant 
conservation of energy. (42 U.S.C. 6316(a); 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. 6316(a); 42 U.S.C. 6295(m))
    In light of the above and under the authority provided by 42 U.S.C. 
6295(p)(4), DOE is issuing this direct final rule amending the energy 
conservation standards for electric motors. The amended standard levels 
in this document were submitted in a joint recommendation (the 
``November 2022 Joint Recommendation'') \3\ by the American Council for 
an Energy-Efficient Economy (``ACEEE''), Appliance Standards Awareness 
Project (``ASAP''), National Electrical Manufacturers Association 
(``NEMA''), Natural Resources Defense Council (``NRDC''), Northwest 
Energy Efficiency Alliance (``NEEA''), Pacific Gas & Electric Company 
(``PG&E''), San Diego Gas & Electric (``SDG&E''), and Southern 
California Edison (``SCE'') hereinafter referred to as ``the Electric 
Motors Working Group.'' In a letter comment submitted December 12, 
2022, the New York State Energy Research and Development Authority 
(``NYSERDA'') expressed its support of the November 2022 Joint 
Recommendation and urged DOE to implement it in a timely manner. The 
November 2022 Joint Recommendation was preceded by the following DOE 
actions in this rulemaking and stakeholder comments thereon: May 2020 
Early Assessment Review RFI (85 FR 30878 (May 21, 2020)); March 2022 
Preliminary Analysis (87 FR 11650 (March 2, 2022)) and the Preliminary 
Analysis TSD (``March 2022 Prelim TSD''). See sections II.B.2 and 
II.B.3 for a detailed history of the current rulemaking and a 
discussion of the November 2022 Joint Recommendation.
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    \3\ Joint comment response to the published Notification of a 
webinar and availability of preliminary technical support document; 
www.regulations.gov/comment/EERE-2020-BT-STD-0007-0035.
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    After carefully considering the November 2022 Joint Recommendation, 
DOE determined that the recommendations contained therein are compliant 
with 42 U.S.C. 6295(o), as required by 42 U.S.C. 6295(p)(4)(A)(i) for 
the issuance of a direct final rule. As required by 42 U.S.C. 
6295(p)(4)(A)(i), DOE is simultaneously publishing a NOPR proposing 
that the identical standard levels contained in this direct final rule 
be adopted. Consistent with the statute, DOE is providing a 110-day 
public comment period on the direct final rule. (42 U.S.C. 
6295(p)(4)(B)) If DOE determines that any comments received provide a 
reasonable basis for withdrawal of the direct final rule under 42 
U.S.C. 6295(o), DOE will continue the rulemaking under the 
simultaneously published NOPR. (42 U.S.C. 6295(p)(4)(C)) See section 
II.A for more details on DOE's statutory authority.
    This direct final rule documents DOE's analyses to objectively and 
independently evaluate the energy savings potential, technological 
feasibility, and economic justification of the standard levels 
recommended in the November 2022 Joint Recommendation, as per the 
requirements of 42 U.S.C. 6295(o).
    Ultimately, DOE found that the standard levels recommended in the 
November 2022 Joint Recommendation would result in significant energy 
savings and are technologically feasible and economically justified. 
Table I-1 through Table I-3 document the amended standards for electric 
motors. The amended standards correspond to the recommended trial 
standard level (``TSL'') 2 (as described in section V.A of this 
document) and are expressed in terms of nominal full-load efficiency. 
The amended standards are the same as those recommended by the Electric 
Motors Working Group. These standards apply to all products listed in 
through Table I-1 through Table I-3 and manufactured in, or imported 
into, the United States starting on June 1, 2027.

[[Page 36068]]



  Table I-1--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Motors (Excluding Fire Pump Electric Motors
                                                         and Air-Over Electric Motors) at 60 Hz
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                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
         Motor horsepower/ standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       77.0       77.0       85.5       85.5       82.5       82.5       75.5       75.5
1.5/1.1.........................................................       84.0       84.0       86.5       86.5       87.5       86.5       78.5       77.0
2/1.5...........................................................       85.5       85.5       86.5       86.5       88.5       87.5       84.0       86.5
3/2.2...........................................................       86.5       85.5       89.5       89.5       89.5       88.5       85.5       87.5
5/3.7...........................................................       88.5       86.5       89.5       89.5       89.5       89.5       86.5       88.5
7.5/5.5.........................................................       89.5       88.5       91.7       91.0       91.0       90.2       86.5       89.5
10/7.5..........................................................       90.2       89.5       91.7       91.7       91.0       91.7       89.5       90.2
15/11...........................................................       91.0       90.2       92.4       93.0       91.7       91.7       89.5       90.2
20/15...........................................................       91.0       91.0       93.0       93.0       91.7       92.4       90.2       91.0
25/18.5.........................................................       91.7       91.7       93.6       93.6       93.0       93.0       90.2       91.0
30/22...........................................................       91.7       91.7       93.6       94.1       93.0       93.6       91.7       91.7
40/30...........................................................       92.4       92.4       94.1       94.1       94.1       94.1       91.7       91.7
50/37...........................................................       93.0       93.0       94.5       94.5       94.1       94.1       92.4       92.4
60/45...........................................................       93.6       93.6       95.0       95.0       94.5       94.5       92.4       93.0
75/55...........................................................       93.6       93.6       95.4       95.0       94.5       94.5       93.6       94.1
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4
300/224.........................................................       95.8       95.4       96.2       95.8       95.8       95.8  .........  .........
350/261.........................................................       95.8       95.4       96.2       95.8       95.8       95.8  .........  .........
400/298.........................................................       95.8       95.8       96.2       95.8  .........  .........  .........  .........
450/336.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
500/373.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
550/410.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
600/447.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
650/485.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
700/522.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
750/559.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Table I-2--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY
           Standard Frame Size Air-Over Electric Motors (Excluding Fire Pump Electric Motors) at 60 Hz
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                                                       Nominal full-load efficiency (%)
                             -----------------------------------------------------------------------------------
 Motor horsepower/ standard          2 Pole               4 Pole               6 Pole               8 Pole
     kilowatt equivalent     -----------------------------------------------------------------------------------
                               Enclosed    Open     Enclosed    Open     Enclosed    Open     Enclosed    Open
----------------------------------------------------------------------------------------------------------------
1/.75.......................       77.0      77.0       85.5      85.5       82.5      82.5       75.5      75.5
1.5/1.1.....................       84.0      84.0       86.5      86.5       87.5      86.5       78.5      77.0
2/1.5.......................       85.5      85.5       86.5      86.5       88.5      87.5       84.0      86.5
3/2.2.......................       86.5      85.5       89.5      89.5       89.5      88.5       85.5      87.5
5/3.7.......................       88.5      86.5       89.5      89.5       89.5      89.5       86.5      88.5
7.5/5.5.....................       89.5      88.5       91.7      91.0       91.0      90.2       86.5      89.5
10/7.5......................       90.2      89.5       91.7      91.7       91.0      91.7       89.5      90.2
15/11.......................       91.0      90.2       92.4      93.0       91.7      91.7       89.5      90.2
20/15.......................       91.0      91.0       93.0      93.0       91.7      92.4       90.2      91.0
25/18.5.....................       91.7      91.7       93.6      93.6       93.0      93.0       90.2      91.0
30/22.......................       91.7      91.7       93.6      94.1       93.0      93.6       91.7      91.7
40/30.......................       92.4      92.4       94.1      94.1       94.1      94.1       91.7      91.7
50/37.......................       93.0      93.0       94.5      94.5       94.1      94.1       92.4      92.4
60/45.......................       93.6      93.6       95.0      95.0       94.5      94.5       92.4      93.0
75/55.......................       93.6      93.6       95.4      95.0       94.5      94.5       93.6      94.1
100/75......................       95.0      94.5       96.2      96.2       95.8      95.8       94.5      95.0
125/90......................       95.4      94.5       96.2      96.2       95.8      95.8       95.0      95.0
150/110.....................       95.4      94.5       96.2      96.2       96.2      95.8       95.0      95.0
200/150.....................       95.8      95.4       96.5      96.2       96.2      95.8       95.4      95.0
250/186.....................       96.2      95.4       96.5      96.2       96.2      96.2       95.4      95.4
----------------------------------------------------------------------------------------------------------------


[[Page 36069]]


    Table I-3--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY
         Specialized Frame Size Air-Over Electric Motors (Excluding Fire Pump Electric Motors) at 60 Hz
----------------------------------------------------------------------------------------------------------------
                                                       Nominal full-load efficiency (%)
                             -----------------------------------------------------------------------------------
 Motor horsepower/ standard          2 Pole               4 Pole               6 Pole               8 Pole
     kilowatt equivalent     -----------------------------------------------------------------------------------
                               Enclosed    Open     Enclosed    Open     Enclosed    Open     Enclosed    Open
----------------------------------------------------------------------------------------------------------------
1/.75.......................       74.0  ........       82.5      82.5       80.0      80.0       74.0      74.0
1.5/1.1.....................       82.5      82.5       84.0      84.0       85.5      84.0       77.0      75.5
2/1.5.......................       84.0      84.0       84.0      84.0       86.5      85.5       82.5      85.5
3/2.2.......................       85.5      84.0       87.5      86.5       87.5      86.5       84.0      86.5
5/3.7.......................       87.5      85.5       87.5      87.5       87.5      87.5       85.5      87.5
7.5/5.5.....................       88.5      87.5       89.5      88.5       89.5      88.5       85.5      88.5
10/7.5......................       89.5      88.5       89.5      89.5       89.5      90.2  .........  ........
15/11.......................       90.2      89.5       91.0      91.0  .........  ........  .........  ........
20/15.......................       90.2      90.2       91.0      91.0  .........  ........  .........  ........
----------------------------------------------------------------------------------------------------------------

A. Benefits and Costs to Consumers

    Table I-4 summarizes DOE's evaluation of the economic impacts of 
the adopted standards on consumers of electric motors, as measured by 
the average life-cycle cost (``LCC'') savings and the simple payback 
period (``PBP'').\4\ The average LCC savings are positive for all 
representative units, and the PBP is less than the average lifetime of 
electric motors, which is estimated to be 13.6 years (see section V.B.1 
of this document).
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    \4\ The average LCC savings refer to consumers that are affected 
by a standard and are measured relative to the efficiency 
distribution in the no-new-standards case, which depicts the market 
in the compliance year in the absence of new or amended standards 
(see section IV.F.8 of this document). The simple PBP, which is 
designed to compare specific efficiency levels, is measured relative 
to the baseline product (see section IV.F.9 of this document).

           Table I-4--Impacts of Adopted Energy Conservation Standards on Consumers of Electric Motors
----------------------------------------------------------------------------------------------------------------
                                                                                 Average LCC     Simple payback
          Equipment class group                   Representative unit          savings (2021$)   period (years)
----------------------------------------------------------------------------------------------------------------
MEM, 1-500 hp, NEMA Design A and B.......  RU1..............................               N/A               N/A
                                           RU2..............................               N/A               N/A
                                           RU3..............................               N/A               N/A
                                           RU4..............................             567.1               4.1
                                           RU5..............................               N/A               N/A
MEM, 501-750 hp, NEMA Design A and B       RU6..............................           2,550.1               3.7
 above 500 hp.
AO-MEM (Standard Frame Size).............  RU7..............................              57.6               4.0
                                           RU8..............................             472.4               1.6
                                           RU9 *............................  ................  ................
                                           RU10.............................             930.7               4.9
AO-Polyphase (Specialized Frame Size)....  RU11.............................              49.9               4.1
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No impact because there are no shipments below the efficiency level corresponding to TSL1 and TSL2 for RU9.

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

B. Impact on Manufacturers

    The industry net present value (``INPV'') is the sum of the 
discounted cash flows to the industry from the base year through the 
end of the analysis period (2023-2056). Using a real discount rate of 
9.1 percent, DOE estimates that the INPV for manufacturers of electric 
motors in the case without new and amended standards is $5,023 million 
in 2021 dollars. Under the adopted standards, DOE estimates the change 
in INPV to range from -6.6 percent to -6.0 percent, which is 
approximately -$333 million to -$303 million. In order to bring 
products into compliance with new and amended standards, it is 
estimated that industry will incur total conversion costs of $468 
million.
    DOE's analysis of the impacts of the adopted standards on 
manufacturers is described in sections IV.J and V.B.2 of this document.

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

    \5\ All monetary values in this document are expressed in 2021 
dollars.
---------------------------------------------------------------------------

    DOE's analyses indicate that the adopted energy conservation 
standards for electric motors would save a significant amount of 
energy. Relative to the case without new and amended standards, the 
lifetime energy savings for electric motors purchased in the 30-year 
period that begins in the anticipated year of compliance with the new 
and amended standards (2027-2056) amount to 3.0 quadrillion British 
thermal units (``Btu''), or quads.\6\ This represents a savings of 0.2 
percent relative to the energy use of these products in the case 
without amended standards (referred to as the ``no-new-standards 
case'').
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    \6\ The quantity refers to full-fuel-cycle (``FFC'') energy 
savings. FFC energy savings includes the energy consumed in 
extracting, processing, and transporting primary fuels (i.e., coal, 
natural gas, petroleum fuels), and, thus, presents a more complete 
picture of the impacts of energy efficiency standards. For more 
information on the FFC metric, see section IV.H.2 of this document.
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    The cumulative net present value (``NPV'') of total consumer 
benefits of the standards for electric motors ranges from $2.23 billion 
(at a 7-percent discount rate) to $7.47 billion (at a 3-percent 
discount rate). This NPV

[[Page 36070]]

expresses the estimated total value of future operating-cost savings 
minus the estimated increased equipment and installation costs for 
electric motors purchased in 2027-2056.
    In addition, the adopted standards for electric motors are 
projected to yield significant environmental benefits. DOE estimates 
that the adopted standards will result in cumulative emission 
reductions (over the same period as for energy savings) of 91.69 
million metric tons (``Mt'') \7\ of carbon dioxide 
(``CO2''), 35.12 thousand tons of sulfur dioxide 
(``SO2''), 148.74 thousand tons of nitrogen oxides 
(``NOX''), 690.10 thousand tons of methane 
(``CH4''), 0.82 thousand tons of nitrous oxide 
(``N2O''), and 0.23 tons of mercury (``Hg'').\8\ The 
estimated cumulative reduction in CO2 emissions through 2030 
amounts to 0.90 million Mt, which is equivalent to the emissions 
resulting from the annual electricity use of more than 0.15 million 
homes.
---------------------------------------------------------------------------

    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the no-new-
standards case, which reflects key assumptions in the Annual Energy 
Outlook 2022 (``AEO2022''). AEO2022 represents current federal and 
state legislation and final implementation of regulations as of the 
time of its preparation. See section IV.K of this document for 
further discussion of AEO2022 assumptions that effect air pollutant 
emissions.
---------------------------------------------------------------------------

    DOE estimates climate benefits from a reduction in greenhouse gases 
(GHG) using four different estimates of the social cost of 
CO2 (``SC-CO2''), the social cost of methane 
(``SC-CH4''), and the social cost of nitrous oxide (``SC-
N2O''). Together these represent the social cost of GHG (SC-
GHG). DOE used SC-GHG values based on the interim values developed by 
an Interagency Working Group on the Social Cost of Greenhouse Gases 
(IWG),\9\ as discussed in section IV.K of this document. For 
presentational purposes, the climate benefits associated with the 
average SC-GHG at a 3-percent discount rate are $3.14 billion. DOE does 
not have a single central SC-GHG point estimate and it emphasizes the 
importance and value of considering the benefits calculated using all 
four SC-GHG estimates.
---------------------------------------------------------------------------

    \9\ See Interagency Working Group on Social Cost of Greenhouse 
Gases, Technical Support Document: Social Cost of Carbon, Methane, 
and Nitrous Oxide. Interim Estimates Under Executive Order 13990, 
Washington, DC, February 2021 (``February 2021 SC-GHG TSD''). 
www.whitehouse.gov/wp-content/uploads/2021/02/TechnicalSupportDocument_SocialCostofCarbonMethaneNitrousOxide.pdf.
---------------------------------------------------------------------------

    DOE also estimated health benefits from SO2 and 
NOX emissions reductions.\10\ DOE estimated the present 
value of the health benefits would be $1.76 billion using a 7-percent 
discount rate, and $5.72 billion using a 3-percent discount rate.\11\ 
DOE is currently only monetizing (for SO2 and 
NOX) PM2.5 precursor health benefits and (for 
NOX) ozone precursor health benefits, but will continue to 
assess the ability to monetize other effects such as health benefits 
from reductions in direct PM2.5 emissions.
---------------------------------------------------------------------------

    \10\ DOE estimated the monetized value of SO2 and 
NOX emissions reductions associated with electricity 
savings using benefit per ton estimates from the scientific 
literature. See section IV.L.2 of this document for further 
discussion.
    \11\ DOE estimates the economic value of these emissions 
reductions resulting from the considered TSLs for the purpose of 
complying with the requirements of Executive Order 12866.
---------------------------------------------------------------------------

    Table I-5 summarizes the economic benefits and costs expected to 
result from the new and amended standards for electric motors. There 
are other important unquantified effects, including certain 
unquantified climate benefits, unquantified public health benefits from 
the reduction of toxic air pollutants and other emissions, unquantified 
energy security benefits, and distributional effects, among others.

   Table I-5--Summary of Economic Benefits and Costs of Adopted Energy
               Conservation Standards for Electric Motors
                                 [TSL 2]
------------------------------------------------------------------------
                                                          Billion $2021
------------------------------------------------------------------------
                            3% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.......................               8.8
Climate Benefits *....................................               3.1
Health Benefits **....................................               5.7
                                                       -----------------
    Total Benefits [dagger]...........................              17.7
Consumer Incremental Equipment Costs [Dagger].........               1.4
                                                       -----------------
    Net Benefits......................................              16.3
------------------------------------------------------------------------
                            7% discount rate
------------------------------------------------------------------------
Consumer Operating Cost Savings.......................               3.0
Climate Benefits * (3% discount rate).................               3.1
Health Benefits **....................................               1.8
                                                       -----------------
    Total Benefits [dagger]...........................               7.8
Consumer Incremental Equipment Costs [Dagger].........               0.7
                                                       -----------------
    Net Benefits......................................               7.1
------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with product
  name shipped in 2027-2056. These results include benefits to consumers
  which accrue after 2027 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the
  SC-GHG (see section IV.L of this document). For presentational
  purposes of this table, the climate benefits associated with the
  average SC-GHG at a 3 percent discount rate are shown, but the
  Department does not have a single central SC-GHG point estimate, and
  it emphasizes the importance of considering the benefits calculated
  using all four SC-GHG estimates.
** Health benefits are calculated using benefit-per-ton values for NOX
  and SO2. DOE is currently only monetizing (for SO2 and NOX) PM2.5
  precursor health benefits and (for NOX) ozone precursor health
  benefits, but will continue to assess the ability to monetize other
  effects such as health benefits from reductions in direct PM2.5
  emissions. The health benefits are presented at real discount rates of
  3 and 7 percent. See section IV.L of this document for more details.

[[Page 36071]]

 
[dagger] Total and net benefits include consumer, climate, and health
  benefits. For presentation purposes, total and net benefits for both
  the 3-percent and 7-percent cases are presented using the average SC-
  GHG with 3-percent discount rate, but the Department does not have a
  single central SC-GHG point estimate. DOE emphasizes the importance
  and value of considering the benefits calculated using all four SC-GHG
  estimates. See Table V-41 for net benefits using all four SC-GHG
  estimates. To monetize the benefits of reducing GHG emissions this
  analysis uses the interim estimates presented in the Technical Support
  Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
  Estimates Under Executive Order 13990 published in February 2021 by
  the Interagency Working Group on the Social Cost of Greenhouse Gases
  (IWG).
[Dagger] Costs include incremental equipment costs as well as
  installation costs.

    The benefits and costs of the standards 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 increase in product purchase prices and installation 
costs, plus (3) the value of the benefits of GHG and NOX and 
SO2 emission reductions, all annualized.\12\ The national 
operating 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 electric motors shipped in 2027-2056. The 
benefits associated with reduced emissions achieved as a result of the 
standards are also calculated based on the lifetime of electric motors 
shipped in 2027-2056.
---------------------------------------------------------------------------

    \12\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2023, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2030), and then discounted the present value from each year 
to 2023. Using the present value, DOE then calculated the fixed 
annual payment over a 30-year period, starting in the compliance 
year, that yields the same present value.
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the adopted standards 
are shown in Table I-6. The results under the primary estimate are as 
follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
health benefits from reduced NOX and SO2 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated cost of the standards adopted 
in this rule is $62.1 million per year in increased equipment costs, 
while the estimated annual benefits are $254.8 million in reduced 
equipment operating costs, $164.8 million in climate benefits, and 
$151.4 million in health benefits. In this case, the net benefit would 
amount to $508.9 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the standards is $71.0 million per year in increased 
equipment costs, while the estimated annual benefits are $463.6 million 
in reduced operating costs, $164.8 million in climate benefits, and 
$300.7 million in health benefits. In this case, the net benefit would 
amount to $858.2 million per year.

                Table I-6--Annualized Benefits and Costs of Adopted Standards for Electric Motors
                                                     [TSL 2]
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                                                                                     Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           463.6           405.1           542.9
Climate Benefits *..............................................           164.8           148.0           186.5
Health Benefits **..............................................           300.7           269.5           341.0
                                                                 -----------------------------------------------
    Total Benefits [dagger].....................................           929.1           822.5          1070.4
Consumer Incremental Equipment Costs [Dagger]...................            71.0            73.7            73.0
                                                                 -----------------------------------------------
    Net Benefits................................................           858.2           748.8           997.4
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           254.8           225.3           293.6
Climate Benefits * (3% discount rate)...........................           164.8           148.0           186.5
    Health Benefits **..........................................           151.4           137.1           169.5
                                                                 -----------------------------------------------
    Total Benefits [dagger].....................................           571.0           510.4           649.6
Consumer Incremental Equipment Costs [Dagger]...................            62.1            63.8            63.9
                                                                 -----------------------------------------------
    Net Benefits................................................           508.9           446.6           585.6
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with electric motors shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
  document). For presentational purposes of this table, the climate benefits associated with the average SC-GHG
  at a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point
  estimate, and it emphasizes the importance and value of considering the benefits calculated using all four SC-
  GHG estimates.
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
  of this document for more details.

[[Page 36072]]

 
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates. See Table V-
  41 for net benefits using all four SC-GHG estimates. To monetize the benefits of reducing GHG emissions this
  analysis uses the interim estimates presented in the Technical Support Document: Social Cost of Carbon,
  Methane, and Nitrous Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the
  Interagency Working Group on the Social Cost of Greenhouse Gases (IWG).
[Dagger] Costs include incremental equipment costs as well as installation costs.

    DOE's analysis of the national impacts of the adopted standards is 
described in sections IV.H, V.B.3 and V.C of this document.

D. Conclusion

    DOE has determined that the November 2022 Joint Recommendation 
containing recommendations with respect to energy conservation 
standards for electric motors was submitted jointly by interested 
persons that are fairly representative of relevant points of view, in 
accordance with 42 U.S.C. 6295(p)(4)(A). After considering the analysis 
and weighing the benefits and burdens, DOE has determined that the 
recommended standards are in accordance with 42 U.S.C. 6295(o), which 
contains the criteria for prescribing new or amended standards. 
Specifically, the Secretary has determined that the adoption of the 
recommended standards would result in the significant conservation of 
energy and is technologically feasible and economically justified. In 
determining whether the recommended standards are economically 
justified, the Secretary has determined that the benefits of the 
recommended standards exceed the burdens. Namely, the Secretary has 
concluded that the recommended standards, when considering 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 yield benefits outweighing the 
negative impacts on some consumers and on manufacturers, including the 
conversion costs that could result in a reduction in INPV for 
manufacturers.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOX and SO2 reduction benefits, and a 3-percent 
discount rate case for GHG social costs, the estimated cost of the 
standards for electric motors is $62.1 million per year in increased 
equipment and installation costs, while the estimated annual benefits 
are $254.8 million in reduced equipment operating costs, $164.8 million 
in climate benefits and $151.4 million in health benefits. The net 
benefit amounts to $508.9 million per year.
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking.\13\ For 
example, some covered products and equipment have most of their energy 
consumption occur during periods of peak energy demand. The impacts of 
these products on the energy infrastructure can be more pronounced than 
products with relatively constant demand. Accordingly, DOE evaluates 
the significance of energy savings on a case-by-case basis.
---------------------------------------------------------------------------

    \13\ Procedures, Interpretations, and Policies for Consideration 
in New or Revised Energy Conservation Standards and Test Procedures 
for Consumer Products and Commercial/Industrial Equipment, 86 FR 
70892, 70901 (Dec. 13, 2021).
---------------------------------------------------------------------------

    As previously mentioned, the standards are projected to result in 
estimated national energy savings of 3.0 quads (FFC), the equivalent of 
the primary annual energy use of 31 million homes. The NPV of consumer 
benefit for these projected energy savings is $2.2 billion using a 
discount rate of 7 percent, and $7.5 billion using a discount rate of 3 
percent. The cumulative emission reductions associated with these 
energy savings are 91.69 Mt of CO2, 35.12 thousand tons of 
SO2, 148.74 thousand tons of NOX, 690.10 thousand 
tons of CH4, 0.82 thousand tons of N2O, and 0.23 
tons of Hg. The estimated monetary value of the climate benefits from 
reduced GHG emissions (associated with the average SC-GHG at a 3-
percent discount rate) is $3.14 billion. The estimated monetary value 
of the health benefits from reduced SO2 and NOX 
emissions is $1.76 billion using a 7-percent discount rate, and $5.72 
billion using a 3-percent discount rate. Based on these findings, DOE 
has determined the energy savings from the standard levels adopted in 
this DFR are ``significant'' within the meaning of 42 U.S.C. 
6295(o)(3)(B). A more detailed discussion of the basis for these 
tentative conclusions is contained in the remainder of this document 
and the accompanying TSD.
    Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is 
issuing this direct final rule (``DFR'') amending the energy 
conservation standards for electric motors. Consistent with this 
authority, DOE is also publishing elsewhere in this Federal Register a 
notice of proposed rulemaking proposing standards that are identical to 
those contained in this direct final rule. See 42 U.S.C. 
6295(p)(4)(A)(i).

II. Introduction

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

A. Authority

    EPCA authorizes DOE to regulate the energy efficiency of a number 
of consumer products and certain industrial equipment. Title III, Part 
C \14\ of EPCA added by Public Law 95-619, Title IV, section 441(a) (42 
U.S.C. 6311-6317, as codified), established the Energy Conservation 
Program for Certain Industrial Equipment, which sets forth a variety of 
provisions designed to improve the energy efficiency of certain types 
of industrial equipment, including electric motors, the subject of this 
direct final rule. (42 U.S.C. 6311(1)(A)). The Energy Policy Act of 
1992 (``EPACT 1992'') (Pub. L. 102-486 (Oct. 24, 1992)) further amended 
EPCA by establishing energy conservation standards and test procedures 
for certain commercial and industrial electric motors that are 
manufactured alone or as a component of another piece of equipment. In 
December 2007, Congress enacted the Energy Independence and Security 
Act of 2007 (``EISA 2007'') (Pub. L. 110-140 (Dec. 19, 2007). Section 
313(b)(1) of EISA 2007 updated the energy conservation standards for 
those electric motors already covered by EPCA and established energy 
conservation standards for a larger scope of motors not previously 
covered by standards. (42 U.S.C. 6313(b)(2)) EISA 2007 also revised 
certain statutory definitions related to electric motors. See EISA 
2007, sec. 313 (amending statutory definitions related to electric 
motors at 42 U.S.C. 6311(13)).
---------------------------------------------------------------------------

    \14\ For editorial reasons, upon codification in the U.S. Code, 
Part C was redesignated Part A-1.
---------------------------------------------------------------------------

    The energy conservation program under EPCA consists essentially of 
four parts: (1) testing, (2) labeling, (3) the establishment of Federal 
energy conservation standards, and (4) certification and enforcement 
procedures. Relevant provisions of EPCA include definitions (42 U.S.C.

[[Page 36073]]

6311), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C. 
6315), energy conservation standards (42 U.S.C. 6313), and the 
authority to require information and reports from manufacturers (42 
U.S.C. 6316; 42 U.S.C. 6296).
    Federal energy efficiency requirements for covered equipment 
established under EPCA generally supersede State laws and regulations 
concerning energy conservation testing, labeling, and standards. (42 
U.S.C. 6316(a) and (b); 42 U.S.C. 6297) DOE may, however, grant waivers 
of Federal preemption in limited instances for particular State laws or 
regulations, in accordance with the procedures and other provisions set 
forth under EPCA. (See 42 U.S.C. 6316(a) (applying the preemption 
waiver provisions of 42 U.S.C. 6297))
    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. 
6314(a), 42 U.S.C. 6295(o)(3)(A) and 42 U.S.C. 6295(r)) Manufacturers 
of covered equipment must use the Federal test procedures as the basis 
for: (1) certifying to DOE that their equipment complies with the 
applicable energy conservation standards adopted pursuant to EPCA (42 
U.S.C. 6316(a); 42 U.S.C. 6295(s)), and (2) making representations 
about the efficiency of that equipment (42 U.S.C. 6314(d)). Similarly, 
DOE must use these test procedures to determine whether the equipment 
complies with relevant standards promulgated under EPCA. (42 U.S.C. 
6316(a); 42 U.S.C. 6295(s)) The DOE test procedures for electric motors 
appear at title 10 of the Code of Federal Regulations (``CFR'') part 
431, subpart B, appendix B.
    EPCA further provides that, not later than 6 years after the 
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. 6316(a); 42 U.S.C. 6295(m)(1)) 
DOE must follow specific statutory criteria for prescribing new or 
amended standards for covered equipment, including electric motors. 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. 6316(a); 42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 
6295(o)(3)(B)) Furthermore, DOE may not adopt any standard that would 
not result in the significant conservation of energy. (42 U.S.C. 
6316(a); 42 U.S.C. 6295(o)(3))
    Moreover, DOE may not prescribe a standard: (1) for certain 
products, including electric motors, 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. 6316(a); 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. 6316(a); 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. 6316(a); 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. 6316(a); 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. 6316(a); 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. 6316(a); 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. 
6316(a); 42 U.S.C. 6295(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products, 
DOE must consider such factors as the utility to the consumer of such a 
feature and other factors DOE deems appropriate. Id. Any rule 
prescribing such a standard must include an explanation of the basis on 
which such higher or lower level was established. (42 U.S.C. 6316(a); 
42 U.S.C. 6295(q)(2))
    Finally, EISA 2007 amended EPCA, in relevant part, to grant DOE 
authority to issue a final rule (i.e., a ``direct final rule'' or 
``DFR'') establishing an energy conservation standard on receipt of a 
statement submitted jointly by interested persons that are fairly 
representative of relevant points of view (including representatives of 
manufacturers of covered products, States, and efficiency advocates), 
as determined by the Secretary, that contains recommendations with 
respect to an energy or water conservation standard that are in 
accordance with the provisions of 42 U.S.C. 6295(o). (42 U.S.C. 
6295(p)(4)) Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also 
determine whether a jointly-submitted recommendation for an energy or 
water conservation standard satisfies 42 U.S.C. 6295(o) or 42 U.S.C. 
6313(a)(6)(B), as applicable.

[[Page 36074]]

    The direct final rule must be published simultaneously with a NOPR 
that proposes an energy or water conservation standard that is 
identical to the standard established in the direct final rule, and DOE 
must provide a public comment period of at least 110 days on this 
proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) Based on the comments received 
during this period, the direct final rule will either become effective, 
or DOE will withdraw it not later than 120 days after its issuance if 
(1) one or more adverse comments is received, and (2) DOE determines 
that those comments, when viewed in light of the rulemaking record 
related to the direct final rule, provide a reasonable basis for 
withdrawal of the direct final rule under 42 U.S.C. 6295(o), 42 U.S.C. 
6313(a)(6)(B), or any other applicable law. (42 U.S.C. 6295(p)(4)(C)) 
Receipt of an alternative joint recommendation may also trigger a DOE 
withdrawal of the direct final rule in the same manner. Id. After 
withdrawing a direct final rule, DOE must proceed with the notice of 
proposed rulemaking published simultaneously with the direct final rule 
and publish in the Federal Register the reasons why the direct final 
rule was withdrawn. Id.
    Typical of other rulemakings, it is the substance, rather than the 
quantity, of comments that will ultimately determine whether a direct 
final rule will be withdrawn. To this end, the substance of any adverse 
comment(s) received will be weighed against the anticipated benefits of 
the jointly-submitted recommendations and the likelihood that further 
consideration of the comment(s) would change the results of the 
rulemaking. DOE notes that, to the extent an adverse comment had been 
previously raised and addressed in the rulemaking proceeding, such a 
submission will not typically provide a basis for withdrawal of a 
direct final rule.

B. Background

1. Current Standards
    In a final rule published on May 29, 2014, DOE prescribed the 
current energy conservation standards for electric motors manufactured 
on and after June 1, 2016. 79 FR 30934 (``May 2014 Final Rule''). These 
standards are set forth in DOE's regulations at 10 CFR 431.25 and are 
repeated in Table II-1, Table II-2, and Table II-3.

  Table II-1--Energy Conservation Standards for NEMA Design A, NEMA Design B and IEC Design N Motors (Excluding
                                       Fire Pump Electric Motors) at 60 Hz
----------------------------------------------------------------------------------------------------------------
                                                       Nominal full-load efficiency (%)
                             -----------------------------------------------------------------------------------
  Motor horsepower/standard          2 Pole               4 Pole               6 Pole               8 Pole
     kilowatt equivalent     -----------------------------------------------------------------------------------
                               Enclosed    Open     Enclosed    Open     Enclosed    Open     Enclosed    Open
----------------------------------------------------------------------------------------------------------------
1/.75.......................       77.0      77.0       85.5      85.5       82.5      82.5       75.5      75.5
1.5/1.1.....................       84.0      84.0       86.5      86.5       87.5      86.5       78.5      77.0
2/1.5.......................       85.5      85.5       86.5      86.5       88.5      87.5       84.0      86.5
3/2.2.......................       86.5      85.5       89.5      89.5       89.5      88.5       85.5      87.5
5/3.7.......................       88.5      86.5       89.5      89.5       89.5      89.5       86.5      88.5
7.5/5.5.....................       89.5      88.5       91.7      91.0       91.0      90.2       86.5      89.5
10/7.5......................       90.2      89.5       91.7      91.7       91.0      91.7       89.5      90.2
15/11.......................       91.0      90.2       92.4      93.0       91.7      91.7       89.5      90.2
20/15.......................       91.0      91.0       93.0      93.0       91.7      92.4       90.2      91.0
25/18.5.....................       91.7      91.7       93.6      93.6       93.0      93.0       90.2      91.0
30/22.......................       91.7      91.7       93.6      94.1       93.0      93.6       91.7      91.7
40/30.......................       92.4      92.4       94.1      94.1       94.1      94.1       91.7      91.7
50/37.......................       93.0      93.0       94.5      94.5       94.1      94.1       92.4      92.4
60/45.......................       93.6      93.6       95.0      95.0       94.5      94.5       92.4      93.0
75/55.......................       93.6      93.6       95.4      95.0       94.5      94.5       93.6      94.1
100/75......................       94.1      93.6       95.4      95.4       95.0      95.0       93.6      94.1
125/90......................       95.0      94.1       95.4      95.4       95.0      95.0       94.1      94.1
150/110.....................       95.0      94.1       95.8      95.8       95.8      95.4       94.1      94.1
200/150.....................       95.4      95.0       96.2      95.8       95.8      95.4       94.5      94.1
250/186.....................       95.8      95.0       96.2      95.8       95.8      95.8       95.0      95.0
300/224.....................       95.8      95.4       96.2      95.8       95.8      95.8  .........  ........
350/261.....................       95.8      95.4       96.2      95.8       95.8      95.8  .........  ........
400/298.....................       95.8      95.8       96.2      95.8  .........  ........  .........  ........
450/336.....................       95.8      96.2       96.2      96.2  .........  ........  .........  ........
500/373.....................       95.8      96.2       96.2      96.2  .........  ........  .........  ........
----------------------------------------------------------------------------------------------------------------


          Table II-2--Energy Conservation Standards for NEMA Design C and IEC Design H Motors at 60 Hz
----------------------------------------------------------------------------------------------------------------
                                                                Nominal full-load efficiency (%)
                                               -----------------------------------------------------------------
 Motor horsepower/standard kilowatt equivalent         4 Pole                6 Pole                8 Pole
                                               -----------------------------------------------------------------
                                                 Enclosed     Open     Enclosed     Open     Enclosed     Open
----------------------------------------------------------------------------------------------------------------
1/.75.........................................       85.5       85.5       82.5       82.5       75.5       75.5
1.5/1.1.......................................       86.5       86.5       87.5       86.5       78.5       77.0
2/1.5.........................................       86.5       86.5       88.5       87.5       84.0       86.5
3/2.2.........................................       89.5       89.5       89.5       88.5       85.5       87.5
5/3.7.........................................       89.5       89.5       89.5       89.5       86.5       88.5
7.5/5.5.......................................       91.7       91.0       91.0       90.2       86.5       89.5
10/7.5........................................       91.7       91.7       91.0       91.7       89.5       90.2
15/11.........................................       92.4       93.0       91.7       91.7       89.5       90.2
20/15.........................................       93.0       93.0       91.7       92.4       90.2       91.0

[[Page 36075]]

 
25/18.5.......................................       93.6       93.6       93.0       93.0       90.2       91.0
30/22.........................................       93.6       94.1       93.0       93.6       91.7       91.7
40/30.........................................       94.1       94.1       94.1       94.1       91.7       91.7
50/37.........................................       94.5       94.5       94.1       94.1       92.4       92.4
60/45.........................................       95.0       95.0       94.5       94.5       92.4       93.0
75/55.........................................       95.4       95.0       94.5       94.5       93.6       94.1
100/75........................................       95.4       95.4       95.0       95.0       93.6       94.1
125/90........................................       95.4       95.4       95.0       95.0       94.1       94.1
150/110.......................................       95.8       95.8       95.8       95.4       94.1       94.1
200/150.......................................       96.2       95.8       95.8       95.4       94.5       94.1
----------------------------------------------------------------------------------------------------------------


                                    Table II-3--Energy Conservation Standards for Fire Pump Electric Motors At 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       75.5  .........       82.5       82.5       80.0       80.0       74.0       74.0
1.5/1.1.........................................................       82.5       82.5       84.0       84.0       85.5       84.0       77.0       75.5
2/1.5...........................................................       84.0       84.0       84.0       84.0       86.5       85.5       82.5       85.5
3/2.2...........................................................       85.5       84.0       87.5       86.5       87.5       86.5       84.0       86.5
5/3.7...........................................................       87.5       85.5       87.5       87.5       87.5       87.5       85.5       87.5
7.5/5.5.........................................................       88.5       87.5       89.5       88.5       89.5       88.5       85.5       88.5
10/7.5..........................................................       89.5       88.5       89.5       89.5       89.5       90.2       88.5       89.5
15/11...........................................................       90.2       89.5       91.0       91.0       90.2       90.2       88.5       89.5
20/15...........................................................       90.2       90.2       91.0       91.0       90.2       91.0       89.5       90.2
25/18.5.........................................................       91.0       91.0       92.4       91.7       91.7       91.7       89.5       90.2
30/22...........................................................       91.0       91.0       92.4       92.4       91.7       92.4       91.0       91.0
40/30...........................................................       91.7       91.7       93.0       93.0       93.0       93.0       91.0       91.0
50/37...........................................................       92.4       92.4       93.0       93.0       93.0       93.0       91.7       91.7
60/45...........................................................       93.0       93.0       93.6       93.6       93.6       93.6       91.7       92.4
75/55...........................................................       93.0       93.0       94.1       94.1       93.6       93.6       93.0       93.6
100/75..........................................................       93.6       93.0       94.5       94.1       94.1       94.1       93.0       93.6
125/90..........................................................       94.5       93.6       94.5       94.5       94.1       94.1       93.6       93.6
150/110.........................................................       94.5       93.6       95.0       95.0       95.0       94.5       93.6       93.6
200/150.........................................................       95.0       94.5       95.0       95.0       95.0       94.5       94.1       93.6
250/186.........................................................       95.4       94.5       95.0       95.4       95.0       95.4       94.5       94.5
300/224.........................................................       95.4       95.0       95.4       95.4       95.0       95.4  .........  .........
350/261.........................................................       95.4       95.0       95.4       95.4       95.0       95.4  .........  .........
400/298.........................................................       95.4       95.4       95.4       95.4  .........  .........  .........  .........
450/336.........................................................       95.4       95.8       95.4       95.8  .........  .........  .........  .........
500/373.........................................................       95.4       95.8       95.8       95.8  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. History of Standards Rulemaking for Electric Motors
    In the May 2020 Early Assessment Review RFI, DOE stated that it was 
initiating an early assessment review to determine whether any new or 
amended standards would satisfy the relevant requirements of EPCA for a 
new or amended energy conservation standard for electric motors and 
sought information related to that effort. Specifically, DOE sought 
data and information that could enable the agency to determine whether 
DOE should propose a ``no new standard'' determination because a more 
stringent standard: (1) would not result in a significant savings of 
energy; (2) is not technologically feasible; (3) is not economically 
justified; or (4) any combination of the foregoing. 85 FR 30878, 30879.
    On March 2, 2022, DOE published the preliminary analysis for 
electric motors. 87 FR 11650 (``March 2022 Preliminary Analysis''). In 
conjunction with the March 2022 Preliminary Analysis, DOE published a 
technical support document (``March 2022 Prelim TSD'') which presented 
the results of the in-depth technical analyses in the following areas: 
(1) Engineering; (2) markups to determine equipment price; (3) energy 
use; (4) life cycle cost (``LCC'') and payback period (``PBP''); and 
(5) national impacts. The results presented included the current scope 
of electric motors regulated at 10 CFR 431.25, in addition to an 
expanded scope of motors, including electric motors above 500 
horsepower, air-over electric motors, and small, non-small-electric-
motor, electric motors (``SNEM''). See Chapter 2 of the March 2022 
Prelim TSD. DOE requested comment on a number of topics regarding the 
analysis presented.
    DOE received comments in response to the March 2022 Preliminary 
Analysis from the interested parties listed in Table II-4.

[[Page 36076]]



                          Table II-4--March 2022 Preliminary Analysis Written Comments
----------------------------------------------------------------------------------------------------------------
                                             Reference in this final
               Commenter(s)                            rule              Docket No.         Commenter type
----------------------------------------------------------------------------------------------------------------
ABB Motors and Mechanical Inc............  ABB........................           28  Manufacturer.
American Council for an Energy-Efficient   Electric Motors Working           35, 36  Working Group.
 Economy, Appliance Standards Awareness     Group.
 Project, National Electrical
 Manufacturers Association, Natural
 Resources Defense Council, Northwest
 Energy Efficiency Alliance, Pacific Gas
 & Electric Company, San Diego Gas &
 Electric, Southern California Edison.
Appliance Standards Awareness Project,     Joint Advocates............           27  Efficiency Organizations.
 American Council for an Energy-Efficient
 Economy, Natural Resources Defense
 Council, New York State Energy Research
 and Development Authority.
Association of Home Appliance              AHAM and AHRI..............           25  Industry OEM Trade
 Manufacturers; Air-Conditioning,                                                     Association.
 Heating, and Refrigeration Institute.
Air-Conditioning, Heating, and             AHRI.......................           26  Industry OEM Trade
 Refrigeration Institute.                                                             Association.
Pacific Gas and Electric Company (PG&E),   CA IOUs....................           30  Utilities.
 San Diego Gas and Electric (SDG&E), and
 Southern California Edison (SCE).
Daikin Comfort Technologies Manufacturing  Daikin.....................           32  Manufacturer.
 Company, L.P.
Electrical Apparatus Service Association,  EASA.......................           21  International Trade
 Inc.                                                                                 Association.
Hydraulics Institute.....................  HI.........................           31  Industry Pump Trade
                                                                                      Association.
Lennox International.....................  Lennox.....................           29  Manufacturer.
Metglas, Inc.............................  Metglas....................           24  Materials supplier.
Northwest Energy Efficiency Alliance.....  NEEA.......................           33  Non-profit organization.
National Electrical Manufacturers          Joint Industry Stakeholders           23  Industry Trade
 Association (NEMA), Association of Home                                              Associations.
 Appliance Manufacturers (AHAM), the Air-
 Conditioning, Heating, and Refrigeration
 Institute (AHRI), the Medical Imaging
 Technology Alliance (MITA), the Outdoor
 Power Equipment Institute (OPEI), Home
 Ventilating Institute (HVI) and the
 Power Tool Institute (PTI).
National Electrical Manufacturers          NEMA.......................           22  Industry Trade Association.
 Association.
----------------------------------------------------------------------------------------------------------------

    By letter dated on November 15, 2022, DOE received a joint 
recommendation for energy conservation standards for electric motors 
(``November 2022 Joint Recommendation''). The November 2022 Joint 
Recommendation represented the motors industry, energy efficiency 
organizations and utilities (collectively, ``the Electric Motors 
Working Group'').\15\ The November 2022 Joint Recommendation addressed 
energy conservation standards for medium electric motors that are 1-750 
hp and polyphase, and air-over medium electric motors. On December 9, 
2022, DOE received a supplemental letter to the November 2022 Joint 
Recommendation from the Electric Motors Working Group. The supplemental 
letter provided additional guidance on the recommended levels for open 
medium electric motors rated 100 hp to 250 hp, and a recommended 
compliance date for standards presented in the November 2022 Joint 
Recommendation.
---------------------------------------------------------------------------

    \15\ The members of the Electric Motors Working Group included 
ACEEE, ASAP, NEMA, NRDC, NEEA, PG&E, SDG&E, and SCE.
---------------------------------------------------------------------------

    A parenthetical reference at the end of a comment quotation or 
paraphrase provides the location of the item in the public record.\16\
---------------------------------------------------------------------------

    \16\ The parenthetical reference provides a reference for 
information located in the docket of DOE's rulemaking to develop 
energy conservation standards for electric motors. (Docket NO EERE-
2020-BT-STD-0007, which is maintained at www.regulations.gov). The 
references are arranged as follows: (commenter name, comment docket 
ID number, page of that document).
---------------------------------------------------------------------------

3. Electric Motors Working Group Recommended Standard Levels
    This section summarizes the standard levels recommended in the 
November 2022 Joint Recommendation and supplement by the Electric 
Motors Working Group and the subsequent procedural steps taken by DOE. 
Further discussion on scope is provided in section III.B of this 
document.
    Recommendation #1: For NEMA Design A/B medium electric motors 
(``MEM'') rated up to 500 hp at 60Hz, standard levels as follows:
    a. Less than 100 hp--remain at Premium LevelIE3 level \17\
---------------------------------------------------------------------------

    \17\ IE3 efficiency level refers to the 60 Hz efficiency values 
in Table 8 of IEC 60034-30-1:2014.
---------------------------------------------------------------------------

    b. 100-250 hp--increase to Super Premium/IE4 level,\18\ aligning 
with European Union (``EU'') Ecodesign Directive 2019/1781 which 
requires IE4 levels for 75-200 kW motors.
---------------------------------------------------------------------------

    \18\ IE4 efficiency level refers to the 60 Hz efficiency values 
in Table 10 of IEC 60034-30-1:2014.
---------------------------------------------------------------------------

    c. Over 250 and up to 500 hp--remain at Premium Level/IE3 level
    Separately, because the efficiencies for the IE4 level in IEC 
60034-30-1:2014 do not distinguish between enclosed and open motors, 
the supplemental letter to the November 2022 Joint Recommendation 
recommended efficiencies for open motors based on the efficiencies for 
enclosed motors in the IEC standard. The supplemental letter stated 
that for some horsepower ratings, open motors have different minimum 
efficiencies which account for the different frame size at a given 
horsepower rating.

[[Page 36077]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Premium efficiency level refers to the efficiency values in NEMA MG 
1-2016 Tables 12-12. The current standards for NEMA Design A/B in Table 
5 of 10 CFR 431.25 are at Premium efficiency. Accordingly, in this 
direct final rule, pursuant to the November 22 Joint Recommendation, 
the energy conservation standards for NEMA Design A/B medium electric 
motors (``MEM'') less than 100 hp and between 250 to 500 hp, remain at 
the current levels in 10 CFR 430.25. However, the energy conservation 
standards for such MEMs between 100 and 250 hp increase to the Super 
Premium/IE4 Level, which approximately represents a 20 percent 
reduction of losses over Premium/IE3. Table II-4 presents a comparison 
of the current and updated standards for MEMs between 100 and 250 hp.

                                    Table II-4--Crosswalk of Current and New Efficiency Standards for MEMs 100-250 hp
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Current Standards in Table 5 of 10 CFR 431.25
--------------------------------------------------------------------------------------------------------------------------------------------------------
100/75..........................................................       94.1       93.6       95.4       95.4       95.0       95.0       93.6       94.1
125/90..........................................................       95.0       94.1       95.4       95.4       95.0       95.0       94.1       94.1
150/110.........................................................       95.0       94.1       95.8       95.8       95.8       95.4       94.1       94.1
200/150.........................................................       95.4       95.0       96.2       95.8       95.8       95.4       94.5       94.1
250/186.........................................................       95.8       95.0       96.2       95.8       95.8       95.8       95.0       95.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Updated Standards in this DFR, pursuant to the November 2022 Joint Recommendation
--------------------------------------------------------------------------------------------------------------------------------------------------------
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Recommendation #2: For medium electric motors rated over 500 hp and 
up to 750 hp at 60 Hz, standard levels that correspond to IE3 levels 
for open and enclosed electric motors.
    The current energy conservation standards for MEMs do not contain 
standards for MEMs with greater than 500 hp. However, in the May 2014 
Final Rule, DOE noted that it may consider future regulation of motor 
types not regulated in the May 2014 Final Rule, including motors 
greater than 500 hp. See 79 FR 30946. As discussed more in section 
III.B of this document, DOE recently expanded the electric motor test 
procedure to include motors between 500 hp and 750 hp. Pursuant to the 
November 2022 Joint Recommendation, this direct final rule establishes 
standards for motors between 500 and 750 hp at levels consistent with 
IE3 levels for open and enclosed electric motors.
    Recommendation #3: For air-over \19\ medium electric motors (``AO-
MEMs''), establish two equipment classes and corresponding energy 
conservation standards for AO MEMs: AO-MEMs in standard NEMA frame 
sizes and air-over motors in specialized NEMA frame sizes, with 
standard levels as follows:
---------------------------------------------------------------------------

    \19\ Air-over electric motor means an electric motor that does 
not reach thermal equilibrium (i.e., thermal stability), during a 
rated load temperature test according to section 2 of appendix B, 
without the application of forced cooling by a free flow of air from 
an external device not mechanically connected to the motor within 
the motor enclosure. 10 CFR 430.12.
---------------------------------------------------------------------------

    a. Standard Frame Size AO-MEMs: For AO MEMs sold in standard NEMA 
frame sizes aligned with NEMA MG 1-2016, Table 13.2 (open motors) and 
Table 13.3 (enclosed motors), standard levels consistent with 
Recommendation #1 (i.e., standard levels for NEMA MG 1 12-12 levels for 
motors rated less than 100 hp, IE4 levels for motors rated 100 to 250 
hp, and MG 1 12-12 levels for motors rated over 250 hp).
    b. Specialized Frame Size air-over electric motors: For air-over 
electric motors sold in smaller, specialized NEMA frame sizes, standard 
levels consistent with current fire pump efficiency levels (in Table 7 
of 10 CFR 431.25), but with constraint on frame size as follows:

[[Page 36078]]



--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           2 Pole (maximum NEMA    4 Pole (maximum NEMA    6 Pole (maximum NEMA    8 Pole (maximum NEMA
                                                              frame diameter)         frame diameter)         frame diameter)         frame diameter)
                          HP/kW                          -----------------------------------------------------------------------------------------------
                                                           Enclosed      Open      Enclosed      Open      Enclosed      Open      Enclosed      Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...................................................     74 (48)  ..........   82.5 (48)   82.5 (48)     80 (48)     80 (48)    74 (140)    74 (140)
1.5/1.1.................................................   82.5 (48)   82.5 (48)     84 (48)     84 (48)  85.5 (140)    84 (140)    77 (140)  75.5 (140)
2/1.5...................................................     84 (48)     84 (48)     84 (48)     84 (48)  86.5 (140)  85.5 (140)  82.5 (180)  85.5 (180)
3/2.2...................................................  85.5 (140)     84 (48)  87.5 (140)  86.5 (140)  87.5 (180)  86.5 (180)    84 (180)  86.5 (180)
5/3.7...................................................  87.5 (140)  85.5 (140)  87.5 (140)  87.5 (140)  87.5 (180)  87.5 (180)  85.5 (210)  87.5 (210)
7.5/5.5.................................................  88.5 (180)  87.5 (140)  89.5 (180)  88.5 (180)  89.5 (210)  88.5 (210)  85.5 (210)  88.5 (210)
10/7.5..................................................  89.5 (180)  88.5 (180)  89.5 (180)  89.5 (180)  89.5 (210)  90.2 (210)  ..........  ..........
15/11...................................................  90.2 (210)  89.5 (180)    91 (210)    91 (210)  ..........  ..........  ..........  ..........
20/15...................................................  90.2 (210)  90.2 (210)    91 (210)    91 (210)  ..........  ..........  ..........  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The current energy conservation standard for electric motors in 10 
CFR 430.25 exempt air-over electric motors from the standards. 10 CFR 
430.25(l). In the May 2014 Final Rule, DOE explained that this 
exemption was due to a lack of information at that time to support the 
establishment of a test method for air-over electric motors. See 79 FR 
30946; 78 FR 38474. However, as discussed more in section III.B, DOE 
recently expanded the electric motor test procedure to include AO-MEMs. 
Accordingly, pursuant to the November 2022 Joint Recommendation, this 
direct final rule establishes 2 equipment classes for AO-MEMs (AO-MEMs 
in standard NEMA frame sizes, and those in specialized NEMA frame 
sizes) and corresponding standards based on the November 2022 Joint 
Recommendation. However, based on DOE's review of the market, DOE only 
observed AO-MEMs up to 250 hp. As such, in this direct final rule, DOE 
is only establishing standards for AO-MEMs up to 250 hp.
    Recommendation #4: For synchronous and inverter-only electric 
motors, a recommendation to forego establishing standards until an 
updated test procedure is adopted that better captures the energy-
saving benefits of these motors.
    The current energy conservation standard for electric motors in 10 
CFR 430.25 exempts inverter-only electric motors from the standards. 10 
CFR 431.25(l). Similarly, the current energy conservation standards 
apply to AC induction motors, which do not include synchronous 
motors.\20\ Accordingly, following this recommendation, this direct 
final rule continues to exempt these types of motors from the energy 
conservation standards.
---------------------------------------------------------------------------

    \20\ In the May 2014 Final Rule, DOE chose not to establish 
standards for inverter-only electric motors because of the then 
absence of a reliable and repeatable method to test them for 
efficiency, but DOE noted that if a test procedure became available, 
DOE may consider setting standards for inverter-only electric motors 
at that time. 79 FR 30945. DOE recently expanded the electric motor 
test procedure to include inverter-only and synchronous electric 
motors. See 87 FR 63600-63605. Similarly, DOE expanded the scope of 
the test procedure to include synchronous electric motors. 87 FR 
63601-63605. However, pursuant to the November 2022 Joint 
Recommendation, DOE is not separately regulating inverter-only and 
synchronous electric motors in this direct final rule. Rather, DOE 
is only considering the substitution effects of switching to these 
electric motors if higher standards for MEMs are established. More 
discussion on inverter-only and synchronous electric motors may be 
found in sections IV.A and F of this document.
---------------------------------------------------------------------------

    Recommendation #5: For the recommended energy conservation standard 
levels, a compliance date of four (4) years from the date of 
publication of the final rule.
    In the May 2014 Final Rule, DOE provided a 2-year compliance lead 
time based on the requirements of 42 U.S.C. 6313(b)(4)(B). See 79 FR 
30944. DOE notes that EPCA generally requires a 3-year compliance lead 
time from the effective date of an amended standard under EPCA's 6-year 
lookback provisions. (42 U.S.C. 6316(a); 42 U.S.C. 6295(m)) However, 
EPCA's direct final rule provision (42 U.S.C. 6295(p)(4)) conveys upon 
DOE a substantive grant of rulemaking authority, thereby allowing 
stakeholders to negotiate over more aspects of the energy or water 
conservation standard, so long as the requirements of 42 U.S.C. 6295(o) 
are met. See 86 FR 70892, 70915. In the past, DOE has looked to joint 
recommendations to fill in necessary details that EPCA does not place 
upon the direct final rule process, including compliance periods. DOE's 
direct final rules have frequently utilized alternative compliance 
dates, while continuing to ensure that the standards in these rules 
represent the maximum improvement in energy efficiency that is 
technologically feasible and economically justified.
    After carefully considering the November 2022 Joint Recommendation 
and supplement for amending the energy conservation standards for 
electric motors submitted by the Electric Motors Working Group, DOE has 
determined that these recommendations are in accordance with the 
statutory requirements of 42 U.S.C. 6295(p)(4) for the issuance of a 
direct final rule.
    More specifically, these recommendations comprise a statement 
submitted by interested persons who are fairly representative of 
relevant points of view on this matter. In appendix A to subpart C of 
10 CFR part 430 (``Appendix A''), DOE explained that to be ``fairly 
representative of relevant points of view,'' the group submitting a 
joint statement must, where appropriate, include larger concerns and 
small business in the regulated industry/manufacturer community, energy 
advocates, energy utilities, consumers, and States. However, it will be 
necessary to evaluate the meaning of ``fairly representative'' on a 
case-by-case basis, subject to the circumstances of a particular 
rulemaking, to determine whether fewer or additional parties must be 
part of a joint statement in order to be ``fairly representative of 
relevant points of view.'' Section 10 of appendix A. In reaching this 
determination, DOE took into consideration the fact that the Joint 
Recommendation was signed and submitted by a broad cross-section of 
interests, including a manufacturers' trade association, environmental 
and energy-efficiency advocacy organizations, and electric utility 
companies. NYSERDA, a state organization, also submitted a letter 
supporting the Joint Recommendation. DOE notes that these organizations 
include the relevant points of view specifically identified by 
Congress: manufacturers of covered products, States, and efficiency 
advocates. (42 U.S.C. 6295(p)(4)(A))
    DOE also evaluated whether the recommendation satisfies 42 U.S.C. 
6295(o), as applicable. In making this determination, DOE conducted an 
analysis to evaluate whether the potential energy conservation 
standards under consideration achieve the maximum improvement in energy 
efficiency that is technologically

[[Page 36079]]

feasible and economically justified and result in significant energy 
conservation. The evaluation is the same comprehensive approach that 
DOE typically conducts whenever it considers potential energy 
conservation standards for a given type of product or equipment.
    Upon review, the Secretary determined that the November 2022 Joint 
Recommendation comports with the standard-setting criteria set forth 
under 42 U.S.C. 6295(p)(4)(A). Accordingly, the Electric Motors Working 
Group recommended efficiency levels were included as the ``recommended 
TSL'' for electric motors (see section V.A for description of all of 
the considered TSLs). The details regarding how the Electric Motors 
Working Group-recommended TSLs comply with the standard-setting 
criteria are discussed and demonstrated in the relevant sections 
throughout this document.
    In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have 
been satisfied, the Secretary has determined that it is appropriate to 
adopt the Electric Motors Working Group-recommended amended energy 
conservation standards for Electric Motors through this direct final 
rule. Also, in accordance with the provisions described in section II.A 
of this document, DOE is simultaneously publishing a NOPR proposing 
that the identical standard levels contained in this direct final rule 
be adopted.

III. General Discussion

A. General Comments

    This section summarizes general comments received from interested 
parties regarding rulemaking timing and process for the March 2022 
Preliminary Analysis.
    Lennox commented that long-standing DOE practice recognizes the 
benefit of establishing an appropriate test procedure before 
undertaking an energy conservation standards rulemaking. Lennox 
commented that the March 2022 Preliminary Analysis was issued in 
February 2022 while comments on the test procedure NOPR were due. As 
such, Lennox suggested that DOE cutting corners on the regulatory 
process undermines the accuracy and reliability of data contained in 
the March 2022 Preliminary Analysis TSD. (Lennox, No. 29 at p. 4-5) The 
Joint Industry Stakeholders commented that the process DOE is using for 
the electric motor test procedure and standards undermines the value of 
early stakeholder engagement. Specifically, they claimed that DOE is: 
(1) shortening comment periods; (2) overlapping comment periods; and 
(3) condensing the rulemaking process. The Joint Industry Stakeholders 
noted that DOE published the March 2022 Preliminary Analysis two months 
after issuing a proposed test procedure. Furthermore, the Joint 
Industry Stakeholders commented that there were numerous comments 
challenging DOE's proposed test procedure, which resulted in 
significant changes. They commented that manufacturers and others lack 
enough time with the proposed test procedure to fully understand or 
comment upon its impact on potential energy conservation standards, 
especially for SNEMs where they stated that DOE has done no testing. 
The Joint Industry Stakeholders commented that they recognize and 
support DOE's interest in moving rulemakings forward, especially rules 
such as the electric motor standards and test procedures, which have 
missed statutory deadlines. However, they stated that DOE should have 
released the proposed test procedure earlier so that DOE could receive 
feedback on the test procedure before proceeding with its resource-
intensive preliminary analysis. (Joint Industry Stakeholders, No. 23 at 
p. 9-10)
    Appendix A establishes procedures, interpretations, and policies to 
guide DOE in the consideration and promulgation of new or revised 
appliance energy conservation standards and test procedures under EPCA. 
DOE has maintained the process and timeline for the electric motors 
test procedure and energy conservation standards based on appendix A.
    Appendix A requires that DOE provide for early input from 
stakeholders so that the initiation and direction of rulemaking is 
informed by comments from interested parties. Appendix A, section 1(a). 
As discussed in section II.B.2 of this document, DOE provided 
opportunity for comment for these energy conservation standards through 
the May 2020 Early Assessment Review RFI, which had a 30-day comment 
period, and the March 2022 Preliminary Analysis, which had a 60-day 
comment period. Further, DOE provided multiple opportunities for 
stakeholder comments and inputs through the test procedure rulemaking 
process; DOE published a request for information (85 FR 34111; June 3, 
2020 ``June 2020 RFI''), which had a 45-day comment period, and DOE 
published a test procedure NOPR (86 FR 71710; December 17, 2021 
``December 2021 NOPR''), which originally had a 60-day comment period, 
which was extended to a 75-day comment period. 87 FR 6436. Even though 
some of these comment periods overlapped to some extent, DOE has 
nonetheless provided ample opportunity for stakeholder review and 
comments and has considered such comments and recommendations in this 
notice.
    Appendix A also generally requires that test procedure rulemakings 
establishing methodologies used to evaluate proposed energy 
conservation standards will be finalized prior to publication of a NOPR 
proposing new or amended energy conservation standards. Appendix A, 
section 8(d)(1). Pursuant to 42 U.S.C. 6295(p)(4), published elsewhere 
in the Federal Register is a NOPR accompanying this direct final rule, 
which proposes standards identical to those in this direct final rule. 
On October 19, 2022, DOE published the electric motor test procedure 
final rule. (``October 2022 Final Rule''). Thus, in accordance with 
appendix A section 8(d)(1), the October 2022 Final Rule prior was 
published 180 days prior to publication of this energy conservations 
standards direct final rule and the accompanying NOPR.

B. Scope of Coverage and Equipment Classes

    When evaluating and establishing energy conservation standards, DOE 
divides covered equipment into equipment classes by the type of energy 
used or by capacity or other performance-related features that justify 
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q))
    This document covers certain equipment meeting the definition of 
electric motors as defined in 10 CFR 431.12. Specifically, the 
definition for ``electric motor'' is ``a machine that converts 
electrical power into rotational mechanical power.'' Id. Electric 
motors are used in a wide range of applications in commercial building 
and in the industrial sector (e.g., chemicals, primary metals, food, 
paper, plastic/rubber, petroleum refining, and wastewater), including: 
fans, compressors, pumps, material handling equipment, and material 
processing equipment.
    Currently, DOE regulates medium electric motors (``MEMs'') falling 
into the NEMA Design A, NEMA Design B, NEMA Design C, and fire pump 
motor categories and those electric motors that meet the criteria 
specified at 10 CFR 431.25(g). 10 CFR 431.25(h)-(j). Section

[[Page 36080]]

431.25(g) specifies that the relevant standards apply only to electric 
motors, including partial electric motors, that satisfy the following 
criteria:

    (1) Are single-speed, induction motors;
    (2) Are rated for continuous duty (MG 1) operation or for duty 
type S1 (IEC)
    (3) Contain a squirrel-cage (MG 1) or cage (IEC) rotor;
    (4) Operate on polyphase alternating current 60-hertz sinusoidal 
line power;
    (5) Are rated 600 volts or less;
    (6) Have a 2-, 4-, 6-, or 8-pole configuration;
    (7) Are built in a three-digit or four-digit NEMA frame size (or 
IEC metric equivalent), including those designs between two 
consecutive NEMA frame sizes (or IEC metric equivalent), or an 
enclosed 56 NEMA frame size (or IEC metric equivalent);
    (8) Produce at least one horsepower (0.746 kW) but not greater 
than 500 horsepower (373 kW), and
    (9) Meet all of the performance requirements of one of the 
following motor types: A NEMA Design A, B, or C motor or an IEC 
Design N, NE, NEY, NY or H, HE, HEY, HYmotor.\21\
---------------------------------------------------------------------------

    \21\ DOE added the ``E'' and ``Y'' designations for IEC Design 
motors into Sec.  431.25(g) in the October 2022 Final Rule. 87 FR 
63596, 636597, 6306.

    10 CFR 431.25(g).
    The definitions for NEMA Design A motors, NEMA Design B motors, 
NEMA Design C motors, fire pump electric motors, IEC Design N motor and 
IEC Design H motor, as well as ``E'' and ``Y'' designated IEC Design 
motors, are codified in 10 CFR 431.12. DOE has also currently exempted 
certain categories of motors from standards. The exemptions are as 
follows:

    (1) Air-over electric motors;
    (2) Component sets of an electric motor;
    (3) Liquid-cooled electric motors;
    (4) Submersible electric motors; and
    (5) Inverter-only electric motors.

    10 CFR 431.25(l)
    On October 19, 2022, DOE published the electric motors test 
procedure final rule. 87 FR 63588 (``October 2022 Final Rule''). As 
part of the October 2022 Final Rule, DOE expanded the test procedure 
scope to additional categories of electric motors that currently do not 
have energy conservation standards. 87 FR 63588, 63593-63606. The 
expanded test procedure scope included the following:
     Electric motors having a rated horsepower above 500 and up 
to 750 hp that meets the criteria listed at Sec.  431.25(g), with the 
exception of criteria Sec.  431.25(g)(8) to air-over electric motors 
(``AO-MEMs''), and inverter-only electric motors;
     Small, non-Small-Electric Motor, Electric Motors 
(``SNEM''), which:
    (a) Is not a small electric motor, as defined at Sec.  431.442 and 
is not a dedicated pool pump motors as defined at Sec.  431.483;
    (b) Is rated for continuous duty (MG 1) operation or for duty type 
S1 (IEC);
    (c) Operates on polyphase or single-phase alternating current 60-
hertz (Hz) sinusoidal line power; or is used with an inverter that 
operates on polyphase or single-phase alternating current 60-hertz (Hz) 
sinusoidal line power;
    (d) Is rated for 600 volts or less;
    (e) Is a single-speed induction motor capable of operating without 
an inverter or is an inverter-only electric motor;
    (f) Produces a rated motor horsepower greater than or equal to 0.25 
horsepower (0.18 kW); and
    (g) Is built in the following frame sizes: any two-, or three-digit 
NEMA frame size (or IEC equivalent) if the motor operates on single-
phase power; any two-, or three-digit NEMA frame size (or IEC 
equivalent) if the motor operates on polyphase power, and has a rated 
motor horsepower less than 1 horsepower (0.75 kW); or a two-digit NEMA 
frame size (or IEC metric equivalent), if the motor operates on 
polyphase power, has a rated motor horsepower equal to or greater than 
1 horsepower (0.75 kW), and is not an enclosed 56 NEMA frame size (or 
IEC metric equivalent).
     SNEMs that are air-over electric motors (``AO-SNEMs'') and 
inverter-only electric motors;
     Synchronous electric motors, which:
    (a) Is not a dedicated pool pump motor as defined at Sec.  431.483 
or is not an air-over electric motor;
    (b) Is a synchronous electric motor;
    (c) Operates on polyphase or single-phase alternating current 60-
hertz (Hz) sinusoidal line power; or is used with an inverter that 
operates on polyphase or single-phase alternating current 60-hertz (Hz) 
sinusoidal line power;
    (d) Is rated 600 volts or less; and
    (e) Produces at least 0.25 hp (0.18 kW) but not greater than 750 hp 
(559 kW).
     Synchronous electric motors that are inverter-only 
electric motors.
    In the October 2022 Final Rule, DOE noted that, for these motors 
newly included within the scope of the test procedure for which there 
was no established energy conservation standard, manufacturers would 
not be required to use the test procedure to certify these motors to 
DOE until such time as a standard is established. 87 FR 63591.\22\ 
Further, the October 2022 Final Rule continued to exclude the following 
categories of electric motors:
---------------------------------------------------------------------------

    \22\ However, manufacturers making voluntary representations 
respecting the energy consumption or cost of energy consumed by such 
motors are required to use the DOE test procedure for making such 
representations beginning 180 days following publication of the 
October 2022 Final Rule. Id.

     inverter-only electric motors that are air-over electric 
motors;
     component sets of an electric motor;
     liquid-cooled electric motors; and
     submersible electric motors.
    In the March 2022 Preliminary Analysis, DOE analyzed the additional 
motors now included within the scope of the test procedure after the 
October 2022 Final Rule.\23\ See sections 2.2.1 and 2.2.3.2 of the 
March 2022 Prelim TSD. This included MEMs from 1-500 hp, AO-MEMs, 
SNEMs, and AO-SNEMs. However, consistent with the November 2022 Joint 
Recommendation, this direct final rule establishes new and amended 
standards for only a portion of the scope analyzed in the March 2022 
Preliminary Analysis and included within the scope of the test 
procedure after the October 2022 Final Rule. Specifically, in this 
direct final rule, DOE is only amending standards for certain MEMs and 
establishing new standards for AO-MEMs and certain air-over polyphase 
motors. DOE may address in a future rulemaking energy conservation 
standards for electric motor equipment classes not addressed in this 
direct final rule. Table III-1 summarizes the equipment class groups 
(``ECG'') DOE established pursuant to the November 2022 Joint 
Recommendation and analyzed in this direct final rule. Further 
discussion on equipment classes is provided in section IV.A.3 of this 
document.
---------------------------------------------------------------------------

    \23\ At the time, most of these motors had been proposed for 
inclusion in the scope of the test procedure in the December 2021 
Test Procedure NOPR. 86 FR 71710.

                                 Table III-1--Equipment Class Groups Considered
----------------------------------------------------------------------------------------------------------------
                                ECG motor design                    Horsepower         Pole
              ECG                     type        Motor topology      rating       configuration     Enclosure
----------------------------------------------------------------------------------------------------------------
1.............................  MEM 1-500 hp,     Polyphase.....           1-500      2, 4, 6, 8  Open.
                                 NEMA Design A &                                                  Enclosed.
                                 B.

[[Page 36081]]

 
2.............................  MEM 501-750 hp,   Polyphase.....         501-750            2, 4  Open.
                                 NEMA Design A &                                                  Enclosed.
                                 B.
3.............................  AO-MEM (Standard  Polyphase.....           1-250      2, 4, 6, 8  Open.
                                 Frame Size).                                                     Enclosed.
4.............................  AO-Polyphase      Polyphase.....            1-20      2, 4, 6, 8  Open.
                                 (Specialized                                                     Enclosed.
                                 Frame Size).
----------------------------------------------------------------------------------------------------------------

    As described in section II.B.3 of this document, this direct final 
rule establishes new equipment classes for AO-MEMs, AO-polyphase 
motors, and MEMs between 500 and 750 hp, and amends the standards for 
the 100-250 hp MEMs equipment classes.

C. Test Procedure

    EPCA sets forth generally applicable criteria and procedures for 
DOE's adoption and amendment of test procedures. (42 U.S.C. 6314(a)) 
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. On October 
19, 2022, DOE published the electric motor test procedure final rule. 
87 FR 63588 (``October 2022 Final Rule''). As described previously, the 
October 2022 Final Rule expanded the types of motors included within 
the scope of the test procedure, including the new classes of electric 
motors for which DOE is establishing energy conservation standards in 
this final rule. DOE's test procedures for electric motors are 
currently prescribed at appendix B to subpart B of 10 CFR part 431 
(``appendix B'').
    DOE's energy conservation standards for electric motors are 
currently prescribed at 10 CFR 431.25. DOE's current energy 
conservation standards for electric motors are expressed in terms of 
nominal full-load efficiency.

D. Technological Feasibility

1. General
    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such an analysis, DOE develops a list 
of technology options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of those means for improving efficiency are 
technologically feasible. DOE considers technologies incorporated in 
commercially-available products or in working prototypes to be 
technologically feasible. 10 CFR 431.4; 10 CFR part 430, subpart C, 
appendix A, sections 6(c)(3)(i) and 7(b)(1) (``Appendix A'').
    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; (3) adverse impacts on 
health or safety, and (4) unique-pathway proprietary technologies. 
Section 7(b)(2)-(5) of appendix A. Section IV.B of this document 
discusses the results of the screening analysis for electric motors, 
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 direct final rule technical support 
document (``TSD'').
2. Maximum Technologically Feasible Levels
    When DOE adopts 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. 6316(a); 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 electric 
motors, 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 III.C 
of this direct final rule and in chapter 5 of the direct final rule 
TSD.

E. Energy Savings

1. Determination of Savings
    For each trial standard level (``TSL''), DOE projected energy 
savings from application of the TSL to electric motors purchased in the 
30-year period that begins in the first year of compliance with the 
amended standards (2027-2056).\24\ The savings are measured over the 
entire lifetime of electric motors purchased in the 30-year analysis 
period. DOE quantified the energy savings attributable to each TSL as 
the difference in energy consumption between each standards case and 
the no-new-standards case. The no-new-standards case represents a 
projection of energy consumption that reflects how the market for an 
equipment would likely evolve in the absence of new and amended energy 
conservation standards.
---------------------------------------------------------------------------

    \24\ Each TSL is composed of specific efficiency levels for each 
product class. The TSLs considered for this direct final rule are 
described in section V.A of this document. DOE also presents a 
sensitivity analysis that considers impacts for products shipped in 
a 9-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (``NIA'') spreadsheet model 
to estimate national energy savings (``NES'') from potential amended or 
new standards for electric motors. 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 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. DOE also calculates NES in terms of FFC energy savings. 
The FFC metric includes the energy consumed in extracting, processing, 
and transporting primary fuels (i.e., coal, natural gas, petroleum 
fuels), and thus presents a more complete picture of the impacts of 
energy conservation standards.\25\ DOE's

[[Page 36082]]

approach is based on the calculation of an FFC multiplier for each of 
the energy types used by covered products or equipment. For more 
information on FFC energy savings, see section IV.H.2 of this document.
---------------------------------------------------------------------------

    \25\ The FFC metric is discussed in DOE's statement of policy 
and notice of policy amendment. 76 FR 51282 (Aug. 18, 2011), as 
amended at 77 FR 49701 (Aug. 17, 2012).
---------------------------------------------------------------------------

2. Significance of Savings
    To adopt any new or amended standards for a covered product, DOE 
must determine that such action would result in significant energy 
savings. (42 U.S.C. 6295(o)(3)(B))
    The significance of energy savings offered by a new or amended 
energy conservation standard cannot be determined without knowledge of 
the specific circumstances surrounding a given rulemaking. For example, 
some covered products and equipment have most of their energy 
consumption occur during periods of peak energy demand. The impacts of 
these products on the energy infrastructure can be more pronounced than 
products with relatively constant demand.
    Accordingly, DOE evaluates the significance of energy savings on a 
case-by-case basis, taking into account the significance of cumulative 
FFC national energy savings, the cumulative FFC emissions reductions, 
health benefits, and the need to confront the global climate crisis, 
among other factors.
    As stated, the standard levels adopted in this direct final rule 
are projected to result in national energy savings of 3.0 quads, the 
equivalent of the electricity use of 31 million homes in one year. 
Based on the amount of FFC savings, the corresponding reduction in 
emissions, and need to confront the global climate crisis, DOE has 
determined the energy savings from the standard levels adopted in this 
direct final rule are ``significant'' within the meaning of 42 U.S.C. 
6316(a); 42 U.S.C. 6295(o)(3)(B).

F. Economic Justification

1. Specific Criteria
    As noted previously, EPCA provides seven factors to be evaluated in 
determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(I)-(VII)) The following sections discuss how DOE has 
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts an 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 net present value of 
the consumer costs and benefits expected to result from particular 
standards. DOE also evaluates the impacts of potential standards on 
identifiable subgroups of consumers that may be affected 
disproportionately by a standard.
b. Savings in Operating Costs Compared to Increase in Price (LCC and 
PBP)
    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. 6316(a); 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 an equipment(including 
its installation) and the operating costs (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.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(B)(i)(III)) As discussed in section IV.H of this document, 
DOE uses the NIA spreadsheet model to project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes and in evaluating design options 
and the impact of potential standard levels, DOE evaluates potential 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6316(a); 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.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a standard. (42 U.S.C. 6316(a); 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

[[Page 36083]]

days of the publication of a rule, together with an analysis of the 
nature and extent of the impact. (42 U.S.C. 6316(a); 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 energy 
conservation standards for electric motors are unlikely to have a 
significant adverse impact on competition. DOE is publishing the 
Attorney General's assessment at the end of this direct final rule.
f. Need for National Energy Conservation
    DOE also considers the need for national energy and water 
conservation in determining whether a new or amended standard is 
economically justified. (42 U.S.C. 6316(a); 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 the estimated emissions impacts are reported in section V.B.6 of 
this document. DOE also estimates the economic value of emissions 
reductions resulting from the considered TSLs, as discussed in section 
IV.L of this document.
g. Other Factors
    In determining whether an energy conservation standard is 
economically justified, DOE may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6316(a); 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 previously, DOE could consider such 
information under ``other factors.''
2. Rebuttable Presumption
    EPCA creates a rebuttable presumption that an energy conservation 
standard is economically justified if the additional cost to 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. (42 U.S.C. 6316(a); 
42 U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC and PBP analyses generate 
values used to calculate the effects that 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. 6316(a); 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 direct final rule.

IV. Methodology and Discussion of Related Comments

    This section addresses the analyses DOE has performed for this 
rulemaking with regards to electric motors. Separate subsections 
address each component of DOE's analyses. In this direct final rule, 
DOE is only addressing comments and analysis specific to the scope of 
motors provided in the November 2022 Joint Recommendation. As such, any 
analysis and comments related to SNEMs and AO-SNEMs will be addressed 
in a separate NOPR.
    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: www.regulations.gov/docket/EERE-2020-BT-STD-0007. Additionally, DOE used output from the 
latest version of the Energy Information Administration's (``EIA's'') 
Annual Energy Outlook (``AEO'') for the emissions and utility impact 
analyses.

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the 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 electric motors. The key 
findings of DOE's market assessment are summarized in the following 
sections. See chapter 3 of the direct final rule TSD for further 
discussion of the market and technology assessment.
1. Scope of Coverage
    This document covers equipment meeting the definition of electric 
motors as defined in 10 CFR 431.12. Specifically, the definition for 
``electric motor'' is ``a machine that converts electrical power into 
rotational mechanical power.'' Id.
    In the March 2022 Preliminary Analysis, DOE presented analysis for 
the current scope of electric motors regulated at 10 CFR 431.25, as 
well as expanded scope proposed in the December 2021 test procedure 
NOPR, which included air-over electric motors and SNEMs. See Chapter 2 
of the March 2022 Prelim TSD. Since, DOE has published the October 2022 
Final Rule, which expanded the scope of the test procedures to include 
such motors, as discussed in detail in section III.B of this direct 
final rule.
    In response to the scope presented in the March 2022 Preliminary 
Analysis, DOE received a number of comments, which are discussed in the 
subsections

[[Page 36084]]

below. In this direct final rule, DOE is only addressing comments and 
analysis specific to the scope of motors provided in the November 2022 
Joint Recommendation, which includes MEMs and polyphase air-over 
electric motors.
a. Motor Used as a Component of a Covered Product or Equipment
    Generally, Lennox noted that DOE should apply a finished-product 
approach to energy efficiency regulations. Specifically, Lennox 
commented that system performance standards of HVAC-R products include 
the energy used by the electric motors, and that increasing the 
stringency of component-level regulation does not have any efficiency 
benefit when the ultimate efficiency is measured at the systems level 
and manufacturers adjust other equipment parameters based on the 
overall system level of performance, offsetting increased motor costs 
by reducing other component costs and efficiencies to mitigate adverse 
financial impacts on consumers.\26\ Lennox stated that mandating 
additional testing and certification of motors used in already-
regulated HVAC-R products would not save energy and create needless 
testing, paperwork, and record-keeping requirements that raise consumer 
costs. (Lennox, No. 29 at p. 2-3) Lennox elaborated that the HVAC-R 
standards in place will drive more efficient design of relevant 
components, including motors, without unnecessary further regulation of 
components, and that the March 2022 Preliminary Analysis has not 
adequately accounted for these cumulative manufacturer burdens.\27\ 
(Lennox, No. 29 at p. 6)
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    \26\ Lennox made these comments in the context of air-over and 
inverter-only motors included within HVACR products, requesting that 
DOE maintain the exemptions to the energy conservation standards for 
these motors contained in 10 CFR 431.25(l). (Lennox, No. 29 at p. 2) 
DOE addresses Lennox's comments regarding the exemption for these 
specific motors in sections IV.1.b and d of this document.
    \27\ Lennox also commented that DOE should continue exempting 
SEMs used as a component in covered equipment (specifically, HVACR 
equipment) from the energy conservation standards for electric 
motors, and that including SNEMs in the energy conversation 
standards for electric motors would circumvent Congressional intent 
to exempt from regulation small electric motors that are components 
of EPCA covered products and covered equipment. (Lennox, No. 29 at 
p. 3). As noted previously, DOE is not including SNEMs within the 
scope of this direct final rule. SNEMs may be addressed in a future 
rulemaking, and DOE will consider such comments in that rulemaking.
---------------------------------------------------------------------------

    AHAM and AHRI strongly opposed DOE's plan to expand the existing 
scope of coverage of electric motors to include motors destined for 
particular applications in finished goods, and instead recommended that 
DOE should apply a finished-product approach to energy efficiency 
regulations. (AHAM, AHRI, No. 25 at p. 7-9) NEMA commented that further 
elevations to component efficiencies or changes to scope for electric 
motors energy conservation standards will lead to diminishing returns, 
and are therefore less practical, because previous electric motors 
rulemakings adequately addressed concerns for ``application and 
performance of existing equipment'' to the maximum extent practical. 
NEMA stated that DOE should allow application-dependent solutions like 
power drive systems to take over from minimum energy conservation 
standards as the most-appropriate and best-fit market transformation 
vehicles, but they must be selected and installed with due regard for 
their application-specific nature, which calls for ``other than 
regulatory action'' on the part of DOE. (NEMA, No. 22 at p. 26)
    Daikin commented that they do not support the regulation of 
electric motors that are components of a covered equipment such as HVAC 
equipment. Daikin added that regulating embedded components creates 
both apparent and likely unforeseen issues. For HVAC manufacturers, 
Daikin commented that regulating components reduces design flexibility 
and may not result in optimal design for overall system performance. 
Daikin stated that standards for HVAC equipment are regularly evaluated 
by DOE to ensure regulations are aligned with the most cost-effective 
product for consumers, and HVAC manufacturers generally respond by 
producing a class of equipment at these federal minimum efficiency 
levels. As such, Daikin stated that regulating an embedded component 
will not improve the overall product's energy efficiency. (Daikin, No. 
32 at p. 1)
    On the other hand, the Joint Advocates commented in support of 
regulating electric motors that are components of covered equipment. 
The Joint Advocates stated that there is value in regulating the motors 
separately. The Joint Advocates agreed with DOE that different motor 
efficiency levels may be cost-effective for different covered products, 
and the presence of electric motors in covered equipment does not 
preclude the possibility of cost-effective energy standards for 
electric motors individually. Furthermore, the Joint Advocates 
commented that absent standards for motors that are used in covered 
equipment, consumers may get stuck with inefficient replacement motors. 
Finally, the Joint Advocates commented that motors used in covered 
equipment are often purchased by the original equipment manufacturer 
(``OEM'') from a motor manufacturer, and thus, exempting motors used in 
covered equipment would likely create enforcement challenges since it 
would be difficult to determine a given motor's end use application. 
(Joint Advocates, No. 27 at p. 5)
    DOE understands that the majority of the concerns summarized in 
this section and provided separately by commenters stems from DOE 
potentially regulating SNEMs and AO-SNEMs. This direct final rule does 
not address SNEMs or AO-SNEMs as part of the scope. DOE may consider in 
a future rulemaking energy conservation standards for electric motor 
equipment classes not addressed in this direct final rule, including 
SNEMs and AO-SNEMs. If so, DOE will address these comments and concerns 
as part of any future rulemaking. As such, in this final rule, DOE is 
generally addressing comments regarding electric motors scope and what 
DOE has the authority to regulate.
    As discussed in the October 2022 Final Rule, EPCA, as amended 
through EISA 2007, provides DOE with the authority to regulate the 
expanded scope of motors addressed in this rule. 87 FR 63588, 63596. 
Before the enactment of EISA 2007, EPCA defined the term ``electric 
motor'' as any motor that is a general purpose T-frame, single-speed, 
foot-mounting, polyphase squirrel-cage induction motor of the NEMA, 
Design A and B, continuous rated, operating on 230/460 volts and 
constant 60 Hertz line power as defined in NEMA Standards Publication 
MG1-1987. (See 42 U.S.C. 6311(13)(A) (2006)) Section 313(a)(2) of EISA 
2007 removed that definition and the prior limits that narrowly defined 
what types of motors would be considered as electric motors. In its 
place, EISA 2007 inserted a new ``Electric motors'' heading, and 
created two new subtypes of electric motors: General purpose electric 
motor (subtype I) and general purpose electric motor (subtype II). (42 
U.S.C. 6311(13)(A)-(B) (2011)) In addition, section 313(b)(2) of EISA 
2007 established energy conservation standards for four types of 
electric motors: general purpose electric motors (subtype I) (i.e., 
subtype I motors) with a power rating of 1 to 200 horsepower; fire pump 
motors; general purpose electric motor (subtype II) (i.e., subtype II 
motors) with a power rating of 1 to 200 horsepower; and NEMA Design B, 
general purpose electric motors with a power rating of more than 200 
horsepower, but less than or equal to 500 horsepower. (42 U.S.C. 
6313(b)(2)) The term ``electric motor'' was left undefined. However, in 
a May 4, 2012 final rule amending the electric

[[Page 36085]]

motors test procedure (the May 2012 Final Rule), DOE adopted the 
broader definition of ``electric motor'' currently found in 10 CFR 
431.12 because DOE noted that the absence of a definition may cause 
confusion about which electric motors are required to comply with 
mandatory test procedures and energy conservation standards, and to 
provide DOE with the flexibility to set energy conservation standards 
for other types of electric motors without having to continuously 
update the definition of ``electric motors'' each time DOE sets energy 
conservation standards for a new subset of electric motors. 77 FR 
26608, 26613.
    The provisions of EPCA make clear that DOE may regulate electric 
motors ``alone or as a component of another piece of equipment.'' See 
42 U.S.C. 6313(b)(1) & (2) (providing that standards for electric 
motors be applied to electric motors manufactured ``alone or as a 
component of another piece of equipment'') In contrast, Congress 
exempted small electric motors (SEMs) \28\ that are a component of a 
covered product or a covered equipment from the standards that DOE was 
required to establish under 42 U.S.C. 6317(b). Congress did not, 
however, similarly restrict electric motors. Unlike SEMs, the statute 
does not limit DOE's authority to regulate an electric motor with 
respect to whether ``electric motors'' are stand-alone equipment items 
or components of a covered product or covered equipment. Rather, 
Congress specifically provided that DOE could regulate electric motors 
that are components of other covered equipment in the standards 
established by DOE.
---------------------------------------------------------------------------

    \28\ Congress defined what equipment comprises a small electric 
motor (``SEM'')--specifically, ``a NEMA general purpose alternating 
current single-speed induction motor, built in a two-digit frame 
number series in accordance with NEMA Standards Publication MG1-
1987.'' (42 U.S.C. 6311(13)(G)) (DOE clarified, at industry's 
urging, that the definition also includes motors that are IEC metric 
equivalents to the specified NEMA motors prescribed by the statute. 
See 74 FR 32059, 32061-32062; 10 CFR 431.442.
---------------------------------------------------------------------------

    Additionally, EPCA requires that 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. 
6316(a); 42 U.S.C. 6295(o)(2)(A) and 42 U.S.C. 6295(o)(3)(B)) In this 
direct final rule, DOE performs the necessary analyses to determine 
whether amended or new standards would meet the aforementioned 
criteria. Further, DOE has determined that the amended standards 
provide cost-effective standards that would result in the significant 
conservation of energy. Further discussion on double-counting as it 
relates to energy savings is provided in section IV.F of this document. 
Further discussion on the analytical results and DOE's justification is 
provided in section V.C of this document.
b. Air-Over Electric Motors
    NEEA supported the inclusion of air-over electric motors in the 
scope of the standards, noting that including them will allow 
comparison of performance and informed purchase decisions. (NEEA, No. 
33 at p. 2) The CA IOUs supported the inclusion of Totally Enclosed Air 
Over (``TEAO'') motors in the analysis. In addition, the CA IOUs 
commented that they support establishing standards for air-over motors 
that otherwise meet the description of regulated motors (i.e., ``AO-
MEM'') consistent with the levels for totally enclosed fan cooled 
(``TEFC'') electric motors. (CA IOUs, No. 30 at p. 1-2)
    Lennox commented that DOE must continue the current electric motor 
exemptions specified in 10 CFR 431.25(l) for air-over, particularly 
when those motors are used in already-regulated HVACR products. 
(Lennox, No. 29 at p. 3) AHRI commented that air-over motors are 
explicitly exempted from regulation in 10 CFR 431.25(l), and that DOE 
has not overcome the challenges to include these exempted products, 
procedurally or technically. (AHRI, No. 26 at p. 1, 2)
    DOE is covering air-over electric motors under its ``electric 
motors'' authority. (42 U.S.C. 6311(1)(A)) As previously discussed, the 
statute does not limit DOE's authority to regulate an electric motor 
with respect to whether they are stand-alone equipment items or as 
components of a covered product or covered equipment. See 42 U.S.C. 
6313(b)(1) (providing that standards for electric motors be applied to 
electric motors manufactured ``alone or as a component of another piece 
of equipment'').
    DOE's previous determination in the December 2013 Final Rule to 
exclude air-over electric motors from scope was due to insufficient 
information available to DOE at the time to support establishment of a 
test method. See 78 FR 75962, 75974-75975. Since that time, NEMA 
published a test standard for air-over motors in Section IV, 
``Performance Standards Applying to All Machines,'' Part 34 ``Air-Over 
Motor Efficiency Test Method'' of NEMA MG 1-2016 (``NEMA Air-over Motor 
Efficiency Test Method''). The air-over method was originally published 
as part of the 2017 NEMA MG-1 Supplements and is also included in the 
latest version of NEMA MG 1-2016. In the October 2022 Final Rule, DOE 
used the aforementioned argument to include air-over electric motors 
into the test procedure scope and establish test procedures. See 87 FR 
63588, 63597. In this direct final rule, DOE has analyzed the scope of 
electric motors based on the finalized test procedures from the October 
2022 Final Rule, and amended energy conservation standards based on the 
November 2022 Joint Recommendation.
c. AC Induction Electric Motors Greater Than 500 Horsepower
    NEEA commented in support of expanding the scope to include AC 
induction electric motors greater than 500 horsepower to identify their 
energy use, potential for energy savings, price, and prevalence in the 
market today. NEEA added that these motors consume a significant amount 
of energy, and that motor efficiency generally improves as a function 
of motor size, so it may be possible to establish higher efficiency 
standards for greater than 500 HP motors. (NEEA, No. 33 at p. 3)
    NEMA stated that energy conservation standards for >500 HP motors 
would likely not be justified because of how tiny their market share 
is. It also stated that there are unique performance requirements 
applied to these motors that require custom designs that limit 
efficiency. NEMA stated that, at minimum, if a motor has one of the 
following special requirements, it should not be subject to standards; 
those special requirements are: <550 percent locked-rotor current, 
minimum locked rotor steady state supply voltage of <80 percent, 
ability to accelerate a moment of inertia greater than the moment of 
inertia defined by NEMA, ability to operate outside the range of -20 
[deg]C to +60 [deg]C, ability to operate above 4,000 m above sea level, 
a load-torque envelope with a minimum torque of 25 percent of rated 
torque with a square shaped T-n[supcaret]2 up to a max load, ability to 
start consecutively from cold three times or from hot two times, being 
a multi-speed motor, submersible, smoke extraction motor, explosion-
proof motor, or a motor used in nuclear plants. (NEMA, No. 22 at p. 9-
10)
    Since the comments to the March 2022 Preliminary Analysis, the 
Electric Motors Working Group, which included NEEA and NEMA, 
recommended standards for medium electric motors rated over 500 hp and 
up to 750 hp at 60 Hz (Recommendation #2). The scope of medium electric 
motors includes those electric motors that currently meet

[[Page 36086]]

10 CFR 431.25(g), but expanded to include motor horsepower >500 hp but 
less than 750 hp. Accordingly, in this direct final rule, DOE is 
including the aforementioned scope of electric motors for consideration 
of new standards, based on the November 2022 Joint Recommendation. 
Specifically, in the November 2022 Joint Recommendation, the Electric 
Motors Working Group agreed on establishing efficiency levels 
corresponding to 60 Hz NEMA Premium levels for motors rated over 500 hp 
and up to 750 hp. The Electric Motors Working Group noted that 
extending the horsepower range of electric motors subject to energy 
conservation standards would be beneficial in aligning with EU 
Ecodesign Directive 2019/1781,\29\ which covers motors up to 1000 kW 
(1341 hp) at NEMA Premium levels, and for which manufacturers are 
making investments to comply.
---------------------------------------------------------------------------

    \29\ In terms of standardized horsepowers, this would correspond 
to 100-250 hp when applying the guidance from 10 CFR 431.25(k) (and 
new section 10 CFR 431.25(q)).
---------------------------------------------------------------------------

d. AC Induction Inverter-Only and Synchronous Electric Motors
    NEEA commented in support of expanding the scope of standards to 
synchronous and inverter-only motors to identify their energy use, 
potential for energy savings, price, and prevalence in the market 
today. NEEA recommended to include these motors in the same equipment 
classes are induction motors. In addition, NEEA recommended not to 
establish stricter efficiency requirements for these motors based on 
full-load efficiency because these motors allow energy savings at part 
load conditions. (NEEA, No. 33 at p. 3) NEMA stated that synchronous 
motors should have their own equipment class until analysis concludes 
they are not needed. NEMA suggested DOE make an ``other than regulatory 
action'' to save energy at the application and reference NEMA Standard 
10011-22 with regards to the power index. (NEMA, No. 22 at p. 8)
    CA IOUs supported including inverter-only and synchronous electric 
motors, but in the same equipment class as currently regulated 
induction motors. The CA IOUs recommended convening an Appliance 
Standards and Rulemaking Federal Advisory Committee (``ASRAC'') Working 
Group to finalize a test procedure and part-load metric for these 
motors before finalizing a test procedure and energy conservation 
standards rulemaking. (CA IOUs, No. 30 at p. 2) The Joint Advocates 
also commented supporting analyzing synchronous motors jointly with 
currently covered motors and recommended that DOE also analyze 
synchronous motors jointly with relevant SNEM and AO motors. The Joint 
Advocates commented that synchronous motors represent the most 
efficient motors on the market and highlighted the potential energy 
savings opportunities facilitated by market shifts to synchronous 
motors. In addition, the Joint Advocates commented that the potential 
life-cycle cost savings associated with synchronous motor substitutions 
should be directly accounted for when evaluating potential amended 
standards for electric motors. (Joint Advocates, No. 27 at p. 2) 
Similarly, the CA IOUs also provided the following supporting data to 
show that synchronous and inverter-only electric motor are designed, 
marketed, capable, and are being used to replace induction motors: (1) 
manufacturer reference tables that promote the direct replacement of 
currently regulated induction motors with synchronous and inverter-only 
motors (2) data showing synchronous motor performance exceeding a best-
in-class copper cage induction motor paired with a commercially 
available VFD (which the CA IOUs stated corroborates the PTSD savings 
estimates for synchronous electric motors), and (3) a summary of case 
studies docketed in response to the December 2021 test procedure NOPR. 
The CA IOUs commented that this supporting data demonstrates the use of 
synchronous and inverter-only motors in applications where National 
Electrical Manufacturers Association (NEMA) Design B motors are 
typically used. (CA IOUs, No. 30 at p. 2-3)
    AHAM and AHRI commented that if DOE includes inverter-only and 
synchronous motors in the scope of the ECS, it should first publish a 
preliminary analysis or NODA for these motors before proceeding to a 
NOPR. (AHAM, AHRI, No. 25 at p. 2) Lennox commented that DOE imposing 
increased costs on inverter-only motors by additional regulation may 
inhibit HVACR manufacturer use of these motors in innovative 
applications. Further, Lennox commented that DOE ceasing its exemptions 
for inverter-only motors, and thereby unduly-burdening manufacturers 
and forcing higher HVACR product costs on consumers with component-
level regulation, is particularly inappropriate during an ongoing 
pandemic where inflation has been at a 40-year high. (Lennox, No. 29 at 
p. 2-3) NEMA stated that by regulating synchronous motors, DOE is 
regulating both the required adjustable speed drive and the motor 
itself. It stated that this is unnecessary and poorly conceived, and 
that synchronous motors do not generally conform to the torque-speed 
curves required by NEMA and IEC Designs. (NEMA, No. 22 at p. 7) In 
addition, NEMA stated that inverter-only induction motors have 
characteristics warranting their own equipment class. It stated these 
motors are used exclusively for constant torque or constant HP 
applications and that certain applications have performance 
requirements like acceleration, deceleration, and overload capability 
for optimal control of a process. NEMA also stated that the performance 
requirements go beyond a single steady-state load condition that the 
test procedure uses, and that targeting a specific operating point's 
efficiency could restrict the other torque and thermal requirements of 
these motors. It also states that since the metric includes the losses 
of the inverter, these motors will have a lower maximum potential 
efficiency than typical induction motors. NEMA pointed to IEC 60034-30-
2 as an example for efficiency values that pertain specifically to 
variable-speed motors. (NEMA, No. 22 at p. 8-9)
    In this direct final rule, DOE is not separately regulating or 
establishing standards for inverter-only and synchronous electric 
motors. As a sensitivity analysis, DOE notes that it analyzed the 
impacts of potentially switching to these electric motors as a result 
of higher standards that will be finalized for MEMs 100-250 hp, NEMA 
Design A & B in this DFR; further discussion is provided in section 
IV.F of this document.
e. Submersible Electric Motors
    NEEA and HI recommended excluding submersible motors from the scope 
of the standards due to the lack of repeatable and representative test 
procedures. (NEEA, No. 33 at p. 4; HI, No. 31 at p. 1) CA IOUs 
commented that they do not support including submersible electric 
motors, and that DOE should collaborate with industry stakeholders in 
developing a test procedure for this motor category. (CA IOUs, No. 30 
at p. 2) Finally, NEMA stated that submersible electric motors should 
be removed from the rulemaking. (NEMA, No. 22 at p. 9) In the October 
2022 Final Rule, DOE did not finalize a test method for submersible 
electric motors. See 87 FR 63588, 63605. Moreover, the November 2022 
Joint Recommendation did not recommend energy conservation standards 
for submersible electric motors. Accordingly, submersible electric 
motors continue to be excluded

[[Page 36087]]

from the test procedure and are not included in this standards direct 
final rule.
2. Test Procedure and Metric
    DOE received comments regarding the test procedure and efficiency 
metric for electric motors subject to these energy conservation 
standards.
    NEMA requested an SNOPR for the test procedure and requested that 
the energy conservation standards rulemaking not move forward until the 
test procedure is finished. (NEMA, No. 22 at p. 2). DOE published the 
electric motor test procedure final rule on October 19, 2022. 87 FR 
63588.
    NEEA commented that, until DOE revises their test procedure and 
efficiency metric to account for part-load operating conditions, they 
do not recommend that DOE establish stricter efficiency requirements 
for synchronous electric motors and inverter-only electric motors. 
(NEEA, No. 33 at p. 4,5) CA IOUs commented similarly, strongly 
encouraging DOE to adopt the use of a metric that is representative of 
part-load performance for inverter-only and synchronous electric 
motors. CA IOUs provided data in support of the use of a part-load 
metric for inverter-only and synchronous electric motor applications to 
better reflect how these motors operate in the field. (CA IOUs, No. 30 
at p. 2) The Joint Advocates explained that inverter-only AC motors may 
not have a higher full-load efficiency than a comparable single-speed 
motor, but they may save energy by reducing motor speed and resulting 
input power at partial loads. Therefore, they commented that because 
the efficiency is evaluated only at full load, inverter-only motors 
would be at a disadvantage as the input losses associated with the 
inverter would be included in the efficiency calculation, but the 
potential energy savings resulting from its speed control capabilities 
would not be captured. (Joint Advocates, No. 27 at p. 3) NEMA commented 
that DOE should transition away from a single point efficiency metric 
and instead should develop a Power Index that incorporates the savings 
associated with power drive systems. NEMA commented that by applying a 
fixed speed efficiency testing at full load metric, the DOE misses the 
true opportunity for energy savings. NEMA explained that while at 
certain load points the motor losses might be a fraction (0.5 percent) 
lower, the application of a PDS would save 25-50 percent of power in 
the integral horsepower market and that these savings dwarf the 0.8 
percent reduction associated with EL2. (NEMA, No. 22 at p. 5)
    The currently prescribed test procedure in appendix B requires 
testing electric motors at full-load only. In the October 2022 Final 
Rule, DOE argued that variable-load applications primarily operate in a 
range where efficiency is relatively flat as a function of load, and 
therefore measuring the performance of these motors at full-load is 
representative of an average use cycle. See 87 FR 63588, 63620. 
Moreover, in this direct final rule, DOE is not proposing to separately 
regulate inverter-only and synchronous electric motors, but rather DOE 
is considering substitution effects to these motors for higher 
efficiency standards for MEMs.
    Lennox commented that there would be insufficient testing 
facilities to accommodate significantly expanded motor product classes, 
such as DOE expanding motor regulations into SNEMs, air-over, 
synchronous or inverter-only motors, specifically in view of the 
proposal to require third-party laboratory testing. (Lennox, No. 29 at 
p. 5-6) The Joint Industry Stakeholders commented that DOE proposed 
that electric motors certified to the new test procedure could only be 
certified by 3rd party test labs, instead of certified labs in 
accordance with longstanding recognized practice. They stated that 
special and definite-purpose motors potentially classified as SNEM 
could not possibly be tested, redesigned, retested, certified, and made 
available for OEM use by the few third-party small electric motor 
certification bodies recognized by DOE today. (Joint Industry 
Stakeholders, No. 23 at p. 9) As discussed in section IV.A.1, in this 
direct final rule, DOE is only amending standards for certain MEMs and 
establishing standards for AO-MEMs and certain air-over polyphase 
motors. Further, DOE understands the Joint Industry Stakeholders 
comments to be directed at the proposals from the test procedure 
rulemaking. Since this proposal, DOE published the October 2022 Final 
Rule, where DOE decided to not adopt its proposal to require the use of 
an independent testing program, and to instead continue permitting the 
use of accredited labs as currently allowed through National Institute 
of Standards and Technology (``NIST'') and National Voluntary 
Laboratory Accreditation Program (``NVLAP'') accreditation. See 87 FR 
62588, 63628-63629.
3. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
divides covered equipment into equipment classes by the type of energy 
used or by capacity or other performance-related features that justify 
differing standards. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6316(a); 42 U.S.C. 6295(q))
    Due to the number of electric motor characteristics (e.g., 
horsepower rating, pole configuration, and enclosure), in the March 
2022 Preliminary Analysis, DOE used two constructs to help develop 
appropriate energy conservation standards for electric motors: 
``equipment class'' and ``equipment class groups.'' An equipment class 
represents a unique combination of motor characteristics for which DOE 
is establishing a specific energy conservation standard. This includes 
permutations of electric motor design types (i.e., NEMA Design A & B 
(and IEC equivalents)), standard horsepower ratings (i.e., standard 
ratings from 1 to 500 horsepower), pole configurations (i.e., 2-, 4-, 
6-, or 8-pole), and enclosure types (i.e., open or enclosed). An 
equipment class group (``ECG'') is a collection of electric motors that 
share a common design trait. Equipment class groups include motors over 
a range of horsepower ratings, enclosure types, and pole 
configurations. Essentially, each equipment class group is a collection 
of a large number of equipment classes with the same design trait. As 
such, in the March 2022 Preliminary Analysis, DOE presented equipment 
class groups based on electric motor design, motor topology, horsepower 
rating, pole configuration and enclosure type. See Chapters 2.3.1 and 
3.2.2 of the March 2022 Preliminary Analysis TSD.
    Further, although DOE acknowledged that synchronous electric 
motors, inverter-only electric motors and induction electric motors 
>500 hp and <=750 hp would be within scope, DOE did not create separate 
equipment classes for these electric motors and did not evaluate 
separate energy conservation standards. (See Chapter 2.3.1.3 of the 
March 2022 Preliminary Analysis TSD) However, DOE did evaluate 
synchronous and inverter-only electric motors jointly with the 
induction motors because the motors did not have a performance-related 
feature that would justify a separate class. Id.
    In response to the equipment classes, DOE received a number of 
comments, which are presented below. Comments regarding SNEM and AO-
SNEM equipment classes will be addressed in a separate NOPR.

[[Page 36088]]

    Regarding air-over motors, NEMA agreed that an air-over rating 
warrants a separate equipment class because these motors are often 
built in a smaller frame size to take advantage of the outside airflow. 
NEMA stated that these motors built in a smaller frame size are limited 
in their efficiency capability because less active material can fit in 
them. (NEMA, No. 22 at p. 7)
    Since the comments to the March 2022 Preliminary Analysis TSD, the 
November 2022 Joint Recommendation specifically recommended that DOE 
establish two separate equipment classes for AO-MEMs, i.e., standard 
frame AO-MEMs and specialized frame AO-MEMs, because of their different 
applications. The November 2022 Joint Recommendation identified 
standard frame AO-MEMs as AO-MEMs sold in standard NEMA frame sizes 
aligned with NEMA MG1, Table 13.2 and Table 13.3. In addition, the 
November 2022 Joint Recommendation identified specialized, smaller 
frame AO-MEMs as a group of motors for which the rated output exceeds 
the horsepower-frame size limits in the aforementioned NEMA MG1 tables. 
The Electric Motors Working Group noted that these motors are used in 
specialty applications where the design is optimized to meet space 
constraints and take advantage of higher-than-normal airflows, such as 
in agriculture applications. They also stated that because of the 
higher airflows, the motor operates at greater power densities than 
standard-frame motors, which therefore results in the motor being 
loaded to a slightly less efficient operating point. Accordingly, they 
recommended these motors be separated into their own equipment class. 
See November 2022 Joint Recommendation at 4-5.
    Consistent with the November 2022 Joint Recommendation, in this 
direct final rule, DOE is separating the air-over equipment class into 
two equipment classes. As such, DOE is including ``AO-MEM (Standard 
frame size),'' and renaming ``Specialized Frame Size AO-MEMs'' (from 
the November 2022 Joint Recommendation) to ``AO-Polyphase (Specialized 
frame size)''. DOE notes that the frame size constraints from 
Recommendation 3.b. include frame sizes beyond those specifically in 
the AO-MEM scope; as discussed in section III.A, 10 CFR 431.25(g)(7) 
specifically states that a MEM built in a two-digit frame size would 
only be an enclosed 56 NEMA frame size (or IEC metric equivalent), 
whereas Recommendation 3.b. specifies maximum NEMA frame diameters at 
48 NEMA frame size. Accordingly, to provide a more representative 
naming convention for these motors, DOE is using ``AO-Polyphase 
(Specialized frame size)'' in this direct final rule. DOE notes that 
only the naming convention is changed compared to the November 2022 
Joint Recommendation; the scope of motors being represented continues 
to stay the same.
    In addition, to clarify what is meant by ``standard frame size'' 
and ``specialized frame size,'' DOE is adding definitions in the CFR 
consistent with the recommendations from the November 2022 Joint 
Recommendation. Specifically, in this direct final rule, DOE is adding 
a definition for ``standard frame size'' as ``aligned with the 
specifications in NEMA MG 1-2016 section 13.2 for open motors, and NEMA 
MG 1-2016 section 13.3 for enclosed motors.'' Further, DOE is adding a 
definition for ``specialized frame size'' as ``means an electric motor 
frame size for which the rated output power of the motor exceeds the 
motor frame size limits specified for standard frame size. Specialized 
frame sizes have maximum diameters corresponding to the following NEMA 
Frame Sizes:''

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Maximum NEMA frame diameter
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................         48  .........         48         48         48         48        140        140
1.5/1.1.........................................................         48         48         48         48        140        140        140        140
2/1.5...........................................................         48         48         48         48        140        140        180        180
3/2.2...........................................................        140         48        140        140        180        180        180        180
5/3.7...........................................................        140        140        140        140        180        180        210        210
7.5/5.5.........................................................        180        140        180        180        210        210        210        210
10/7.5..........................................................        180        180        180        180        210        210  .........  .........
15/11...........................................................        210        180        210        210  .........  .........  .........  .........
20/15...........................................................        210        210        210        210  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Regarding motors already covered at 10 CFR 431.25(g), NEMA stated 
that locked-rotor torque is not a typical design criterion used by end-
users and that this value is already captured in the NEMA Design A, B, 
C etc. classification. NEMA also stated that locked-rotor torque is not 
a reliable means for determining energy efficiency. (NEMA, No. 22 at p. 
6) DOE agrees with the statement and is therefore not incorporating 
locked-rotor torque as an equipment class identifier for MEMs currently 
covered at 10 CFR 431.25(g).
    Regarding synchronous and inverter-only electric motors, NEEA 
recommended that DOE not create separate equipment classes because 
these motors are used in the same applications as their induction motor 
counterparts. (NEEA, No. 33 at p. 3) The Joint Advocates stated that 
while they agree that inverter-only induction electric motors do not 
have a unique performance-related feature or utility that justifies a 
separate class from non-inverter and inverter-capable motors, they were 
concerned that inverter-only motors may be at an unfair disadvantage 
relative to single-speed induction motors when efficiencies are 
evaluated only at full load. (Joint Advocates, No. 28 at p. 3) As 
discussed in section IV.A.1.d of this document, DOE is not separately 
regulating inverter-only and synchronous electric motors in this direct 
final rule. Rather, DOE is only considering the substitution effects of 
switching to these electric motors if higher standards for MEMs are 
established. Otherwise, comments regarding the test procedure and 
metric are addressed in section IV.A.2 of this document.
    Therefore, Table IV-1 presents the ECGs considered in this direct 
final rule. The equipment class groups represent a total of 425 
equipment classes.

[[Page 36089]]



                                                      Table IV-1--Equipment Class Groups Considered
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Horsepower         Pole
                 ECG                   ECG motor design type          Motor topology             rating       configuration           Enclosure
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................  MEM 1-500 hp, NEMA      Polyphase....................           1-500      2, 4, 6, 8  Open.
                                       Design A & B.                                                                         Enclosed.
2...................................  MEM 501-750 hp, NEMA    Polyphase....................         501-750            2, 4  Open.
                                       Design A & B.                                                                         Enclosed.
3...................................  AO-MEM (Standard Frame  Polyphase....................           1-250      2, 4, 6, 8  Open.
                                       Size).                                                                                Enclosed.
4...................................  AO-Polyphase            Polyphase....................            1-20      2, 4, 6, 8  Open.
                                       (Specialized Frame                                                                    Enclosed.
                                       Size).
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Technology Options
    In the March 2022 Preliminary Analysis market and technology 
assessment, DOE identified several technology options that were 
initially determined to improve the efficiency of electric motors, as 
measured by the DOE test procedure. Table IV-2 presents the technology 
options considered in the March 2022 Preliminary Analysis.

    Table IV-2--March 2022 Preliminary Analysis Technology Options To
                        Increase Motor Efficiency
------------------------------------------------------------------------
    Type of loss to reduce                 Technology option
------------------------------------------------------------------------
Stator I2R Losses............  Increase cross-sectional area of copper
                                in stator slots
                               Decrease the length of coil extensions
Rotor I2R Losses.............  Increase cross-sectional area of end
                                rings.
                               Increase cross-sectional area of rotor
                                conductor bars.
                               Use a die-cast copper rotor cage.
Core Losses..................  Use electrical steel laminations with
                                lower losses. (watts/lb)
                               Use thinner steel laminations.
                               Increase stack length (i.e., add
                                electrical steel laminations).
Friction and Windage Losses..  Optimize bearing and lubrication
                                selection.
                               Improve cooling system design.
Stray-Load Losses............  Reduce skew on rotor cage.
                               Improve rotor bar insulation.
------------------------------------------------------------------------

    In response to the technology options, DOE received several 
comments.
    Regarding electrical steel, NEMA stated that newer grade steels are 
available but not in the high volumes required to replace today's 
production, and that many new grades are imported and subject to 
tariffs and delays. (NEMA, No. 22 at p. 10) NEMA argued that using 
lower-loss steel would not necessarily result in a more efficient 
electric motor. (NEMA, No. 22 at p. 10-13) Specifically, NEMA stated 
that processing of the steel during motor manufacturing could alter 
electrical steel performance. As an example, NEMA noted that thinner 
steels would deform more when punched than thicker grades. (NEMA, No. 
22 at p. 11) Additionally, NEMA stated that different steel grades 
could have different heat transfer rates, which may affect motor 
operating temperature and, thus, efficiency. (NEMA, No. 22 at p. 11) 
NEMA provided certain test data illustrating its claims regarding the 
potential for steel loss and motor efficiency to diverge. (NEMA, No. 22 
at p. 12) Relatedly, NEMA provided finite element model data 
illustrating magnetic flux density over the cross section of a 4-pole 
induction motor and noting the nonuniformity of the flux density values 
obtained, which NEMA observed could exceed the 1.5T-reference value 
commonly used by steel producers to rate their products. (NEMA, No. 22 
at p. 13-14)
    Losses generated in the electrical steel in the core of an 
induction motor can be significant and are classified as either 
hysteresis or eddy current losses. Hysteresis losses are caused by 
magnetic domains resisting reorientation to the alternating magnetic 
field. Eddy currents are physical currents that are induced in the 
steel laminations by the magnetic flux produced by the current in the 
windings. Both hysteresis and eddy current losses generate heat in the 
electrical steel.
    In evaluating techniques used to reduce steel losses, DOE 
considered two types of material: conventional non-oriented electrical 
steel and ``non-conventional'' steels, which may contain high 
proportions of boron or cobalt or lack metal grain structure 
altogether. Conventional steels are more commonly used in electric 
motors manufactured today. The three types of steel that DOE classifies 
as ``conventional,'' include cold-rolled magnetic laminations, fully 
processed non-oriented electrical steel, and semi-processed non-
oriented electrical steel. DOE does not model non-conventional 
electrical steels in its analysis of electric motors, including cobalt-
based and amorphous steels. For additional details on DOE's software 
modeling and analysis of electrical steel performance, see chapter 3 of 
the direct final rule TSD.
    DOE acknowledges the potential for increased non-oriented steel 
demand arising from a larger trend toward electrification of vehicles 
and equipment. However, DOE's research of publicly announced non-
oriented electrical steel manufacturing capacity expansions \30\ either 
currently underway

[[Page 36090]]

or planned for the near future suggests that steelmakers, both US-based 
and international, are anticipating increased demand and demonstrating 
willingness to increase supply accordingly.
---------------------------------------------------------------------------

    \30\ E.g., (1) US-based Cleveland-Cliffs doubles NOES capacity 
by 2023, adding 70 kilotons of annual capacity in response to 
customer demand.
    (2) US-based Big River Steel (a subsidiary of United States 
Steel Corporation) announced plans to increase annual NOES 
production capacity by 200 kilotons by September 2023.
    (3) JFE Steel reports plans to double NOES production capacity 
by the first half of the 2024 fiscal year, which begins in April 
2024.
    (4) Baoshan Iron & Steel (``Baosteel'', a subsidiary of China 
Baowu Steel Group) is reported to be expanding NOES production 
capacity by 500 kilotons by March 2023.
    (5) POSCO announced groundbreaking for a NOES production 
facility which will approximately quadruple high-efficiency NOES 
capacity to 400 kilotons by 2025.
---------------------------------------------------------------------------

    Regarding tariffs on imported steels, DOE presented the costs for 
various steel grades to manufacturers during interviews and updated the 
costs based on input received. The input DOE received about steel 
prices incorporated changes in costs due to importing delays, tariffs, 
and global supply. Because the steel tariff applies to articles 
imported into the United States, it does not directly affect prices 
paid for steel in other nations, including those which manufacture 
motors sold in the US market.
    Regarding the uncertain ability of lower-loss electrical steel to 
increase motor efficiency, electric motor manufacturers stated during 
confidential interviews that lower-loss steel would generally increase 
motor efficiency, even when considering the potential increase in steel 
loss that can arise during manufacturing. Accordingly, DOE considers 
lower-loss electrical steel to be an available option for improving 
motor efficiency in general, even if not in all possible motor designs. 
Electric motor manufacturers during confidential interviews did not 
report having constructed or tested electric motor designs using what 
appear to be the lowest-loss electrical steel grades available in the 
market. In cases, manufacturers reported unfamiliarity with the grades. 
As a result, DOE is not able to assess whether testing performed by 
manufacturers, including the example presented by NEMA (NEMA, No. 22 at 
p. 12), establishes a limitation on the degree of electric motor 
efficiency improvement possible through use of increasingly lower-loss 
electric steel.
    Regarding the flux density map from finite element modeling 
provided by NEMA, it is reasonable to expect variation in flux density 
levels throughout both the motor laminations and over time, as NEMA 
observes. DOE's analysis does not assume a constant flux density would 
exist throughout an electric motor. Those variations would cause 
instantaneous, localized steel loss levels to vary accordingly, and 
depart from the manufacturer-rated values at a given, single reference 
value (1.5T, commonly for non-oriented electric steels). All grades of 
non-oriented electrical steel that DOE has identified share the 
property of increasing loss with increasing flux density. Thus, the 
flux density variation cited by NEMA would ostensibly exist for 
electrical steels generally; it would not be unique to lower-loss steel 
grades. Additionally, when evaluating use of a higher steel grade, 
manufacturers would likely optimize the design for the grade in 
question for any design likely to be built in significant volume. For 
DOE's modeling, DOE considered a conservative approach to represent 
performance of these lower-loss electrical steels, which is discussed 
further in section IV.C.1.c of this document.
    Some production requirements associated with using lower-loss steel 
grades are understood and able to be accounted for with a cost. For 
example, increasing the silicon content of an alloy may increase 
resistivity (and thus, potentially reduce loss) but increase the 
hardness of the grade as a side effect. The comparatively harder steel 
may wear punching dies more rapidly, which would be likely to worsen 
the quality of the punched steel laminations more quickly if tooling 
were not replaced correspondingly more often or substituted with a 
harder tooling material. More frequent tooling replacement and harder 
tooling would be likely to add cost to the electric motor manufacturing 
process, which DOE accounts for in the manufacturer impact analysis.
    Separately, NEMA also commented on another technology option that 
DOE considered. Specifically, NEMA stated that the benefits of reducing 
the length of the coil extensions are not clear. It noted that to 
reduce the I\2\R loss, the mean length of each turn in the end coil 
region would have to be reduced during the coil winding stage but doing 
so would increase the difficulty of winding insertion due to increased 
crowding with adjacent coils. However, NEMA stated that if such a 
reduction in mean length was feasible, it is likely to have already 
been exploited to their full extent because it would reduce the amount 
of copper in the winding, and would also be a cost-saving measure. 
(NEMA, No. 22 at p. 3) DOE agrees that decreasing the length of the 
coil extensions in the stator slots of an electric motor reduces the 
resistive I\2\R losses, and reduces the material cost of the electric 
motor because less copper is being used. DOE also agrees that there may 
be limited efficiency gains, if any, for most electric motors using 
this technology option. DOE understands that electric motors have been 
produced for many decades and that many manufacturers have improved 
their production techniques to the point where certain design 
parameters may already be fully optimized. However, DOE cannot conclude 
that this design parameter is fully optimized for all electric motors, 
and therefore maintains that this is a design parameter that affects 
efficiency and should be considered when designing an electric motor 
because it is a technology option that continues to be technologically 
feasible. DOE has previously made similar conclusions in the May 2014 
Final Rule. See 79 FR 30934, 30960.
    The CA IOUs strongly suggested that DOE update the maximum 
technology feasible for electric motors to include, at a minimum, the 
commercially available technology with the highest efficiency. The CA 
IOUs provided data for commercially available electric motors, as well 
as built and tested prototypes, that exceed the max-tech performance 
assumption in the March 2022 Preliminary Analysis. (CA IOUs, No. 30 at 
p. 3) For the analysis, DOE uses the maximum efficiency technology 
option to represent the design option which yields the highest energy 
efficiency that is technologically feasible within the scope of MEMs 
and air-over electric motors, which are all induction motors. In their 
comment, the CA IOU's present high efficiency motors that are all 
outside the scope of this direct final rule, such as permanent magnet 
synchronous motors, and electronically commutated motors. As such, DOE 
is not amending the maximum technology design option in this direct 
final rule.
    Therefore, DOE maintains the same technology options from the March 
2022 Preliminary Analysis in this direct final rule.

B. Screening Analysis

    DOE uses the following five screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (8) Technological feasibility. Technologies that are not 
incorporated in commercial products or in commercially viable, existing 
prototypes will not be considered further.
    (9) Practicability to manufacture, install, and service. If it is 
determined that mass production of a technology in commercial products 
and reliable installation and servicing of the technology could not be 
achieved on the scale necessary to serve the relevant market at the 
time of the projected compliance date of the standard, then that 
technology will not be considered further.

[[Page 36091]]

    (10) Impacts on product utility. If a technology is determined to 
have a significant adverse impact on the utility of the product to 
subgroups of consumers, or result in the unavailability of any covered 
product type with performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as products generally available in the United States at the time, 
it will not be considered further.
    (11) Safety of technologies. If it is determined that a technology 
would have significant adverse impacts on health or safety, it will not 
be considered further.
    (12) Unique-pathway proprietary technologies. If a technology has 
proprietary protection and represents a unique pathway to achieving a 
given efficiency level, it will not be considered further, due to the 
potential for monopolistic concerns.
    10 CFR 431.4; 10 CFR part 430, subpart C, appendix A, sections 
6(c)(3) and 7(b).
    In summary, if DOE determines that a technology, or a combination 
of technologies, fails to meet one or more of the listed five criteria, 
it will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed in 
the following sections.
    As part of the May 2022 Preliminary Analysis, DOE requested 
feedback, in part, on its screening analysis based on the five criteria 
described in this section. 87 FR 11650. 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.
1. Screened-Out Technologies
    In the March 2022 Prelim TSD, DOE screened out amorphous metal 
laminations and plastic bonded iron powder (``PBIP'') from the 
analysis. DOE requested further data on the feasibility of amorphous 
steel being used in electric motors at scale. See chapter 3 of the 
March 2022 Prelim TSD. In response, DOE received comments regarding the 
technologies excluded from this engineering analysis.
    Metglas commented that they strongly disagree with the decision to 
exclude electric motors that use amorphous steel. Metglas stated that 
Hitachi Industrial Equipment Systems Co., Ltd. (Hitachi Sanki Systems) 
has commercially produced higher efficiency air compressors (IE5 class) 
with an amorphous metal-based motor since 2017. Metglas noted that 
Hitachi Ltd. is using novel motor topologies to optimize the use of 
amorphous foil in the fabrication process. Metglas claimed that other 
motor producers are actively designing amorphous metal-based motors, 
and while amorphous metal-based motors are certainly not predominant 
today, they do represent where the maximum technological feasibility 
efficiency levels can be set for electric motors. Metglas claimed the 
losses when using an amorphous metal stator have been shown to drop by 
more than 75 percent compared to a conventional non-oriented electrical 
steel, and that this allows for higher operational frequencies which 
reduces the overall motor size for the same output power. Furthermore, 
Metglas claimed higher efficiencies in other electrical appliances can 
be achieved with more efficient amorphous-based motors. (Metglas, No. 
24 at p. 1) Metglas requested that DOE consider the maximum technical 
feasibility efficiency be based on the performance of amorphous metal 
containing motors, but understands that the DOE cannot set efficiency 
levels based on niche materials that have not been widely demonstrated 
on a commercial scale. (Metglas, No. 24 at p. 2) On the other hand, 
NEMA commented that amorphous steel is not a direct replacement for the 
current electrical steel that is in motors, and stated that this option 
is unproven since NEMA is not aware of any successful prototype motors 
using this steel. (NEMA, No. 22 at p. 14)
    DOE reviewed the information submitted by Metglas and notes that 
the motors provided appear to all require an inverter to drive and are 
thus not in the scope of this direct final rule. DOE understands the 
potential benefits of using amorphous steel, particularly the reduction 
in core losses during operation, but was unable to identify any 
electric motors within the scope of this rule using amorphous steel. 
Additionally, as stated in the March 2022 Preliminary TSD, amorphous 
steel is a very brittle material which makes it difficult to punch into 
motor laminations. Amorphous steel may also be less structurally stiff, 
requiring additional mechanical support to implement. Finally, 
amorphous steel may entail greater acoustic noise levels, which may be 
unsuitable for some applications or require design compromises to 
mitigate. As such, with it not being definitive that amorphous steel is 
able to meet all the screening criteria, DOE is continuing to screen 
out amorphous metal in this direct final rule on the basis of 
technological feasibility.
    Accordingly, consistent with the March 2022 Preliminary Analysis, 
DOE is continuing to screen out amorphous metal laminations and PBIP in 
this direct final rule.
2. Remaining Technologies
    In the March 2022 Prelim TSD, DOE did not screen out the following 
technology options: Increasing cross-sectional area of copper in stator 
slots; decreasing the length of coil extensions; increasing cross-
sectional area of end rings; increasing cross-sectional area of rotor 
conductor bars; using a die-cast copper rotor cage; using electrical 
steel laminations with lower losses (watts/lb); using thinner steel 
laminations; increasing stack length; optimizing bearing and 
lubrication selection; improving cooling system design; reducing skew 
on rotor cage; and improving rotor bar insulation. See chapter 3 of the 
March 2022 Prelim TSD.
    Regarding copper die-cast rotors, NEMA commented in opposition of 
DOE's decision to not screen out copper die-cast rotors. NEMA stated 
that only one manufacturer offers NEMA Design A, B, or C motors with 
copper rotor cages, and that the largest horsepower offered of these 
motors was 20 HP. NEMA also stated that they are not practicable to 
manufacture because of added equipment requirements, higher energy 
costs to melt the copper, die lifespan that is 10 percent that of dies 
used for aluminum, and a casting piston life of only 500 rotors. NEMA 
also stated that the increased locked-rotor current due to the copper 
rotor would push certain motors out of NEMA Design B requirements and 
reduce consumer utility. NEMA finally stated that the higher melting 
point of copper (1084 deg C) vs. aluminum (660 deg C) poses health and 
safety issues for plant workers, and that DOE failed to rebut this 
claim with evidence in 2012. (NEMA, No. 22 at p. 4-5)
    Aluminum is the most common material used today to create die-cast 
rotor bars for electric motors. Some manufacturers that focus on 
producing high-efficiency designs have started to offer electric motors 
with die-cast rotor bars made of copper. Copper offers better 
performance than aluminum because it has better electrical conductivity 
(i.e., a lower electrical resistance). However, because copper also has 
a higher melting point than aluminum, the casting process becomes more 
difficult and is likely to increase both production time and cost.

[[Page 36092]]

    DOE recognizes that assessing the technological feasibility of 
copper die-cast rotors in high-horsepower motors (above 30 HP) is made 
more complex by the fact that manufacturers do not offer them 
commercially. That could be for a variety of reasons, among them: (1) 
large copper die-cast rotors are physically impossible to construct; 
(2) they are possible to construct, but impossible to construct to 
required specifications, or (3) they are possible to construct to 
required specifications, but would require large capital investment to 
do so and would be so costly that few (if any) consumers would choose 
them. As stated in the March 2022 Preliminary TSD, electric motors 
incorporating copper die-cast rotor cages are already commercially 
available by large manufacturers for motors up to 30 horsepower.\31\ As 
such, DOE does not have enough evidence to screen out copper die-cast 
rotors on the basis of practicability to manufacture, install, and 
service, or adverse impacts to equipment utility or availability. 
Additionally, DOE is hesitant to screen out copper die-cast rotors on 
the basis of technological feasibility because there is nothing to 
suggest the advantages associated with copper rotors would not occur 
beyond a certain size. Therefore, DOE's research into commercially 
available electric motors with copper die-cast rotors does not conclude 
that copper die-cast rotors are either: (1) physically impossible to 
construct, or (2) possible to construct, but impossible to construct to 
required specifications.
---------------------------------------------------------------------------

    \31\ DOE is aware of two large manufacturers--Siemens and SEW-
Eurodrive--that offer die-cast copper rotor motors up to 30-
horsepower.
---------------------------------------------------------------------------

    DOE considers a higher factory overhead markup (which includes all 
the indirect costs associated with production, indirect materials and 
energy use, taxes, and insurance) for copper die-cast rotors in the 
engineering analysis. See Chapter 5 of the direct final rule TSD. In 
addition, DOE understands that large capital investments may be needed 
for copper die-cast rotors, which is addressed as additional conversion 
costs in the manufacturer impact analysis (see section IV.J.4).
    Regarding the higher melting point of copper versus aluminum (1085 
degrees Celsius versus 660 degrees Celsius), although the increased 
temperature could theoretically affect the health or safety of plant 
workers, DOE does not believe that this potential impact is 
sufficiently adverse to screen out copper as a die cast material for 
rotor conductors. The process for die casting copper rotors involves 
risks similar to those of die casting aluminum. DOE believes that 
manufacturers who die-cast metal at 660 Celsius or 1085 Celsius (the 
respective temperatures required for aluminum and copper) would need to 
maintain strict safety protocols in both cases. DOE understands that 
many plants already work with molten aluminum die casting processes and 
believes that similar processes could be adopted for copper. Since DOE 
has not received any supporting data about the increased risks 
associated with copper die-casting versus aluminum die-casting, DOE is 
not screening out copper die-cast rotors from this direct final rule.
    Otherwise, through a review of each technology, DOE concludes that 
all of the other identified technologies listed in section IV.A.4 met 
all five screening criteria to be examined further as design options in 
DOE's direct final rule analysis. The design options screened-in are 
consistent with the design options from the March 2022 Preliminary 
Analysis. DOE determined that these technology options are 
technologically feasible because they are being used or have previously 
been used in commercially-available products or working prototypes. DOE 
also finds that all of the remaining technology options meet the other 
screening criteria (i.e., practicable to manufacture, install, and 
service and do not result in adverse impacts on consumer utility, 
product availability, health, or safety). For additional details, see 
chapter 4 of the direct final rule TSD.

C. Engineering Analysis

    The purpose of the engineering analysis is to establish the 
relationship between the efficiency and cost of electric motors. There 
are two elements to consider in the engineering analysis; the selection 
of efficiency levels to analyze (i.e., the ``efficiency analysis'') and 
the determination of product cost at each efficiency level (i.e., the 
``cost analysis''). In determining the performance of higher-efficiency 
equipment, DOE considers technologies and design option combinations 
not eliminated by the screening analysis. For each equipment class, DOE 
estimates the baseline cost, as well as the incremental cost for the 
equipment at efficiency levels above the baseline. The output of the 
engineering analysis is a set of cost-efficiency ``curves'' that are 
used in downstream analyses (i.e., the LCC and PBP analyses and the 
NIA).
1. Efficiency Analysis
    DOE typically uses one of two approaches to develop energy 
efficiency levels for the engineering analysis: (1) relying on observed 
efficiency levels in the market (i.e., the efficiency-level approach), 
or (2) determining the incremental efficiency improvements associated 
with incorporating specific design options to a baseline model (i.e., 
the design-option approach). Using the efficiency-level approach, the 
efficiency levels established for the analysis are determined based on 
the market distribution of existing products (in other words, based on 
the range of efficiencies and efficiency level ``clusters'' that 
already exist on the market). Using the design option approach, the 
efficiency levels established for the analysis are determined through 
detailed engineering calculations and/or computer simulations of the 
efficiency improvements from implementing specific design options that 
have been identified in the technology assessment. DOE may also rely on 
a combination of these two approaches. For example, the efficiency-
level approach (based on actual products on the market) may be extended 
using the design option approach to interpolate to define ``gap fill'' 
levels (to bridge large gaps between other identified efficiency 
levels) and/or to extrapolate to the max-tech level (particularly in 
cases where the max-tech level exceeds the maximum efficiency level 
currently available on the market).
    In this rulemaking, DOE applied a combination of the efficiency-
level approach and the design-option approach to establish efficiency 
levels to analyze. The design-option approach was used to characterize 
efficiency levels that are not available on the market but appear to be 
market solutions for those higher efficiency levels if sufficient 
demand existed. For the efficiency levels available on the market, 
sufficient performance data was publicly available to characterize 
these levels.
a. Representative Units Analyzed
    Due to the large number of equipment classes, DOE did not directly 
analyze all equipment classes of electric motors considered in this 
direct final rule. Instead, DOE selected representative units based on 
two factors: (1) the quantity of motor models available within an 
equipment class and (2) the

[[Page 36093]]

ability to scale to other equipment classes.
    Table IV-3 presents the representative units DOE analyzed in the 
March 2022 Preliminary Analysis. DOE only analyzed NEMA Design B 
representative units.

                    Table IV-3--March 2022 Preliminary Analysis Representative Units Analyzed
----------------------------------------------------------------------------------------------------------------
                                             Representative unit
              ECG/Design type               horsepower (4 poles,   Represented horsepower range (all poles, all
                                                  enclosed)                         enclosures)
----------------------------------------------------------------------------------------------------------------
MEM, NEMA Design B........................                     5  1 <= hp <=5.
                                                              30  5 < hp <= 50.
                                                              75  51 < hp <= 100.
                                                            *150  101 < hp <= 200.
                                                            *250  201 < hp <= 500.
AO-MEM, NEMA Design B.....................                     5  1 < hp <= 20.
                                                              30  21 < hp <= 50.
                                                              75  51 < hp <= 500.
----------------------------------------------------------------------------------------------------------------
* While these representative units were not directly analyzed in the engineering analysis, they were added to
  represent consumers of larger sized electric motors for the LCC and NIA analyses.

    DOE received a comment regarding motor testing at higher efficiency 
levels. NEMA stated that DOE should test a greater number of 
representative units across all design types to better inform scaling 
assumptions, and that for higher efficiency levels, testing is more 
important than scaling. In addition, NEMA commented that DOE places too 
much reliance on untested models, scaling and interpolation. NEMA 
commented that the only appropriate way to evaluate non-represented 
equipment classes is to study them through testing (including prototype 
construction for testing, as appropriate). (NEMA, No. 22 at p. 15, 24)
    DOE recognizes that scaling motor efficiencies is a complicated 
proposition that has the potential to result in efficiency standards 
that are not evenly stringent across all equipment classes. However, 
given the extremely high volume of horsepower rating, pole 
configuration, and enclosure combinations, DOE cannot feasibly analyze 
all of these variants directly, hence, the need for scaling.
    For the analysis, DOE obtained electric motor performance data from 
a catalog reflecting electric motors currently available in the U.S. 
market and views this database as representative of the full range of 
motors that can be purchased. Specifically, DOE created a database 
which contains information regarding the characteristics of the motor 
(motor performance values like horsepower output, pole configuration, 
NEMA Design letter, etc.), and the full-load efficiency (``2022 Motor 
Database''). DOE collected performance data from online catalogs for 
four major motor manufacturers in 2022: ABB (which includes the 
manufacturer formerly known as Baldor Electric Company), Nidec Motor 
Corporation (which includes the US Motors brand), Regal-Beloit 
Corporation (which includes the Marathon and Leeson brands), and WEG 
Electric Motors Corporation.\32\ Based on market information from the 
Low-Voltage Motors World Market Report,\33\ DOE estimates that the four 
major motor manufacturers noted above comprise the majority of the U.S. 
motors market and are consistent with the motor brands considered in 
this direct final rule. In addition, DOE tested multiple motors and 
obtained test reports detailing the efficiency of these motors at their 
rated load, along with many other measurements and technical 
specifications, to inform the scaling relationships and efficiency 
analysis described in this direct final rule.
---------------------------------------------------------------------------

    \32\ ABB (Baldor-Reliance): Online Manufacturer Catalog, 
accessed March 22, 2022. Available at https://www.baldor.com/catalog#category=2; Nidec: Online Manufacturer Catalog, accessed 
April 8, 2022. Available at ecatalog.motorboss.com/Catalog/Motors/ALL; Regal (Marathon and Leeson): Online Manufacturer Catalog, 
accessed May 25, 2022. Available at https://www.regalbeloit.com/Products/Faceted-Search?category=Motors&brand=Leeson,Marathon%20Motors; WEG: Online 
Manufacturer Catalog, accessed March 22, 2022. Available at http://catalog.wegelectric.com/.
    \33\ Based on the OMDIA, Low-Voltage Motors Intelligence 
Service, Annual 2020 Analysis(OMDIA Report November 2020) Table 3: 
Market Share Estimates for Low-voltage Motors: Americas; Suppliers 
`share of the Market:2019.
---------------------------------------------------------------------------

    Using the 2022 Motor Database, and along with testing and modeling, 
DOE affirms that the scaling methodologies employed are accurate for 
the purposes of determining energy conservation standards, and 
therefore maintains the current scaling methodology. Further, the 
relationships used to scale between efficiency and a combination of 
horsepower, pole count, and enclosure are consistent with previously 
used and validated methods of scaling, which are based on Table 12-12 
of NEMA MG 1-2016. For more detailed discussion on scaling, see section 
IV.C.4. Consequently, DOE has concluded that scaling is necessary and 
suitable for establishing appropriate efficiency levels for new or 
amended energy conservation standards for electric motors.
    For this direct final rule, DOE updated several representative 
units based on the November 2022 Joint Recommendation. Overall, DOE 
updated the representative units to be based on both NEMA Design A and 
B instead of only NEMA Design B. The November 2022 Joint Recommendation 
specifically noted that to achieve IE4 levels, manufacturers would 
likely shift from NEMA Design B to NEMA Design A motors.
    DOE notes that the one main difference between NEMA Design A and 
Design B is that Design A does not have a locked-rotor current limit. 
Locked-rotor current is the steady-state current applied to a motor, at 
its rated voltage, when the rotor is stationary. It is a critical 
design characteristic of induction motors because higher locked-rotor 
currents can negatively impact (or even damage) the starting circuit if 
the starting circuit is not equipped to handle the locked-rotor 
current. One of the ways to improve motor efficiency is to use lower 
core-loss electrical steel, but a common tradeoff of these low core-
loss steels is a lower permeability \34\ that requires the motor to 
have a higher locked-rotor current to meet the torque requirements of 
NEMA Design A and B. DOE analyzed a sample of over 3,000 NEMA Design A 
and B motors currently available on the market and found that

[[Page 36094]]

over 50 percent of them are already at or above 90 percent of the NEMA 
Design B locked-rotor current limit. DOE notes that higher energy 
conservation standards could incentivize manufacturers to offer NEMA 
Design A motors in place of their Design B motors.
---------------------------------------------------------------------------

    \34\ The magnetic permeability of a material determines the 
magnitude of magnetic flux density in the material after a magnetic 
field is applied to it, and the magnetic flux density is 
proportional to the amount of torque generated in an electric motor.
---------------------------------------------------------------------------

    While it appears to be possible to design NEMA Design B motors that 
are at higher efficiency levels than current standards, these NEMA 
Design B motors would require some combination of longer stack lengths, 
wider core laminations, and/or higher slot fills, all of which could 
require additional equipment and retooling by the manufacturer. Because 
NEMA Design A and B motors are in the same equipment class, in the case 
of higher standards, manufacturers could opt to shift their offerings 
to NEMA Design A motors that do not require nearly the same magnitude 
of investment by the manufacturer. This shift to NEMA Design A 
offerings could result in additional installation costs, discussed in 
section IV.F.2. DOE's review of current motor catalogs suggests 
multiple manufacturers representing their IE4 motors as NEMA Design 
A.\35\ As such, in this direct final rule, the representative unit 
designs include both NEMA Design A and Design B.
---------------------------------------------------------------------------

    \35\ ABB Product Brochure: NEMA Super-E Premium efficient 
motors. (Last accessed December 2, 2022.) https://library.e.abb.com/public/e35d57ce4df3160285257d6d00720f51/9AKK106369_SuperE_1014_WEB.pdf.
    WEG Super Premium Efficiency Catalog: https://www.weg.net/catalog/weg/US/en/c/MT_1PHASE_LV_TEFC_W22_STANDARD/list?h=3a6a6e81.
---------------------------------------------------------------------------

    In addition, DOE updated the horsepowers analyzed, and the range of 
horsepowers each representative unit represents. First, DOE updated the 
MEM Design A/B 250 hp representative unit to 350 hp to better represent 
the horsepower range between 250 hp to 500 hp, which the Electric 
Motors Working Group recommended to remain at Premium Level/IE3 level 
(see Recommendation #1 in section II.B.3). Second, DOE added a MEM 
Design A/B representative unit at 600 hp to represent and analyze 
electric motors rated over 500 hp and up to 750 hp (see Recommendation 
#2 in section II.B.3). Third, DOE split the air-over equipment class 
into AO-MEM (Standard Frame Size) and AO-Polyphase (Specialized Frame 
Size), as discussed in section IV.A.3, and added the following 
representative units: (1) a representative unit to represent the 
horsepower range between 100 hp to 250 hp for AO-MEM (Standard Frame 
Size), which the Electric Motors Working Group recommended at Super 
Premium/IE4 level; and (2) a representative unit to represent the 
horsepower range between 1 hp to 20 hp for AO-Polyphase (Specialized 
Frame Size), which the Electric Motors Working Group recommended at 
fire pump level (see Recommendation #3 in section II.B.3). DOE notes 
that the 250 hp limit for AO-MEM (Standard Frame Size) corresponds to 
the horsepower output range observed in the 2022 Motor Database.
    Otherwise, similar to the March 2022 Preliminary Analysis, DOE 
chose the horsepower ratings that constitute a high volume of motor 
models and approximate the middle of the range of covered horsepower 
ratings so that DOE could develop a reasonable scaling methodology. DOE 
did not vary the pole configuration of the representative classes it 
analyzed because analyzing the same pole configuration provided the 
strongest relationship upon which to base its scaling. Keeping as many 
design characteristics constant as possible enabled DOE to more 
accurately identify how design changes affect efficiency across 
horsepower ratings. For each motor topology, DOE directly analyzed the 
most common pole-configuration, which was 4-pole.
    Table IV-4 presents the representative units analyzed, and the 
covered horsepower ranges for each of the representative units.

                                    Table IV-4--Representative Units Analyzed
----------------------------------------------------------------------------------------------------------------
                                                      Representative unit
               ECG                  Representative   horsepower (4 poles,    Represented horsepower range (all
                                       unit (RU)           enclosed)               poles, all enclosures)
----------------------------------------------------------------------------------------------------------------
MEM 1-500 hp, NEMA Design A & B..                 1                     5  1 <= hp <= 5.
                                                  2                    30  5 < hp <= 20.
                                                                           20 < hp <= 50.
                                                  3                    75  50 < hp < 100.
                                                  4                   150  100 <= hp <= 250.
                                                  5                   350  250 < hp <= 500.
MEM 501-750 hp, NEMA Design A & B                 6                   600  500 < hp <= 750.
AO-MEM (Standard Frame Size).....                 7                     5  1 <= hp <= 20.
                                                  8                    30  20 < hp <= 50.
                                                  9                    75  50 < hp < 100.
                                                 10                   150  100 <= hp <= 250.
AO-Polyphase (Specialized Frame                  11                     5  1 <= hp <= 20.
 Size).
----------------------------------------------------------------------------------------------------------------

b. Baseline Efficiency
    For each equipment class, DOE generally selects a baseline model as 
a reference point for each class, and measures changes resulting from 
potential energy conservation standards against the baseline. The 
baseline model in each equipment class represents the characteristics 
of an equipment typical of that class (e.g., capacity, physical size). 
Generally, a baseline model is one that just meets current energy 
conservation standards, or, if no standards are in place, the baseline 
is typically the most common or least efficient unit on the market.
    In the March 2022 Preliminary Analysis, for current scope motors in 
10 CFR 431.25, DOE used the current energy conservation standards in 
Table 5 of 10 CFR 431.25 as the baseline. For AO-MEMs, DOE used a 
baseline representing the lowest efficiencies available in the market 
based on catalog listings. See Chapter 5 of the March 2022 Prelim TSD. 
In response to the March 2022 Preliminary Analysis, DOE received 
comments on how the baseline efficiencies were established.
    The Joint Advocates encouraged DOE to both clarify and refine the 
baseline efficiency levels for air-over electric motors. (Joint 
Advocates, No. 27 at pp. 2-3) Specifically, they commented that while 
the March 2022 Preliminary Analysis stated that the baseline

[[Page 36095]]

efficiency levels of the currently covered motors were the same as the 
air-over versions (See: EERE-2020-BT-STD-0007-0010, p. 5-7), Table 
5.3.6 of the March 2022 Prelim TSD showed the baseline efficiency 
levels for the currently covered motors as EL1 for the air-over 
variants. Further, the Joint Advocates commented that the assumption 
that baseline air-over motors are less efficient than the baseline in 
the current standard for covered motors is supported by the 2015 
Appliance Standards and Rulemaking Federal Advisory Committee 
(``ASRAC'') term sheet for fans and blowers,\36\ which included default 
air-over motor efficiencies less than those shown in the March 2022 
Preliminary Analysis. The Joint Advocates commented that they suspected 
that the lack of coverage for air-over motors means that there are 
available models that may be considerably less efficient than 
equivalent non-air-over motors. In addition, the Joint Advocates 
commented that the appropriate baseline efficiency levels for AO motors 
will depend heavily on the final AO motor test procedure. (Joint 
Advocates, No. 27 at pp. 2-3)
---------------------------------------------------------------------------

    \36\ See EERE-2013-BT-STD-0006-0179, p. 18, www.regulations.gov/document/EERE-2013-BT-STD-0006-0179.
---------------------------------------------------------------------------

    DOE notes that the Joint Advocates' statement that the baseline 
efficiency levels of currently covered motors are the same as the air-
over versions in the March 2022 Prelim TSD is incorrect. The March 2022 
Prelim TSD stated that, since AO motors are designed largely the same 
as non-AO motors, DOE used the same higher efficiency levels for AO MEM 
motors, and did not state that baseline efficiency levels of currently 
covered motors are the same as the air-over versions. This is shown in 
Table 5.3.6 and Table ES3.3.3 of the March 2022 Preliminary TSD, which 
also present the baseline efficiency for air-over motors as lower than 
the baseline for currently regulated motors.
    Otherwise, DOE acknowledges that because air-over electric motors 
are not currently regulated, air-over electric motors will likely be 
less efficient than currently regulated non-air-over electric motors 
available on the market. In order to understand the efficiency of air-
over electric motors currently available, DOE reviewed the 2022 Motor 
Database. With that, DOE confirmed that air-over electric motors were 
less efficient than currently regulated non-air-over electric motors 
and also noted that AO-MEMs were only available up to 250 hp. However, 
DOE did not identify baselines as low as what was considered in the 
2015 ASRAC term sheet for fans and blowers; because DOE had current 
market data through the 2022 Motor Database, DOE decided to consider 
more up-to-date baseline efficiencies. As such, DOE maintained the 
engineering analysis for AO-MEMs from the March 2022 Preliminary 
Analysis.
    The Joint Advocates commented that DOE's specification of a single 
target test temperature of 75 [deg]C for all AO motors may not be 
representative. For example, the Joint Advocates commented that it is 
plausible that one or more of the AO motors that DOE tested may run at 
higher temperatures in the field, which would result in lower real-
world efficiency. As such, they noted that artificially cooling a 
hotter running motor beyond realistic operating temperatures could 
result in AO motor efficiency ratings that are not representative both 
in comparison to other AO motors and the equivalent non-AO motors. 
Therefore, the Joint Advocates recommend that DOE analyze appropriate 
baseline efficiency levels for AO motors. (Joint Advocates, No. 27 at 
p. 3) In the October 2022 Final Rule, DOE addressed the single-target 
temperature concerns by specifying that the requirement to use a single 
target temperature of 75 [deg]C only applies to air-over motors that do 
not have a specified temperature rise. As such, if the temperature rise 
is specified on the motor, such temperature rise will be used to 
determine the target temperature. 87 FR 63588, 63614.
    Accordingly, in this direct final rule, DOE included the following 
baseline efficiencies, which are summarized below in Table IV-5:
    For ECG 1, DOE used the current energy conservations standards in 
Table 5 of 10 CFR 431.25 to establish the baseline efficiency for each 
representative unit analyzed. The standards for this ECG align with 
Table 12-12 of NEMA MG 1-2016 ``Full-Load Efficiencies for 60 Hz 
Premium Efficiency . . .'' and is commonly referred to by industry as 
``NEMA Premium'' or IE3 levels.
    For ECGs 2 and 3, DOE used available catalog data to understand the 
efficiencies of motors offered. DOE observed that the lowest 
efficiencies at multiple horsepowers aligned with the efficiencies 
found in Table 12-11 of NEMA MG 1-2016 ``Full-Load Efficiencies of 60 
Hz Energy-Efficient Motors''. These levels of efficiency are commonly 
referred to as ``fire pump electric motor levels'' since they largely 
correspond to the energy conservations standards for fire pump motors 
set out in Table 7 of 10 CFR 431.25. As such, DOE set the baseline for 
ECGs 2 and 3 in line with fire pump electric motor levels.
    For ECG 4, during the electric motor working group negotiations it 
was discussed that catalog data would not accurately represent the 
efficiencies of these ``specialized'' frame size motors since they are 
designed be placed in larger equipment based on manufacturer 
specifications, and not typically sold through publicly available 
catalogs. DOE understands that given a fixed horsepower output, 
reducing frame size will restrict the potential for efficiency 
improvements in a motor and may make improvements in efficiency more 
expensive compared to a larger motor. Because the electric motors in 
ECG 4 are smaller versions of those in ECG 3, DOE assumed that the 
baseline efficiency for ECG 4 would be an offset version of the 
baseline of ECG 3. DOE decided to quantify the offset in terms of `NEMA 
bands' because these bands are commonly used by industry when 
describing motor efficiency. One NEMA band represents a 10 percent 
reduction in motor losses from the previous efficiency value; Table 12-
10 of NEMA MG 1-2016 specifies the list of selectable efficiency 
values. DOE received feedback from manufacturers that they typically 
design motors in increments of 20 percent loss differences or more 
because of motor efficiency test variability and marketing clarity. 
This 20 percent loss is consistent with the IE level designations, in 
that each IE level that is included in IEC 60034-30-1:2014, starting 
from IE1 (lowest efficiency) to IE4 (highest efficiency), is 
approximately in increments of 20 percent loss difference. As such, DOE 
assumed the baseline for ECG 4 would be 2 NEMA bands (or 20 percent 
loss difference) lower than the baseline of ECG 3 due to reduced size 
of ECG 4 motors. This baseline corresponds with the IE1 level, the 
lowest level defined by IEC 60034-30-1:2014.

[[Page 36096]]



                                   Table IV-5--Baseline Efficiencies Analyzed
----------------------------------------------------------------------------------------------------------------
                ECG                       ECG motor design type             RU                Description
----------------------------------------------------------------------------------------------------------------
1..................................  MEM 1-500 hp, NEMA Design A & B               1  NEMA Premium/IE3.
                                                                                   2
                                                                                   3
                                                                                   4
                                                                                   5
2..................................  MEM 501-750 hp, NEMA Design A &               6  Fire Pump.
                                      B.
3..................................  AO-MEM (Standard Frame Size)...               7  Fire Pump.
                                                                                   8
                                                                                   9
                                                                                  10
4..................................  AO-Polyphase (Specialized Frame              11  2 NEMA bands below Fire
                                      Size).                                           Pump.
----------------------------------------------------------------------------------------------------------------

c. Higher Efficiency Levels
    As part of DOE's analysis, the maximum available efficiency level 
is the highest efficiency unit currently available on the market. DOE 
also defines a ``max-tech'' efficiency level to represent the maximum 
possible efficiency for a given product.
    In the March 2022 Preliminary Analysis, DOE established the higher 
efficiency levels by shifting the baseline efficiencies up a certain 
number of NEMA bands. For ECG 1, EL 1 represented a 1 NEMA band 
increase over baseline efficiency, EL 2 a 2 NEMA band increase, and so 
on until max-tech. For ECG 3 of this direct final rule (referred to as 
``AO-MEMs'' in the March 2022 Preliminary Analysis), EL 1 was NEMA 
Premium because this ECG had a lower baseline at fire pump levels. EL 2 
was 1 NEMA band above premium, EL 3 was 2 NEMA bands above NEMA 
Premium, and the max-tech was the same as ECG 1. See Chapter 5 of the 
March 2022 Prelim TSD.
    In response to the March 2022 Preliminary Analysis, DOE received 
comments regarding the analysis used to determine efficiencies at 
higher levels.
    NEMA stated that any performance modeling done by DOE should rely 
on multiple tested models rather than a single unverified motor 
performance model (NEMA, No. 22 at p. 2-3). NEMA also stated that 
building and testing models with high enough volumes to ensure 
repeatability is the only way to prove the performance of a new steel. 
(NEMA, No. 22 at p. 11,13)
    While DOE acknowledges that testing individual models is the most 
ideal way to gather performance data for electric motors, given the 
extremely high volume of horsepower rating, pole configuration, and 
enclosure combinations, DOE cannot feasibly analyze all of these 
variations directly, hence, the need for scaling and modeling. 
Accordingly, DOE retained an electric motors subject matter expert 
(``SME'') with significant experience in terms of both design and 
related software, who prepared a set of electric motor designs with 
increasing efficiency.
    DOE concurs that modeling is not an exact equivalent to testing in 
all regards, and that relative to physical motor units, modeled results 
may over- or -underestimate performance. That prototyping and testing 
of production runs are important motor tools does not imply, however, 
that properly modeled motors would carry no predictive power and could 
not be of value in estimating electric motor performance. Through 
confidential interviews of electric motor manufacturers, DOE learned 
that performance modeling, along with prototyping, is a central element 
in modern electric motor development. Therefore, DOE does not find 
justification to abandon modeling as an analytical practice. DOE pairs 
and informs modeled results using physical testing and teardown of 
motors purchased on the market, and from performance data collected in 
the 2022 Motor Database, as detailed in chapter 5 of the direct final 
rule TSD. The motors that were torn down represented a range of 
horsepowers, and had efficiencies rated at 2 to 3 NEMA bands above 
their respective standards. As new designs were created, DOE's SME 
ensured that the critical performance characteristics that define a 
NEMA design letter (e.g., locked-rotor torque, breakdown torque, pull-
up torque, and locked-rotor currents) were maintained.
    As an example on how the modeling was informed by teardowns, DOE's 
SME used lamination diameters measured during the teardowns as limits 
for the software models. After establishing baseline models, DOE used 
the motor design software to incorporate design options (generated in 
the market and technology assessment and screening analysis) to 
increase motor efficiency all the way up to the max-tech design. This 
procedure has been utilized to inform scaling relationships in previous 
rulemakings, and as such, DOE is continuing to use motor performance 
modeling as the basis of its efficiency analysis in this direct final 
rule.
    In recognition of the potential for electrical steel quality to 
vary and of modeled results to diverge from test results of production 
electric motor designs, DOE opted to use a conservative approach when 
modeling the performance of electrical steels by using the guaranteed 
maximum core loss values for various steel grades in place of 
``average'' or ``typical'' core loss per pound values. Purchasers of 
electrical steel cannot rely on a given sample of electrical steel 
exceeding (i.e., carrying lower loss) the guaranteed loss. However, on 
a larger scale the steel performance would be expected to converge to 
the average if steel manufacturers are accurately representing their 
products.
    Separately, NEMA stated that the inrush current of multiple models 
exceeds the NEMA Design B and C locked-rotor current limits for the 
following representative units: 5HP, Design B; 5HP, Design C; and 50 
HP, Design C. (NEMA, No. 22 at p. 3) NEMA also stated that in order to 
comply with the test procedure, motors may become NEMA Design A motors 
with higher inrush current, and that this higher current could create 
safety issues on other components and would require upgrades and 
modifications to electrical components of the motor. It stated that not 
being able to satisfy NEMA Design B requirements would present a loss 
of consumer utility. (NEMA, No. 22 at p. 2)
    DOE disagrees with NEMA's claim that the test procedure rule would 
require a change in motor design to comply with standards. DOE 
understands NEMA's comment to relate to the changes to the represented 
value formula (currently in 10 CFR 429.64) proposed in the test 
procedure NOPR (86 FR 71710, December 17, 2021). DOE addressed concerns 
regarding the

[[Page 36097]]

updates to the test procedure in the October 2022 Final Rule; 
specifically, DOE noted that while DOE proposed changes in the formulas 
used to determine the represented value of a basic model, DOE did not 
propose to change how the compliance of a given basic model is 
determined. As such, DOE concluded that the compliance or noncompliance 
of a basic model would remain unchanged by the publication of this 
final rule, and therefore, disagreed with NEMA that basic model 
redesigns would be required to ensure compliance. 87 FR 63588, 63631-
63633
    As for the representative unit designs not complying with NEMA 
Design B locked-rotor current requirements, DOE agrees and notes that 
the voltages specified for those units in the March 2022 Preliminary 
TSD were incorrect and will be corrected in the TSD of this direct 
final rule. With that voltage correction, the locked-rotor current 
units for the mentioned representative units fell within NEMA Design B 
limits. However, as discussed in section IV.C.1.a, DOE is considering 
NEMA Design A at higher efficiency levels.
    As such, for this direct final rule, DOE considered several design 
options for higher efficiencies: improved electrical steel for the 
stator and rotor, using die-cast copper rotors, increasing stack 
length, and any other applicable design options remaining after the 
screening analysis when improving electric motor efficiency from the 
baseline level up to a max-tech level. As each of these design options 
are added, the manufacturer's cost generally increases and the electric 
motor's efficiency improves. DOE worked with an SME to develop the 
highest efficiency levels technologically feasible for each 
representative unit analyzed, and used a combination of electric motor 
software design programs and SME input to develop these levels. The SME 
also checked his designs against tear-down data and calibrated his 
software using the relevant test results. DOE notes that for all 
efficiency levels of directly modeled representative units, the frame 
size was constrained to that of the baseline unit. DOE also notes that 
the full-load speed of the simulated motors did not stay the same 
throughout all efficiency levels. Depending on the materials used to 
meet a given efficiency level, the full-load speed of the motor may 
increase compared to a lower efficiency model, but for the 
representative units analyzed this was not always the case. See chapter 
5 of the TSD for more details on the full-load speeds of modeled units.
    For the max-tech efficiencies in the engineering analysis, DOE 
considered 35H210 silicon steel, which has the lowest theoretical 
maximum core loss of all steels considered in this engineering 
analysis, and the thinnest practical thickness for use in motor 
laminations. In addition, the max-tech efficiency designs all use die-
cast copper rotors, because copper offers better performance than 
aluminum since it has better electrical conductivity (i.e., a lower 
electrical resistance), leading to a higher-efficiency design. The max-
tech designs also have the highest possible slot fill, maximizing the 
number of motor laminations that can fit inside the motor. Further 
details are provided in Chapter 5 of the direct final rule TSD.
    For intermediate efficiency levels that were higher than an ECG's 
baseline but not the max-tech efficiency considered, DOE used different 
approaches to establish these levels depending on the ECG, as discussed 
in the next few paragraphs.
    For ECG 1, EL 1 was set at IE4 levels (also referred to as NEMA 
Super-Premium) after receiving feedback during the electric motor 
working group negotiations that this should be the first EL considered 
above current standards (in 10 CFR 431.25, IE3 or ``NEMA Premium''), 
consistent with the progression of the IE levels to represent 
efficiency, when available. IE4 levels correspond to the efficiency 
values in Table 10 of IEC 60034-30-1:2014,''Nominal efficiency limits 
(percentage) for 60 Hz IE4''. DOE notes that the efficiencies at IE4 
levels are varying magnitudes above current standard levels, but are 
typically either 1 or 2 NEMA bands higher depending on pole 
configuration and horsepower output. Next, DOE defined EL 2 as 2 NEMA 
bands above current standards and EL 3 as 3 NEMA bands above current 
standards. For RU1, RU2 and RU5, EL 1 efficiency is the same as EL 2 
efficiency because the IE4 efficiencies are the same as the 
efficiencies at 2 NEMA bands above current standard levels.
    When possible, DOE opted to set the intermediate efficiency levels 
at industry-recognized levels of efficiency like NEMA Premium or IE4. 
For ECGs 2 and 3, EL 1 was set at current standards since the baseline 
for these ECGs was lower than current standards. EL 2 was then set at 
IE4 levels, and EL 3 set at 2 NEMA bands above current standard levels. 
For RU6, RU7 and RU8, EL 2 efficiency is the same as EL 3 efficiency 
because the IE4 efficiencies are the same as the efficiencies at 2 NEMA 
bands above current standards.
    For ECG 4, DOE again opted to set the intermediate efficiency 
levels at industry-recognized levels. Therefore, EL 1 was set at fire 
pump electric motor levels, EL 2 at current standards or NEMA Premium, 
and EL 3 at IE4 levels. For RU11, the max-tech efficiency is the same 
as EL 3 efficiency at IE4.
    Table IV-6 presents a summary of the description of the higher 
efficiency levels analyzed in this direct final rule. For additional 
details on the efficiency levels, see chapter 5 of the direct final 
rule TSD.

                                                        Table IV-6--Higher Efficiencies Analyzed
--------------------------------------------------------------------------------------------------------------------------------------------------------
              ECG                        RUs            EL0/Baseline             EL1                 EL2                EL3                  EL4
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..............................  1 through 5.......  Premium/IE3.......  Super Premium/IE4.  2 NEMA bands above  3 NEMA bands       Max-tech
                                                                                              Premium.            above Premium.
2..............................  6.................  Fire pump.........  Premium/IE3.......  Super Premium/IE4.  2 NEMA bands       Max-tech
                                                                                                                  above Premium.
3..............................  7 through 10......  Fire pump.........  Premium/IE3.......  Super Premium/IE4.  2 NEMA bands       Max-tech
                                                                                                                  above Premium.
4..............................  11................  2 NEMA Bands below  Fire pump.........  Premium/IE3.......  Super Premium/IE4  Max-tech
                                                      Fire pump.
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Cost Analysis
    The cost analysis portion of the engineering analysis is conducted 
using one or a combination of cost approaches. The selection of cost 
approach depends on a suite of factors, including the availability and 
reliability of public information, characteristics of the regulated 
product, the availability and timeliness of purchasing the equipment on 
the market. The cost approaches are summarized as follows:
     Physical teardowns: Under this approach, DOE physically 
dismantles a commercially available product,

[[Page 36098]]

component-by-component, to develop a detailed bill of materials for the 
product.
     Catalog teardowns: In lieu of physically deconstructing a 
product, DOE identifies each component using parts diagrams (available 
from manufacturer websites or appliance repair websites, for example) 
to develop the bill of materials for the product.
     Price surveys: If neither a physical nor catalog teardown 
is feasible (for example, for tightly integrated products such as 
fluorescent lamps, which are infeasible to disassemble and for which 
parts diagrams are unavailable) or cost-prohibitive and otherwise 
impractical (e.g. large commercial boilers), DOE conducts price surveys 
using publicly available pricing data published on major online 
retailer websites and/or by soliciting prices from distributors and 
other commercial channels.
    In the March 2022 Preliminary Analysis, DOE conducted the analysis 
using a combination of physical teardowns and software modeling. DOE 
contracted a professional motor laboratory to disassemble various 
electric motors and record what types of materials were present and how 
much of each material was present, recorded in a final bill of 
materials (``BOM''). To supplement the physical teardowns, software 
modeling by an SME was also used to generate BOMs for select efficiency 
levels of directly analyzed representative units. The resulting bill of 
materials provides the basis for the manufacturer production cost 
(``MPC'') estimates. See Chapter 5 of the March 2022 Prelim TSD.
    In response to the March 2022 Preliminary Analysis, DOE received a 
number of comments. First, DOE received a comment regarding labor rates 
and markups used in the engineering analysis. ABB commented that the 
tabulated cost of labor used in Table 2.5.17 of the March 2022 Prelim 
TSD does not accurately reflect the current labor market. ABB added 
that the U.S. labor markets have tightened significantly over the past 
12 months, and as a result labor rates have increased significantly. 
Therefore, ABB commented that they believe the labor rates shown in the 
table are outdated and need to be revised with current rates. Regarding 
the magnitude of the factory markup in Table 2.5.17 in the March 2022 
Prelim TSD, ABB also commented that they believe that 30 percent is a 
more accurate estimate than the 15 percent mentioned, and that using 
the 15 percent markup would result in an underestimation of the cost 
impacts of factory overhead. (ABB, No. 28 at p. 1)
    Regarding labor rates and markups, DOE used the same hourly labor 
rate for all electric motors analyzed. DOE determined the unburdened 
labor rate by using the 2007 Economic Census of Industry, and since the 
March 2022 Preliminary Analysis, updated the labor rate to dollar year 
2021 using producer price index (``PPI'') data.\37\ DOE understands 
this method of calculation accounts for changes in the labor market 
because the PPI data contains information from the current market. In 
addition, several markups were applied to this hourly rate to obtain a 
fully burdened rate, which is representative of the labor costs 
associated with manufacturing electric motors. The markups applied to 
the base labor cost per hour include indirect production, overhead, 
fringe, and assembly labor up-time costs. Finally, DOE also 
incorporated input from manufacturers during interviews on domestic and 
foreign labor rates to inform the labor cost values used in the 
engineering analysis in this direct final rule. As such, DOE concludes 
that the updates to the labor rates since the March 2022 Preliminary 
Analysis accurately represent current labor market.
---------------------------------------------------------------------------

    \37\ NAICS code 335312 ``Motor and generator manufacturing'' 
production workers hours and wages.
---------------------------------------------------------------------------

    Regarding the overhead markup, DOE notes that in the March 2022 
Preliminary Analysis, an overhead markup of 30 percent was applied to 
the unburdened labor rate in line with ABB's recommendation. The 15 
percent factory overheard markup referenced in ABB's comment is a 
separate markup applied to the material cost of a motor, not related to 
the labor markup of concern. In addition, the factory overhead markup 
was increased to 20 percent when copper die-casting was used in the 
rotor. DOE presented the range of factory overhead markups in 
manufacturer interviews, and either received little feedback, or 
generally supportive comments from manufacturers. Accordingly, DOE 
concludes that the factory overhead markups used in the March 2022 
Preliminary Analysis sufficiently characterizes the markups used for 
the cost analysis.
    DOE also received a comment regarding material prices. NEMA 
commented referring DOE to a Department of Commerce study from October 
2020 for perspective on conductor prices. NEMA also stated that DOE 
should update its information to 2022 data and pricing. (NEMA, No. 22 
at p. 16) DOE reviewed the Department of Commerce study referenced by 
NEMA and did not find any specific material pricing information 
regarding copper or aluminum, the two conductors that this engineering 
analysis focuses on. In the direct final rule, DOE determined conductor 
prices based on producer price indices \38\ and manufacturer input 
obtained through interviews.
---------------------------------------------------------------------------

    \38\ Producer Price Index by Commodity: Metals and Metal 
Products: Copper Wire and Cable (WPU10260314): https://fred.stlouisfed.org/series/WPU10260314; Producer Price Index by 
Commodity: Metals and Metal Products: Extruded Aluminum Rod, Bar, 
and Other Extruded Shapes (WPU10250162): https://fred.stlouisfed.org/series/WPU10250162.
---------------------------------------------------------------------------

    Regarding the dollar year used for the analysis, DOE usually uses 
the most recent completed year before the publication of any rulemaking 
document when presenting pricing information and data to reduce the 
impact of month-to-month material pricing volatility. However, due to 
recent pricing volatility as a result of global supply chain issues, 
DOE is presenting pricing information as a 5-year average price so that 
the price results can be extrapolated more accurately for use in future 
years. As such, DOE presents all costs and pricing information as a 5-
year average of the years 2017 to 2021 in this direct final rule.
    Finally, DOE also received a comment regarding how costs would need 
to be updated because of the stack length increase. NEMA commented that 
the stack lengths of motors in Table 2.5.13 of the March 2022 
Preliminary Analysis TSD appear to be longer than what would fit in a 
typical motor housing and stated that DOE needs to consider the cost of 
redesigning the motor to accommodate the larger stack and all costs of 
changing the production line. NEMA stated that certain stack lengths 
may be so long that they are not able to be machine wound, and instead 
would use the more labor-intensive process of hand winding. NEMA 
commented that the increased labor requirements would push 
manufacturers to move production to facilities with lower cost of labor 
outside of the US and would reduce US jobs. Finally, NEMA stated that 
the conversion costs of using thinner steels did not capture the 
conversion costs of using longer stack lengths. NEMA also stated that 
end-use motor application redesign should be accounted for as well. 
(NEMA, No. 22 at p. 17)
    DOE notes that NEMA did not identify specific units that would have 
to be hand-wound because of their stack lengths. A given winding 
machine may have a limit of how long of a stack it can wind, but DOE 
understands that if the

[[Page 36099]]

stack length increased beyond this limit, a manufacturer could use the 
next sized winding machine that they may already use for larger 
horsepower motors. However, in this direct final rule, DOE is not 
adopting a standard level that would require motors to be hand-wound, 
and as such does not find that there will be a push to offshore US 
manufacturing of electric motors for the standards being finalized. 
However, separately DOE also performs a manufacturer impact analysis to 
quantify the costs incurred by the manufacturer to redesign regulated 
equipment at each efficiency level; see discussion in section IV.J.
    Accordingly, in this direct final rule, DOE continues to use the 
approach from the March 2022 Preliminary Analysis by determining costs 
using a combination of physical teardowns and software modeling. In 
addition, as part of this direct final rule, DOE supplemented other 
critical inputs to the MPC estimate, including material prices assumed, 
scrap costs, overhead costs, and conversion costs incurred by the 
manufacturer, using information provided by manufacturers under a 
nondisclosure agreement through both manufacturer interviews and the 
Electric Motors Working Group. Through these nondisclosure agreements, 
DOE solicited and received feedback on inputs like: motor starter costs 
associated with NEMA Design A motors, recent electrical steel prices by 
grade, and the MPCs of both Design A and Design B motors at different 
efficiency levels and rated motor output. See chapter 5 of the direct 
final rule TSD for more detail on the scrap, overhead, and conversion 
costs as well as material prices used.
    Finally, to account for manufacturers' non-production costs and 
profit margin, DOE applies a non-production cost multiplier (the 
manufacturer markup) to the MPC. The resulting manufacturer selling 
price (``MSP'') is the price at which the manufacturer distributes a 
unit into commerce. 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 
electric motor manufacturing and whose combined product range includes 
electric motors. For motors with a rated output power of 5 or less 
horsepower, DOE used a non-production markup of 37 percent. For motors 
rated above 5 horsepower, DOE used a non-production markup of 45 
percent.
3. Cost-Efficiency Results
    The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of MSP (in dollars) versus 
full-load efficiency (in %), which form the basis for subsequent 
analysis. DOE developed eleven curves representing the four equipment 
class groups. The methodology for developing the curves started with 
determining the full-load efficiency and MPCs for baseline motors. 
Above the baseline, DOE implemented various combinations of design 
options to achieve each efficiency level. Design options were 
implemented until all available technologies were employed (i.e., at a 
max-tech level). To account for manufacturers' non-production costs and 
profit margin, DOE applies a manufacturer markup to the MPC, resulting 
in the MSP. See Table IV-7 for the final results. See TSD Chapter 5 for 
additional detail on the engineering analysis.

                                                                               Table IV-7--Cost-Efficiency Results
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Full-load efficiency (%)                                   MSP (2021$)
                    RU                        HP      Pole            Enclosure         --------------------------------------------------------------------------------------------------------
                                                                                           EL0      EL1      EL2      EL3      EL4        EL0         EL1         EL2         EL3         EL4
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................        5        4  Enclosed..................    89.50    91.00    91.00    91.70    92.40     $340.95     $424.52     $424.52     $459.91     $614.47
2........................................       30        4  Enclosed..................    93.60    94.50    94.50    95.00    95.40    1,331.45    1,792.24    1,792.24    1,928.42    1,999.62
3........................................       75        4  Enclosed..................    95.40    95.80    96.20    96.50    96.80    3,724.25    4,577.13    4,943.96    5,219.07    5,541.73
4........................................      150        4  Enclosed..................    95.80    96.20    96.50    96.80    97.10    6,181.17    6,378.33    8,205.53    8,662.15    9,197.66
5........................................      350        4  Enclosed..................    96.20    96.80    96.80    97.10    97.40   12,874.60   15,313.54   15,313.54   18,042.15   19,157.57
6........................................      600        4  Enclosed..................    95.80    96.20    96.80    96.80    97.40   19,711.60   20,532.73   24,422.41   24,422.41   30,552.96
7........................................        5        4  Enclosed..................    87.50    89.50    91.00    91.00    92.40      304.59      332.96      414.57      414.57      554.40
8........................................       30        4  Enclosed..................    92.40    93.60    94.50    94.50    95.40    1,281.82    1,326.36    1,785.38    1,785.38    1,975.97
9........................................       75        4  Enclosed..................    94.10    95.40    95.80    96.20    96.80    3,097.87    3,703.79    4,551.99    4,910.11    5,510.57
10.......................................      150        4  Enclosed..................    95.00    95.80    96.20    96.50    97.10    5,352.67    6,199.20    6,396.94    8,229.47    8,687.42
11.......................................        5        4  Enclosed..................    85.50    87.50    89.50    91.00    91.00      304.59      332.96      414.57      554.40      554.40
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    In this direct final rule, DOE also added a scenario to account for 
the fact that some consumers may choose to purchase a synchronous 
electric motor (out of scope of this direct final rule) rather than a 
more efficient NEMA Design A or B electric motor or select to purchase 
a VFD in combination with a compliant electric motor. As such, DOE 
costed out the price of a synchronous electric motor and a VFD to 
analyze for this substitution; further discussion on this analysis is 
provided in Chapter 5 of the direct final rule TSD.
4. Scaling Methodology
    Due to the large number of equipment classes, DOE was not able to 
perform a detailed engineering analysis on each one. Instead, DOE 
focused its analysis on the representative units and scaled the results 
to equipment classes not directly analyzed in the engineering analysis. 
In the March 2022 Preliminary Analysis, DOE used the current standards 
at 10 CFR 431.25 as a basis to scale the efficiency of the 
representative units to all other equipment classes. In order to scale 
for efficiency levels above baseline, the efficiencies for the 
representative units were shifted up or down by however many NEMA 
bands, because these bands are commonly used by industry when 
describing motor efficiency, that efficiency level was above current 
standards.
    In response to the preliminary analysis, NEMA disagreed that a 
given enclosed motor could meet the same or higher efficiency standards 
as an open motor. NEMA stated that Part 13 of NEMA MG1 specifies, for 
many ratings, their standard frame size to be smaller than an enclosed 
motor of the same frame size. NEMA provided an example of a 7.5 hp, 
575V, 2 pole standard NEMA Design A/B motor and state that an open 
enclosure motor is standard as a 184T frame whereas an enclosed would 
be a 213T frame. NEMA stated that the ratings for which the standard 
frame size is the same for an open or enclosed enclosure, the 
efficiency capability of the open motor is expected to be equal or 
greater than an enclosed motor because of the reduced windage losses 
and potentially lower operating temperature. NEMA noted that the 
specific utility lost by switching from an open motor to an enclosed 
one would be having to move to a physically larger motor and mounting 
dimensions for certain ratings. NEMA stated that the

[[Page 36100]]

efficiency ratings of NEMA 12-12 is higher for open motors at some 
ratings, higher for enclosed at others, and in some cases equal in 
order to retain this utility of having a smaller motor for a given 
application. (NEMA, No. 22 at p. 6)
    DOE acknowledges that the efficiencies would be different for open 
and enclosed motors for the scope of electric motors being considered 
in this direct final rule. As such, DOE considered separate 
efficiencies for open and enclosed motors; although DOE only analyzed 
enclosed motor representative units as part of the analysis, for the 
full range of efficiencies being considered for the downstream 
analysis, DOE considered different efficiencies for open and enclosed. 
DOE based the relationship between enclosed and open motor efficiencies 
on Table 5 of 10 CFR 431.25. Specifically, DOE quantified the offset 
between enclosed and open motor efficiencies for each pole and 
horsepower combination in terms of NEMA bands. DOE used the same offset 
to determine the open motor efficiencies from the enclosed motor 
efficiencies for the full range of pole and horsepower combinations 
being considered for each ECG and efficiency level analyzed.
    In this direct final rule, to scale across horsepower, pole 
configuration, and enclosure, DOE again relied on industry-recognized 
levels of efficiency when possible, or shifted forms of these levels. 
For example: when an efficiency level for a representative unit was 
NEMA Premium, Table 12-12 of NEMA MG 1-2016 was used to determine the 
efficiency of all the non-representative unit equipment classes. This 
method of scaling was also done for IE4 levels of efficiency, electric 
motor fire pump levels, and shifted versions of NEMA Premium (see Table 
IV-10 for description of efficiency levels analyzed). DOE relied on 
industry-recognized levels because they sufficiently capture the 
effects of enclosure, pole configuration, frame size, and horsepower on 
motor efficiency.

D. Markups Analysis

    The markups analysis develops appropriate markups (e.g., retailer 
markups, distributor markups, contractor markups) in the distribution 
chain and sales taxes to convert the MSP estimates derived in the 
engineering analysis to consumer prices, which are then used in the LCC 
and PBP analysis and in the manufacturer impact analysis. At each step 
in the distribution channel, companies mark up the price of the product 
to cover business costs and profit margin.
    In the March 2022 Preliminary Analysis, DOE identified distribution 
channels for MEM 1-500 hp, NEMA Design A and B and AO-MEM (Standard 
Frame Size) and their respective market shares (i.e., percentage of 
sales going through each channel). For these electric motors, the main 
parties in the distribution chain are OEMs, equipment or motor 
wholesalers, retailers, and contractors. In response to the March 2022 
Preliminary Analysis, DOE did not receive any comment on the 
distribution channels identified. Therefore, DOE retained these 
distribution channels for MEM 1-500 hp, NEMA Design A and B and AO-MEM 
(Standard Frame Size) in the direct final rule. For electric motors 
above 500 hp and up to 750 hp (``MEM 501-750 hp, NEMA Design A & B''), 
DOE applied the same distribution channels. For and AO-polyphase 
(specialized frame size) electric motors which are typically sold 
through OEMs, DOE assumed that these motors are only sold through 
distribution channels that include OEMs.
    DOE developed baseline and incremental markups for each actor 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.\39\
---------------------------------------------------------------------------

    \39\ Because the projected price of standards-compliant products 
is typically higher than the price of baseline products, using the 
same markup for the incremental cost and the baseline cost would 
result in higher per-unit operating profit. While such an outcome is 
possible, DOE maintains that in markets that are reasonably 
competitive it is unlikely that standards would lead to a 
sustainable increase in profitability in the long run.
---------------------------------------------------------------------------

    In the March 2022 Preliminary Analysis, DOE relied on economic data 
from the U.S. Census Bureau and on 2020 RS Means Electrical Cost Data 
to estimate average baseline and incremental markups. Specifically, DOE 
estimated the OEM markups for electric motors based on financial data 
of different sets of OEMs that use respective electric motors from the 
latest 2019 Annual Survey of Manufactures.\40\ The relevant sets of 
OEMs identified were listed in Table 6.4.2 of the March 2022 Prelim 
TSD, using six-digit code level North American Industry Classification 
System (NAICS). Further, DOE collected information regarding sales 
taxes from the Sales Tax Clearinghouse.\41\ See chapter 6 of the March 
2022 Prelim TSD.
---------------------------------------------------------------------------

    \40\ U.S. Census Bureau. 2019 Annual Survey of Manufactures 
(ASM): Statistics for Industry Groups and Industries. (Last accessed 
March 23, 2021.) www.census.gov/programs-surveys/asm.html.
    \41\ Sales Tax Clearinghouse Inc. State Sales Tax Rates Along 
with Combined Average City and County Rates. July 2021. (Last 
accessed July 1, 2021.) thestc.com/STrates.stm.
---------------------------------------------------------------------------

    In response to the March 2022 Preliminary Analysis, NEMA commented 
that Table 6.4.2 of the March 2022 Prelim TSD should be replaced by 
Table IV.3 of the Import Data Declaration Proposed Rule.\42\ (NEMA, No. 
22 at p. 18)
---------------------------------------------------------------------------

    \42\ NEMA also provided the following link: www.regulations.gov/document/EERE-2015-BT-CE-0019-0001
---------------------------------------------------------------------------

    Table IV.3 of the Import Data Declaration Proposed Rule provides a 
list of five-digit code level NAICS.\43\ DOE reviewed the corresponding 
six-digit code level NAICS and identified the following additional 
NAICS code as relevant in the context of OEMs incorporating electric 
motors in their equipment: 333999 ``All other miscellaneous general 
Purpose machinery manufacturing''. Other NAICS codes were either 
already included in the March 2022 Preliminary Analysis or were did not 
correspond to OEMs incorporating electric motors subject to this DFR in 
their equipment.
---------------------------------------------------------------------------

    \43\ Each five-digit code level NAICS includes several six-digit 
code level NAICS.
---------------------------------------------------------------------------

    For the direct final rule, DOE revised the OEM baseline and 
incremental markups calculation to account for this additional NAICS 
code. In addition, DOE relied on updated data from the economic data 
from the U.S. Census Bureau and on 2022 RS Means Electrical Cost Data, 
and the Sales Tax Clearinghouse.
    Chapter 6 of the direct final rule TSD provides details on DOE's 
development of markups for electric motors.

E. Energy Use Analysis

    The purpose of the energy use analysis is to determine the annual 
energy consumption of electric motors at different efficiencies for a 
representative sample of commercial, industrial, and agricultural 
consumers, and to assess the energy savings potential of increased 
electric motor efficiency. The energy use analysis estimates the range 
of energy use of electric motors in the field (i.e., as they are 
actually used by consumers). For each consumer in the sample, the 
energy use is calculated by multiplying the annual average motor input 
power by the annual operating hours. The

[[Page 36101]]

energy use analysis provides the basis for other analyses DOE 
performed, particularly assessments of the energy savings and the 
savings in consumer operating costs that could result from adoption of 
amended or new standards.
1. Consumer Sample
    In the March 2022 Preliminary Analysis, DOE created a consumer 
sample to represent consumers of electric motors in the commercial, 
industrial, and agricultural sectors. DOE used the sample to determine 
electric motor annual energy consumption as well as for conducting the 
LCC and PBP analyses. Each consumer in the sample was assigned a 
sector, an application, and a region. The sector and application 
determine the usage profile of the electric motor and the economic 
characteristics of the motor owner vary by sector and region. DOE 
primarily relied on data from the 2018 Commercial Building Energy 
Consumption Survey (``CBECS''), the 2018 Manufacturing Energy 
Consumption Survey (``MECS''), the 2013 Farm and Ranch Irrigation 
Survey, and a DOE-AMO report ``U.S. Industrial and Commercial Motor 
System Market Assessment Report Volume 1: Characteristics of the 
Installed Base'' (``MSMA'' or ``DOE-AMO report'').\44\ See chapter 7 of 
the March 2022 Prelim TSD.
---------------------------------------------------------------------------

    \44\ Prakash Rao et al., ``U.S. Industrial and Commercial Motor 
System Market Assessment Report Volume 1: Characteristics of the 
Installed Base,'' January 12, 2021, doi.org/10.2172/1760267.
---------------------------------------------------------------------------

    In response to DOE's requests for feedback regarding the consumer 
sample, NEMA referred to the MSMA report (NEMA, No. 22 at p. 19) As 
previously described, DOE relied on information from the MSMA report to 
inform its consumer sample. DOE did not receive any additional comments 
related to the consumer sample developed in the preliminary analysis 
and retained the same approach for this direct final rule. In addition, 
for electric motors above 500 hp and up to 750 hp, and AO-polyphase 
specialized frame size electric motors, DOE applied the same consumer 
sample.
2. Motor Input Power
    In the March 2022 Preliminary Analysis, DOE calculated the motor 
input power as the sum of (1) the electric motor's rated horsepower 
multiplied by its operating load (i.e., the motor output power), and 
(2) the losses at the operating load (i.e., part-load losses). DOE 
estimated distributions of motor average annual operating load by 
application and sector based on information from the MSMA report. DOE 
determined the part-load losses using outputs from the engineering 
analysis (full-load efficiency at each efficiency level) and published 
part-load efficiency information from 2016 and 2020 catalog data from 
several manufacturers to model motor part-load losses as a function of 
the motor's operating load. See chapter 7 of the March 2022 Prelim TSD.
    In response to DOE's requests for feedback regarding distributions 
of average annual operating load by application and sector, NEMA 
referred to the MSMA report (NEMA, No. 22 at p. 19) As previously 
described, DOE relied on information from the MSMA report to 
characterize average annual operating loads. DOE did not receive any 
additional comments related to the distributions of operating loads 
developed in the March 2022 Preliminary Analysis and retained the same 
approach for this DFR.
    DOE did not receive any comments on its approach to determine part-
load losses and retained the same methodology for this DFR. However, 
DOE updated its analysis to account for more recent part-load 
efficiency information from the 2022 Motor Database. In addition, for 
electric motors larger than 500 hp and up to 750 hp, and AO-polyphase 
specialized frame size electric motors, DOE applied the same approach 
for establishing motor part-load losses and motor input power.
3. Annual Operating Hours
    In the March 2022 Preliminary Analysis, DOE used information from 
the MSMA report to establish distributions of motor annual hours of 
operation by application for the commercial and industrial sectors. The 
MSMA report provided average, mean, median, minimum, maximum, and 
quartile boundaries for annual operating hours across industrial and 
commercial sectors by application and showed no significant difference 
in average annual hours of operation between horsepower ranges. DOE 
used this information to develop application-specific statistical 
distributions of annual operating hours in the commercial and 
industrial sectors. See chapter 7 of the March 2022 Prelim TSD.
    For electric motors used in the agricultural sector (which were not 
included in the MSMA report), DOE derived statistical distributions of 
annual operating hours of irrigation pumps by region using data from 
the 2013 Census of Agriculture Farm and Ranch Irrigation Survey.
    In response to DOE's requests for feedback regarding distributions 
of average annual operating hours by application and sector, NEMA 
referred to the DOE MSMA report. (NEMA, No. 22 at p. 20) As previously 
described, DOE relied on information from the MSMA report to inform its 
distributions of annual operating hours in the commercial and 
industrial sectors. For the agricultural sector, which was not included 
in the MSMA report, DOE relied on additional data sources as previously 
described. DOE did not receive any additional comments related to the 
distributions of operating hours developed in the March 2022 
Preliminary Analysis and retained the same approach for this final 
rule. In addition for electric motors larger than 500 hp, DOE also 
relied on data from the MSMA report to develop operating hours.
4. Impact of Electric Motor Speed
    Any increase in operating speeds as the efficiency of the motor is 
increased could affect the energy saving benefits of more efficient 
motors in certain variable torque applications (i.e., fans, pumps, and 
compressors) due to the cubic relation between speed and power 
requirements (i.e., ``affinity law''). In the March 2022 Preliminary 
Analysis, DOE accounted for any changes in the motor's rated speed with 
an increase in efficiency levels, based on the speed information by EL 
provided in the engineering analysis. Based on information from a 
European motor study,\45\ DOE assumed that 20 percent of consumers with 
fan, pump, and air compressor applications would be negatively impacted 
by higher operating speeds. See chapter 7 of the March 2022 Prelim TSD.
---------------------------------------------------------------------------

    \45\ ``EuP-LOT-30-Task-7-Jun-2014.Pdf,'' accessed April 26, 
2021, www.eup-network.de/fileadmin/user_upload/EuP-LOT-30-Task-7-
Jun-2014.pdf. The European motor study estimated, as a ``worst case 
scenario,'' that up to 40 percent of consumers purchasing motors for 
replacement applications may not see any decrease or increase in 
energy use due to this impact and did not incorporate any change in 
energy use with increased speed. In addition, the European motor 
study also predicts that any energy use impact will be reduced over 
time because new motor driven equipment would be designed to take 
account of this change in speed. Therefore, the study did not 
incorporate this effect in the analysis (i.e., 0 percent of 
negatively impacted consumers). In the absence of additional data to 
estimate the percentage of consumers that may be negatively impacted 
in the compliance year, DOE relied on the mid-point value of 20 
percent.
---------------------------------------------------------------------------

    The Joint Advocates requested clarifications regarding how DOE 
accounted for the impact of the increased motor speed on the energy 
use, as well as how motor slip \46\ was

[[Page 36102]]

incorporated into the energy use analysis. (Joint Advocates, No. 27 at 
p. 4-5)
---------------------------------------------------------------------------

    \46\ The motor slip is the difference between the motor's 
synchronous speed and actual speed which is lower than the 
synchronous speed). At higher ELs, the speed of a given motor may 
increase and the motor slip may decrease.
---------------------------------------------------------------------------

    DOE described the method and assumptions used to calculate the 
impact of higher speeds (i.e., lower slip) by EL on the energy use in 
section 7.2.2.1 of the March 2022 Prelim TSD. In the direct final rule 
TSD, DOE provided additional details on the methodology and equations 
used as part of Appendix 7A.
    NEMA commented that nearly 100 percent of fans, pumps and 
compressors using electric motors would be negatively impacted by an 
increase in speed. In addition, NEMA commented that it would take up to 
two years for OEMs to redesign and recertify an equipment with a motor 
that has higher speed and provided an example calculation to illustrate 
the impacts of higher speed operation. (NEMA, No. 22 at pp. 20-21, 49) 
The Joint Industry Stakeholders commented that DOE should consider the 
full impact of higher speed motors by taking into account new products 
as well as replacement. The Joint Industry Stakeholders commented that 
if lower speed motors are no longer available, appliances may be forced 
to incorporate higher speed motors which may cause short-cycling in 
HVAC and refrigeration applications and result in negative impacts in 
other appliances. (Joint Industry Stakeholders, No. 23 at pp. 8-9)
    In this direct final rule, DOE included the effect of increased 
speeds in the energy use calculation for all equipment classes. DOE 
reviewed information related to pump, fans, and compressor applications 
and notes that: (1) seven to 20 percent of motors used in these 
applications are paired with VFDs which allow the user to adjust the 
speed of the motor; \47\ (2) approximately half of fans operate with 
belts which also allow the user to adjust the speed of the driven fan; 
\48\ (3) some applications would benefit from increase in speeds as the 
work would be completed at a higher load in less operating hours (e.g. 
pump filling water tank faster at increased speed); (4) not all fans, 
pumps and compressors are variable torque loads to which the affinity 
laws applies. Therefore, less than 100 percent of motors in these 
applications would experience an increase in energy use as a result of 
an increase in speed. In addition, as described in the European motor 
study, the increase in speed would primarily impact replacement motors 
installed in applications that previously operated with a lower speed 
motor. For these reasons, DOE determined that assuming that 100 percent 
of fans, pumps and compressors using electric motors would be 
negatively impacted by an increase in speed would not be 
representative. DOE continues to rely on a 20 percent assumption used 
in the March 2022 Preliminary Analysis. In addition, DOE incorporated a 
sensitivity analysis allowing the user to consider this effect 
following scenarios described in Appendix 7-A of the TSD.
---------------------------------------------------------------------------

    \47\ See Figure 64 and Figure 71 of the MSMA report.
    \48\ See 2016 Fan Notice of Data Availability, 81 FR 75742 
(November 1, 2016). LCC spreadsheet, ``LCC sample'' worksheet, 
``Belt vs. direct driven fan distribution'' available at 
www.regulations.gov/document/EERE-2013-BT-STD-0006-0190.
---------------------------------------------------------------------------

    Chapter 7 of the direct final rule TSD provides details on DOE's 
energy use analysis for electric motors.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
electric motors. 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 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 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 electric motors 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 
consumers. As stated previously, DOE developed consumer samples from 
various data sources (see section IV.E.1 of this document). For each 
sample consumer, DOE determined the energy consumption for the electric 
motor and the appropriate energy price. By developing a representative 
sample of consumers, the analysis captured the variability in energy 
consumption and energy prices associated with the use of electric 
motors.
    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 electric motor user 
samples. The model calculated the LCC and PBP for products at each 
efficiency level for 10,000 consumer per simulation run. The analytical 
results include a distribution of 10,000 data points showing the range 
of LCC savings for a given efficiency level relative to the no-new-
standards case efficiency distribution. In performing an iteration of 
the Monte Carlo simulation for a given consumer, product efficiency is 
chosen based on its probability. If the chosen product efficiency is 
greater than or equal to the efficiency of the standard level under 
consideration, the LCC and PBP calculation reveals that a consumer is 
not impacted by the standard level. By accounting for consumers who 
already purchase more-efficient products, DOE avoids overstating the 
potential benefits from increasing product efficiency.
    DOE calculated the LCC and PBP for all consumers of electric motors 
as if each were to purchase a new product in the first year of required 
compliance with new or amended standards. DOE

[[Page 36103]]

expects the direct final rule to publish in the first half of 2023. 
Therefore, DOE used 2027 as the year of compliance with any new or 
amended standards for electric motors based on the recommended 4 year 
compliance period after the direct final rule publication.
    Table IV-8 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 LCC model, and of all the 
inputs to the LCC and PBP analyses, are contained in chapter 8 of the 
direct final rule TSD and its appendices.

Table IV-8--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
            Inputs                           Source/method
------------------------------------------------------------------------
Equipment Cost...............  Derived by multiplying MPCs by
                                manufacturer and retailer markups and
                                sales tax, as appropriate. Used a
                                constant price trend to project
                                equipment costs based on historical
                                data.
Installation Costs...........  Installation costs vary by EL. Used input
                                from NEMA and engineering analysis to
                                determine installation costs.
Annual Energy Use............  Motor input power multiplied by annual
                                operating hours per year. Variability:
                                Primarily based on the MSMA report, 2018
                                CBECS, 2018 MECS, and 2013 Farm and
                                Ranch Irrigation Survey.
Energy Prices................  Electricity: Based on EEI Typical Bills
                                and Average Rates Reports data for 2021.
                                Variability: Regional energy prices
                                determined for four census regions.
Energy Price Trends..........  Based on AEO 2022 price projections.
Repair and Maintenance Costs.  Repair costs based on Vaughen 2021,
                                varies by EL Assumed no change in
                                maintenance costs with efficiency level.
Equipment Lifetime...........  Average: 11.8-33.6 years depending on the
                                equipment class group and horsepower
                                considered. Shipments-weighted average
                                lifetime is 13.6.
Discount Rates...............  Calculated as the weighted average cost
                                of capital for entities purchasing
                                electric motors. Primary data source was
                                Damodaran Online.
Compliance Date..............  2027.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the direct
  final rule TSD.

    In response to the preliminary analysis, the Joint Stakeholders 
commented that double-regulation has no corresponding consumer benefits 
in the form of reduced power consumption given the appliance 
regulations being unchanged and the fact that a more efficient motor 
does not necessarily translate to a more efficient product when 
incorporated into a finished good. The Joint Stakeholders commented 
that to potentially increase the cost of an OEM product, without a 
corresponding energy savings would mean a net loss for consumers and 
negative national impacts. The Joint Industry Stakeholders noted that 
the DOE used operating hours for the following categories of equipment: 
air compressors, refrigeration compressors, fans and blowers, pumps 
material handling, material processing, other, and agricultural pumps. 
Of these, the Joint Stakeholders noted that electric motors used in air 
compressors, refrigeration compressors, fans and blowers, pumps and 
agricultural pumps are already regulated to some extent and that DOE 
made no apparent effort to account for this and deduct a significant 
portion of those estimated hours (Joint Industry Stakeholders, No. 23 
at p. 5) Lennox commented that DOE must accurately assess, and avoid 
double-counting, energy savings when assessing potential efficiency 
improvements from motors used in already-regulated HVAC equipment. 
Lennox commented that it is unclear in the LCC and payback periods 
analysis if DOE accounted for double regulation and eliminated energy 
savings already achieved from system-level HVACR regulation. (Lennox, 
No. 29 at p. 4) HI commented that there is a potential for duplicate 
accounting of energy savings when regulating motors in general. In 
addition, there is a potential for other motor product efficiencies to 
be counted twice such as the use of inverter-only products in pumps 
when the DOE calculates savings in their evaluations (one for inverter 
only motors, and another for pumps using those motors). (HI, No. 31 at 
p. 1) NEMA commented that many of the proposed additions to scope are 
accompanied by erroneous claims of potential energy savings, owing to 
the fact that the added motors are components to other regulated 
appliances and devices. They commented that their review of the 
document shows instances where the DOE is anticipating energy savings 
on products that will be used in other covered products, suggesting the 
potentially significant overstatement of potential energy savings 
benefits. (NEMA, No. 22 at p. 5)
    As highlighted in a previous DOE report, motor energy savings 
potential and opportunities for higher efficiency electric motors in 
commercial and residential equipment would result in overall energy 
savings.\49\ In addition, some manufacturers advertise electric motors 
as resulting in energy savings in HVAC equipment.\50\ Therefore, DOE 
disagrees with the Joint Industry Stakeholders that an increase in 
motor efficiency would not necessarily result in a more efficient 
equipment when incorporated into a given equipment. In addition, DOE's 
analysis ensures the LCC and NIA analysis do not result in double-
counting of energy savings by accounting for consumers who already 
purchase more-efficient products and calculating LCC and energy savings 
relative to a no-new standards case efficiency distribution. See 
Section IV.F.8 for more details. DOE applies the same approach in other 
equipment rulemakings, and evaluates energy savings relative to a no-
new standards case efficiency distribution that accounts for consumers 
who already purchase more-efficient equipment incorporating more 
efficient motors. As such, any future analysis in support of energy 
conservation standards for equipment incorporating motors would also 
account for equipment that already incorporate more-efficient electric

[[Page 36104]]

motors and would not result in any double counting of energy savings 
resulting from motor efficiency improvements.
---------------------------------------------------------------------------

    \49\ U.S. DOE Building technology Office, Energy Savings 
Potential and Opportunities for High-Efficiency Electric Motors in 
residential and Commercial Equipment, December 2013. Available at: 
www.energy.gov/eere/buildings/downloads/motor-energy-savings-potential-report
    \50\ See for example Nidec and ABB: acim.nidec.com/motors/usmotors/industry-applications/hvac; bit.ly/3wEIQyu
---------------------------------------------------------------------------

    In the direct final rule TSD, DOE added a scenario to account for 
the fact that some consumers may choose to purchase a synchronous 
electric motor (out of scope of this direct final rule) rather than a 
more efficient NEMA Design A or B electric motor or select to purchase 
a VFD in combination with a compliant electric motor. DOE developed a 
consumer choice model to estimate the percentage of consumers that 
would purchase a synchronous electric motor based on the payback period 
of such investment. See Appendix 8-D for more details on this analysis. 
DOE notes that there is uncertainty as to which rate such substitution 
would occur and did not incorporate this scenario as part of the 
reference analysis.
1. Equipment Cost
    To calculate consumer product costs, DOE multiplied the MSPs 
developed in the engineering analysis by the distribution channel 
markups described previously (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. To derive a price trend for electric motors, DOE obtained 
historical PPI data for integral horsepower motors and generators 
manufacturing spanning the time period 1969-2021 from the Bureau of 
Labor Statistics' (``BLS'').\51\ The PPI data reflect nominal prices, 
adjusted for electric motor quality changes. An inflation-adjusted 
(deflated) price index for integral horsepower motors and generators 
manufacturing was calculated by dividing the PPI series by the implicit 
price deflator for Gross Domestic Product. The deflated price index for 
integral horsepower motors was found to align with the copper, steel 
and aluminum deflated price indices. DOE believes that the extent to 
how these trends will continue in the future is very uncertain. 
Therefore, DOE relied on a constant price assumption as the default 
price factor index to project future electric motor prices.
---------------------------------------------------------------------------

    \51\ Serie PCU3353123353121 for integral horsepower motors and 
generators manufacturing; www.bls.gov/ppi/.
---------------------------------------------------------------------------

    DOE did not receive any comments on price trends in response to the 
preliminary analysis and followed the same methodology in the direct 
final rule.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. In the March 2022 
Preliminary Analysis, DOE considered that all motors would remain NEMA 
Design B as efficiency increased, and DOE found no evidence that 
installation costs would be impacted with increased efficiency levels. 
Therefore, in the March 2022 Preliminary Analysis, DOE did not 
incorporate changes in installation costs for motors that are more 
efficient than baseline equipment. DOE assumed there was no variation 
in installation costs between a baseline efficiency motor and a higher 
efficiency motor except in terms of shipping costs. These shipping 
costs were based on weight data from the engineering analysis for the 
representative units. See chapter 8 of the March 2022 Prelim TSD.
    In response to the preliminary analysis, EASA stated that there is 
no simple or reliable method to estimate the installation time and 
costs for synchronous motors under 100 hp because they are typically 
embedded into a machine like a fan or compressor. EASA further 
commented that submersible motors do not have a simple or reliable 
method to estimate their installation costs because of the physically 
connected piping that would require more time to install than a typical 
motor. EASA commented that inverter-only motors probably do not require 
additional time and cost to install compared to non-inverter motor 
unless they require additional wiring for feedback devices and sensors 
or mitigation of harmonics. (EASA, No. 21 at pp. 3-4)
    DOE is not including synchronous electric motors, submersible 
electric motors, and inverter-only motors in the scope of this direct 
final rule.
    EASA commented that motors above 500 hp have additional rigging 
costs during installation because of their size and sometimes difficult 
to access locations. EASA stated that there is not a simple or reliable 
method to estimate the installation time and costs for this size of 
motor. (EASA, No. 21 at p. 3) NEMA commented that DOE should include 
costs for rigging (hoisting) for larger motors due to their extreme 
weight. As rated horsepower increases, so too does the expense and time 
to move them safely. (NEMA, No. 22 at p. 22)
    DOE agrees that at a given efficiency level, the installation costs 
will vary as a function of the motor's weight. However, DOE did not 
find evidence that rigging costs (for a given motor size) would be 
impacted with increased efficiency levels as the variations in weights 
by EL are not significant enough to change the equipment and labor 
required to hoist the motor as compared to the baseline.
    EASA commented that if a motor is replaced with a physically larger 
frame, the replacement would have higher installation costs because of 
the added complexity of modifying the mounting setup to accommodate the 
larger motor, and in some case would be impossible. (EASA, No. 21 at p. 
2-3)
    As noted in section IV.C of this document, DOE fixed the frame size 
which remains the same across efficiency levels. Therefore, DOE did not 
account for any changes in installation costs due to changes in frame 
sizes in this direct final rule.
    In addition, as noted in IV.C.1.a, in this direct final rule, DOE 
revised the engineering approach, and assumed that higher efficiency 
motors above the baseline would meet the characteristics of a NEMA A 
motors and have higher inrush currents. Therefore, based on input from 
NEMA, DOE estimated the additional installation costs associated with 
the higher inrush current at efficiency levels above baseline, and 
incorporated these costs in the analysis.
3. Annual Energy Consumption
    For each sampled consumer, DOE determined the energy consumption 
for an electric motor at different efficiency levels using the approach 
described previously in section IV.E of this document.
4. Energy Prices
    Because marginal electricity price more accurately captures the 
incremental savings associated with a change in energy use from higher 
efficiency, it provides a better representation of incremental change 
in consumer costs than average electricity prices. Therefore, DOE 
applied average electricity prices for the energy use of the product 
purchased in the no-new-standards case, and marginal electricity prices 
for the incremental change in energy use associated with the other 
efficiency levels considered.

[[Page 36105]]

    DOE derived electricity prices in 2021 using data from EEI Typical 
Bills and Average Rates reports. Based upon comprehensive, industry-
wide surveys, this semi-annual report presents typical monthly electric 
bills and average kilowatt-hour costs to the customer as charged by 
investor-owned utilities. For all sectors, DOE calculated electricity 
prices using the methodology described in Coughlin and Beraki 
(2019).\52\
---------------------------------------------------------------------------

    \52\ Coughlin, K. and B. Beraki. 2019. Non-residential 
Electricity Prices: A Review of Data Sources and Estimation Methods. 
Lawrence Berkeley National Lab. Berkeley, CA. Report No. LBNL-
2001203. https://ees.lbl.gov/publications/non-residential-electricity-prices.
---------------------------------------------------------------------------

    DOE's methodology allows electricity prices to vary by sector, 
region and season. In the analysis, variability in electricity prices 
is chosen to be consistent with the way the consumer economic and 
energy use characteristics are defined in the LCC analysis. For 
electric motors, DOE relied on variability by region and sector. See 
chapter 8 of the final rule TSD for details.
    To estimate energy prices in future years, DOE multiplied the 2021 
energy prices by the projection of annual average price changes for 
each sector from the Reference case in AEO2022, which has an end year 
of 2050.\53\ To estimate price trends after 2050, DOE used the 2050 
electricity prices, held constant.
---------------------------------------------------------------------------

    \53\ U.S. Energy Information Administration. Annual Energy 
Outlook 2022. 2022. Washington, DC (Last accessed June 1, 2022.) 
https://www.eia.gov/outlooks/aeo/index.php.
---------------------------------------------------------------------------

5. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing product 
components that have failed in an appliance; maintenance costs are 
associated with maintaining the operation of the product
    In the March 2022 Preliminary Analysis, for the maintenance costs, 
DOE did not find data indicating a variation in maintenance costs 
between baseline efficiency and higher efficiency motors. The cost of 
replacing bearings, which is the most common maintenance practice, is 
constant across efficiency levels. Therefore, DOE did not include 
maintenance costs in the LCC analysis. See chapter 8 of the March 2022 
Prelim TSD.
    DOE did not receive any comments related to maintenance costs and 
retained the same approach in this direct final rule.
    DOE defines motor repair as including rewinding and reconditioning. 
In the March 2022 Preliminary Analysis, DOE estimated repair costs as a 
function of efficiency based on data from 2021 Vaughen's National 
Average Prices. Based on these data, DOE estimated the repair costs for 
baseline electric motors, and used a 15 percent repair cost increase 
per NEMA efficiency band increase. In addition, DOE considered that 
electric motors at or below 20 horsepower were not repaired. DOE also 
assumed that electric motors with a horsepower greater than 20 and less 
than or equal to 100 horsepower are repaired once over their lifetime, 
while electric motors with a horsepower greater than 100 and less than 
or equal to 500 are repaired twice over their lifetime. DOE also 
assumed that all electric motors above 20 horsepower would be repaired 
at least one, regardless of the sampled lifetime. As a sensitivity 
analysis, DOE also considered an alternative scenario where motors are 
repaired only upon meeting certain lifetime criteria. See chapter 8 of 
the March 2022 Prelim TSD.
    In response to the March 2022 Preliminary Analysis, EASA and NEMA 
stated that DOE may have overlooked non-rewinding repairs like bearing 
changes and stated that these repairs occur 5-7 times more often than 
rewinds regardless of motor output power. (EASA, No. 21 at p. 3; NEMA, 
No. 22 at p. 21) As noted previously, DOE defines motor repair as 
including rewinding and reconditioning. Other non-rewinding related 
practices such as bearing replacement were considered as part of the 
maintenance costs.
    EASA commented that a higher efficiency motor may require more 
material (e.g. copper magnet wire) and more labor to rewind windings 
with the higher slot fill that is typical of high efficiency designs. 
EASA also state that section 2.8.5 of the preliminary analysis TSD 
attributes a 15 percent increase in repair cost due to higher 
efficiency which contradicts Table 2.8.1 of the preliminary analysis 
TSD that states ``assumed no change with efficiency level'' for repair 
costs. (EASA, No. 21 at pp. 3-4) NEMA commented that as efficiency 
increases, the rate of hand winding increases. Repairing hand-wound 
motors may take longer as they are usually would by hand to accomplish 
very tight stacking. Rewinding such motors will take longer and cost 
more than random wound designs (NEMA, No. 22 at p. 22) NEMA also 
commented that the discussion on section 2.8.5 of the preliminary 
analysis TSD contradicted the summary table 2.8.1. of the preliminary 
analysis TSD (NEMA, No. 22 at p. 22)
    As noted by NEMA and EASA, more efficient motors are more expensive 
to repair. In the March 2022 Preliminary Analysis, DOE estimated the 
repair costs for baseline electric motors, and used a 15 percent repair 
cost increase per NEMA efficiency band increase to characterize the 
increase in repair costs with increased electric motor efficiency. In 
this direct final rule, DOE continues to apply an increase in repair 
costs at higher efficiency, and because the increase is directly 
related to the increase in material costs, DOE assumed the repair costs 
would increase similarly to the MSP instead of applying a 15 percent 
increase per NEMA efficiency band increase. DOE notes a typographical 
error in Table 2.8.1 of the preliminary analysis TSD. In that Table, 
DOE omitted to describe the repair cost assumption, and the statement 
only applies to the maintenance costs.
    EASA and NEMA commented that they believe 20 horsepower is not a 
valid breakpoint for a repair/replace decision on electric motors. In 
practice, EASA and NEMA commented that the horsepower breakpoint may be 
as high as 100 horsepower on motors readily available from stock. Also, 
special OEM motors and IEC motors that may be unavailable from 
inventory may be rewound more often than other motors and in lower 
power ratings due to need to keep equipment in service. (EASA, No. 21 
at p. 2; NEMA, No. 22 at p. 21) EASA provided data from 2017-2021 
regarding 11,000 technical inquiries they received about rewinding 
motors. The data showed that 32 percent, 29 percent, 31 percent and 8 
percent of inquiries related to motors with horsepower below 20, 
between 20 and 100 hp, between 100-500 hp, and greater than 500 hp, 
respectively. (EASA, No. 21 at p. 2) EASA commented that getting 
substantive data on repair likelihood would require polling a large 
sample of end-users and providing them with the definition of repair 
given in 8.3.3. of the preliminary analysis TSD.\54\ (EASA, No. 21 at 
p. 4)
---------------------------------------------------------------------------

    \54\ DOE defined a motor repair as repair as including rewinding 
and reconditioning
---------------------------------------------------------------------------

    Since the publication of the March 2022 Preliminary Analysis, DOE 
reviewed additional information related to repair practices. DOE found 
that although a breakpoint of 20 hp reflects the breakpoint below which 
the repair cost for is equivalent to or exceeds the cost of a new 
motor, the decision to repair or replace the motor is not only based on 
a cost effectiveness criteria.\55\ Specifically, in most facilities the 
cost of lost production or customer

[[Page 36106]]

inconvenience from downtime outweighs any cost differences between 
repairing or replacing a failed motor. As noted by EASA, the need to 
keep the equipment in service also affects the repair or replace 
decision. In addition, when replacing a motor, another major concern is 
stock availability. Most motors under 100 hp will typically be 
available on the shelf at the facility while larger and specialty 
motors will not.\56\ Based on this additional information, DOE updated 
the repair breakpoint from 20 hp to 100 hp. As such DOE considered that 
electric motors below 100 hp would not be repaired while motors above 
100 hp would be repaired at least once. In addition, DOE revised the 
analysis to consider that specialty electric motors, which are less 
likely to be in stock would be repaired regardless of their size.
---------------------------------------------------------------------------

    \55\ ``US Department of Energy, Advanced Manufacturing Office, 
Premium Efficiency Motor Selection and Application Guide,'' February 
2014, www.energy.gov/sites/prod/files/2014/04/f15/amo_motors_handbook_web.pdf.
    \56\ Bonneville Power Administration, ``Quality Electric Motor 
Repair, a Guidebook for Electric Utilities'' 
digital.library.unt.edu/ark:/67531/metadc665937/m2/1/high_res_d/237370.pdf.
---------------------------------------------------------------------------

    The Joint Advocates observed that for several representative units 
of currently-covered motors, the lifetime operating costs increased at 
higher EL and commented that DOE should review the repair assumptions 
and costs to ensure that operating costs at higher ELs are not over-
estimated. Specifically, the Joint Advocates commented that DOE should 
use the alternative scenario, wherein a motor is only assumed to be 
repaired if that motor's projected lifetime is greater than half of the 
average motor lifetime. The Joint Advocates commented that this 
alternative approach is similar to that used in the analysis for motor 
replacements in the direct final rule for dedicated-purpose pool pumps 
\57\ and would result in LCCs that are more reflective of real-world 
repair/replacement decisions. (Joint Advocates, No. 27 at p. 3-4)
---------------------------------------------------------------------------

    \57\ See 82 FR 5650 (January 18, 2017).
---------------------------------------------------------------------------

    In this direct final rule, DOE revised the repair assumptions to 
align with the alternative scenario presented in the March 2022 
Preliminary Analysis. As noted by the Joint Advocates, this scenario, 
which assumes that motors with longer lifetimes would be repaired more 
often is more representative of industry practice.
6. Equipment Lifetime
    In the March 2022 Preliminary Analysis, for electric motors 
regulated at 10 CFR 431.25, DOE estimated the average mechanical 
lifetime of electric motors (i.e., the total number of hours an 
electric motor operates throughout its lifetime) and used different 
values depending on the electric motor's horsepower. For NEMA Design A 
and B electric motors, and AO MEMs, DOE established sector-specific 
average motor lifetime estimates to account for differences in 
maintenance practices and field usage conditions. In addition, DOE 
applied a maximum lifetime of 30 years as used in the May 2014 Final 
Rule. DOE then developed Weibull distributions of mechanical lifetimes. 
The lifetime in years for a sampled electric motor is calculated by 
dividing the sampled mechanical lifetime by the sampled annual 
operating hours of the electric motor. This model produces a negative 
correlation between annual hours of operation and electric motor 
lifetime. Electric motors operated many hours per year are likely to be 
retired sooner than electric motors that are used for only a few hours 
per year. In addition, DOE considered that electric motors of less than 
or equal to 75 horsepower are most likely to be embedded in a piece of 
equipment (i.e., an application). For such applications, DOE developed 
Weibull distributions of application lifetimes expressed in years and 
compared the sampled motor mechanical lifetime (in years) with the 
sampled application lifetime. DOE assumed that the electric motor would 
be retired at the earlier of the two lifetimes. See chapter 8 of the 
March 2022 Prelim TSD.
    In response to the March 2022 Preliminary Analysis, NEMA commented 
that the lifetimes assigned to the representative units appear to be 
sufficiently accurate. (NEMA, No. 22 at p. 22). The CA IOUs recommended 
higher maximum lifetimes for NEMA Designs A and B electric motors 
beyond 30 years and provided data to justify a higher maximum lifetime. 
Specifically, the CA IOUs referenced the MSMA report which shows that 
5.4 percent of motors with legible nameplate were older than 30 years, 
including 3.4 percent of motors rated 101 to 500 hp which had lifetimes 
of at least 50 years. The CA IOUs also cited the Swiss EASY program 
which showed motors of 40 years still in operation. Finally the CA IOUs 
cited the ``Energy-Efficient Motor Systems: A Handbook on Technology, 
Program, and Policy Opportunities'' which references average lifetimes 
of 30 years for motors larger than 50 hp. (CA IOUs, No. 30 at p. 3)
    DOE reviewed the data provided by the CA IOUs. As noted by the CA 
IOUs, the maximum lifetime of 30 years assumed in the March 2022 
Preliminary Analysis is not representative as some motors are reported 
to have a lifetime exceeding 50 years. In this direct final rule, DOE 
revised the maximum lifetime of NEMA Designs A and B electric motors 
and AO MEMs from 30 years to 60 years based on information from the 
MSMA report which showed motors still in operation after 50 years.
7. Discount Rates
    In the calculation of LCC, DOE applies discount rates appropriate 
to consumers to estimate the present value of future operating cost 
savings. DOE estimated a distribution of discount rates for electric 
motors based on 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.\58\ The LCC analysis estimates net present value over the 
lifetime of the product, so the appropriate discount rate will reflect 
the general opportunity cost of household funds, taking this time scale 
into account. Given the long time horizon modeled in the LCC analysis, 
the application of a marginal interest rate associated with an initial 
source of funds is inaccurate. Regardless of the method of purchase, 
consumers are expected to continue to rebalance their debt and asset 
holdings over the LCC analysis period, based on the restrictions 
consumers face in their debt payment requirements and the relative size 
of the interest rates available on debts and assets. DOE estimates the 
aggregate impact of this rebalancing using the historical distribution 
of debts and assets.
---------------------------------------------------------------------------

    \58\ The implicit discount rate is inferred from a consumer 
purchase decision between two otherwise identical goods with 
different first cost and operating cost. It is the interest rate 
that equates the increment of first cost to the difference in net 
present value of lifetime operating cost, incorporating the 
influence of several factors: transaction costs; risk premiums and 
response to uncertainty; time preferences; interest rates at which a 
consumer is able to borrow or lend. The implicit discount rate is 
not appropriate for the LCC analysis because it reflects a range of 
factors that influence consumer purchase decisions, rather than the 
opportunity cost of the funds that are used in purchases.
---------------------------------------------------------------------------

    To establish commercial and industrial discount rates, DOE 
estimated the weighted-average cost of capital using data from 
Damodaran Online.\59\ 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. 
DOE estimated the cost of equity using the

[[Page 36107]]

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 average commercial, industrial, and agricultural 
discount rates in 2022 are 6.8 percent, 7.2 percent, and 7.1 percent 
respectively.
---------------------------------------------------------------------------

    \59\ Damodaran, A. Data Page: Historical Returns on Stocks, 
Bonds and Bills-United States. 2021. (Last accessed April 26, 2022.) 
pages.stern.nyu.edu/~adamodar/.
---------------------------------------------------------------------------

    In response to the March 2022 Preliminary Analysis, DOE did not 
receive any comments on discount rates.
    See chapter 8 of the direct final rule TSD for further details on 
the development of consumer discount rates.
8. Energy Efficiency Distribution in the No-New-Standards Case
    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 equipment efficiencies under the no-
new-standards case (i.e., the case without amended or new energy 
conservation standards).
    In the March 2022 Preliminary Analysis, to estimate the energy 
efficiency distribution of electric motors for 2027, DOE relied on 
model counts by efficiency from the 2016 and 2020 Manufacturer Catalog 
Data and assumed no changes in electric motor efficiency over time. In 
some cases where DOE did not have enough models with efficiency 
information within a single horsepower range, DOE aggregated horsepower 
ranges. In addition for certain AO-SNEM electric motors, DOE did not 
find enough models with efficiency information to develop a 
distribution and used the efficiency distributions of the corresponding 
non-AO equipment class instead. In the March 2022 Preliminary Analysis, 
DOE used a Monte Carlo simulation to draw from the efficiency 
distributions and randomly assign an efficiency to the electric motor 
purchased by each sample household in the no-new-standards case. The 
resulting percent shares within the sample match the market shares in 
the efficiency distributions. See chapter 8 of the March 2022 Prelim 
TSD.
    NEMA disagreed with the DOE estimates for AO MEMs efficiency 
distributions and commented that these distributions were modeled/
estimated, rather than gathered properly and accurately through testing 
and other means. NEMA commented that DOE should not develop estimates 
and interpolations and instead finalize test procedures. NEMA added 
that energy efficiency information does not exist because Federal test 
procedures for some of these motors have not been established. (NEMA, 
No. 22 at p. 23)
    DOE notes that NEMA did not provide any data to support alternative 
efficiency distributions. In the absence of such data, DOE relied on 
model counts by efficiency from manufacturer Catalog Data and updated 
the data to reflect 2022 catalog offerings (using the 2022 Motor 
Database). For AO Polyphase specialized frame electric motors, DOE did 
not find any catalog data to characterize their efficiency 
distributions and assumed all motors were at the baseline, because the 
OEM market is cost-driven. As such these motors are typically built on 
a first-cost basis and are not optimized for efficiency.\60\ In 
addition, the electric motors test procedure, which relies on industry 
test methods published in 2016,\61\ was finalized on October 19, 2022. 
87 FR 63588 For air-over motors, DOE believes manufacturers currently 
use the industry test methods (which were adopted in the October 2022 
Final Rule) to evaluate the efficiency of electric motors as reported 
in their catalogs, which is in line with the DOE test procedure as 
finalized.
---------------------------------------------------------------------------

    \60\ See, Almeida, Anibal T., et al. 2008. EuP Lot 11 Motors, 
Ecodesign Assessment of Energy Using Products. s.l.: ISR-University 
of Coimbra for the European Commission Directorate General for 
Mobility and Transport, 2008. (p.117). Available at: 
circabc.europa.eu/sd/d/62415be2-3d5a-4b3f-b29a-d1760f4dc11a/
Lot11Motors1-8final28-04-08.pdf.
    \61\ NEMA Standards Publication MG 1-2016, ``Motors and 
Generators: Air-Over Motor Efficiency Test Method Section IV Part 
34'', www.nema.org/docs/default-source/standards-document-library/part-34-addition-to-mg1-2016-watermarkd91d7834-cf4f-4a87-b86f-bef96b7dad54.pdf?sfvrsn=cbf1386d_3.
---------------------------------------------------------------------------

    As previously noted, in the March 2022 Preliminary Analysis, DOE 
assumed no changes in electric motor efficiency over time. DOE did not 
receive any comment on this assumption and retain the same approach in 
this direct final rule: to estimate the energy efficiency distribution 
of electric motors for 2027, DOE assumed no changes in electric motor 
efficiency over time. The estimated market shares for the no-new-
standards case for electric motors are shown in Table IV-9 by equipment 
class group and horsepower range.

                Table IV-9--No-New Standards Case Efficiency Distributions in the Compliance Year
----------------------------------------------------------------------------------------------------------------
       Equipment class group                Horsepower range         EL0 (%)  EL1 (%)  EL2 (%)  EL3 (%)  EL4 (%)
----------------------------------------------------------------------------------------------------------------
MEM 1-500 hp, NEMA Design A and B..  1 <= hp <= 5..................     79.8     18.8      0.0      0.9      0.6
                                     5 < hp <= 20..................     93.9      5.4      0.0      0.5      0.1
                                     20 < hp <= 50.................     93.9      5.4      0.0      0.5      0.1
                                     50 < hp <100..................     89.6      1.2      6.7      2.5      0.0
                                     100 <= hp <= 250..............     85.9      7.0      6.5      0.6      0.0
                                     250 < hp <= 500...............     91.9      8.1      0.0      0.0      0.0
MEM 501-750 hp, NEMA Design A & B..  500 < hp <= 750...............     10.5     73.7     15.8      0.0      0.0
AO-MEM (Standard Frame Size).......  1 <= hp <= 20.................     33.3     64.3      2.3      0.0      0.0
                                     20 < hp <= 50.................     10.3     89.7      0.0      0.0      0.0
                                     50 < hp < 100.................      0.0    100.0      0.0      0.0      0.0
                                     100 <= hp <= 250..............     16.7     75.0      8.3      0.0      0.0
AO-Polyphase (Specialized Frame      1 <= hp <= 20.................      100        0        0        0        0
 Size).
----------------------------------------------------------------------------------------------------------------
* May not sum to 100% due to rounding.

    The existence of market failures in the commercial and industrial 
sectors is well supported by the economics literature and by a number 
of case studies as discussed in the remainder of this section. DOE did 
not receive any comments specific to the random assignment of no-new-
standards case efficiencies (sampled from the developed efficiency 
distribution) in the LCC model and continued to rely on the same 
approach to reflect market failures in the motor market, as noted in 
the following examples. First, a recognized problem in commercial 
settings is the

[[Page 36108]]

principal-agent problem, where the building owner (or building 
developer) selects the equipment and the tenant (or subsequent building 
owner) pays for energy costs.62 63 In the case of electric 
motors, for many companies, the energy bills are paid for the company 
as a whole and not allocated to individual departments. This practice 
provides maintenance and engineering staff little incentives to pursue 
energy saving investments because the savings in energy bills provide 
little benefits to the decision-making maintenance and engineering 
staff. (Nadel et al.) \64\ Second, the nature of the organizational 
structure and design can influence priorities for capital budgeting, 
resulting in choices that do not necessarily maximize 
profitability.\65\ In the case of electric motors, within manufacturing 
as a whole, motor system energy costs constitute less than 1 percent of 
total operating costs and energy efficiency has a low level of priority 
among capital investment and operating objectives. (Xenergy,\66\ Nadel 
et al.) Third, there are asymmetric information and other potential 
market failures in financial markets in general, which can affect 
decisions by firms with regard to their choice among alternative 
investment options, with energy efficiency being one such option.\67\ 
In the case of electric motors, Xenergy identified the lack of 
information concerning the nature of motor system efficiency measures--
their benefits, costs, and implementation procedures--as a principal 
barrier to their adoption. In addition, Almeida \68\ reports that the 
attitude of electric motor end-user is characterized by bounded 
rationality where they adopt `rule of thumb' routines because of the 
complexity of market structure which makes it difficult for motors end-
users to get all the information they need to make an optimum decision 
concerning allocation of resources. The rule of thumb is to buy the 
same type and brand as the failed motor from the nearest retailer. 
Almeida adds that the same problem of bounded rationality exists when 
end-users purchase electric motors incorporated in larger equipment. In 
general, end-users are only concerned about the overall performance of 
a machine, and energy efficiency is rarely a key factor in this 
performance. Motor selection is therefore often left to the OEM, which 
are not responsible for energy costs and prioritize price and 
reliability.
---------------------------------------------------------------------------

    \62\ Vernon, D., and Meier, A. (2012). ``Identification and 
quantification of principal-agent problems affecting energy 
efficiency investments and use decisions in the trucking industry,'' 
Energy Policy, 49, 266-273.
    \63\ Blum, H. and Sathaye, J. (2010). ``Quantitative Analysis of 
the Principal-Agent Problem in Commercial Buildings in the U.S.: 
Focus on Central Space Heating and Cooling,'' Lawrence Berkeley 
National Laboratory, LBNL-3557E. (Available at: escholarship.org/uc/item/6p1525mg) (Last accessed January 20, 2022).
    \64\ Nadel, S., R.N. Elliott, M. Shepard, S. Greenberg, G. Katz 
& A.T. de Almedia. 2002. Energy-Efficient Motor Systems: A Handbook 
on Technology, Program and Policy Opportunities. Washington, DC: 
American Council for an Energy-Efficient Economy. Second Edition.
    \65\ DeCanio, S.J. (1994). ``Agency and control problems in US 
corporations: the case of energy-efficient investment projects,'' 
Journal of the Economics of Business, 1(1), 105-124.
    Stole, L.A., and Zwiebel, J. (1996). ``Organizational design and 
technology choice under intrafirm bargaining,'' The American 
Economic Review, 195-222.
    \66\ Xenergy, Inc. (1998). United States Industrial Electric 
Motor Systems Market Opportunity Assessment. (Available at: 
www.energy.gov/sites/default/files/2014/04/f15/mtrmkt.pdf) (Last 
accessed January 20, 2022).
    \67\ Fazzari, S.M., Hubbard, R.G., Petersen, B.C., Blinder, 
A.S., and Poterba, J.M. (1988). ``Financing constraints and 
corporate investment,'' Brookings Papers on Economic Activity, 
1988(1), 141-206.
    Cummins, J.G., Hassett, K.A., Hubbard, R.G., Hall, R.E., and 
Caballero, R.J. (1994). ``A reconsideration of investment behavior 
using tax reforms as natural experiments,'' Brookings Papers on 
Economic Activity, 1994(2), 1-74.
    DeCanio, S.J., and Watkins, W.E. (1998). ``Investment in energy 
efficiency: do the characteristics of firms matter?'' Review of 
Economics and Statistics, 80(1), 95-107.
    Hubbard R.G. and Kashyap A. (1992). ``Internal Net Worth and the 
Investment Process: An Application to U.S. Agriculture,'' Journal of 
Political Economy, 100, 506-534.
    \68\ de Almeida, E.L.F. (1998). ``Energy efficiency and the 
limits of market forces: The example of the electric motor market in 
France'', Energy Policy, 26(8), 643-653.
---------------------------------------------------------------------------

    See chapter 8 of the direct final rule TSD for further information 
on the derivation of the efficiency distributions.
9. Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
    As noted previously, EPCA establishes a rebuttable presumption that 
a standard is economically justified if the Secretary finds that the 
additional cost to the consumer of purchasing a product complying with 
an energy conservation standard level will be less than three times the 
value of the 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 or amended 
standards would be required.

G. Shipments Analysis

    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.\69\ 
The shipments model takes an accounting approach, tracking market 
shares of each product class and the vintage of units in the stock. 
Stock accounting uses product shipments as inputs to estimate the age 
distribution of in-service product stocks for all years. The age 
distribution of in-service product stocks is a key input to 
calculations of both the NES and NPV, because operating costs for any 
year depend on the age distribution of the stock.
---------------------------------------------------------------------------

    \69\ DOE uses data on manufacturer shipments as a proxy for 
national sales, as aggregate data on sales are lacking. In general 
one would expect a close correspondence between shipments and sales.
---------------------------------------------------------------------------

    In the March 2022 Preliminary Analysis, DOE estimated shipments in 
the base year (2020). DOE estimated the shipments of NEMA Design A and 
B electric motors regulated under 10 CFR 431.25 to be approximately 4.5 
million units in 2020 based on data from the 2019 Low-Voltage Motors, 
World Market Report, and on the share of low-voltage motors that are 
subject to the electric motors energy conservation standards. DOE 
estimated the total shipments AO-MEMs in 2020 to be 240,000 units. For 
electric motors regulated under 10 CFR 431.25, DOE developed a 
distribution of shipments by equipment class group, horsepower, 
enclosure, and poles based on data from manufacturer interviews. For 
AO-MEMs, DOE relied on model counts from the 2020 and 2016/2020 
Manufacturer Catalog Data. DOE also provided shipments estimates for 
additional categories of electric motors not analyzed in the 
preliminary analysis such as electric motors with horsepower greater 
than 500 hp. See chapter 9 of the March 2022 Prelim TSD.

[[Page 36109]]

    NEMA commented that shipments for motors above 500 hp were over-
estimated (NEMA, No. 22 at p. 24) During the electric motor working 
group negotiations, NEMA provided an estimate of 250--400 units sold 
per year. NEMA also provided an estimate of 180,000 units for AO MEMs, 
and 20,000 units for AO polyphase specialized frame size electric 
motors. In this direct final rule, DOE is including electric motors 
with horsepower greater than 500 hp and relied on NEMA's input to 
estimate shipments to 375 units in the base year. For AO MEMs and AO 
polyphase specialized frame size electric motors, DOE revised the total 
shipments to align with NEMA's estimate and revised the distribution of 
shipments by horsepower range based on model counts from the 2022 Motor 
Database. DOE did not receive any additional comments related to the 
base year shipments estimates and retained the values estimated in the 
March 2022 Preliminary Analysis for NEMA Design A and B motors between 
1--500 hp.
    In the March 2022 Preliminary Analysis, for NEMA A and B electric 
motors which are primarily used in the industry and commercial sectors, 
DOE projected shipments in the no-new standards case under the 
assumption that long-term growth of electric motor shipments will be 
driven by long-term growth of fixed investments. DOE relied on the AEO 
2021 forecast of fixed investments through 2050 to inform its shipments 
projection. For the years beyond 2050, DOE assumed that fixed 
investment growth will follow the same growth trend as GDP, which DOE 
projected for years after 2050 based on the GDP forecast provided by 
AEO 2021. For AO-MEM electric motors, which are typically lower 
horsepower motors, DOE projected shipments using the following sector-
specific market drivers from AEO 2021: commercial building floor space, 
housing numbers, and value of manufacturing activity for the 
commercial, residential, and industrial sector, respectively. In 
addition, DOE kept the distribution of shipments by equipment class 
group/horsepower range constant across the analysis period. Finally, in 
each standard case, DOE accounted for the possibility that some 
consumers may choose to purchase a synchronous electric motor (out of 
scope of this preliminary analysis) rather than a more efficient NEMA 
Design A or B electric motor. DOE developed a consumer choice model to 
estimate the percentage of consumers that would purchase a synchronous 
electric motor based on the payback period of such investment.
    In response to the March 2022 Preliminary Analysis, NEMA commented 
that they do not anticipate horsepower shifts from technology changes. 
NEMA also noted that, as an example, increased emission requirements 
for stationary diesel pump drivers will increase demand for larger 200 
hp and above electric motors. (NEMA, No. 22 at p. 24) NEMA did not 
provide any additional comments regarding shipments projections. DOE 
did not receive any additional comments related to shipments and 
retained the same methodology as in the preliminary analysis and 
updated the analysis to reflect AEO 2022. DOE applied the same 
shipments trends to electric motors above 500 hp.
    With respect to synchronous motors, NEMA commented that in section 
2.9.5 of the March 2022 Prelim TSD, DOE notes that synchronous motors 
are less efficient than their Design A or B counterparts, which NEMA 
does not agree with. Furthermore, NEMA stated that a focus on single 
point efficiency at full load misses the benefit synchronous motors 
provide (variable load and reduced speed operation). (NEMA, No. 22 at 
p. 24)
    DOE clarifies that Table 2.9.5 of the March 2022 Preliminary 
Analysis TSD did not provide information related to the efficiency of 
synchronous motors. Instead, Table 2.9.5 of the March 2022 Prelim TSD 
presented the percentage of consumer that would select a synchronous 
motor over a compliant induction motor in each considered standard 
level case. In addition, as noted by NEMA, synchronous motors offer 
additional energy savings benefits through variable load and reduced 
speed operation and DOE accounted for these savings in the preliminary 
analysis by applying a reduction of energy of 30 percent based on 
information from a previous DOE study.\70\ (See section 9.4 of the 
March 2022 Prelim TSD).
---------------------------------------------------------------------------

    \70\ U.S Department of Energy. United States Industrial Electric 
Motor Systems Market Opportunities Assessment. 2002.
---------------------------------------------------------------------------

    The Electric Motors Working Group stated that to achieve IE4 
efficiency levels, manufacturers would likely shift from NEMA Design B 
to NEMA Design A motors. This shift may result in the increased 
adoption of variable frequency drives (VFDs), which would significantly 
increase energy savings. Furthermore, while DOE's March 2022 
Preliminary Analysis looked only at substitutions to synchronous motors 
up to 100 hp, the increased adoption of VFDs (paired with an IE4 motor) 
would also be relevant at higher horsepower levels. The Electric Motors 
Working Group therefore encouraged DOE to include this VFD substitution 
in its analysis and added that with these substitutions, DOE's updated 
analysis will show the recommended efficiency levels to be cost 
effective. The Electric Motors Working Group did not provide estimates 
regarding the rate at which this substitution would occur.
    In the direct final rule TSD, DOE added a scenario to account for 
the fact that some consumers may choose to purchase a synchronous 
electric motor (out of scope of this direct final rule) rather than a 
more efficient NEMA Design A or B electric motor or select to purchase 
a VFD in combination with a compliant electric motor. Similar to the 
approach used in the March 2022 Preliminary Analysis, DOE developed a 
consumer choice model to estimate the percentage of consumers that 
would purchase a synchronous electric motor based on the payback period 
of such investment. DOE notes that there is uncertainty as to which 
rate such substitution would occur and did not incorporate this 
scenario as part of the reference analysis. To support the payback 
calculation, DOE accounted for the total installed costs and annual 
operating costs of a synchronous motor and of a VFD in combination with 
a compliant electric motor. In addition, DOE updated its previous 
estimate of energy use reduction resulting from variable load and 
reduced speed operation based on a more recent study. See appendix 8-D 
of the DFR TSD for more details on this analysis.
    NEMA added that comparing a synchronous motor and drive combination 
to an induction motor is not an apples-to-apples comparison and should 
be avoided. NEMA stated that the application of motor-drive systems are 
application dependent. NEMA stated that programs which encourage and 
facilitate power drive system installations in the field and during 
planning are the appropriate vehicles for market transformation, not 
point-of-sale regulations such as those in question of the PTSD. NEMA 
stated that DOE should defer to and encourage those programs as 
appropriate ``other than regulatory'' actions for market 
transformation. (NEMA, No. 22 at p. 24)
    DOE notes that NEMA is a member of the Electric Motors Working 
Group and jointly commented that DOE should consider that some 
consumers may select to purchase a synchronous motor and drive 
combination or a VFD combined with a compliant motor. As noted, DOE 
analyzed this scenario as a

[[Page 36110]]

sensitivity analysis and the reference scenario did not include this 
potential market shift to synchronous motors and VFD usage.
    NEMA commented that legacy induction motors are being replaced by 
PDS (or power drive systems) consisting of a motor and controls/drives 
as a means to dramatically reduce power and integrate motor driven 
systems into sophisticated control schemes that continuously monitor 
processes managing flow, pressure, etc., to reduce operating costs and 
emissions. (NEMA, No. 22 at p. 23) As noted by NEMA, advanced 
technology electric motors that are combined with a drive are now 
available on the market and could be used in the same applications as 
the electric motors analyzed in this direct final rule. However, DOE 
estimates these PDS currently represent a small fraction of the 
market.\71\ Further, NEMA did not provide data to quantitatively 
estimate the rate at which such PDS would replace legacy induction 
motors. As such DOE did not include such impact in the reference 
scenario. Instead, DOE accounted for the potential switch from 
induction motors to PDS as a sensitivity scenario. See Appendix 8-C and 
10-D for more details. In addition, as another sensitivity analysis, 
DOE also projected shipments in a low growth scenario which assumed 
lower shipments compared to the reference scenario. See Chapter 9 of 
the direct final rule for more details.
---------------------------------------------------------------------------

    \71\ DOE estimates the market share of advanced technology 
motors to be less than 1 percent based on information from OMDIA, 
Low-Voltage Motors Intelligence Service, Annual 2020 Analysis (OMDIA 
Report November 2020).
---------------------------------------------------------------------------

H. National Impact Analysis
    The NIA assesses the national energy savings (``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 
efficiency levels.\72\ (``Consumer'' in this context refers to 
consumers of the product being regulated.) DOE calculates the NES and 
NPV for the potential standard levels considered based on projections 
of annual product shipments, along with the annual energy consumption 
and total installed cost data from the energy use and LCC analyses. For 
the present analysis, DOE projected the energy savings, operating cost 
savings, product costs, and NPV of consumer benefits over the lifetime 
of electric motors sold from 2027 through 2056.
---------------------------------------------------------------------------

    \72\ The NIA accounts for impacts in the 50 states and U.S. 
territories.
---------------------------------------------------------------------------

    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 
(i.e., the TSLs or standards cases) for that class. For the standards 
cases, DOE considers how a given standard would likely affect the 
market shares of products with efficiencies greater than the standard.
    In its analysis, DOE analyzes the energy and economic impacts of a 
potential standard on all equipment classes aggregated by horsepower 
range and equipment class group. For NEMA Design A and B electric 
motors regulated under 10 CFR 431.25, inputs for non-representative 
equipment classes (i.e., those not analyzed in the engineering, energy-
use, and LCC analyses) are scaled using inputs for the analyzed 
representative equipment classes.\73\ For AO-MEMs and electric motors 
above 500 hp, DOE used the results of the representative units without 
any scaling due to the smaller size of horsepower ranges associated for 
each representative unit, and lower shipments of motors at larger 
horsepower ratings.
---------------------------------------------------------------------------

    \73\ For example, results from representative unit 1 (NEMA 
Design A and B electric motors, 5-horsepower, 4-pole, enclosed) were 
scaled based by HP and weight to represent all NEMA Design A and B 
electric motor equipment classes between 1 and 5 horsepower. DOE 
then used shipments weighted-average results to represent the 1-5 HP 
range.
---------------------------------------------------------------------------

    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-10 summarizes the inputs and methods DOE used for the NIA 
analysis for the direct final rule. Discussion of these inputs and 
methods follows the table. See chapter 10 of the direct final rule TSD 
for further details.

   Table IV-10--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
            Inputs                               Method
------------------------------------------------------------------------
Shipments....................  Annual shipments from shipments model.
Compliance Date of Standard..  2027.
Efficiency Trends............  No-new-standards case: constant trend
                                Standard cases: constant trend.
Annual Energy Consumption per  Annual weighted-average values are a
 Unit.                          function of energy use at each TSL.
Total Installed Cost per Unit  Annual weighted-average values are a
                                function of cost at each TSL.
                                Incorporates projection of future
                                product prices based on historical data
                                (constant trend).
Repair and Maintenance Cost    Maintenance costs: Do not change with
 per Unit.                      efficiency level. Repair costs: Changes
                                with efficiency level.
Electricity Price............  Estimated average and marginal
                                electricity prices from the LCC analysis
                                based on EEI data.
Electricity Price Trends.....  AEO2022 projections (to 2050) and
                                extrapolation thereafter.
Energy Site-to-Primary and     A time-series conversion factor based on
 FFC Conversion.                AEO2022.
Discount Rate................  3 percent and 7 percent.
Present Year.................  2023.
------------------------------------------------------------------------

1. Equipment Efficiency Trends
    A key component of the NIA is the trend in energy efficiency 
projected for the no-new-standards case and each of the standards 
cases. Section IV.F.8 of this document describes how DOE developed an 
energy efficiency distribution for the no-new-standards case (which 
yields a shipment-weighted average efficiency) for each of the 
considered equipment classes for the first year of anticipated 
compliance with an amended or new standard. To project the trend in 
efficiency absent amended standards for electric motors over the

[[Page 36111]]

entire shipments projection period, similar to what was done in the 
March 2022 preliminary Analysis, DOE applied a constant trend. The 
approach is further described in chapter 10 of the direct final rule 
TSD.
    For the standards cases, similar to what was done in the March 2022 
preliminary Analysis, DOE used a ``roll-up'' scenario to establish the 
shipment-weighted efficiency for the year that standards are assumed to 
become effective (2027). In this scenario, the market shares 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 2027, DOE assumed 
no change over the forecast period.
    DOE did not receive any comments on the projected efficiency 
trends.
2. National Energy Savings
    The national energy savings analysis involves a comparison of 
national energy consumption of the considered products between each 
potential standards case (``TSL'') and the case with no new 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 (i.e., the energy consumed by power plants to 
generate site electricity) using annual conversion factors derived from 
AEO2022. Cumulative energy savings are the sum of the NES for each year 
over the timeframe of the analysis.
    Use of higher-efficiency products is sometimes associated with a 
direct rebound effect, which refers to an increase in utilization of 
the product due to the increase in efficiency. For example, when a 
consumer realizes that a more-efficient electric motor used for cooling 
will lower the electricity bill, that person may opt for increased 
comfort in the building by using the equipment more, thereby negating a 
portion of the energy savings. In commercial buildings, however, the 
person owning the equipment (i.e., the building owner) is usually not 
the person operating the equipment (i.e., the renter). Because the 
operator usually does not own the equipment, that person will not have 
the operating cost information necessary to influence their operation 
of the equipment. Therefore, DOE believes that a rebound effect is 
unlikely to occur in commercial buildings. In the industrial and 
agricultural sectors, DOE believes that electric motors are likely to 
be operated whenever needed for the required process or service, so a 
rebound effect is also unlikely to occur in the industrial and 
agricultural sectors.
    In addition, electric motors are components of larger equipment or 
systems and DOE has determined that a change in motor efficiency alone 
would not increase the utilization of that equipment or system. DOE did 
not find any data on the rebound effect specific to electric motors and 
did not receive any comments supporting the inclusion of a rebound 
effect for electric motors. DOE did not apply a rebound effect for 
electric motors.
    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 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 \74\ 
that EIA uses to prepare its Annual Energy Outlook. The FFC factors 
incorporate losses in production and delivery in the case of natural 
gas (including fugitive emissions) and additional energy used to 
produce and deliver the various fuels used by power plants. The 
approach used for deriving FFC measures of energy use and emissions is 
described in appendix 10B of the direct final rule TSD.
---------------------------------------------------------------------------

    \74\ For more information on NEMS, refer to The National Energy 
Modeling System: An Overview 2018, DOE/EIA-0581(2018), April 2019. 
Available at www.eia.gov/outlooks/aeo/nems/documentation/ (last 
accessed July 26, 2022).
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3. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are (1) total annual installed cost, (2) total 
annual operating costs (energy costs and repair and maintenance costs), 
and (3) a discount factor to calculate the present value of costs and 
savings. DOE calculates net savings each year as the difference between 
the no-new-standards case and each standards case in terms of total 
savings in operating costs versus total increases in installed costs. 
DOE calculates operating cost savings over the lifetime of each product 
shipped during the projection period.
    As discussed in section IV.F.1 of this document, DOE developed 
equipment price trends based on historical PPI data. DOE applied the 
same trends (i.e., constant price trend) to project prices for each 
equipment class at each considered efficiency level.
    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 electric 
motors. In addition to the default price trend, DOE considered two 
product price sensitivity cases: (1) a high price decline case and (2) 
a low price decline case based on historical PPI data. The derivation 
of these price trends and the results of these sensitivity cases are 
described in appendix 10-C of the direct final rule TSD.
    The operating cost savings are electricity cost savings and any 
changes in repair costs, which are calculated using the estimated 
energy savings in each year and the projected electricity price as well 
as using the lifetime repair costs estimates from the LCC. To estimate 
electricity prices in future years, in each sector (commercial, 
industrial and agriculture), DOE multiplied the sector-specific average 
electricity prices by the projection of annual national-average 
electricity price changes in the Reference case from AEO2022, which has 
an end year of 2050. To estimate price trends after 2050, DOE used the 
2050 electricity prices, held constant. DOE then used a weighted-
average trend across all sectors in the NIA. As part of the NIA, DOE 
also analyzed scenarios that used inputs from variants of the AEO2022 
Reference case that have lower and higher economic growth. Those cases 
have lower and higher energy price trends compared to the Reference 
case. NIA results based on these cases are presented in appendix 10C of 
the direct final rule TSD.

[[Page 36112]]

    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For this 
direct 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.\75\ The discount rates for the determination of 
NPV are in contrast to the discount rates used in the LCC analysis, 
which are designed to reflect a consumer's perspective. The 7-percent 
real value is an estimate of the average before-tax rate of return to 
private capital in the U.S. economy. The 3-percent real value 
represents the ``social rate of time preference,'' which is the rate at 
which society discounts future consumption flows to their present 
value.
---------------------------------------------------------------------------

    \75\ United States Office of Management and Budget. Circular A-
4: Regulatory Analysis. September 17, 2003. Section E. Available at 
georgewbush-whitehouse.archives.gov/omb/memoranda/m03-21.html (last 
accessed July 26, 2022).
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I. Consumer Subgroup Analysis

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

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of new and 
amended energy conservation standards on manufacturers of electric 
motors 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 new and 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, 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 and amended standards, the GRIM estimates a range of 
possible impacts under different manufacturer 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 direct 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 electric motors 
manufacturing industry based on the market and technology assessment, 
preliminary manufacturer interviews, and publicly-available 
information. This included a top-down analysis of electric motors 
manufacturers that DOE used to derive preliminary financial inputs for 
the GRIM (e.g., revenues; materials, labor, overhead, and depreciation 
expenses; selling, general, and administrative expenses (``SG&A''); and 
R&D expenses). DOE also used public sources of information to further 
calibrate its initial characterization of the electric motors 
manufacturing industry, including company filings of form 10-K from the 
SEC,\76\ corporate annual reports, the U.S. Census Bureau's ``Economic 
Census,'' \77\ and reports from D&B Hoover.\78\
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    \76\ www.sec.gov/edgar.
    \77\ www.census.gov/programs-surveys/asm/data/tables.html.
    \78\ app.avention.com.
---------------------------------------------------------------------------

    In Phase 2 of the MIA, DOE prepared a framework industry cash-flow 
analysis to quantify the potential impacts of new and 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 electric motors 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. See section IV.J.3 of this document for a 
description of the key issues raised by manufacturers during the 
interviews. As part of Phase 3, DOE also evaluated subgroups of 
manufacturers that may be disproportionately impacted by new and 
amended standards or that may not be accurately represented by the 
average cost assumptions used to develop the industry cash flow 
analysis. Such

[[Page 36113]]

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 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 direct final rule TSD.
2. Government Regulatory Impact Model and Key Inputs
    DOE uses the GRIM to quantify the changes in cash flow due to new 
and 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 new and amended energy conservation standards. The 
GRIM spreadsheet uses the inputs to arrive at a series of annual cash 
flows, beginning in 2023 (the base year of the analysis) and continuing 
to 2056. DOE calculated INPVs by summing the stream of annual 
discounted cash flows during this period. For manufacturers of electric 
motors, DOE used a real discount rate of 9.1 percent, which was used in 
the May 2014 Final Rule and then asked for feedback on this value 
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 
and amended energy conservation standards 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 and 
subsequent Working Group meetings. The GRIM results are presented in 
section V.B.2. Additional details about the GRIM, the discount rate, 
and other financial parameters can be found in chapter 12 of the direct 
final rule TSD.
a. Manufacturer Production Costs
    Manufacturing more efficient 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 MPCs of the covered equipment can affect the 
revenues, gross margins, and cash flow of the industry.
    DOE conducted the engineering analysis using a combination of 
physical teardowns and software modeling. DOE contracted a professional 
motor laboratory to disassemble various electric motors and record what 
types of materials were present and how much of each material was 
present, recorded in a final bill of materials (``BOM''). To supplement 
the physical teardowns, software modeling by a subject matter expert 
(``SME'') was also used to generate BOMs for select efficiency levels 
of directly analyzed representative units.
    For a complete description of the MPCs, see chapter 5 of the direct 
final rule TSD.
b. Shipments Projections
    The GRIM estimates manufacturer revenues based on total unit 
shipment projections 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 2023 (the base year) to 2056 (the end year of 
the analysis period). See chapter 9 of the direct final rule TSD for 
additional details.
c. Product and Capital Conversion Costs
    New and amended energy conservation standards 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 equipment 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 equipment 
designs comply with new 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 equipment designs can be fabricated and assembled.
    DOE calculated the product and capital conversion costs using 
bottom-up approach based on feedback from manufacturers during 
manufacturer interviews. During manufacturer interviews, DOE asked 
manufacturers questions regarding the estimated product and capital 
conversion costs needed to produce electric motors within an equipment 
class at each specific EL. DOE used the feedback provided from 
manufacturers to estimate the approximate amount of engineering time, 
testing costs and capital equipment that would be purchased to redesign 
a single frame size to each EL. Some of the types of capital conversion 
costs manufacturers identified were the purchase of lamination die 
sets, winding machines, frame casts, and assembly equipment as well as 
other retooling costs. The two main types of product conversion costs 
manufacturers shared with DOE during interviews were number of engineer 
hours necessary to re-engineer frames to meet higher efficiency 
standards and the testing costs to comply with higher efficiency 
standards.
    DOE then took average values (i.e., costs or number of hours) based 
on the range of responses given by manufacturers for each product and 
capital conversion costs necessary for a manufacturer to increase the 
efficiency of one frame size to a specific EL. DOE multiplied the 
conversion costs associated with manufacturing a single frame size at 
each EL by the number of frames each interviewed manufacturer produces. 
DOE finally scaled this number based on the market share of the 
manufacturers DOE interviewed, to arrive at industry wide bottom-up 
product and capital conversion cost estimates for each representative 
unit at each EL.
    In response to the May 2020 Early Assessment Review RFI, NEMA 
stated that if DOE decides to pursue revision of energy conservation 
standards for electric motors, DOE should revisit its analyses and 
assumptions for the product and capital conversion costs used in the 
May 2014 Final Rule. (NEMA, No. 4 at p. 3) Additionally, in response to 
the March 2022 Preliminary Analysis EASA agreed with NEMA's comment 
that DOE should revise the analyses for product and capital conversion 
costs (EASA, No. 21 at p. 5) After the publication of the March 2022 
Preliminary Analysis, DOE interviewed manufacturers to gather 
information regarding the product and capital conversion costs used in 
this NOPR analysis. DOE relied on the information gathered during these 
manufacturer interviews to create the product and

[[Page 36114]]

capital conversion cost estimated used in this direct final rule 
analysis.
    In general, DOE assumes all conversion-related investments occur 
between the year of publication of the direct final rule and the year 
by which manufacturers must comply with the new and amended standard. 
The conversion cost figures used in the GRIM can be found in section 
V.B.2 of this document. For additional information on the estimated 
capital and product conversion costs, see chapter 12 of the direct 
final rule TSD.
d. Markup Scenarios
    MSPs include direct manufacturing production costs (i.e., labor, 
materials, and overhead estimated in DOE's MPCs) and all non-production 
costs (i.e., SG&A, R&D, and interest), along with profit. To calculate 
the MSPs in the GRIM, DOE applied non-production cost markup 
multipliers to the MPCs estimated in the engineering analysis for each 
equipment class and efficiency level. Modifying these markup 
multipliers the standards case yields different sets of impacts on 
manufacturers. For the MIA, DOE modeled two standards-case markup 
scenarios to represent uncertainty regarding the potential impacts on 
prices and profitability for manufacturers following the implementation 
of new and amended energy conservation standards: (1) a preservation of 
gross margin scenario; and (2) a preservation of operating profit 
markup scenario. These scenarios lead to different markup multipliers 
that, when applied to the MPCs, result in varying revenue and cash flow 
impacts.
    Under the preservation of gross margin scenario, DOE applied a 
single uniform ``gross margin percentage'' across all efficiency 
levels, which 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. In this manufacturer markup scenario, 
electric motor manufacturers fully pass on any additional MPC increase 
due to standards to their consumers. DOE used a manufacturer markup of 
1.37 for all electric motors covered by this rulemaking with less than 
or equal to 5 hp, and a manufacturer markup or 1.45 for all electric 
motors covered by this rulemaking greater than 5 hp. DOE used these 
same manufacturer markups for all TSLs in the preservation of gross 
margin scenario. This manufacturer markup scenario represents the 
upper-bound of manufacturer INPV and is the manufacturer markup 
scenario used to calculate the economic impacts on consumers.
    Under the preservation of operating profit scenario, DOE modeled a 
situation in which manufacturers are not able to increase per-unit 
operating profit in proportion to increases in MPCs. Under this 
scenario, as MPCs increase, manufacturers reduce the manufacturer 
margins to maintain a cost competitive offering in the market. However, 
in this scenario manufacturers maintain their total operating profit in 
absolute dollars in the standards case, despite higher product costs 
and investment. Therefore, gross margin (as a percentage) shrinks in 
the standards cases. This manufacturer markup scenario represents the 
lower-bound to industry profitability under new and amended energy 
conservation standards.
    A comparison of industry financial impacts under the two markup 
scenarios is presented in section V.B.2.a of this document.
3. Manufacturer Interviews
    DOE conducted additional interviews with manufacturers following 
the publication of the March 2022 Prelim TSD in preparation for this 
NOPR analysis. In interviews, DOE asked manufacturers to describe their 
major concerns regarding this rulemaking. The following section 
highlights manufacturer concerns that helped inform the projected 
potential impacts of anew and amended standard on the industry. 
Manufacturer interviews are conducted under non-disclosure agreements 
(``NDAs''), so DOE does not document these discussions in the same way 
that it does public comments in the comment summaries and DOE's 
responses throughout the rest of this document.
    During these interviews, most manufacturers stated that even 
manufacturing a single electric motor to an efficiency level above IE 4 
(or IE 4 equivalent efficiency levels) would require a significant 
level of investments. Further, most manufacturers also stated that it 
would be impossible to manufacturer a complete line of electric motors 
spanning all horsepower covered by this rulemaking regardless of the 
costs associated with this task. Increasing the efficiency of any 
electric motor to an efficiency level above IE 4 would require each 
manufacturer to make a significant capital investment to retool their 
entire production line. It would also require manufacturers to 
completely redesign almost every electric motor configuration offered, 
which could take more than a decade of engineering time.
    DOE examines a range of efficiency levels for covered equipment 
when determining whether to amend or establish energy conservation 
standards, including the level that represents the most energy-
efficient combination of design options. In this analysis for NEMA 
Design A and B electric motors between 1 and 500 hp, EL 1 is associated 
with an IE 4 equivalent efficiency level and EL 2, EL 3, and EL 4 (max-
tech) represent efficiency levels above IE 4. DOE understands the level 
of burden placed on electric motor manufacturers if energy conservation 
standards require any electric motors to meet energy conservation 
standards set above IE 4 equivalent levels. These investments (in the 
form of conversion costs) are accounted for in the MIA and displayed in 
section V.B.2.a.

K. Emissions Analysis

    The emissions analysis consists of two components. The first 
component estimates the effect of potential energy conservation 
standards on power sector and site (where applicable) combustion 
emissions of CO2, NOX, SO2, and Hg. 
The second component estimates the impacts of potential standards on 
emissions of two additional greenhouse gases, CH4 and 
N2O, as well as the reductions in emissions of other gases 
due to ``upstream'' activities in the fuel production chain. These 
upstream activities comprise extraction, processing, and transporting 
fuels to the site of combustion.
    The analysis of electric power sector emissions of CO2, 
NOX, SO2, and Hg uses emissions factors intended 
to represent the marginal impacts of the change in electricity 
consumption associated with amended or new standards. The methodology 
is based on results published for the AEO, including a set of side 
cases that implement a variety of efficiency-related policies. The 
methodology is described in appendix 13A in the direct final rule TSD. 
The analysis presented in this notice uses projections from AEO2022. 
Power sector emissions of CH4 and N2O from fuel 
combustion are estimated using Emission Factors for Greenhouse Gas 
Inventories published by the Environmental Protection Agency (EPA).\79\
---------------------------------------------------------------------------

    \79\ Available at www.epa.gov/sites/production/files/2021-04/documents/emission-factors_apr2021.pdf (last accessed July 12, 
2021).
---------------------------------------------------------------------------

    FFC upstream emissions, which include emissions from fuel 
combustion during extraction, processing, and transportation of fuels, 
and ``fugitive''

[[Page 36115]]

emissions (direct leakage to the atmosphere) of CH4 and 
CO2, are estimated based on the methodology described in 
chapter 15 of the direct final rule TSD.
    The emissions intensity factors are expressed in terms of physical 
units per MWh or MMBtu of site energy savings. For power sector 
emissions, specific emissions intensity factors are calculated by 
sector and end use. Total emissions reductions are estimated using the 
energy savings calculated in the national impact analysis.
1. Air Quality Regulations Incorporated in DOE's Analysis
    DOE's no-new-standards case for the electric power sector reflects 
the AEO, which incorporates the projected impacts of existing air 
quality regulations on emissions. AEO2022 generally represents current 
legislation and environmental regulations, including recent government 
actions, that were in place at the time of preparation of AEO2022, 
including the emissions control programs discussed in the following 
paragraphs.\80\
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    \80\ For further information, see the Assumptions to AEO2022 
report that sets forth the major assumptions used to generate the 
projections in the Annual Energy Outlook. Available at www.eia.gov/outlooks/aeo/assumptions/ (last accessed June 22, 2022).
---------------------------------------------------------------------------

    SO2 emissions from affected electric generating units 
(``EGUs'') are subject to nationwide and regional emissions cap-and-
trade programs. Title IV of the Clean Air Act sets an annual emissions 
cap on SO2 for affected EGUs in the 48 contiguous States and 
the District of Columbia (``DC''). (42 U.S.C. 7651 et seq.) 
SO2 emissions from numerous States in the eastern half of 
the United States are also limited under the Cross-State Air Pollution 
Rule (``CSAPR''). 76 FR 48208 (Aug. 8, 2011). CSAPR requires these 
States to reduce certain emissions, including annual SO2 
emissions, and went into effect as of January 1, 2015.\81\ AEO2022 
incorporates implementation of CSAPR, including the update to the CSAPR 
ozone season program emission budgets and target dates issued in 2016. 
81 FR 74504 (Oct. 26, 2016). Compliance with CSAPR is flexible among 
EGUs and is enforced through the use of tradable emissions allowances. 
Under existing EPA regulations, for states subject to SO2 
emissions limits under CSAPR, any excess SO2 emissions 
allowances resulting from the lower electricity demand caused by the 
adoption of an efficiency standard could be used to permit offsetting 
increases in SO2 emissions by another regulated EGU.
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    \81\ CSAPR requires states to address annual emissions of 
SO2 and NOX, precursors to the formation of 
fine particulate matter (PM2.5) pollution, in order to 
address the interstate transport of pollution with respect to the 
1997 and 2006 PM2.5 National Ambient Air Quality 
Standards (``NAAQS''). CSAPR also requires certain states to address 
the ozone season (May-September) emissions of NOX, a 
precursor to the formation of ozone pollution, in order to address 
the interstate transport of ozone pollution with respect to the 1997 
ozone NAAQS. 76 FR 48208 (Aug. 8, 2011). EPA subsequently issued a 
supplemental rule that included an additional five states in the 
CSAPR ozone season program; 76 FR 80760 (Dec. 27, 2011) 
(Supplemental Rule).
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    However, beginning in 2016, SO2 emissions began to fall 
as a result of the Mercury and Air Toxics Standards (``MATS'') for 
power plants. 77 FR 9304 (Feb. 16, 2012). The final rule establishes 
power plant emission standards for mercury, acid gases, and non-mercury 
metallic toxic pollutants. In order to continue operating, coal plants 
must have either flue gas desulfurization or dry sorbent injection 
systems installed. Both technologies, which are used to reduce acid gas 
emissions, also reduce SO2 emissions. Because of the 
emissions reductions under the MATS, it is unlikely that excess 
SO2 emissions allowances resulting from the lower 
electricity demand would be needed or used to permit offsetting 
increases in SO2 emissions by another regulated EGU. 
Therefore, energy conservation standards that decrease electricity 
generation will generally reduce SO2 emissions. DOE 
estimated SO2 emissions reduction using emissions factors 
based on AEO2022.
    CSAPR also established limits on NOX emissions for 
numerous States in the eastern half of the United States. Energy 
conservation standards would have little effect on NOX 
emissions in those States covered by CSAPR emissions limits if excess 
NOX emissions allowances resulting from the lower 
electricity demand could be used to permit offsetting increases in 
NOX emissions from other EGUs. In such case, NOX 
emissions would remain near the limit even if electricity generation 
goes down. Depending on the configuration of the power sector in the 
different regions and the need for allowances, however, NOX 
emissions might not remain at the limit in the case of lower 
electricity demand. That would mean that standards might reduce 
NOX emissions in covered States. Despite this possibility, 
DOE has chosen to be conservative in its analysis and has maintained 
the assumption that standards will not reduce NOX emissions 
in States covered by CSAPR. Standards would be expected to reduce 
NOX emissions in the States not covered by CSAPR. DOE used 
AEO2022 data to derive NOX emissions factors for the group 
of States not covered by CSAPR.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would be expected to slightly reduce Hg emissions. DOE 
estimated mercury emissions reduction using emissions factors based on 
AEO2022, which incorporates the MATS.
    NEMA commented that DOE does not adequately examine or account for 
the significant impacts from ever-increasing investment in and use of 
renewable energy sources and associated decrease in emissions. (NEMA, 
No. 22 at p. 25)
    DOE acknowledges that increasing use of renewable electricity 
sources could reduce CO2 emissions and likely other 
emissions from the power sector faster than could have been expected 
when AEO2022 was prepared. Nevertheless, DOE has used AEO2022 for the 
purposes of quantifying emissions as DOE believes it continues to be 
the most appropriate projection at this time for such purposes.

L. Monetizing Emissions Impacts

    As part of the development of this direct final rule, for the 
purpose of complying with the requirements of Executive Order 12866, 
DOE considered the estimated monetary benefits from the reduced 
emissions of CO2, CH4, N2O, 
NOX, and SO2 that are expected to result from 
each of the TSLs considered. In order to make this calculation 
analogous to the calculation of the NPV of consumer benefit, DOE 
considered the reduced emissions expected to result over the lifetime 
of products shipped in the projection period for each TSL. This section 
summarizes the basis for the values used for monetizing the emissions 
benefits and presents the values considered in this direct final rule.
    To monetize the benefits of reducing GHG emissions this analysis 
uses the interim estimates presented in the Technical Support Document: 
Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates 
Under Executive Order 13990 published in February 2021 by the 
Interagency Working Group on the Social Cost of Greenhouse Gases (IWG). 
DOE requests comment on how to address the climate benefits and other 
non-monetized effects of the proposal.
1. Monetization of Greenhouse Gas Emissions
    DOE estimates the monetized benefits of the reductions in emissions 
of CO2, CH4, and N2O by using a 
measure of the SC of each pollutant (e.g., SC-CO2).

[[Page 36116]]

These estimates represent the monetary value of the net harm to society 
associated with a marginal increase in emissions of these pollutants in 
a given year, or the benefit of avoiding that increase. These estimates 
are intended to include (but are not limited to) climate-change-related 
changes in net agricultural productivity, human health, property 
damages from increased flood risk, disruption of energy systems, risk 
of conflict, environmental migration, and the value of ecosystem 
services.
    DOE exercises its own judgment in presenting monetized climate 
benefits as recommended by applicable Executive orders, and DOE would 
reach the same conclusion presented in this direct final rule in the 
absence of the social cost of greenhouse gases. That is, the social 
costs of greenhouse gases, whether measured using the February 2021 
interim estimates presented by the Interagency Working Group on the 
Social Cost of Greenhouse Gases or by another means, did not affect the 
rule ultimately adopted by DOE.
    DOE estimated the global social benefits of CO2, 
CH4, and N2O reductions (i.e., SC-GHGs) using the 
estimates presented in the Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990, published in February 2021 by the IWG. The SC-GHGs is the 
monetary value of the net harm to society associated with a marginal 
increase in emissions in a given year, or the benefit of avoiding that 
increase. In principle, SC-GHGs includes the value of all climate 
change impacts, including (but not limited to) changes in net 
agricultural productivity, human health effects, property damage from 
increased flood risk and natural disasters, disruption of energy 
systems, risk of conflict, environmental migration, and the value of 
ecosystem services. The SC-GHGs therefore, reflects the societal value 
of reducing emissions of the gas in question by one metric ton. The SC-
GHGs is the theoretically appropriate value to use in conducting 
benefit-cost analyses of policies that affect CO2, 
N2O and CH4 emissions. As a member of the IWG 
involved in the development of the February 2021 SC-GHG TSD, DOE agrees 
that the interim SC-GHG estimates represent the most appropriate 
estimate of the SC-GHG until revised estimates have been developed 
reflecting the latest, peer-reviewed science.
    The SC-GHGs estimates presented here were developed over many 
years, using transparent process, peer-reviewed methodologies, the best 
science available at the time of that process, and with input from the 
public. Specifically, in 2009, the IWG, that included the DOE and other 
executive branch agencies and offices was established to ensure that 
agencies were using the best available science and to promote 
consistency in the social cost of carbon (SC-CO2) values 
used across agencies. The IWG published SC-CO2 estimates in 
2010 that were developed from an ensemble of three widely cited 
integrated assessment models (IAMs) that estimate global climate 
damages using highly aggregated representations of climate processes 
and the global economy combined into a single modeling framework. The 
three IAMs were run using a common set of input assumptions in each 
model for future population, economic, and CO2 emissions 
growth, as well as equilibrium climate sensitivity--a measure of the 
globally averaged temperature response to increased atmospheric 
CO2 concentrations. These estimates were updated in 2013 
based on new versions of each IAM. In August 2016 the IWG published 
estimates of the social cost of methane (SC-CH4) and nitrous 
oxide (SC-N2O) using methodologies that are consistent with 
the methodology underlying the SC-CO2 estimates. The 
modeling approach that extends the IWG SC-CO2 methodology to 
non-CO2 GHGs has undergone multiple stages of peer review. 
The SC-CH4 and SC-N2O estimates were developed by 
Marten et al.\82\ and underwent a standard double-blind peer review 
process prior to journal publication. In 2015, as part of the response 
to public comments received to a 2013 solicitation for comments on the 
SC-CO2 estimates, the IWG announced a National Academies of 
Sciences, Engineering, and Medicine review of the SC-CO2 
estimates to offer advice on how to approach future updates to ensure 
that the estimates continue to reflect the best available science and 
methodologies. In January 2017, the National Academies released their 
final report, Valuing Climate Damages: Updating Estimation of the 
Social Cost of Carbon Dioxide, and recommended specific criteria for 
future updates to the SC-CO2 estimates, a modeling framework 
to satisfy the specified criteria, and both near-term updates and 
longer-term research needs pertaining to various components of the 
estimation process (National Academies, 2017).\83\ Shortly thereafter, 
in March 2017, President Trump issued Executive Order 13783, which 
disbanded the IWG, withdrew the previous TSDs, and directed agencies to 
ensure SC-CO2 estimates used in regulatory analyses are 
consistent with the guidance contained in OMB's Circular A-4, 
``including with respect to the consideration of domestic versus 
international impacts and the consideration of appropriate discount 
rates'' (Executive Order (``E.O.'') 13783, section 5(c)). Benefit-cost 
analyses following E.O. 13783 used SC-GHG estimates that attempted to 
focus on the U.S.-specific share of climate change damages as estimated 
by the models and were calculated using two discount rates recommended 
by Circular A-4, 3 percent and 7 percent. All other methodological 
decisions and model versions used in SC-GHG calculations remained the 
same as those used by the IWG in 2010 and 2013, respectively.
---------------------------------------------------------------------------

    \82\ Marten, A.L., E.A. Kopits, C.W. Griffiths, S.C. Newbold, 
and A. Wolverton. Incremental CH4 and N2O 
mitigation benefits consistent with the U.S. Government's SC-
CO2 estimates. Climate Policy. 2015. 15(2): pp. 272-298.
    \83\ National Academies of Sciences, Engineering, and Medicine. 
Valuing Climate Damages: Updating Estimation of the Social Cost of 
Carbon Dioxide. 2017. The National Academies Press: Washington, DC.
---------------------------------------------------------------------------

    On January 20, 2021, President Biden issued Executive Order 13990, 
which re-established the IWG and directed it to ensure that the U.S. 
Government's estimates of the social cost of carbon and other 
greenhouse gases reflect the best available science and the 
recommendations of the National Academies (2017). The IWG was tasked 
with first reviewing the SC-GHG estimates currently used in Federal 
analyses and publishing interim estimates within 30 days of the E.O. 
that reflect the full impact of GHG emissions, including by taking 
global damages into account. The interim SC-GHG estimates published in 
February 2021 are used here to estimate the climate benefits for this 
direct final rule. The E.O. instructs the IWG to undertake a fuller 
update of the SC-GHG estimates by January 2022 that takes into 
consideration the advice of the National Academies (2017) and other 
recent scientific literature. The February 2021 SC-GHG TSD provides a 
complete discussion of the IWG's initial review conducted under 
E.O.13990. In particular, the IWG found that the SC-GHG estimates used 
under E.O. 13783 fail to reflect the full impact of GHG emissions in 
multiple ways.
    First, the IWG found that the SC-GHG estimates used under E.O. 
13783 fail to fully capture many climate impacts that affect the 
welfare of U.S. citizens and residents, and those impacts are better 
reflected by global measures of the SC-GHG. Examples of omitted effects 
from

[[Page 36117]]

the E.O. 13783 estimates include direct effects on U.S. citizens, 
assets, and investments located abroad, supply chains, U.S. military 
assets and interests abroad, and tourism, and spillover pathways such 
as economic and political destabilization and global migration that can 
lead to adverse impacts on U.S. national security, public health, and 
humanitarian concerns. In addition, assessing the benefits of U.S. GHG 
mitigation activities requires consideration of how those actions may 
affect mitigation activities by other countries, as those international 
mitigation actions will provide a benefit to U.S. citizens and 
residents by mitigating climate impacts that affect U.S. citizens and 
residents. A wide range of scientific and economic experts have 
emphasized the issue of reciprocity as support for considering global 
damages of GHG emissions. If the United States does not consider 
impacts on other countries, it is difficult to convince other countries 
to consider the impacts of their emissions on the United States. The 
only way to achieve an efficient allocation of resources for emissions 
reduction on a global basis--and so benefit the U.S. and its citizens--
is for all countries to base their policies on global estimates of 
damages. As a member of the IWG involved in the development of the 
February 2021 SC-GHG TSD, DOE agrees with this assessment and, 
therefore, in this direct final rule DOE centers attention on a global 
measure of SC-GHG. This approach is the same as that taken in DOE 
regulatory analyses from 2012 through 2016. A robust estimate of 
climate damages that accrue only to U.S. citizens and residents does 
not currently exist in the literature. As explained in the February 
2021 TSD, existing estimates are both incomplete and an underestimate 
of total damages that accrue to the citizens and residents of the U.S. 
because they do not fully capture the regional interactions and 
spillovers discussed above, nor do they include all of the important 
physical, ecological, and economic impacts of climate change recognized 
in the climate change literature. As noted in the February 2021 SC-GHG 
TSD, the IWG will continue to review developments in the literature, 
including more robust methodologies for estimating a U.S.-specific SC-
GHG value, and explore ways to better inform the public of the full 
range of carbon impacts. As a member of the IWG, DOE will continue to 
follow developments in the literature pertaining to this issue
    Second, the IWG found that the use of the social rate of return on 
capital (7 percent under current OMB Circular A-4 guidance) to discount 
the future benefits of reducing GHG emissions inappropriately 
underestimates the impacts of climate change for the purposes of 
estimating the SC-GHG. Consistent with the findings of the National 
Academies (2017) and the economic literature, the IWG continued to 
conclude that the consumption rate of interest is the theoretically 
appropriate discount rate in an intergenerational context,\84\ and 
recommended that discount rate uncertainty and relevant aspects of 
intergenerational ethical considerations be accounted for in selecting 
future discount rates.
---------------------------------------------------------------------------

    \84\ Interagency Working Group on Social Cost of Carbon. Social 
Cost of Carbon for Regulatory Impact Analysis under Executive Order 
12866. 2010. United States Government. (Last accessed April 15, 
2022.) www.epa.gov/sites/default/files/2016-12/documents/scc_tsd_2010.pdf; Interagency Working Group on Social Cost of 
Carbon. Technical Update of the Social Cost of Carbon for Regulatory 
Impact Analysis Under Executive Order 12866. 2013. (Last accessed 
April 15, 2022.) www.federalregister.gov/documents/2013/11/26/2013-28242/technical-support-document-technical-update-of-the-social-cost-of-carbon-for-regulatory-impact; Interagency Working Group on 
Social Cost of Greenhouse Gases, United States Government. Technical 
Support Document: Technical Update on the Social Cost of Carbon for 
Regulatory Impact Analysis-Under Executive Order 12866. August 2016. 
(Last accessed January 18, 2022.) www.epa.gov/sites/default/files/2016-12/documents/sc_co2_tsd_august_2016.pdf; Interagency Working 
Group on Social Cost of Greenhouse Gases, United States Government. 
Addendum to Technical Support Document on Social Cost of Carbon for 
Regulatory Impact Analysis under Executive Order 12866: Application 
of the Methodology to Estimate the Social Cost of Methane and the 
Social Cost of Nitrous Oxide. August 2016. (Last accessed January 
18, 2022.) www.epa.gov/sites/default/files/2016-12/documents/addendum_to_sc-ghg_tsd_august_2016.pdf.
---------------------------------------------------------------------------

    Furthermore, the damage estimates developed for use in the SC-GHG 
are estimated in consumption-equivalent terms, and so an application of 
OMB Circular A-4's guidance for regulatory analysis would then use the 
consumption discount rate to calculate the SC-GHG. DOE agrees with this 
assessment and will continue to follow developments in the literature 
pertaining to this issue. DOE also notes that while OMB Circular A-4, 
as published in 2003, recommends using 3% and 7% discount rates as 
``default'' values, Circular A-4 also reminds agencies that ``different 
regulations may call for different emphases in the analysis, depending 
on the nature and complexity of the regulatory issues and the 
sensitivity of the benefit and cost estimates to the key assumptions.'' 
On discounting, Circular A-4 recognizes that ``special ethical 
considerations arise when comparing benefits and costs across 
generations,'' and Circular A-4 acknowledges that analyses may 
appropriately ``discount future costs and consumption benefits . . . at 
a lower rate than for intragenerational analysis.'' In the 2015 
Response to Comments on the Social Cost of Carbon for Regulatory Impact 
Analysis, OMB, DOE, and the other IWG members recognized that 
``Circular A-4 is a living document'' and ``the use of 7 percent is not 
considered appropriate for intergenerational discounting. There is wide 
support for this view in the academic literature, and it is recognized 
in Circular A-4 itself.'' Thus, DOE concludes that a 7% discount rate 
is not appropriate to apply to value the social cost of greenhouse 
gases in the analysis presented in this analysis.
    To calculate the present and annualized values of climate benefits, 
DOE uses the same discount rate as the rate used to discount the value 
of damages from future GHG emissions, for internal consistency. That 
approach to discounting follows the same approach that the February 
2021 TSD recommends ``to ensure internal consistency--i.e., future 
damages from climate change using the SC-GHG at 2.5 percent should be 
discounted to the base year of the analysis using the same 2.5 percent 
rate.'' DOE has also consulted the National Academies' 2017 
recommendations on how SC-GHG estimates can ``be combined in RIAs with 
other cost and benefits estimates that may use different discount 
rates.'' The National Academies reviewed several options, including 
``presenting all discount rate combinations of other costs and benefits 
with [SC-GHG] estimates.''
    As a member of the IWG involved in the development of the February 
2021 SC-GHG TSD, DOE agrees with the above assessment and will continue 
to follow developments in the literature pertaining to this issue. 
While the IWG works to assess how best to incorporate the latest, peer 
reviewed science to develop an updated set of SC-GHG estimates, it set 
the interim estimates to be the most recent estimates developed by the 
IWG prior to the group being disbanded in 2017. The estimates rely on 
the same models and harmonized inputs and are calculated using a range 
of discount rates. As explained in the February 2021 SC-GHG TSD, the 
IWG has recommended that agencies revert to the same set of four values 
drawn from the SC-GHG distributions based on three discount rates as 
were used in regulatory analyses between 2010 and 2016 and were subject 
to public comment. For each discount rate, the IWG combined the 
distributions across models and socioeconomic emissions scenarios 
(applying equal weight to

[[Page 36118]]

each) and then selected a set of four values recommended for use in 
benefit-cost analyses: an average value resulting from the model runs 
for each of three discount rates (2.5 percent, 3 percent, and 5 
percent), plus a fourth value, selected as the 95th percentile of 
estimates based on a 3 percent discount rate. The fourth value was 
included to provide information on potentially higher-than-expected 
economic impacts from climate change. As explained in the February 2021 
SC-GHG TSD, and DOE agrees, this update reflects the immediate need to 
have an operational SC-GHG for use in regulatory benefit-cost analyses 
and other applications that was developed using a transparent process, 
peer-reviewed methodologies, and the science available at the time of 
that process. Those estimates were subject to public comment in the 
context of dozens of proposed rulemakings as well as in a dedicated 
public comment period in 2013.
    There are a number of limitations and uncertainties associated with 
the SC-GHG estimates. First, the current scientific and economic 
understanding of discounting approaches suggests discount rates 
appropriate for intergenerational analysis in the context of climate 
change are likely to be less than 3 percent, near 2 percent or 
lower.\85\ Second, the IAMs used to produce these interim estimates do 
not include all of the important physical, ecological, and economic 
impacts of climate change recognized in the climate change literature 
and the science underlying their ``damage functions''--i.e., the core 
parts of the IAMs that map global mean temperature changes and other 
physical impacts of climate change into economic (both market and 
nonmarket) damages--lags behind the most recent research. For example, 
limitations include the incomplete treatment of catastrophic and non-
catastrophic impacts in the integrated assessment models, their 
incomplete treatment of adaptation and technological change, the 
incomplete way in which inter-regional and intersectoral linkages are 
modeled, uncertainty in the extrapolation of damages to high 
temperatures, and inadequate representation of the relationship between 
the discount rate and uncertainty in economic growth over long time 
horizons. Likewise, the socioeconomic and emissions scenarios used as 
inputs to the models do not reflect new information from the last 
decade of scenario generation or the full range of projections. The 
modeling limitations do not all work in the same direction in terms of 
their influence on the SC-CO2 estimates. However, as 
discussed in the February 2021 TSD, the IWG has recommended that, taken 
together, the limitations suggest that the interim SC-GHG estimates 
used in this final rule likely underestimate the damages from GHG 
emissions. DOE concurs with this assessment.
---------------------------------------------------------------------------

    \85\ Interagency Working Group on Social Cost of Greenhouse 
Gases (IWG). 2021. Technical Support Document: Social Cost of 
Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive 
Order 13990. February. United States Government. Available at: 
www.whitehouse.gov/briefing-room/blog/2021/02/26/a-return-to-science-evidence-based-estimates-of-the-benefits-of-reducing-climate-pollution/.
---------------------------------------------------------------------------

    DOE's derivations of the SC-GHG (i.e., SC-CO2, SC-
N2O, and SC-CH4) values used for this direct 
final rule are discussed in the following sections, and the results of 
DOE's analyses estimating the benefits of the reductions in emissions 
of these pollutants are presented in section V.B.6 of this document.
    NEMA disagrees with DOE's approach for estimating monetary benefits 
associated with emissions reductions. NEMA commented that this topic is 
too convoluted and subjective to be included in a rulemaking analysis 
for electric motor standards.(NEMA, No. 22 at p. 25)
    As previously stated, as part of the development of this direct 
final rule, for the purpose of complying with the requirements of 
Executive Order 12866, DOE considered the estimated monetary benefits 
from the reduced emissions of CO2, CH4, 
N2O, NOX, and SO2 that are expected to 
result from each of the TSLs considered.
a. Social Cost of Carbon
    The SC-CO2 values used for this direct final rule were 
generated using the values presented in the 2021 update from the IWG's 
February 2021 TSD. Table IV-11 shows the updated sets of SC-
CO2 estimates from the latest interagency update in 5-year 
increments from 2020 to 2050. The full set of annual values used is 
presented in Appendix 14-A of the direct final rule TSD. For purposes 
of capturing the uncertainties involved in regulatory impact analysis, 
DOE has determined it is appropriate include all four sets of SC-
CO2 values, as recommended by the IWG.\86\
---------------------------------------------------------------------------

    \86\ For example, the February 2021 TSD discusses how the 
understanding of discounting approaches suggests that discount rates 
appropriate for intergenerational analysis in the context of climate 
change may be lower than 3 percent.

                    Table IV-11--Annual SC-CO2 Values From 2021 Interagency Update, 2020-2050
                                           [2020$ per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                          Discount rate
                                               -----------------------------------------------------------------
                     Year                                                                            3% 95th
                                                  5% Average      3% Average     2.5% Average      percentile
----------------------------------------------------------------------------------------------------------------
2020..........................................              14              51              76               152
2025..........................................              17              56              83               169
2030..........................................              19              62              89               187
2035..........................................              22              67              96               206
2040..........................................              25              73             103               225
2045..........................................              28              79             110               242
2050..........................................              32              85             116               260
----------------------------------------------------------------------------------------------------------------

    For 2051 to 2070, DOE used SC-CO2 estimates published by 
EPA, adjusted to 2020$.\87\ These estimates are based on methods, 
assumptions, and parameters identical to the 2020-2050 estimates 
published by the IWG. DOE expects additional climate benefits to accrue 
for any longer-life electric motors after 2070, but a lack of available 
SC-CO2 estimates for emissions years beyond 2070 prevents 
DOE from monetizing these potential benefits in this analysis.
---------------------------------------------------------------------------

    \87\ See EPA, Revised 2023 and Later Model Year Light-Duty 
Vehicle GHG Emissions Standards: Regulatory Impact Analysis, 
Washington, DC, December 2021. Available at: www.epa.gov/system/files/documents/2021-12/420r21028.pdf (last accessed January 13, 
2022).

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

[[Page 36119]]

    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SC-CO2 value for that year in each of the 
four cases. DOE adjusted the values to 2021$ using the implicit price 
deflator for gross domestic product (``GDP'') from the Bureau of 
Economic Analysis. To calculate a present value of the stream of 
monetary values, DOE discounted the values in each of the four cases 
using the specific discount rate that had been used to obtain the SC-
CO2 values in each case.
b. Social Cost of Methane and Nitrous Oxide
    The SC-CH4 and SC-N2O values used for this 
direct final rule were based on the values developed for in the 
February 2021 TSD. Table IV-12 shows the updated sets of SC-
CH4 and SC-N2O estimates from the latest 
interagency update in 5-year increments from 2020 to 2050. The full set 
of annual values used is presented in Appendix 14-A of the direct final 
rule TSD. To capture the uncertainties involved in regulatory impact 
analysis, DOE has determined it is appropriate to include all four sets 
of SC-CH4 and SC-N2O values, as recommended by 
the IWG.

                                  Table IV-12--Annual SC-CH4 and SC-N2O Values From 2021 Interagency Update, 2020-2050
                                                                 [2020$ per metric ton]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              SC-CH4                                          SC-N2O
                                                         -----------------------------------------------------------------------------------------------
                                                                    Discount rate and statistic                     Discount rate and statistic
                          Year                           -----------------------------------------------------------------------------------------------
                                                             5%        3%       2.5%         3% 95th         5%        3%       2.5%         3% 95th
                                                           Average   Average   Average     percentile      Average   Average   Average     percentile
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................       670     1,500     2,000             3,900     5,800    18,000    27,000            48,000
2025....................................................       800     1,700     2,200             4,500     6,800    21,000    30,000            54,000
2030....................................................       940     2,000     2,500             5,200     7,800    23,000    33,000            60,000
2035....................................................     1,100     2,200     2,800             6,000     9,000    25,000    36,000            67,000
2040....................................................     1,300     2,500     3,100             6,700    10,000    28,000    39,000            74,000
2045....................................................     1,500     2,800     3,500             7,500    12,000    30,000    42,000            81,000
2050....................................................     1,700     3,100     3,800             8,200    13,000    33,000    45,000            88,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE multiplied the CH4 and N2O emissions 
reduction estimated for each year by the SC-CH4 and SC-
N2O estimates for that year in each of the cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the cases using the specific discount 
rate that had been used to obtain the SC-CH4 and SC-
N2O estimates in each case.
2. Monetization of Other Emissions Impacts
    For the direct final rule, DOE estimated the monetized value of 
NOX and SO2 emissions reductions from electricity 
generation using benefit per ton estimates for that sector from the 
EPA's Benefits Mapping and Analysis Program.\88\ DOE used EPA's values 
for PM2.5-related benefits associated with NOX 
and SO2 and for ozone-related benefits associated with 
NOX for 2025 and 2030, and 2040, calculated with discount 
rates of 3 percent and 7 percent. DOE used linear interpolation to 
define values for the years not given in the 2025 to 2040 range; for 
years beyond 2040 the values are held constant. DOE derived values 
specific to the sector for electric motors using a method described in 
appendix 14B of the direct final rule TSD.
---------------------------------------------------------------------------

    \88\ Estimating the Benefit per Ton of Reducing PM2.5 
Precursors from 21 Sectors. www.epa.gov/benmap/estimating-benefit-ton-reducing-pm25-precursors-21-sectors.
---------------------------------------------------------------------------

    DOE multiplied the site 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.

M. Utility Impact Analysis

    The utility impact analysis estimates the changes in installed 
electrical capacity and generation projected to result for each 
considered TSL. The analysis is based on published output from the NEMS 
associated with AEO2022. NEMS produces the AEO Reference case, as well 
as a number of side cases that estimate the economy-wide impacts of 
changes to energy supply and demand. For the current analysis, impacts 
are quantified by comparing the levels of electricity sector 
generation, installed capacity, fuel consumption and emissions in the 
AEO2022 Reference case and various side cases. Details of the 
methodology are provided in the appendices to chapters [13] and [15] of 
the direct final rule TSD.
    The output of this analysis is a set of time-dependent coefficients 
that capture the change in electricity generation, primary fuel 
consumption, installed capacity and power sector emissions due to a 
unit reduction in demand for a given end use. These coefficients are 
multiplied by the stream of electricity savings calculated in the NIA 
to provide estimates of selected utility impacts of potential new or 
amended energy conservation standards.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a standard. Employment impacts from new or amended 
energy conservation standards include both direct and indirect impacts. 
Direct employment impacts are any changes in the number of employees of 
manufacturers of the products subject to standards, their suppliers, 
and related service firms. The MIA addresses those impacts. Indirect 
employment impacts are changes in national employment that occur due to 
the shift in expenditures and capital investment caused by the purchase 
and operation of more-efficient appliances. Indirect employment impacts 
from standards consist of the net jobs created or eliminated in the 
national economy, other than in the manufacturing sector being 
regulated, caused by (1) reduced spending by 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

[[Page 36120]]

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.\89\ There are many reasons for these 
differences, including wage differences and the fact that the utility 
sector is more capital-intensive and less labor-intensive than other 
sectors. Energy conservation standards have the effect of reducing 
consumer utility bills. Because reduced consumer expenditures for 
energy likely lead to increased expenditures in other sectors of the 
economy, the general effect of efficiency standards is to shift 
economic activity from a less labor-intensive sector (i.e., the utility 
sector) to more labor-intensive sectors (e.g., the retail and service 
sectors). Thus, the BLS data suggest that net national employment may 
increase due to shifts in economic activity resulting from energy 
conservation standards.
---------------------------------------------------------------------------

    \89\ See U.S. Department of Commerce-Bureau of Economic 
Analysis. Regional Multipliers: A User Handbook for the Regional 
Input-Output Modeling System (RIMS II). 1997. U.S. Government 
Printing Office: Washington, DC. Available at www.bea.gov/scb/pdf/regional/perinc/meth/rims2.pdf (last accessed September 30, 2022).
---------------------------------------------------------------------------

    DOE estimated indirect national employment impacts for the standard 
levels considered in this direct final rule using an input/output model 
of the U.S. economy called Impact of Sector Energy Technologies version 
4 (``ImSET'').\90\ ImSET is a special-purpose version of the ``U.S. 
Benchmark National Input-Output'' (``I-O'') model, which was designed 
to estimate the national employment and income effects of energy-saving 
technologies. The ImSET software includes a computer- based I-O model 
having structural coefficients that characterize economic flows among 
187 sectors most relevant to industrial, commercial, and residential 
building energy use.
---------------------------------------------------------------------------

    \90\ Livingston, O.V., S.R. Bender, M.J. Scott, and R.W. 
Schultz. ImSET 4.0: Impact of Sector Energy Technologies Model 
Description and User Guide. 2015. Pacific Northwest National 
Laboratory: Richland, WA. PNNL-24563.
---------------------------------------------------------------------------

    NEMA commented that the proposed approach for assessing national 
employment impacts appears to be sufficient. (NEMA, No. 22 at p. 25)
    DOE notes that ImSET is not a general equilibrium forecasting 
model, and that 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 (2027-2031), where these uncertainties are 
reduced. For more details on the employment impact analysis, see 
chapter 16 of the direct final rule TSD.

V. Analytical Results and Conclusions

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

A. Trial Standard Levels

    In general, DOE typically evaluates potential amended standards for 
products and equipment by grouping individual efficiency levels for 
each class into TSLs. Use of TSLs allows DOE to identify and consider 
manufacturer cost interactions between equipment classes, to the extent 
that there are such interactions, and market cross elasticity from 
consumer purchasing decisions that may change when different standard 
levels are set.
    In the analysis conducted for this direct final rule, DOE analyzed 
the benefits and burdens of four TSLs for electric motors. DOE 
developed TSLs that combine efficiency levels for each analyzed 
equipment class group by horsepower range. DOE presents the results for 
the TSLs in this document, while the results for all efficiency levels 
that DOE analyzed are in the direct final rule TSD.
    Table V.1 presents the TSLs and the corresponding efficiency levels 
that DOE has identified for potential amended energy conservation 
standards for electric motors. Table V.2 presents the corresponding 
description of the levels.
    TSL 4 represents the maximum technologically feasible (``max-
tech'') energy efficiency for all equipment class groups and is 
constructed with the same efficiency level for all equipment class 
groups (i.e., EL 4). (See Table IV-6 in section IV.C.1.c for a 
breakdown of ELs 1-4 for each ECG).
    TSL 3 represents a level corresponding to the IE4 level for each 
equipment class group (i.e., the industry standard efficiency 
classification above NEMA Premium/I3), except for AO-polyphase 
specialized frame size electric motors, where it corresponds to a lower 
level of efficiency (i.e., NEMA Premium/I3 level) due to the physical 
limitation of these electric motors.
    TSL 2 represents the levels recommended by the November 2022 Joint 
Recommendation. For currently regulated electric motors (i.e., MEM, 1-
500 hp, NEMA Design A and B motors), this TSL represents no changes in 
the current standard (i.e., NEMA Premium/IE3 level, EL0), except for 
currently regulated motors in the 100 to 250 hp range where TSL 2 is 
set at an EL corresponding to the IE4 level (i.e., the industry 
standard efficiency classification above NEMA Premium/IE3, EL1).\91\ At 
TSL 2, MEM 501-750 hp, NEMA Design A and B electric motors are set at 
the NEMA Premium level (EL1). For AO-MEM standard frame size, TSL 2 is 
similarly constructed using the efficiency levels corresponding to the 
NEMA Premium/IE3 level (EL1), except in the 100 to 250 hp range of AO-
MEM standard frame size motors, where it is equivalent to the IE4 level 
(EL2). For AO-polyphase specialized frame electric motors, TSL 2 
represents the fire pump electric motor level (EL1), which is the 
industry standard efficiency classification approximately two bands 
below NEMA Premium/IE3.
---------------------------------------------------------------------------

    \91\ As noted, this TSL would harmonize with the current 
European energy conservation standards (compliance date July, 2023). 
See eur-lex.europa.eu/eli/reg/2019/1781/oj.
---------------------------------------------------------------------------

    TSL1 represents a level below the recommended level. TSL1 
represents a level where the currently non-regulated electric motors 
would be subject to the same standards as currently regulated motors 
(i.e., NEMA Premium level), except for AO-polyphase specialized frame 
size electric motors, where it corresponds to a lower level of 
efficiency (i.e., fire pump electric motor level) due to the physical 
limitation of these electric motors. For currently regulated electric 
motors (i.e., MEM, 1-500 hp, NEMA Design A and B motors), this TSL 
would represent no changes in the current standard.

[[Page 36121]]



                              Table V.1--Trial Standard Levels for Electric Motors
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
       Equipment class group                 Horsepower range        -------------------------------------------
                                                                          1          2          3          4
----------------------------------------------------------------------------------------------------------------
                                     ...............................               Efficiency level
                                    ----------------------------------------------------------------------------
MEM, 1-500 hp, NEMA Design A and B.  1 <= hp <= 5...................          0          0          1          4
                                     5 < hp <= 20...................          0          0          1          4
                                     20 < hp <= 50..................          0          0          1          4
                                     50 < hp <100...................          0          0          1          4
                                     100 <= hp <= 250...............          0          1          1          4
                                     250 < hp <= 500................          0          0          1          4
MEM, 501-750 hp, NEMA Design A and   500 < hp <= 750................          1          1          2          4
 B.
AO-MEM (Standard Frame Size).......  1 <= hp <= 20..................          1          1          2          4
                                     20 < hp <= 50..................          1          1          2          4
                                     50 < hp < 100..................          1          1          2          4
                                     100 <= hp <= 250...............          1          2          2          4
AO-Polyphase (Specialized Frame      1 <= hp <= 20..................          1          1          2          4
 Size).
----------------------------------------------------------------------------------------------------------------


                                           Table V.2--Description of Trial Standard Levels for Electric Motors
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Trial standard level
               ECG                       Horsepower range      -----------------------------------------------------------------------------------------
                                                                          1                     2                     3                      4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Efficiency level description
                                  ----------------------------------------------------------------------------------------------------------------------
                                                                NEMA premium *......  Recommended.........  IE4 *...............  Max-tech
--------------------------------------------------------------------------------------------------------------------------------------------------------
MEM, 1-500 hp, NEMA Design A and   1 <= hp <= 5...............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
 B.
                                   5 < hp <= 20...............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
                                   20 < hp <= 50..............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
                                   50 < hp <100...............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
                                   100 <= hp <= 250...........  Premium/IE3.........  Super Premium/IE4...  Super Premium/IE4...  Max-tech.
                                   250 < hp <= 500............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
MEM, 501-750 hp, NEMA Design A     500 < hp <= 750............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
 and B.
AO-MEM (Standard Frame Size).....  1 <= hp <= 20..............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
                                   20 < hp <= 50..............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
                                   50 < hp < 100..............  Premium/IE3.........  Premium/IE3.........  Super Premium/IE4...  Max-tech.
                                   100 <= hp <= 250...........  Premium/IE3.........  Super Premium/IE4...  Super Premium/IE4...  Max-tech.
AO-Polyphase (Specialized Frame    1 <= hp <= 20..............  Fire pump...........  Fire pump...........  Premium/IE3.........  Max-tech.
 Size).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Except for AO-Polyphase (Specialized Frame Size) electric motors where the efficiency level corresponds to a lower efficiency.

    DOE constructed the TSLs for this direct final rule to include ELs 
representative of ELs with similar characteristics (i.e., using similar 
technologies and/or efficiencies, and having roughly comparable 
equipment availability). The use of representative ELs provided for 
greater distinction between the TSLs. While representative ELs were 
included in the TSLs, DOE considered all efficiency levels as part of 
its analysis.\92\ In constructing the TSLs, DOE did not consider EL3 
because the average LCC savings at EL3 were negative for all 
representative units, with a majority of consumers experiencing net 
cost as shown in section V.B.1.a of this document. Similarly, DOE did 
not consider a TSL with EL2 for the MEM, 1-500 hp, NEMA Design A and B 
electric motors because the average LCC savings at EL 2 were negative 
for each of the representative units analyzed, with a majority of 
consumers experiencing net cost as shown in section V.B.1.a of this 
document.
---------------------------------------------------------------------------

    \92\ Efficiency levels that were analyzed for this final rule 
are discussed in section IV.C of this document. Results by 
efficiency level are presented in TSD chapter 8.
---------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers

    DOE analyzed the economic impacts on electric motors consumers by 
looking at the effects that new and amended 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 
in the following sections.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency products affect consumers in two 
ways: (1) purchase price increases and (2) annual operating costs 
decrease. Inputs used for calculating the LCC and PBP include total 
installed costs (i.e., product price plus installation costs), and 
operating costs (i.e., annual energy use, energy prices, energy price 
trends, repair costs, and maintenance costs). The LCC calculation also 
uses product lifetime and a discount rate. Chapter [8] of the direct 
final rule TSD provides detailed information on the LCC and PBP 
analyses.

[[Page 36122]]

    As described in Table IV-4 of this document, the analysis focuses 
on 11 representative units identified in the engineering analysis. 
Table V-3 through Table V-24 show the LCC and PBP results for the TSLs 
considered for each representative unit. In the first of each pair of 
tables, the simple payback is measured relative to the baseline 
product. In the second table, impacts are measured relative to the 
efficiency distribution in the no-new-standards case in the compliance 
year (see section IV.F.8 of this document). Because some consumers 
purchase products with higher efficiency in the no-new-standards case, 
the average savings are less than the difference between the average 
LCC of the baseline product and the average LCC at each TSL. The 
savings refer only to consumers who are affected by a standard at a 
given TSL. Those who already purchase a product with efficiency at or 
above a given TSL are not affected. Consumers for whom the LCC 
increases at a given TSL experience a net cost.

          Table V-3--Average LCC and PBP Results for MEM, NEMA Design A and B; 5 hp, 4 Poles, Enclosed
                                                      [RU1]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
1-2..............  Baseline........      1,185.5           789.9      5,754.2      6,939.6  .........       12.6
3................  EL1.............      1,356.8           779.7      5,684.8      7,041.6       16.7       12.6
                   EL2 *...........      1,356.8           779.7      5,684.8      7,041.6       16.7       12.6
                   EL3.............      1,408.0           773.7      5,643.8      7,051.8       13.7       12.6
4................  EL4.............      1,620.1           768.5      5,616.7      7,236.8       20.3       12.6
----------------------------------------------------------------------------------------------------------------
* EL1 = EL2.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


   Table V-4--Average LCC Savings Relative to the No-New-Standards Case for MEM, NEMA Design A and B; 5 hp, 4
                                                 Poles, Enclosed
                                                      [RU1]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
1-2................................  Baseline.............                      N/A                          N/A
3..................................  EL1..................                   -101.8                         64.1
                                     EL2 *................                   -101.8                         64.1
                                     EL3..................                    -92.3                         76.4
4..................................  EL4..................                   -276.4                         95.9
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* EL1 = EL2.
** The savings represent the average LCC for affected consumers.


          Table V-5--Average LCC and PBP Results for MEM, NEMA Design A and B; 30 hp, 4 Poles, Enclosed
                                                      [RU2]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
1-2..............  Baseline........      3,274.2         4,568.5     37,700.8     40,975.0  .........       14.1
3................  EL1.............      3,964.7         4,523.7     37,347.1     41,311.9       15.4       14.1
                   EL2 *...........      3,964.7         4,523.7     37,347.1     41,311.9       15.4       14.1
                   EL3.............      4,175.1         4,502.3     37,174.6     41,349.7       13.6       14.1
4................  EL4.............      4,277.2         4,484.2     37,026.9     41,304.1       11.9       14.1
----------------------------------------------------------------------------------------------------------------
* EL1 = EL2.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


[[Page 36123]]


   Table V-6--Average LCC Savings Relative to the No-New-Standards Case for MEM, NEMA Design A and B; 30 hp, 4
                                                 Poles, Enclosed
                                                      [RU2]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
1-2................................  Baseline.............                      N/A                          N/A
3..................................  EL1..................                   -336.9                         82.2
                                     EL2 *................                   -336.9                         82.2
                                     EL3..................                   -356.9                         81.1
4..................................  EL4..................                   -309.4                         75.0
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* EL1 = EL2.
** The savings represent the average LCC for affected consumers.


          Table V-7--Average LCC and PBP Results for MEM, NEMA Design A and B; 75 hp, 4 Poles, Enclosed
                                                      [RU3]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
1-2..............  Baseline........      8,046.4        10,021.1     83,400.1     91,446.5  .........       14.2
3................  EL1.............      9,288.2         9,979.9     83,074.6     92,362.8       30.2       14.2
                   EL2.............      9,811.9         9,956.1     82,879.4     92,691.3       27.2       14.2
                   EL3.............     10,177.1         9,925.6     82,631.4     92,808.5       22.3       14.2
4................  EL4.............     10,636.4         9,895.3     82,386.0     93,022.4       20.6       14.2
----------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


   Table V-8--Average LCC Savings Relative to the No-New-Standards Case for MEM, NEMA Design A and B; 75 hp, 4
                                                 Poles, Enclosed
                                                      [RU3]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings *    Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
1-2................................  Baseline.............                      N/A                          N/A
3..................................  EL1..................                   -916.7                         88.4
                                     EL2..................                 -1,229.6                         86.0
                                     EL3..................                 -1,258.0                         89.0
4..................................  EL4..................                 -1,439.6                         90.5
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* The savings represent the average LCC for affected consumers.


         Table V-9--Average LCC and PBP Results for MEM, NEMA Design A and B; 150 hp, 4 Poles, Enclosed
                                                      [RU4]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
1................  Baseline........     13,066.4        20,576.9    243,710.9    256,777.2  .........       33.4
2-3..............  EL1.............     13,414.0        20,492.3    242,797.2    256,211.3        4.1       33.4
                   EL2.............     15,941.3        20,467.3    243,214.8    259,156.1       26.2       33.4
                   EL3.............     16,547.4        20,404.6    242,661.3    259,208.7       20.2       33.4
4................  EL4.............     17,308.4        20,342.2    242,143.9    259,452.3       18.1       33.4
----------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


[[Page 36124]]


  Table V-10--Average LCC Savings Relative to the No-New-Standards Case for MEM, NEMA Design A and B; 150 hp, 4
                                                 Poles, Enclosed
                                                      [RU4]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings *    Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
1..................................  Baseline.............                      N/A                          N/A
2-3................................  EL1..................                    567.1                         20.2
                                     EL2..................                 -2,424.3                         90.1
                                     EL3..................                 -2,314.5                         90.3
4..................................  EL4..................                 -2,541.1                         89.1
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* The savings represent the average LCC for affected consumers.


         Table V-11--Average LCC and PBP Results for MEM, NEMA Design A and B; 350 hp, 4 Poles, Enclosed
                                                      [RU5]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
1-2..............  Baseline........     26,409.6        47,899.8    563,544.0    589,953.6  .........       33.4
3................  EL1.............     29,815.6        47,610.1    561,091.1    590,906.6       11.8       33.4
                   EL2 *...........     29,815.6        47,610.1    561,091.1    590,906.6       11.8       33.4
                   EL3.............     33,572.3        47,548.0    561,385.2    594,957.5       20.4       33.4
4................  EL4.............     35,153.9        47,405.2    560,142.3    595,296.2       17.7       33.4
----------------------------------------------------------------------------------------------------------------
* EL1 = EL2.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


  Table V-12--Average LCC Savings Relative to the No-New-Standards Case for MEM, NEMA Design A and B; 350 hp, 4
                                                 Poles, Enclosed
                                                      [RU5]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
1-2................................  Baseline.............                      N/A                          N/A
3..................................  EL1..................                   -945.5                         66.9
                                     EL2 *................                   -945.5                         66.9
                                     EL3..................                 -4,918.5                         92.4
4..................................  EL4..................                 -5,257.2                         89.0
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* EL1 = EL2.
** The savings represent the average LCC for affected consumers.


         Table V-13--Average LCC and PBP Results for MEM, NEMA Design A and B; 600 hp, 4 Poles, Enclosed
                                                      [RU6]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
                   Baseline........     40,229.5        83,393.4    980,309.1  1,020,538.6  .........       33.5
1-2..............  EL1.............     41,466.0        83,054.7    976,644.0  1,018,109.9        3.7       33.5
3................  EL2.............     46,889.6        82,698.8    973,798.2  1,020,687.7        9.6       33.5
                   EL3 *...........     46,889.6        82,698.8    973,798.2  1,020,687.7        9.6       33.5
4................  EL4.............     55,293.3        82,201.3    970,160.6  1,025,454.0       12.6       33.5
----------------------------------------------------------------------------------------------------------------
* EL2 = EL3.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


[[Page 36125]]


  Table V-14--Average LCC Savings Relative to the No-New-Standards Case for MEM, NEMA Design A and B; 600 hp, 4
                                                 Poles, Enclosed
                                                      [RU6]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
                                     Baseline.............  .......................  ...........................
1-2................................  EL1..................                  2,550.1                          2.1
3..................................  EL2..................                 -2,287.8                         58.3
                                     EL3 *................                 -2,287.8                         58.3
4..................................  EL4..................                 -6,710.3                         83.2
----------------------------------------------------------------------------------------------------------------
* EL2 = EL3.
** The savings represent the average LCC for affected consumers.


        Table V-15--Average LCC and PBP Results for AO MEM (Standard Frame Size); 5 hp, 4 Poles, Enclosed
                                                      [RU7]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
                   Baseline........      1,126.0           992.2      6,734.4      7,860.4  .........       11.8
1-2..............  EL1.............      1,214.2           970.4      6,589.4      7,803.6        4.0       11.8
3................  EL2.............      1,331.6           960.7      6,531.3      7,862.8        6.5       11.8
                   EL3.............      1,331.6           960.7      6,531.3      7,862.8        6.5       11.8
4................  EL4.............      1,525.2           947.7      6,455.8      7,981.0        9.0       11.8
----------------------------------------------------------------------------------------------------------------
* EL3 = EL2.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


 Table V-16--Average LCC Savings Relative to the No-New-Standards Case for AO MEM (Standard Frame Size); 5 hp, 4
                                                 Poles, Enclosed
                                                      [RU7]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
                                     Baseline.............  .......................  ...........................
1-2................................  EL1..................                     57.6                         10.3
3..................................  EL2..................                    -39.2                         62.9
                                     EL3 *................                    -39.2                         62.9
4..................................  EL4..................                   -156.5                         80.7
----------------------------------------------------------------------------------------------------------------
* EL2 = EL3.
** The savings represent the average LCC for affected consumers.


       Table V-17--Average LCC and PBP Results for AO MEM (Standard Frame Size); 30 hp, 4 Poles, Enclosed
                                                      [RU8]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
                   Baseline........      3,186.7         5,553.3     44,668.1     47,854.8  .........       13.7
1-2..............  EL1.............      3,302.6         5,482.2     44,098.8     47,401.4        1.6       13.7
3................  EL2.............      3,925.6         5,428.3     43,681.1     47,606.7        5.9       13.7
                   EL3 *...........      3,925.6         5,428.3     43,681.1     47,606.7        5.9       13.7
4................  EL4.............      4,214.4         5,384.7     43,337.1     47,551.4        6.1       13.7
----------------------------------------------------------------------------------------------------------------
* EL3 = EL2.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


[[Page 36126]]


Table V-18--Average LCC Savings Relative to the No-New-Standards Case for AO MEM (Standard Frame Size); 30 hp, 4
                                                 Poles, Enclosed
                                                      [RU8]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
                                     Baseline.............  .......................  ...........................
1-2................................  EL1..................                    472.4                          0.9
3..................................  EL2..................                   -160.8                         73.9
                                     EL3 *................                   -160.8                         73.9
4..................................  EL4..................                   -105.5                         64.5
----------------------------------------------------------------------------------------------------------------
* EL2 = EL3.
** The savings represent the average LCC for affected consumers.


       Table V-19--Average LCC and PBP Results for AO MEM (Standard Frame Size); 75 hp, 4 Poles, Enclosed
                                                      [RU9]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
                   Baseline........      6,905.6        13,470.2    104,380.5    111,286.0  .........       13.3
1-2..............  EL1.............      7,850.5        13,291.7    103,149.1    110,999.7        5.3       13.3
3................  EL2.............      8,995.7        13,237.8    102,934.5    111,930.2        9.0       13.3
                   EL3.............      9,505.8        13,227.0    102,934.8    112,440.6       10.7       13.3
4................  EL4.............     10,331.4        13,147.4    102,463.3    112,794.6       10.6       13.3
----------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


Table V-20--Average LCC Savings Relative to the No-New-Standards Case for AO MEM (Standard Frame Size); 75 hp, 4
                                                 Poles, Enclosed
                                                      [RU9]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings **   Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
                                     Baseline.............  .......................  ...........................
1-2................................  EL1 *................  .......................  ...........................
3..................................  EL2..................                   -930.5                         99.9
                                     EL3..................                 -1,441.0                         98.4
4..................................  EL4..................                 -1,795.0                         96.4
----------------------------------------------------------------------------------------------------------------
* No savings at EL1 as there are no shipments at the baseline for RU9. See Table IV-9 of this document.
** The savings represent the average LCC for affected consumers.


       Table V-21--Average LCC and PBP Results for AO MEM (Standard Frame Size); 150 hp, 4 Poles, Enclosed
                                                     [RU10]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
                   Baseline........     11,557.8        26,565.2    296,595.2    308,153.0  .........       31.4
1................  EL1.............     12,862.9        26,349.5    294,637.7    307,500.7        6.1       31.4
2-3..............  EL2.............     13,119.9        26,243.0    293,559.4    306,679.3        4.9       31.4
                   EL3 *...........     15,651.8        26,253.2    294,598.5    310,250.3       13.1       31.4
4................  EL4.............     16,290.6        26,095.5    293,085.9    309,376.5       10.1       31.4
----------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.
* At EL3, for RU10, the increase in motor speed compared to the baseline is greater than the increase in motor
  speed at EL2 compared to the baseline (see section IV.C.1.c of this document). The additional energy use due
  to the increase in motor speed at EL3 results in lower energy savings and higher operating costs at EL3
  compared to EL2. See section IV.E.4 of this document for a detailed explanation of the impact of speed.


[[Page 36127]]


 Table V-22--Average LCC Savings Relative to the No-New-Standards Case for AO MEM (Standard Frame Size); 150 hp,
                                                4 Poles, Enclosed
                                                     [RU10]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings *    Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
                                     Baseline.............  .......................  ...........................
1..................................  EL1..................                    608.8                          6.3
2-3................................  EL2..................                    930.7                         11.7
                                     EL3..................                 -2,720.3                         93.7
4..................................  EL4..................                 -1,846.6                         79.0
----------------------------------------------------------------------------------------------------------------
* The savings represent the average LCC for affected consumers.


     Table V-23--Average LCC and PBP Results for Polyphase (Specialized Frame Size); 5 hp, 4 Poles, Enclosed
                                                     [RU11]
----------------------------------------------------------------------------------------------------------------
                                                     Average costs (2021$)
                                    -------------------------------------------------------   Simple    Average
       TSL         Efficiency level                                 Lifetime                 payback    Lifetime
                                      Installed    First year's    operating       LCC       (years)    (years)
                                         cost     operating cost      cost
----------------------------------------------------------------------------------------------------------------
                   Baseline........      1,134.3           993.4      6,899.6      8,033.9  .........       11.9
1-2..............  EL1.............      1,225.1           971.1      6,758.9      7,984.0        4.1       11.9
3................  EL2.............      1,342.9           956.1      6,688.5      8,031.3        5.6       11.9
                   EL3.............      1,539.1           942.1      6,648.0      8,187.0        7.9       11.9
4................  EL4 *...........      1,539.1           942.1      6,648.0      8,187.0        7.9       11.9
----------------------------------------------------------------------------------------------------------------
* EL3 = EL4.
Note: The results for each TSL are calculated assuming that all consumers use equipment at that efficiency
  level. The PBP is measured relative to the baseline product.


Table V-24--Average LCC Savings Relative to the No-New-Standards Case for AO-Polyphase (Specialized Frame Size);
                                             5 hp, 4 Poles, Enclosed
                                                     [RU11]
----------------------------------------------------------------------------------------------------------------
                                                                           Life-cycle cost savings
                                                           -----------------------------------------------------
                TSL                     Efficiency level     Average LCC savings *    Percent of consumers that
                                                                    (2021$)              experience net cost
----------------------------------------------------------------------------------------------------------------
                                     Baseline.............  .......................  ...........................
1-2................................  EL1..................                     49.9                         32.1
3..................................  EL2..................                      2.5                         53.4
                                     EL3..................                   -153.2                         74.5
4..................................  EL4 *................                   -153.2                         74.5
----------------------------------------------------------------------------------------------------------------
* EL3 = EL4.
** The savings represent the average LCC for affected consumers.

b. Consumer Subgroup Analysis
    In the consumer subgroup analysis, DOE estimated the impact of the 
considered TSLs on small businesses. Table V-25 compares the average 
LCC savings and PBP at each efficiency level for the consumer subgroups 
with similar metrics for the entire consumer sample for electric 
motors. For the subgroup analysis, the only input change to the LCC 
calculation is the discount rate applied. Therefore, the simple 
paybacks remain identical for small businesses compared to the whole 
sample. In all cases, the average LCC savings and PBP for small 
businesses at the considered efficiency levels are reduced compared to 
the average for all consumers. Chapter 11 of the direct final rule TSD 
presents the complete LCC and PBP results for the subgroups.

[[Page 36128]]



      Table V-25--Comparison of LCC Savings and PBP for Small Business Consumer Subgroups and All Consumers
----------------------------------------------------------------------------------------------------------------
                                                   Average LCC savings * (2021$)      Simple payback (years)
                                                 ---------------------------------------------------------------
               TSL                      EL             Small                           Small
                                                    businesses    All businesses    businesses    All businesses
----------------------------------------------------------------------------------------------------------------
                             MEM, NEMA Design A and B; 5 hp, 4 poles, enclosed (RU1)
----------------------------------------------------------------------------------------------------------------
1-2.............................               0             N/A             N/A             N/A             N/A
3...............................               1          -108.5          -101.8            16.7            16.7
                                               2          -108.5          -101.8            16.7            16.7
                                               3          -101.7           -92.3            13.3            13.3
4...............................               4          -288.0          -276.4            20.7            20.7
----------------------------------------------------------------------------------------------------------------
                            MEM, NEMA Design A and B; 30 hp, 4 poles, enclosed (RU2)
----------------------------------------------------------------------------------------------------------------
1-2.............................               0             N/A             N/A             N/A             N/A
3...............................               1          -376.7          -336.9            15.4            15.4
                                               2          -376.7          -336.9            15.4            15.4
                                               3          -414.2          -356.9            13.6            13.6
4...............................               4          -383.3          -309.4            11.8            11.8
----------------------------------------------------------------------------------------------------------------
                            MEM, NEMA Design A and B; 75 hp, 4 poles, enclosed (RU3)
----------------------------------------------------------------------------------------------------------------
1-2.............................               0             N/A             N/A             N/A             N/A
3...............................               1          -954.2          -916.7            30.3            30.3
                                               2        -1,290.1         -1229.6            27.1            27.1
                                               3        -1,342.9         -1258.0            22.0            22.0
4...............................               4        -1,550.9         -1439.6            20.3            20.3
----------------------------------------------------------------------------------------------------------------
                            MEM, NEMA Design A and B; 150 hp, 4 poles, enclosed (RU4)
----------------------------------------------------------------------------------------------------------------
1...............................               0             N/A             N/A             N/A             N/A
2-3.............................               1           398.4           567.1             4.1             4.1
                                               2        -2,471.1         -2424.3            27.6            27.6
                                               3        -2,454.5         -2314.5            20.5            20.5
4...............................               4        -2,768.0         -2541.1            18.2            18.2
----------------------------------------------------------------------------------------------------------------
                            MEM, NEMA Design A and B; 350 hp, 4 poles, enclosed (RU5)
----------------------------------------------------------------------------------------------------------------
1-2.............................               0             N/A             N/A             N/A             N/A
3...............................               1        -1,362.7          -945.5            11.7            11.7
                                               2        -1,362.7          -945.5            11.7            11.7
                                               3        -5,206.4         -4918.5            20.9            20.9
4...............................               4        -5,758.3         -5257.2            17.9            17.9
----------------------------------------------------------------------------------------------------------------
                            MEM, NEMA Design A and B; 600 hp, 4 poles, enclosed (RU6)
----------------------------------------------------------------------------------------------------------------
                                               0  ..............  ..............  ..............  ..............
1-2.............................               1         1,865.7          2550.1             3.6             3.6
3...............................               2        -2,854.2         -2287.8            14.1            14.1
                                               3        -2,854.2         -2287.8            14.1            14.1
4...............................               4        -7,771.5         -6710.3            15.8            15.8
----------------------------------------------------------------------------------------------------------------
                           AO-MEM (Standard Frame Size); 5 hp, 4 poles, enclosed (RU7)
----------------------------------------------------------------------------------------------------------------
                                               0  ..............  ..............  ..............  ..............
1-2.............................               1            44.1            57.6             4.0             4.0
3...............................               2           -49.0           -39.2             8.6             8.6
                                               3           -49.0           -39.2             8.6             8.6
4...............................               4          -172.7          -156.5            11.4            11.4
----------------------------------------------------------------------------------------------------------------
                          AO-MEM (Standard Frame Size); 30 hp, 4 poles, enclosed (RU8)
----------------------------------------------------------------------------------------------------------------
                                               0  ..............  ..............  ..............  ..............
1-2.............................               1           407.9           472.4             1.6             1.6
3...............................               2          -213.1          -160.8            10.4            10.4
                                               3          -213.1          -160.8            10.4            10.4
4...............................               4          -196.1          -105.5             8.8             8.8
----------------------------------------------------------------------------------------------------------------
                          AO-MEM (Standard Frame Size); 75 hp, 4 poles, enclosed (RU9)
----------------------------------------------------------------------------------------------------------------
                                               0  ..............  ..............  ..............  ..............
1-2.............................              *1  ..............  ..............  ..............  ..............

[[Page 36129]]

 
3...............................               2          -947.0          -930.5            21.2            21.2
                                               3        -1,454.5        -1,441.0            25.6            25.6
4...............................               4        -1,854.7         -1795.0            17.2            17.2
----------------------------------------------------------------------------------------------------------------
                         AO-MEM (Standard Frame Size); 150 hp, 4 poles, enclosed (RU10)
----------------------------------------------------------------------------------------------------------------
                                               0  ..............  ..............  ..............  ..............
1...............................               1           292.7           608.8             6.1             6.1
2-3.............................               2           691.0           930.7             3.4             3.4
                                               3        -2,732.4         -2720.3            24.5            24.5
4...............................               4        -2,111.7         -1846.6              13              13
----------------------------------------------------------------------------------------------------------------
                      AO-Polyphase (Specialized Frame Size); 5 hp, 4 poles, enclosed (RU11)
----------------------------------------------------------------------------------------------------------------
                                               0  ..............  ..............  ..............  ..............
1-2.............................               1            37.0            49.9             4.1             4.1
3...............................               2           -16.1             2.5             5.6             5.6
                                               3          -173.9          -153.2             7.9             7.9
4...............................               4          -173.9          -153.2             7.9             7.9
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No savings at EL1 as there are no shipments at the baseline for RU9. See Table IV-9 of this document.

c. Rebuttable Presumption Payback
    As discussed in section III.F.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 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 electric motors. 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-26 presents the rebuttable-presumption payback periods for 
the considered TSLs for electric motors. While DOE examined the 
rebuttable-presumption criterion, it considered whether the standard 
levels considered for the direct 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-26--Rebuttable-Presumption Payback Periods
----------------------------------------------------------------------------------------------------------------
                                                                       Rebuttable payback period (years)
                     Representative unit                     ---------------------------------------------------
                                                                 TSL 1        TSL 2        TSL 3        TSL 4
----------------------------------------------------------------------------------------------------------------
MEM, NEMA Design A and B; 5 hp, 4 poles, enclosed (RU1).....          N/A          N/A         12.6         15.1
MEM, NEMA Design A and B; 30 hp, 4 poles, enclosed (RU2)....          N/A          N/A         11.4          8.8
MEM, NEMA Design A and B; 75 hp, 4 poles, enclosed (RU3)....          N/A          N/A         21.6         14.9
MEM, NEMA Design A and B; 150 hp, 4 poles, enclosed (RU4)...          N/A          3.0          3.0         12.9
MEM, NEMA Design A and B; 350 hp, 4 poles, enclosed (RU5)...          N/A          N/A          8.5         12.9
MEM, NEMA Design A and B; 600 hp, 4 poles, enclosed (RU6)...          2.7          2.7          6.9          9.2
AO-MEM (Standard Frame Size); 5 hp, 4 poles, enclosed (RU7).          3.1          3.1          5.0          6.9
AO-MEM (Standard Frame Size); 30 hp, 4 poles, enclosed (RU8)          1.2          1.2          4.5          4.6
AO-MEM (Standard Frame Size); 75 hp, 4 poles, enclosed (RU9)  ...........  ...........          6.6          7.8
 *..........................................................
AO-MEM (Standard Frame Size); 150 hp, 4 poles, enclosed               4.4          3.5          3.5          7.3
 (RU10).....................................................
AO-Polyphase (Specialized Frame Size); 5 hp, 4 poles,                 3.1          3.1          4.2          5.9
 enclosed (RU11)............................................
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No payback at TSL1 and TSL2 (EL1) as there are no shipments at the baseline for RU9. See Table IV-9 of this
  document.

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new and amended 
energy conservation standards on manufacturers of electric motors. The 
following section describes the expected impacts on manufacturers at 
each considered TSL. Chapter 12 of the direct final rule TSD explains 
the analysis in further detail.
a. Industry Cash Flow Analysis Results
    In this section, DOE provides GRIM results from the analysis, which 
examines changes in the industry that would result from a standard. The

[[Page 36130]]

following tables summarize the estimated financial impacts (represented 
by changes in INPV) of potential new and amended energy conservation 
standards on manufacturers of electric motors, as well as the 
conversion costs that DOE estimates manufacturers of electric motors 
would incur at each TSL.
    To evaluate the range of cash flow impacts on the electric motor 
industry, DOE modeled two manufacturer markup scenarios that correspond 
to the range of possible market responses to new and amended standards. 
Each manufacturer markup scenario results in a unique set of cash flows 
and corresponding INPVs at each TSL.
    In the following discussion, the INPV results refer to the 
difference in industry value between the no-new-standards case and the 
standards cases that result from the sum of discounted cash flows from 
the reference year (2023) through the end of the analysis period 
(2056). The results also discuss the difference in cash flows between 
the no-new standards case and the standards cases in the year before 
the estimated compliance date for new and amended energy conservation 
standards. This figure represents the size of the required conversion 
costs relative to the cash flow generated by the electric motor 
industry in the absence of new and amended energy conservation 
standards.
    To assess the upper (less severe) end of the range of potential 
impacts on electric motors manufacturers, DOE modeled a preservation of 
gross margin scenario. This scenario assumes that in the standards 
cases, electric motor manufacturers will be able to pass along all the 
higher MPCs required for more efficient equipment to their customers. 
Specifically, the industry will be able to maintain its average no-new-
standards case gross margin (as a percentage of revenue) despite the 
higher production costs in the standards cases. In general, the larger 
the MPC increases, the less likely manufacturers are to achieve the 
cash flow from operations calculated in this scenario because it is 
less likely that manufacturers will be able to fully markup these 
larger production cost increases.
    To assess the lower (more severe) end of the range of potential 
impacts on the electric motor manufacturers, DOE modeled a preservation 
of operating profit scenario. This scenario represents the lower end of 
the range of impacts on manufacturers because no additional operating 
profit is earned on the higher MPCs, eroding profit margins as a 
percentage of total revenue.

       Table V-27--Manufacturer Impact Analysis for Electric Motors--Preservation of Gross Margin Scenario
----------------------------------------------------------------------------------------------------------------
                                                           No-new-               Trial standard level
                                           Units          standards  -------------------------------------------
                                                             case         1          2          3          4
----------------------------------------------------------------------------------------------------------------
INPV.............................  2021$ millions......        5,023      4,899      4,720      4,681    (3,840)
Change in INPV...................  2021$ millions......  ...........      (124)      (303)      (342)    (8,863)
                                   %...................  ...........      (2.5)      (6.0)      (6.8)    (176.4)
Product Conversion Costs.........  2021$ millions......  ...........        159        296        870      6,285
Capital Conversion Costs.........  2021$ millions......  ...........         31        173        748      7,231
Total Conversion Costs...........  2021$ millions......  ...........        190        468      1,618     13,516
----------------------------------------------------------------------------------------------------------------


     Table V-28--Manufacturer Impact Analysis for Electric Motors--Preservation of Operating Profit Scenario
----------------------------------------------------------------------------------------------------------------
                                                           No-new-               Trial standard level
                                           Units          standards  -------------------------------------------
                                                             case         1          2          3          4
----------------------------------------------------------------------------------------------------------------
INPV.............................  2021$ millions......        5,023      4,896      4,690      3,659    (6,066)
Change in INPV...................  2021$ millions......  ...........      (127)      (333)    (1,364)   (11,090)
                                   %...................  ...........      (2.5)      (6.6)     (27.2)    (220.8)
Product Conversion Costs.........  2021$ millions......  ...........        159        296        870      6,285
Capital Conversion Costs.........  2021$ millions......  ...........         31        173        748      7,231
Total Conversion Costs...........  2021$ millions......  ...........        190        468      1,618     13,516
----------------------------------------------------------------------------------------------------------------

    TSL 1 sets the efficiency level at baseline for all MEM, 1-500 hp, 
NEMA Design A and B; and at EL 1 for all MEM, 501-750 hp, NEMA Design A 
and B, for all AO-MEM 1-250 hp (standard frame size), and for all AO-
Polyphase 1-20 hp (specialized frame size). At TSL 1, DOE estimates 
impacts on INPV will range from -$127 million to -$124 million, which 
represents a change in INPV of approximately -2.5 percent (for both 
values, when rounded to the nearest tenth of a percent). At TSL 1, 
industry free cash flow (operating cash flow minus capital 
expenditures) is estimated to decrease to $272 million, or a drop of 21 
percent, compared to the no-new-standards case value of $343 million in 
2026, the year leading up to the compliance date of new and amended 
energy conservation standards.
    In the absence of new or amended energy conservation standards, DOE 
estimates that all MEM, 1-500 hp, NEMA Design A and B; 90 percent of 
MEM, 501-750 hp, NEMA Design A and B; 73 percent of the AO-MEM 1-250 hp 
(standard frame size); and none of the AO-Polyphase 1-20 hp 
(specialized frame size) shipments will meet or exceed the ELs required 
at TSL 1 in 2027, the compliance year of new and amended standards.
    DOE does not expect manufacturers to incur any product or capital 
conversion costs for MEM, 1-500 hp, NEMA Design A and B at TSL 1, since 
standards are set at baseline at TSL 1 for these electric motors. For 
the rest of the electric motors covered by this rulemaking, DOE 
estimates that manufacturers will incur approximately $159 million in 
product conversion costs and approximately $31 million in capital 
conversion costs. Product conversion costs primarily include 
engineering time to redesign non-compliance electric motor models and 
to re-test these newly redesigned models to meet the standards set at 
TSL 1. Capital conversion costs include the purchase of lamination die 
sets, winding machines, frame casts, and assembly equipment as well as 
other

[[Page 36131]]

retooling costs for MEM, 501-750 hp, NEMA Design A and B and for all 
AO-MEM 1-250 hp (standard frame size) and all AO-Polyphase 1-20 hp 
(specialized frame size) electric motors covered by this rulemaking.
    At TSL 1, under the preservation of gross margin scenario, the 
shipment weighted average MPC increases slightly by approximately 0.1 
percent relative to the no-new-standards case MPC. This slight price 
increase is outweighed by the $190 million in total conversion costs 
estimated at TSL 1, resulting in slightly negative INPV impacts at TSL 
1 under the preservation of gross margin scenario.
    Under the preservation of operating profit scenario, manufacturers 
earn the same nominal operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit 
from their investments. The slight increase in the shipment weighted 
average MPC results in a slightly lower average manufacturer margin. 
This slightly lower average manufacturer margin and the $190 million in 
total conversion costs result in slightly negative INPV impacts at TSL 
1 under the preservation of operating profit scenario.
    TSL 2 sets the efficiency level at baseline for all MEM, 1-99 hp 
and 251-500 hp, NEMA Design A and B; at EL 1 for all MEM, 100-250 hp 
and 501-750 hp, NEMA Design A and B, for all AO-MEM 1-99 hp (standard 
frame size), and for all AO-Polyphase 1-20 hp (specialized frame size); 
and at EL 2 for all AO-MEM 100-250 hp (standard frame size). At TSL 2, 
DOE estimates impacts on INPV will range from -$333 million to -$303 
million, which represents a change in INPV of approximately -6.6 
percent to -6.0 percent, respectively. At TSL 2, industry free cash 
flow (operating cash flow minus capital expenditures) is estimated to 
decrease to $160 million, or a drop of 53 percent, compared to the no-
new-standards case value of $343 million in 2026, the year leading up 
to the compliance date of new and amended energy conservation 
standards.
    In the absence of new or amended energy conservation standards, DOE 
estimates that all MEM, 1-99 hp and 251-500 hp, NEMA Design A and B; 14 
percent of all MEM, 100-250 hp, NEMA Design A and B; 90 percent of all 
MEM, 501-750, NEMA Design A and B; 72 percent of all AO-MEM 1-99 hp 
(standard frame size); 8 percent of all AO-MEM 100-250 hp (standard 
frame size); and none of the AO-Polyphase 1-20 hp (specialized frame 
size) shipments will meet or exceed the ELs required at TSL 2 in 2027, 
the compliance year of new and amended standards.
    DOE does not expect manufacturers to incur any product or capital 
conversion costs for MEM, 1-99 hp and 250-500 hp, NEMA Design A and B 
at TSL 2, since standards are set at baseline at TSL 2 for these 
electric motors. For the rest of the electric motors covered by this 
rulemaking, DOE estimates that manufacturers will incur approximately 
$296 million in product conversion costs and approximately $173 million 
in capital conversion costs. Product conversion costs primarily include 
engineering time to redesign non-compliance electric motor models and 
to re-test these newly redesigned models to meet the standards set at 
TSL 2. Capital conversion costs include the purchase of lamination die 
sets, winding machines, frame casts, and assembly equipment as well as 
other retooling costs for MEM, 100-250 hp and 501-750 hp, NEMA Design A 
and B and for all AO-MEM 1-250 hp (standard frame size) and all AO-
Polyphase 1-20 hp (specialized frame size) electric motors covered by 
this rulemaking.
    At TSL 2, under the preservation of gross margin scenario, the 
shipment weighted average MPC increases slightly by approximately 0.7 
percent relative to the no-new-standards case MPC. This slight price 
increase is outweighed by the $468 million in total conversion costs 
estimated at TSL 2, resulting in moderately negative INPV impacts at 
TSL 2 under the preservation of gross margin scenario.
    Under the preservation of operating profit scenario, manufacturers 
earn the same nominal operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit 
from their investments. The slight increase in the shipment weighted 
average MPC results in a slightly lower average manufacturer margin. 
This slightly lower average manufacturer margin and the $468 million in 
total conversion costs result in moderately negative INPV impacts at 
TSL 2 under the preservation of operating profit scenario.
    TSL 3 sets the efficiency level at EL 1 for all MEM, 1-500 hp, NEMA 
Design A and B; and at EL 2 for all MEM, 501-750 hp, NEMA Design A and 
B, for all AO-MEM 1-250 hp (standard frame size), and for all AO-
Polyphase 1-20 hp (specialized frame size). At TSL 3, DOE estimates 
impacts on INPV will range from -$1,364 million to -$342 million, which 
represents a change in INPV of approximately -27.2 percent to -6.8 
percent, respectively. At TSL 3, industry free cash flow (operating 
cash flow minus capital expenditures) is estimated to decrease to -$303 
million, or a drop of 189 percent, compared to the no-new-standards 
case value of $343 million in 2026, the year leading up to the 
compliance date of new and amended energy conservation standards.
    In the absence of new or amended energy conservation standards, DOE 
estimates that 14 percent of all MEM, 1-500 hp, NEMA Design A and B; 16 
percent of all MEM, 501-750 hp, NEMA Design A and B; 2 percent of all 
AO-MEM 1-250 hp (standard frame size); and none of the AO-Polyphase 1-
20 hp (specialized frame size) shipments will meet or exceed the ELs 
required at TSL 3 in 2027, the compliance year of new and amended 
standards.
    The majority of electric motors covered by this rulemaking will 
need to be redesigned at TSL 3. DOE estimates that manufacturers will 
have to make significant investments in their manufacturing production 
equipment and the engineering resources dedicated to redesigning 
electric motor models. DOE estimates that manufacturers will incur 
approximately $870 million in product conversion costs and 
approximately $748 million in capital conversion costs.
    At TSL 3, under the preservation of gross margin scenario, the 
shipment weighted average MPC increases significantly by approximately 
22.0 percent relative to the no-new-standards case MPC. This price 
increase is outweighed by the $1,618 million in total conversion costs 
estimated at TSL 3, resulting in moderately negative INPV impacts at 
TSL 3 under the preservation of gross margin scenario.
    Under the preservation of operating profit scenario, manufacturers 
earn the same nominal operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit 
from their investments. The increase in the shipment weighted average 
MPC results in a significantly lower average manufacturer margin, 
compared to the no-new-standards case manufacturer margin. This lower 
average manufacturer margin and the $1,618 million in total conversion 
costs result in significantly negative INPV impacts at TSL 3 under the 
preservation of operating profit scenario.
    TSL 4 sets the efficiency level at EL 4 (max-tech) for all electric 
motors covered by this rulemaking. At TSL 4, DOE estimates impacts on 
INPV will range from -$11,090 million to -$8,863 million, which 
represents a change in INPV of approximately -220.8 percent to -176.4 
percent, respectively. At TSL 4, industry free

[[Page 36132]]

cash flow (operating cash flow minus capital expenditures) is estimated 
to decrease to -$5,634 million, or a drop of 1,745 percent, compared to 
the no-new-standards case value of $343 million in 2026, the year 
leading up to the compliance date of new and amended energy 
conservation standards.
    In the absence of new or amended energy conservation standards, DOE 
estimates that less than 1 percent of all MEM, 1-50 hp, NEMA Design A 
and B; none of the MEM, 51-750 hp, NEMA Design A and B; none of the AO-
MEM 1-250 hp (standard frame size); and none of the AO-Polyphase 1-20 
hp (specialized frame size) shipments will meet the ELs required at TSL 
4 in 2027, the compliance year of new and amended standards.
    Almost all electric motors covered by this rulemaking will need to 
be redesigned at TSL 4. DOE estimates that manufacturers will have to 
make significant investments in their manufacturing production 
equipment and the engineering resources dedicated to redesigning 
electric motor models. DOE estimates that manufacturers will incur 
approximately $6,285 million in product conversion costs and 
approximately $7,231 million in capital conversion costs. The 
significant increase in product and capital conversion costs is because 
DOE assumes that electric motor manufacturers will need to use die-cast 
copper rotors for most, if not all, electric motors manufactured to 
meet this TSL. This technology requires a significant level of 
investment because the majority of the existing electric motor 
production machinery would need to be replaced or significantly 
modified.
    At TSL 4, under the preservation of gross margin scenario, the 
shipment weighted average MPC increases significantly by approximately 
49.5 percent relative to the no-new-standards case MPC. This price 
increase is significantly outweighed by the $13,516 million in total 
conversion costs estimated at TSL 4, resulting in significantly 
negative INPV impacts at TSL 4 under the preservation of gross margin 
scenario.
    Under the preservation of operating profit scenario, manufacturers 
earn the same nominal operating profit as would be earned in the no-
new-standards case, but manufacturers do not earn additional profit 
from their investments. The increase in the shipment weighted average 
MPC results in a lower average manufacturer margin, compared to the no-
new-standards case manufacturer margin. This lower average manufacturer 
margin and the $13,516 million in total conversion costs result in 
significantly negative INPV impacts at TSL 4 under the preservation of 
operating profit scenario.
b. Direct Impacts on Employment
    To quantitatively assess the potential impacts of new and amended 
energy conservation standards on direct employment in the electric 
motors 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 2021 Annual 
Survey of Manufacturers (``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 involved with the manufacturing 
of electric motors are a function of the labor intensity of the 
product, the sales volume, and an assumption that wages remain fixed in 
real terms over time.
    In the GRIM, DOE used the labor content of each piece of equipment 
and the MPCs to estimate the annual labor expenditures of the industry. 
DOE used Census data and interviews with manufacturers to estimate the 
portion of the total labor expenditures attributable to domestic labor.
    The production worker estimates in this employment section cover 
only workers up to the line-supervisor level who are directly involved 
in fabricating and assembling an electric motor within a motor 
facility. Workers performing services that are closely associated with 
production operations, such as material handling with a forklift, are 
also included as production labor. DOE's estimates account for only 
production workers who manufacture the specific equipment covered by 
this rulemaking. For example, a worker on an electric motor line 
manufacturing a fractional horsepower motor (i.e., a motor with less 
than one horsepower) would not be included with this estimate of the 
number of electric motor workers, since fractional motors are not 
covered by this rulemaking.
    The employment impacts shown in Table V-29 represent the potential 
production employment impact resulting from new and amended energy 
conservation standards. The upper bound of the results estimates the 
maximum change in the number of production workers that could occur 
after compliance with new and amended energy conservation standards 
when assuming that manufacturers continue to produce the same scope of 
covered equipment in the same production facilities. It also assumes 
that domestic production does not shift to lower-labor-cost countries. 
Because there is a real risk of manufacturers evaluating sourcing 
decisions in response to new and amended energy conservation standards, 
the lower bound of the employment results includes the estimated total 
number of U.S. production workers in the industry who could lose their 
jobs if some existing electric motor production was moved outside of 
the U.S. While the results present a range of employment impacts 
following 2027, this section also include qualitative discussions of 
the likelihood of negative employment impacts at the various TSLs. 
Finally, the employment impacts shown are independent of the indirect 
employment impacts from the broader U.S. economy, which are documented 
in chapter 16 of the direct final rule TSD.
    Based on 2021 ASM data and interviews with manufacturers, DOE 
estimates approximately 15 percent of electric motors covered by this 
rulemaking sold in the U.S. are manufactured domestically. Using this 
assumption, DOE estimates that in the absence of new and amended energy 
conservation standards, there would be approximately 1,242 domestic 
production workers involved in manufacturing all electric motors 
covered by this rulemaking in 2027. Table V-29 shows the range of 
potential impacts of new and amended energy conservation standards on 
U.S. production workers involved in the production of electric motors 
covered by this rulemaking.

                 Table V-29--Potential Changes in the Number of Domestic Electric Motor Workers
----------------------------------------------------------------------------------------------------------------
                                             No-new-                      Trial standard level
                                            standards  ---------------------------------------------------------
                                               case          1            2              3               4
----------------------------------------------------------------------------------------------------------------
Domestic Production Workers in 2027......        1,242        1,243        1,250           1,515           1,857

[[Page 36133]]

 
Domestic Non-Production Workers in 2027..          712          712          712             712             712
Total Domestic Employment in 2027........        1,954        1,955        1,962           2,227           2,569
Potential Changes in Total Domestic        ...........        (2)-1       (13)-8       (432)-273     (1,201)-615
 Employment in 2027 *....................
----------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential impacts. Numbers in parentheses indicate negative values.

    At the upper end of the range, all examined TSLs show an increase 
in the number of domestic production workers for electric motors. The 
upper end of the range represents a scenario where manufacturers 
increase production hiring due to the increase in the labor associated 
with adding the required components and additional labor (e.g., hand 
winding, etc.) to make electric motors more efficient. However, as 
previously stated, this assumes that in addition to hiring more 
production employees, all existing domestic production would remain in 
the United States and not shift to lower labor-cost countries.
    At the lower end of the range, all examined TSLs show a decrease in 
domestic production employment. In response to the March 2022 
Preliminary TSD NEMA stated that increasing component prices can drive 
production offshore when tariffs only apply to raw materials and not 
finished goods. (NEMA, No. 22 at p. 16). The lower end of the domestic 
employment range assumes that some electric motor domestic production 
employment may shift to lower labor-cost countries in response to 
energy conservation standards. DOE estimated this lower bound potential 
change in domestic employment based on the percent change in the MPC at 
each TSL.
c. Impacts on Manufacturing Capacity
    During manufacturer interviews and during meetings supporting the 
November 2022 Joint Recommendation, most manufacturers stated that any 
standards requiring efficiency levels higher than IE4 (also referred to 
as NEMA Super-Premium) \93\ would severely disrupt manufacturing 
capacity (in this analysis these efficiency levels correspond to two or 
more NEMA bands of efficiency above NEMA Premium). Many electric motor 
manufacturers do not offer any electric motor models that would meet 
these higher efficiency levels. Based on the shipments analysis used in 
the NIA, DOE estimates that less than 1.5 percent of all electric motor 
shipments will meet any efficiency level above IE4, in the no-new-
standards case in 2027, the compliance year of new and amended 
standards.
---------------------------------------------------------------------------

    \93\ The TSL that require efficiency levels above IE4/NEMA 
Super-Premium is TSL 4.
---------------------------------------------------------------------------

    Additionally, most manufacturers stated they would not be able to 
provide a full portfolio of electric motors for any standards that 
would be met using copper rotors. Most manufacturers stated that they 
do not currently have the machinery, technology, or engineering 
resources to produce copper rotors in-house. Some manufacturers claim 
that the few manufacturers that do have the capability of producing 
copper rotors are not able to produce these motors in volumes 
sufficient to fulfill the entire electric motor market and would not be 
able to ramp up those production volumes over the four-year compliance 
period. For manufacturers to either completely redesign their motor 
production lines or significantly expand their very limited copper 
rotor production line would require a massive retooling and engineering 
effort, which could take more than a decade to complete. Most 
manufacturers stated they would have to outsource copper rotor 
production because they would not be able to modify their facilities 
and production processes to produce copper rotors in-house within a 
four-year time period. Most manufacturers agreed that outsourcing rotor 
die casting would constrain capacity by creating a bottleneck in rotor 
production, as there are very few companies that produce copper rotors.
    Manufacturers also pointed out that there is substantial 
uncertainty surrounding the global availability and price of copper, 
which has the potential to constrain capacity. Several manufacturers 
expressed concern that the combination of all of these factors would 
make it impossible to support existing customers while redesigning 
product lines and retooling.
    DOE estimates there is a strong likelihood of manufacturer capacity 
constraints in the near term for any standards that would likely 
require the use of copper rotors and for any standards set at 
efficiency levels higher than IE4.
d. Impacts on Subgroups of Manufacturers
    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 equipment 
manufacturers, and manufacturers exhibiting cost structures 
substantially different from the industry average could be affected 
disproportionately. DOE analyzed the impacts to small businesses in 
section VI.B and did not identify any other adversely impacted electric 
motor-related manufacturer subgroups for this rulemaking based on the 
results of the industry characterization.
e. Cumulative Regulatory Burden
    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

[[Page 36134]]

of cumulative regulatory burden as part of its rulemakings pertaining 
to appliance efficiency. DOE requests information regarding the impact 
of cumulative regulatory burden on manufacturers of electric motors 
associated with multiple DOE standards or product-specific regulatory 
actions of other Federal agencies.
    DOE evaluates product-specific regulations that will take effect 
approximately 3 years before or after the 2027 compliance date of any 
new and amended energy conservation standards for electric motors. This 
information is presented in Table V-30.

      Table V-30--Compliance Dates and Expected Conversion Expenses of Federal Energy Conservation Standards Affecting Electric Motor Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Number of                                                               Industry
                                                  Number of       manufacturers       Approx.                                           conversion costs/
    Federal energy conservation standard       manufacturers *    affected from   standards year  Industry conversion costs (millions)   product revenue
                                                                  this rule **                                                               *** (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dedicated-Purpose Pool Pump Motors 87 FR                     5                 5            2026  $46.2 (2020$)                                      2.8
 37122 (Jun. 21, 2022) [dagger].
Distribution Transformer 88 FR 1722 (Jan.                   27                 6            2027  $343 (2021$)                                       2.7
 11, 2023) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This column presents the total number of manufacturers identified in the energy conservation standard rule contributing to cumulative regulatory
  burden.
** This column presents the number of manufacturers producing electric motors that are also listed as manufacturers in the listed energy conservation
  standard contributing to cumulative regulatory burden.
*** This column presents industry conversion costs as a percentage of product revenue during the conversion period. Industry conversion costs are the
  upfront investments manufacturers must make to sell compliant products/equipment. The revenue used for this calculation is the revenue from just the
  covered product/equipment associated with each row. The conversion period is the time frame over which conversion costs are made and lasts from the
  publication year of the final rule to the compliance year of the energy conservation standard. The conversion period typically ranges from 3 to 5
  years, depending on the rulemaking.
[dagger] Indicates a proposed rulemaking. Final values may change upon the publication of a final rule.

3. National Impact Analysis
    This section presents DOE's estimates of the national energy 
savings and the NPV of consumer benefits that would result from each of 
the TSLs considered as potential amended standards.
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential amended 
standards for electric motors, 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 (2027-2056). Table V-31 
presents DOE's projections of the national energy savings for each TSL 
considered for electric motors. The savings were calculated using the 
approach described in section IV.H of this document.

            Table V-31--Cumulative National Energy Savings for Electric Motors; 30 Years of Shipments
                                                   [2027-2056]
----------------------------------------------------------------------------------------------------------------
                                                                                  Trial standard level
       Equipment class group                 Horsepower range         ------------------------------------------
                                                                            1           2         3         4
----------------------------------------------------------------------------------------------------------------
                                                             (quads)
----------------------------------------------------------------------------------------------------------------
Primary Energy:
    MEM, 1-500 hp, NEMA Design A     1 <= hp <= 5....................          N/A       N/A     0.799     1.877
     and B.
                                     5 < hp <= 20....................          N/A       N/A     2.303     4.461
                                     20 < hp <= 50...................          N/A       N/A     2.049     3.968
                                     50 < hp < 100...................          N/A       N/A     0.327     1.049
                                     100 <= hp <= 250................          N/A     2.609     2.609     7.926
                                     250 < hp <= 500.................          N/A       N/A     1.411     2.497
    MEM, 501-750 hp, NEMA Design A   500 < hp <= 750.................        0.003     0.003     0.029     0.073
     and B above 500 hp.
    AO-MEM (Standard Frame Size)...  1 <= hp <= 20...................        0.045     0.045     0.104     0.184
                                     20 < hp <= 50...................        0.012     0.012     0.100     0.171
                                     50 < hp < 100*..................  ...........  ........     0.018     0.047
                                     100 <=hp <= 250.................        0.056     0.207     0.207     0.436
    AO-Polyphase (Specialized Frame  1 <= hp <= 20...................        0.021     0.021     0.036     0.049
     Size).
                                                                      ------------------------------------------
        Total......................  ................................        0.137     2.898     9.991    22.739
----------------------------------------------------------------------------------------------------------------
FFC:
    MEM, 1-500 hp, NEMA Design A     1 <= hp <= 5....................          N/A       N/A     0.830     1.950
     and B.                          5 < hp <= 20....................          N/A       N/A     2.393     4.635
                                     20 < hp <= 50...................          N/A       N/A     2.128     4.123
                                     50 < hp < 100...................          N/A       N/A     0.339     1.090
                                     100 <= hp <= 250................          N/A     2.710     2.710     8.234
                                     250 < hp <= 500.................          N/A       N/A     1.466     2.594
    MEM, 501-750 hp, NEMA Design A   500 < hp <= 750.................        0.003     0.003     0.031     0.076
     and B above 500 hp.

[[Page 36135]]

 
    AO-MEM (Standard Frame Size)...  1 <= hp <= 20...................        0.047     0.047     0.108     0.192
                                     20 < hp <= 50...................        0.012     0.012     0.104     0.177
                                     50 <= hp <= 100 *...............  ...........  ........     0.018     0.049
                                     100 <= hp <= 250 **.............        0.058     0.215     0.215     0.453
    AO-Polyphase (Specialized Frame  1 hp 20.........................        0.022     0.022     0.037     0.051
     Size).
                                                                      ------------------------------------------
        Total......................  ................................        0.143     3.011    10.379    23.623
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No impact at TSL1 and TSL2 because there are no shipments below the efficiency level corresponding to TSL1 and
  TSL2 in that equipment class group and horsepower range.

    OMB Circular A-4 \94\ requires agencies to present analytical 
results, including separate schedules of the monetized benefits and 
costs that show the type and timing of benefits and costs. Circular A-4 
also directs agencies to consider the variability of key elements 
underlying the estimates of benefits and costs. For this rulemaking, 
DOE undertook a sensitivity analysis using 9 years, rather than 30 
years, of product shipments. The choice of a 9-year period is a proxy 
for the timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards.\95\ The review timeframe established in EPCA is generally 
not synchronized with the product lifetime, product manufacturing 
cycles, or other factors specific to electric motors. Thus, such 
results are presented for informational purposes only and are not 
indicative of any change in DOE's analytical methodology. The NES 
sensitivity analysis results based on a 9-year analytical period are 
presented in Table V-32. The impacts are counted over the lifetime of 
electric motors purchased in 2027-2035.
---------------------------------------------------------------------------

    \94\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. 
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed 
September 30, 2022).
    \95\ EPCA requires DOE to review its standards at least once 
every 6 years, and requires, for certain products, a 3-year period 
after any new standard is promulgated before compliance is required, 
except that in no case may any new standards be required within 6- 
years of the compliance date of the previous standards. While adding 
a 6-year review to the 3-year compliance period adds up to 9 years, 
DOE notes that it may undertake reviews at any time within the 6-
year period and that the 3-year compliance date may yield to the 6-
year backstop. A 9-year analysis period may not be appropriate given 
the variability that occurs in the timing of standards reviews and 
the fact that for some products, the compliance period is 5 years 
rather than 3 years.

            Table V-32--Cumulative National Energy Savings for Electric Motors; 9 Years of Shipments
                                                   [2027-2035]
----------------------------------------------------------------------------------------------------------------
                                                                                  Trial standard level
       Equipment class group                 Horsepower range         ------------------------------------------
                                                                            1           2         3         4
----------------------------------------------------------------------------------------------------------------
                                                             (quads)
----------------------------------------------------------------------------------------------------------------
Primary Energy:
    MEM, 1-500 hp, NEMA Design A     1 <= hp <= 5....................          N/A       N/A     0.182     0.427
     and B.                          5 < hp <= 20....................          N/A       N/A     0.524     1.016
                                     20 < hp <= 50...................          N/A       N/A     0.466     0.903
                                     50 < hp < 100...................          N/A       N/A     0.074     0.239
                                     100 <= hp <= 250................          N/A     0.592     0.592     1.799
                                     250 < hp <= 500.................          N/A       N/A     0.320     0.567
    MEM, 501-750 hp, NEMA Design A   500 < hp <= 750.................        0.001     0.001     0.007     0.017
     and B above 500 hp.
    AO-MEM (Standard Frame Size)...  1 <= hp <= 20...................        0.012     0.012     0.029     0.051
                                     20 < hp <= 50...................        0.003     0.003     0.027     0.047
                                     50 < hp < 100 *.................  ...........  ........     0.005     0.013
                                     100 <= hp <= 250................        0.015     0.057     0.057     0.119
    AO-Polyphase (Specialized Frame  1 <= hp <= 20...................        0.006     0.006     0.010     0.014
     Size).
                                                                      ------------------------------------------
        Total......................  ................................        0.038     0.671     2.294     5.211
----------------------------------------------------------------------------------------------------------------
FFC:
    MEM, 1--500 hp, NEMA Design A    1 <= hp <= 5....................          N/A       N/A     0.189     0.444
     and B.                          5 < hp <= 20....................          N/A       N/A     0.545     1.056
                                     20 < hp <= 50...................          N/A       N/A     0.485     0.939
                                     50 < hp < 100...................          N/A       N/A     0.077     0.248
                                     100 <= hp <= 250................          N/A     0.615     0.615     1.869
                                     250 < hp <= 500.................          N/A       N/A     0.333     0.589
    MEM, 501-750 hp, NEMA Design A   500 < hp <= 750.................        0.001     0.001     0.007     0.017
     and B above 500 hp.
    AO-MEM (Standard Frame Size)...  1 <= hp <= 20...................        0.013     0.013     0.030     0.053
                                     20 < hp <= 50...................        0.003     0.003     0.028     0.049
                                     50 < hp < 100 *.................  ...........  ........     0.005     0.013
                                     100 <= hp <= 250 **.............        0.016     0.059     0.059     0.124

[[Page 36136]]

 
    AO-Polyphase (Specialized Frame  1 <= hp <= 20...................        0.006     0.006     0.010     0.014
     Size).
                                                                      ------------------------------------------
        Total......................  ................................        0.039     0.698     2.384     5.416
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No impact at TSL1 and TSL2 because there are no shipments below the efficiency level corresponding to TSL1 and
  TSL2 (EL1) in that equipment class group and horsepower range.

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for electric 
motors. In accordance with OMB's guidelines on regulatory analysis,\96\ 
DOE calculated NPV using both a 7-percent and a 3-percent real discount 
rate. Table V-33 shows the consumer NPV results with impacts counted 
over the lifetime of products purchased in 2027-2056.
---------------------------------------------------------------------------

    \96\ U.S. Office of Management and Budget. Circular A-4: 
Regulatory Analysis. September 17, 2003. 
obamawhitehouse.archives.gov/omb/circulars_a004_a-4 (last accessed 
September 30, 2022).

    Table V-33--Cumulative Net Present Value of Consumer Benefits for Electric Motors; 30 Years of Shipments
                                                   [2027-2056]
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
         Discount rate             Equipment class      Horsepower   -------------------------------------------
                                        group             range           1          2          3          4
----------------------------------------------------------------------------------------------------------------
                                                                                    (billion 2021$)
----------------------------------------------------------------------------------------------------------------
3 percent......................  MEM, 1-500 hp,         1 <= hp <= 5        N/A        N/A      -2.18      -8.54
                                  NEMA Design A and
                                  B.
                                                        5 < hp <= 20        N/A        N/A      -7.17      -6.21
                                                       20 < hp <= 50        N/A        N/A      -3.24      -0.93
                                                       50 < hp < 100        N/A        N/A      -1.36      -1.50
                                                        100 <= hp <=        N/A       6.73       6.73       5.13
                                                                 250
                                                     250 < hp <= 500        N/A        N/A       1.77       0.66
                                 MEM, 501-750 hp,    500 < hp <= 750       0.01       0.01       0.02       0.03
                                  NEMA Design A and
                                  B above 500 hp.
                                 AO-MEM (Standard      1 <= hp <= 20       0.12       0.12       0.05      -0.14
                                  Frame Size).         20 < hp <= 50       0.04       0.04       0.04       0.17
                                                     50 < hp < 100 *  .........  .........      -0.09      -0.16
                                                        100 <= hp <=       0.11       0.52       0.52       0.18
                                                                 250
                                 AO-Polyphase          1 <= hp <= 20       0.05       0.05       0.05       0.01
                                  (Specialized
                                  Frame Size).
                                                                     -------------------------------------------
                                    Total..........  ...............       0.33       7.47      -4.85     -11.30
----------------------------------------------------------------------------------------------------------------
7 percent......................  MEM, 1-500 hp,         1 <= hp <= 5        N/A        N/A      -1.49      -5.30
                                  NEMA Design A and
                                  B.
                                                        5 < hp <= 20        N/A        N/A      -4.77      -5.18
                                                       20 < hp <= 50        N/A        N/A      -2.62      -2.25
                                                       50 < hp < 100        N/A        N/A      -0.86      -1.26
                                                        100 <= hp <=        N/A       2.00       2.00      -2.04
                                                                 250
                                                     250 < hp <= 500        N/A        N/A       0.09      -1.15
                                 MEM, 501-750 hp,    500 < hp <= 750       0.00       0.00      -0.01      -0.03
                                  NEMA Design A and
                                  B above 500 hp.
                                 AO-MEM (Standard      1 <= hp <= 20       0.04       0.04      -0.02      -0.16
                                  Frame Size).         20 < hp <= 50       0.02       0.02      -0.02       0.01
                                                     50 < hp < 100 *  .........  .........      -0.06      -0.11
                                                        100 <= hp <=       0.02       0.16       0.16      -0.18
                                                                 250
                                 AO-Polyphase          1 <= hp <= 20       0.02       0.02       0.01      -0.02
                                  (Specialized
                                  Frame Size).
                                                                     -------------------------------------------
                                    Total..........  ...............       0.11       2.23      -7.60     -17.67
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No impact at TSL1 and TSL2 because there are no shipments below the efficiency level corresponding to TSL1 and
  TSL2 in that equipment class group and horsepower range.

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V-34. The impacts are counted over the 
lifetime of products purchased in 2027-2035. As mentioned previously, 
such results are presented for informational purposes only and are not 
indicative of any

[[Page 36137]]

change in DOE's analytical methodology or decision criteria.

     Table V-34--Cumulative Net Present Value of Consumer Benefits for Electric Motors; 9 Years of Shipments
                                                   [2027-2035]
----------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard level
         Discount rate             Equipment class      Horsepower   -------------------------------------------
                                        group             range           1          2          3          4
----------------------------------------------------------------------------------------------------------------
                                                                                    (billion 2021$)
----------------------------------------------------------------------------------------------------------------
3 percent......................  MEM, 1-500 hp,         1 <= hp <= 5        N/A        N/A      -0.66      -2.62
                                  NEMA Design A and     5 < hp <= 20        N/A        N/A      -2.17      -1.79
                                  B.
                                                       20 < hp <= 50        N/A        N/A      -0.95      -0.16
                                                       50 < hp < 100        N/A        N/A      -0.41      -0.43
                                                        100 <= hp <=        N/A       2.16       2.16       1.74
                                                                 250
                                                     250 < hp <= 500        N/A        N/A       0.58       0.25
                                 MEM, 501-750 hp,    500 < hp <= 750       0.00       0.00       0.01       0.01
                                  NEMA Design A and
                                  B above 500 hp.
                                 AO-MEM (Standard      1 <= hp <= 20       0.04       0.04       0.02      -0.04
                                  Frame Size).         20 < hp <= 50       0.02       0.02       0.02       0.07
                                                     50 < hp < 100 *  .........  .........      -0.03      -0.06
                                                        100 <= hp <=       0.04       0.20       0.20       0.08
                                                                 250
                                 AO-Polyphase          1 <= hp <= 20       0.02       0.02       0.02       0.01
                                  (Specialized
                                  Frame Size).
                                                                     -------------------------------------------
                                    Total..........  ...............       0.12       2.44      -1.22      -2.95
----------------------------------------------------------------------------------------------------------------
7 percent......................  MEM, 1-500 hp,         1 <= hp <= 5        N/A        N/A      -0.64      -2.30
                                  NEMA Design A and     5 < hp <= 20        N/A        N/A      -2.06      -2.20
                                  B.
                                                       20 < hp <= 50        N/A        N/A      -1.12      -0.93
                                                       50 < hp < 100        N/A        N/A      -0.37      -0.54
                                                        100 <= hp <=        N/A       0.90       0.90      -0.84
                                                                 250
                                                     250 < hp <= 500        N/A        N/A       0.05      -0.49
                                 MEM, 501--750 hp,   500 < hp <= 750       0.00       0.00       0.00      -0.01
                                  NEMA Design A and
                                  B above 500 hp.
                                 AO-MEM (Standard      1 <= hp <= 20       0.02       0.02      -0.01      -0.08
                                  Frame Size).         20 < hp <= 50       0.01       0.01      -0.01       0.01
                                                       50 < hp < 100  .........  .........      -0.03      -0.05
                                                        100 <= hp <=       0.01       0.08       0.08      -0.08
                                                                 250
                                 AO-Polyphase          1 <= hp <= 20       0.01       0.01       0.01      -0.01
                                  (Specialized
                                  Frame Size).
                                                                     -------------------------------------------
                                    Total..........  ...............       0.06       1.02      -3.21      -7.51
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No impact at TSL1 and TSL2 because there are no shipments below the efficiency level corresponding to TSL1 and
  TSL2 in that equipment class group and horsepower range.

    The previous results reflect the use of a default trend to estimate 
the change in price for electric motors over the analysis period (see 
section IV.F.1 of this document). In addition to the default trend 
(constant prices), DOE also conducted a sensitivity analysis that 
considered one scenario with a rate of price decline and one scenario 
with a rate of price increase. The results of these alternative cases 
are presented in appendix 10C of the direct final rule TSD. In the 
price-decline case, the NPV of consumer benefits is higher than in the 
default case. In the price-increase case, the NPV of consumer benefits 
is lower than in the default case.
c. Indirect Impacts on Employment
    It is estimated that that amended energy conservation standards for 
electric motors would 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. 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 
(2027-2031), where these uncertainties are reduced.
    The results suggest that the standards would be 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 direct final rule TSD presents detailed 
results regarding anticipated indirect employment impacts.
4. Impact on Utility or Performance of Products
    As discussed in section IV.C.1.b of this document, DOE concludes 
that the standards in this direct final rule would not lessen the 
utility or performance of the electric motors under consideration in 
this rulemaking. Manufacturers of these products currently offer units 
that meet or exceed the standards.
5. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that would be likely to 
result from new or amended standards. As discussed in section III.F.1.e 
of this document, the Attorney General

[[Page 36138]]

determines the impact, if any, of any lessening of competition likely 
to result from a standard, and transmits such determination in writing 
to the Secretary, together with an analysis of the nature and extent of 
such impact. To assist the Attorney General in making this 
determination, DOE has provided DOJ with copies of this direct final 
rule and the accompanying TSD for review. DOE will consider DOJ's 
comments on the rule in determining whether to proceed to a final rule. 
DOE will publish and respond to DOJ's comments in that document. DOE 
invites comment from the public regarding the competitive impacts that 
are likely to result from this rule. In addition, stakeholders may also 
provide comments separately to DOJ regarding these potential impacts. 
See the ADDRESSES section for information to send comments to DOJ.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the Nation's energy security, strengthens the economy, and reduces the 
environmental impacts (costs) of energy production. Reduced electricity 
demand due to energy conservation standards is also likely to reduce 
the cost of maintaining the reliability of the electricity system, 
particularly during peak-load periods. Chapter 15 in the direct final 
rule TSD presents the estimated impacts on electricity 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 electric motors is expected to yield environmental 
benefits in the form of reduced emissions of certain air pollutants and 
greenhouse gases. Table V-35 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 direct final 
rule TSD.

               Table V-35--Cumulative Emissions Reduction for Electric Motors Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            4.08           84.48          294.36          669.19
CH4 (thousand tons).............................            0.28            5.73           20.15           45.77
N2O (thousand tons).............................            0.04            0.79            2.78            6.31
NOX (thousand tons).............................            1.93           39.32          138.52          314.54
SO2 (thousand tons).............................            1.68           34.64          121.08          275.16
Hg (tons).......................................            0.01            0.23            0.80            1.81
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            0.34            7.20           24.88           56.62
CH4 (thousand tons).............................           32.47          684.37        2,359.60        5,370.22
N2O (thousand tons).............................            0.00            0.04            0.12            0.28
NOX (thousand tons).............................            5.20          109.42          377.47          859.03
SO2 (thousand tons).............................            0.02            0.47            1.67            3.79
Hg (tons).......................................            0.00            0.00            0.00            0.01
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            4.42           91.69          319.24          725.80
CH4 (thousand tons).............................           32.75          690.10        2,379.75        5,415.99
N2O (thousand tons).............................            0.04            0.82            2.90            6.59
NOX (thousand tons).............................            7.13          148.74          516.00        1,173.58
SO2 (thousand tons).............................            1.71           35.12          122.75          278.95
Hg (tons).......................................            0.01            0.23            0.80            1.82
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this rulemaking, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
that DOE estimated for each of the considered TSLs for electric motors. 
Section IV.L of this document discusses the SC-CO2 values 
that DOE used. Table V-36 presents the value of CO2 
emissions reduction at each TSL for each of the SC-CO2 
cases. The time-series of annual values is presented for the TSL in 
chapter 14 of the direct final rule TSD.

          Table V-36--Present Value of CO2 Emissions Reduction for Electric Motors Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                                           SC-CO2 case
                                               -----------------------------------------------------------------
                                                                  Discount rate and statistics
                      TSL                      -----------------------------------------------------------------
                                                                                                     3% 95th
                                                  5% Average      3% Average     2.5% Average      percentile
----------------------------------------------------------------------------------------------------------------
                                                                         (Billion 2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................           35.69          155.25          243.87            470.82
2.............................................          553.79        2,504.21        3,979.48          7,570.82

[[Page 36139]]

 
3.............................................        2,455.13       10,830.27       17,081.13         32,809.19
4.............................................        5,459.53       24,136.32       38,092.58         73,105.31
----------------------------------------------------------------------------------------------------------------

    As discussed in section IV.L.2 of this document, DOE estimated the 
climate benefits likely to result from the reduced emissions of methane 
and N2O that DOE estimated for each of the considered TSLs 
for electric motors. Table V-37 presents the value of the 
CH4 emissions reduction at each TSL, and Table V-38 presents 
the value of the N2O emissions reduction at each TSL. The 
time-series of annual values is presented for the TSL in chapter 14 of 
the direct final rule TSD.

        Table V-37--Present Value of Methane Emissions Reduction for Electric Motors Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                                           SC-CH4 case
                                               -----------------------------------------------------------------
                                                                  Discount rate and statistics
                      TSL                      -----------------------------------------------------------------
                                                                                                     3% 95th
                                                  5% Average      3% Average     2.5% Average      percentile
----------------------------------------------------------------------------------------------------------------
                                                                         (Billion 2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................           12.16           37.03           51.92             97.98
2.............................................          194.82          623.71          884.30          1,651.65
3.............................................          845.85        2,621.71        3,690.13          6,932.36
4.............................................        1,884.39        5,857.68        8,250.30         15,490.67
----------------------------------------------------------------------------------------------------------------


     Table V-38--Present Value of Nitrous Oxide Emissions Reduction for Electric Motors Shipped in 2027-2056
----------------------------------------------------------------------------------------------------------------
                                                                           SC-N2O case
                                               -----------------------------------------------------------------
                                                                  Discount rate and statistics
                      TSL                      -----------------------------------------------------------------
                                                                                                     3% 95th
                                                  5% Average      3% Average     2.5% Average      percentile
----------------------------------------------------------------------------------------------------------------
                                                                         (Billion 2021$)
----------------------------------------------------------------------------------------------------------------
1.............................................            0.13            0.51            0.79              1.36
2.............................................            1.95            8.23           12.94             21.99
3.............................................            8.63           35.54           55.47             94.75
4.............................................           19.20           79.21          123.71            211.22
----------------------------------------------------------------------------------------------------------------

    DOE is aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
global and U.S. economy continues to evolve rapidly. DOE, together with 
other Federal agencies, will continue to review methodologies for 
estimating the monetary value of reductions in CO2 and other 
GHG emissions. This ongoing review will consider the comments on this 
subject that are part of the public record for this and other 
rulemakings, as well as other methodological assumptions and issues. 
DOE notes that the standards would be economically justified even 
without inclusion of monetized benefits of reduced GHG emissions.
    DOE also estimated the monetary value of the health benefits 
associated with NOX and SO2 emissions reductions 
anticipated to result from the considered TSLs for electric motors. The 
dollar-per-ton values that DOE used are discussed in section IV.L of 
this document. Table V-39 presents the present value for NOX 
emissions reduction for each TSL calculated using 7-percent and 3-
percent discount rates, and Table V-40 presents similar results for 
SO2 emissions reductions. The results in these tables 
reflect application of EPA's low dollar-per-ton values, which DOE used 
to be conservative. The time-series of annual values is presented for 
the TSL in chapter 14 of the direct final rule TSD.

[[Page 36140]]



Table V-39--Present Value of NOX Emissions Reduction for Electric Motors
                          Shipped in 2027-2056
------------------------------------------------------------------------
             TSL                3% Discount rate      7% Discount rate
------------------------------------------------------------------------
                                            (million 2021$)
------------------------------------------------------------------------
1...........................                251.49                 93.31
2...........................              4,333.63              1,321.91
3...........................             17,501.29              6,149.06
4...........................             39,226.69             13,614.34
------------------------------------------------------------------------


Table V-40--Present Value of SO2 Emissions Reduction for Electric Motors
                          Shipped in 2027-2056
------------------------------------------------------------------------
             TSL                3% Discount rate      7% Discount rate
------------------------------------------------------------------------
                                            (million 2021$)
------------------------------------------------------------------------
1...........................                 82.00                 31.35
2...........................              1,388.59                434.33
3...........................              5,658.54              2,042.58
4...........................             12,671.52              4,517.89
------------------------------------------------------------------------

    Not all the public health and environmental benefits from the 
reduction of greenhouse gases, NOx, and SO2 are 
captured in the values above, and additional unquantified benefits from 
the reductions of those pollutants as well as from the reduction of 
direct PM and other co-pollutants may be significant. DOE has not 
included the monetary benefits of the reduction of Hg for this direct 
final rule because Hg emissions reductions are expected to be small.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
8. Summary of Economic Impacts
    Table V-41 presents the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced GHG 
and NOX and SO2 emissions to the NPV of consumer 
benefits calculated for each TSL considered in this rulemaking. The 
consumer benefits are domestic U.S. monetary savings that occur as a 
result of purchasing the covered electric motors, and are measured for 
the lifetime of products shipped in 2027-2056. The benefits associated 
with reduced GHG emissions resulting from the adopted standards are 
global benefits, and are also calculated based on the lifetime of 
electric motors shipped in 2027-2056.

        Table V-41--Consumer NPV Combined With Present Value of Benefits From Climate and Health Benefits
----------------------------------------------------------------------------------------------------------------
                    Category                           TSL 1           TSL 2           TSL 3           TSL 4
----------------------------------------------------------------------------------------------------------------
                      3% Discount Rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........................            0.71           13.95           21.62           47.96
3% Average SC-GHG case..........................            0.85           16.33           31.80           70.67
2.5% Average SC-GHG case........................            0.96           18.07           39.14           87.07
3% 95th percentile SC-GHG case..................            1.23           22.44           58.15          129.41
----------------------------------------------------------------------------------------------------------------
                      7% Discount Rate for Consumer NPV and Health Benefits (billion 2021$)
----------------------------------------------------------------------------------------------------------------
5% Average SC-GHG case..........................            0.28            4.74            3.90            7.83
3% Average SC-GHG case..........................            0.43            7.13           14.08           30.54
2.5% Average SC-GHG case........................            0.53            8.87           21.42           46.93
3% 95th percentile SC-GHG case..................            0.80           13.24           40.43           89.27
----------------------------------------------------------------------------------------------------------------

C. Conclusion

    When considering new or amended energy conservation standards, the 
standards that DOE adopts for any type (or class) of covered equipment 
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. 6316(a); 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 in section III.F.1 of 
this document. (42 U.S.C. 6316(a); 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. 6316(a); 42 U.S.C. 6295(o)(3)(B))
    For this direct final rule, DOE considered the impacts of new and 
amended standards for electric motors 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,

[[Page 36141]]

tables in this section present a summary of the results of DOE's 
quantitative analysis for each TSL. In addition to the quantitative 
results presented in the tables, DOE also considers other burdens and 
benefits that affect economic justification. These include the impacts 
on identifiable subgroups of consumers who may be disproportionately 
affected by a national standard and impacts on employment.
1. Benefits and Burdens of TSLs Considered for Electric Motors 
Standards
    Tables V-42 and V-43 summarize the quantitative impacts estimated 
for each TSL for electric motors. The national impacts are measured 
over the lifetime of electric motors purchased in the 30-year period 
that begins in the anticipated year of compliance with amended 
standards (2027-2056). The energy savings, emissions reductions, and 
value of emissions reductions refer to full-fuel-cycle results. DOE is 
presenting monetized benefits of GHG emissions reductions in accordance 
with the applicable Executive Orders and DOE would reach the same 
conclusion presented in this notice in the absence of the social cost 
of greenhouse gases, including the Interim Estimates presented by the 
Interagency Working Group. The efficiency levels contained in each TSL 
are described in section V.A of this document.

              Table V-42--Summary of Analytical Results for Electric Motors TSLs: National Impacts
----------------------------------------------------------------------------------------------------------------
                    Category                           TSL 1           TSL 2           TSL 3           TSL 4
----------------------------------------------------------------------------------------------------------------
                                     Cumulative FFC National Energy Savings
----------------------------------------------------------------------------------------------------------------
Quads...........................................             0.1             3.0            10.4            23.6
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            4.42           91.69          319.24          725.80
CH4 (thousand tons).............................           32.75          690.10        2,379.75        5,415.99
N2O (thousand tons).............................            0.04            0.82            2.90            6.59
NOX (thousand tons).............................            7.13          148.74          516.00        1,173.58
SO2 (thousand tons).............................            1.71           35.12          122.75          278.95
Hg (tons).......................................            0.01            0.23            0.80            1.82
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (3% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................            0.51            8.82           34.86           73.26
Climate Benefits *..............................            0.19            3.14           13.49           30.07
Health Benefits **..............................            0.33            5.72           23.16           51.90
Total Benefits [dagger].........................            1.04           17.68           71.50          155.23
Consumer Incremental Product Costs [Dagger].....            0.18            1.35           39.70           84.56
Consumer Net Benefits...........................            0.33            7.47           -4.85          -11.30
Total Net Benefits..............................            0.85           16.33           31.80           70.67
----------------------------------------------------------------------------------------------------------------
                      Present Value of Benefits and Costs (7% discount rate, billion 2021$)
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................            0.21            2.95           13.44           27.14
Climate Benefits *..............................            0.19            3.14           13.49           30.07
Health Benefits **..............................            0.12            1.76            8.19           18.13
Total Benefits [dagger].........................            0.53            7.85           35.11           75.34
Consumer Incremental Product Costs [Dagger].....            0.10            0.72           21.03           44.80
Consumer Net Benefits...........................            0.11            2.23           -7.60          -17.67
Total Net Benefits..............................            0.43            7.13           14.08           30.54
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with electric motors shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056.
* Climate benefits are calculated using four different estimates of the SC-CO2, SC-CH4 and SC-N2O. Together,
  these represent the global SC-GHG. For presentational purposes of this table, the climate benefits associated
  with the average SC-GHG at a 3 percent discount rate are shown, but the Department does not have a single
  central SC-GHG point estimate. To monetize the benefits of reducing GHG emissions this analysis uses the
  interim estimates presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous
  Oxide Interim Estimates Under Executive Order 13990 published in February 2021 by the Interagency Working
  Group on the Social Cost of Greenhouse Gases (IWG).
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for NOX and SO2) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
  of this document for more details.
[dagger] Total and net benefits include consumer, climate, and health benefits. For presentation purposes, total
  and net benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate. DOE emphasizes
  the importance and value of considering the benefits calculated using all four SC-GHG estimates.
[Dagger] Costs include incremental equipment costs as well as installation costs.


      Table V-43--Summary of Analytical Results for Electric Motors TSLs: Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
                   Category                          TSL 1           TSL 2           TSL 3            TSL 4
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV (million 2021$) (No-new-standards     4,896-4,899     4,690-4,720     3,659-4,681   (6,066)-(3,840)
 case INPV = 5,023)...........................

[[Page 36142]]

 
Industry NPV (% change).......................           (2.5)     (6.6)-(6.0)    (27.2)-(6.8)   (220.8)-(176.4)
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2021$)
----------------------------------------------------------------------------------------------------------------
RU1...........................................             N/A             N/A          -101.8            -276.4
RU2...........................................             N/A             N/A          -336.9            -309.4
RU3...........................................             N/A             N/A          -916.7          -1,439.6
RU4...........................................             N/A           567.1           567.1          -2,541.1
RU5...........................................             N/A             N/A          -945.5          -5,257.2
RU6...........................................         2,550.1         2,550.1        -2,287.8          -6,710.3
RU7...........................................            57.6            57.6           -39.2            -156.5
RU8...........................................           472.4           472.4          -160.8            -105.5
RU9 *.........................................  ..............  ..............          -930.5          -1,795.0
RU10..........................................           608.8           930.7           930.7          -1,846.6
RU11..........................................            49.9            49.9             2.5            -153.2
Shipment-Weighted Average **..................           159.8           337.4          -196.2            -404.2
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
RU1...........................................             N/A             N/A            16.7              20.3
RU2...........................................             N/A             N/A            15.4              11.9
RU3...........................................             N/A             N/A            30.2              20.6
RU4...........................................             N/A             4.1             4.1              18.1
RU5...........................................             N/A             N/A            11.8              17.7
RU6...........................................             3.7             3.7             9.6              12.6
RU7...........................................             4.0             4.0             6.5               9.0
RU8...........................................             1.6             1.6             5.9               6.1
RU9 *.........................................  ..............  ..............             9.0              10.6
RU10..........................................             6.1             4.9             4.9              10.1
RU11..........................................             4.1             4.1             5.6               7.9
Shipment-Weighted Average **..................             3.8             3.9            15.6              16.3
----------------------------------------------------------------------------------------------------------------
                                 Percent of Consumers that Experience a Net Cost
----------------------------------------------------------------------------------------------------------------
RU1...........................................             N/A             N/A           64.1%             95.9%
RU2...........................................             N/A             N/A           82.2%             75.0%
RU3...........................................             N/A             N/A           88.4%             90.5%
RU4...........................................             N/A           20.2%           20.2%             89.1%
RU5...........................................             N/A             N/A           66.9%             89.0%
RU6...........................................            2.1%            2.1%           58.3%             83.2%
RU7...........................................           10.3%           10.3%           62.9%             80.7%
RU8...........................................            0.9%            0.9%           73.9%             64.5%
RU9 *.........................................  ..............  ..............           99.9%             96.4%
RU10..........................................            6.3%           11.7%           11.7%             79.0%
RU11..........................................           32.1%           32.1%           53.4%             74.5%
Shipment-Weighted Average **..................           10.9%           14.9%           70.6%             86.3%
----------------------------------------------------------------------------------------------------------------
The entry ``N/A'' means not applicable because there is no change in the standard at certain TSLs.
* No impact because there are no shipments below the efficiency level corresponding to TSL1 and TSL2 for RU9.
** Weighted by shares of each equipment class in total projected shipments in 2027 for impacted consumers.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. At this level, DOE expects that all equipment 
classes would require 35H210 silicon steel and die-cast copper rotors. 
DOE estimates that approximately 0.34 percent of annual shipments 
across all electric motor equipment classes currently meet the max-tech 
efficiencies required. TSL 4 would save an estimated 23.6 quads of 
energy, an amount DOE considers significant. Under TSL 4, the NPV of 
consumer benefit would be -$17.67 billion using a discount rate of 7 
percent, and -$11.30 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 725.80 Mt of 
CO2, 278.95 thousand tons of SO2, 1,173.58 
thousand tons of NOX, 1.82 tons of Hg, 5,415.99 thousand 
tons of CH4, and 6.59 thousand tons of N2O. The 
estimated monetary value of the climate benefits from reduced GHG 
emissions (associated with the average SC-GHG at a 3-percent discount 
rate) at TSL 4 is $30.07 billion. The estimated monetary value of the 
health benefits from reduced SO2 and NOX 
emissions at TSL 4 is $18.13 billion using a 7-percent discount rate 
and $51.90 billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 4 is $30.54 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 4 is $70.67 billion.
    At TSL 4, for the largest equipment class group and horsepower 
ranges, which are represented by RU1 and RU2, which together represent 
approximately 90 percent of annual shipments, there is a life cycle 
cost savings of -$276.4 and -$309.4 and a payback period of 20.3

[[Page 36143]]

years and 11.9 years, respectively. For these equipment classes, the 
fraction of customers experiencing a net LCC cost is 95.9 percent and 
75.0 percent due to increases in total installed cost of $434.7 and 
$1,003.0, respectively. Overall, for the remaining equipment class 
groups and horsepower ranges, a majority of electric motor consumers 
(84.5 percent) would experience a net cost and the average LCC savings 
would be negative for all remaining equipment class groups and 
horsepower ranges.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$11,090 million to a decrease of $8,863 million, which corresponds to 
decreases of 220.8 percent and 176.4 percent, respectively. DOE 
estimates that industry must invest $13,516 million to comply with 
standards set at TSL 4. The significant increase in product and capital 
conversion costs is because DOE assumes that electric motor 
manufacturers will need to use die-cast copper rotors for most, if not 
all, electric motors manufactured to meet this TSL. This technology 
requires a significant level of investment because almost all existing 
electric motor production machinery would need to be replaced or 
significantly modified. Based on the shipments analysis used in the 
NIA, DOE estimates that approximately 0.3 percent of all electric motor 
shipments will meet the efficiency levels required at TSL 4, in the no-
new-standards case in 2027, the compliance year of new and amended 
standards.
    Under 42 U.S.C. 6295(o)(2)(B)(i), DOE determines whether a standard 
is economically justified after considering seven factors. Based on 
these factors, the Secretary concludes that at TSL 4 for electric 
motors, 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, economic burden on many 
consumers, and the impacts on manufacturers, including the extremely 
large conversion costs, profit margin impacts that will result in a 
negative INPV, and the lack of manufacturers currently offering 
products meeting the efficiency levels required at this TSL. A majority 
of electric motor consumers (86.3 percent) would experience a net cost 
and the average LCC savings for each representative unit DOE examined 
is negative. In both manufacturer markup scenarios, INPV is negative at 
TSL 4, which implies that manufacturers would never recover the 
conversion costs they must make to produce electric motors at TSL 4. 
Consequently, the Secretary concludes that TSL 4 is not economically 
justified.
    DOE then considered TSL 3, which represents a level corresponding 
to the IE4 level, except for AO-polyphase specialized frame size 
electric motors, where it corresponds to a lower level of efficiency 
(i.e., NEMA Premium level). TSL 3 would save an estimated 10.4 quads of 
energy, an amount DOE considers significant. Under TSL 3, the NPV of 
consumer benefit would be -$7.60 billion using a discount rate of 7 
percent, and -$4.85 billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 319.24 Mt of 
CO2, 122.75 thousand tons of SO2, 516.00 thousand 
tons of NOX, 0.80 tons of Hg, 2,379.75 thousand tons of 
CH4, and 2.90 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 3 is $13.49 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 3 is 8.19 billion using a 7-percent discount rate and $23.16 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX 
emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 3 is $14.08 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 3 is $31.80 billion.
    At TSL 3, for the largest equipment class group and horsepower 
ranges, which are represented by RU1 and RU2, there is a life cycle 
cost savings of -$101.8 and -$336.9 and a payback period of 16.7 and 
15.4, respectively. For these equipment classes, the fraction of 
customers experiencing a net LCC cost is 64.1 percent and 82.2 percent 
due to increases in total installed cost of $171.3 and $690.5, 
respectively. Overall, for the remaining equipment class groups and 
horsepower ranges, a majority of electric motor consumers (55.5 
percent) would experience a net cost and the shipments-weighted average 
LCC savings would be negative for all remaining equipment class groups 
and horsepower ranges.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$1,364 million to a decrease of $342 million, which correspond to 
decreases of 27.2 percent and 6.8 percent, respectively. DOE estimates 
that industry must invest $1,618 million to comply with standards set 
at TSL 3. Based on the shipments analysis used in the NIA, DOE 
estimates that approximately 13.3 percent of all electric motor 
shipments will meet or exceed the efficiency levels required at TSL 3, 
in the no-new-standards case in 2027, the compliance year of new and 
amended standards.
    Under 42 U.S.C. 6295(o)(2)(B)(i), DOE determines whether a standard 
is economically justified after considering seven factors. Based on 
these factors, the Secretary concludes that at TSL 3 for electric 
motors, 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, economic burden on many 
consumers, and the impacts on manufacturers, including the large 
conversion costs, profit margin impacts that could result in a large 
reduction in INPV, and the lack of manufacturers currently offering 
products meeting the efficiency levels required at this TSL. A majority 
of electric motor consumers (70.6 percent) would experience a net cost 
and the average LCC savings would be negative. The potential reduction 
in INPV could be as high as 27.2 percent. Consequently, the Secretary 
concludes that TSL 3 is not economically justified.
    DOE then considered TSL 2, the standard levels recommended in the 
November 2022 Joint Recommendation by the Electric Motors Working 
Group. TSL 2 would also align with the EU Ecodesign Directive 2019/
1781, which requires IE4 levels for 75-200 kW motors.\97\ TSL 2 would 
save an estimated 3.0 quads of energy, an amount DOE considers 
significant. Under TSL 2, the NPV of consumer benefit would be $2.23 
billion using a discount rate of 7 percent, and $7.47 billion using a 
discount rate of 3 percent.
---------------------------------------------------------------------------

    \97\ In terms of standardized horsepowers, this would correspond 
to 100-250 hp when applying the provisions from 10 CFR 431.25(k) 
(and new section 10 CFR 431.25(q)).
---------------------------------------------------------------------------

    The cumulative emissions reductions at TSL 2 are 91.69 Mt of 
CO2, 35.12 thousand tons of SO2, 148.74 thousand 
tons of NOX, 0.23 tons of Hg, 690.10 thousand tons of 
CH4, and 0.82 thousand tons of N2O. The estimated 
monetary value of the climate benefits from reduced GHG emissions 
(associated with the average SC-GHG at a 3-percent discount rate) at 
TSL 2 is $3.14 billion. The estimated monetary value of the health 
benefits from reduced SO2 and NOX emissions at 
TSL 2 is $1.76 billion using a 7-percent discount rate and $5.72 
billion using a 3-percent discount rate.
    Using a 7-percent discount rate for consumer benefits and costs, 
health benefits from reduced SO2 and NOX

[[Page 36144]]

emissions, and the 3-percent discount rate case for climate benefits 
from reduced GHG emissions, the estimated total NPV at TSL 2 is $7.13 
billion. Using a 3-percent discount rate for all benefits and costs, 
the estimated total NPV at TSL 2 is $16.33 billion.
    At TSL 2, for the largest equipment class group and horsepower 
ranges, which are represented by RU1 and RU2, there would be no changes 
in the standards. Overall, for the remaining equipment class groups and 
horsepower ranges, 14.9 percent of electric motor consumers would 
experience a net cost and the shipments-weighted average LCC savings 
would be positive for all remaining equipment class groups and 
horsepower ranges.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$333 million to a decrease of $303 million, which correspond to 
decreases of 6.6 percent and 6.0 percent, respectively. DOE estimates 
that industry must invest $468 million to comply with standards set at 
TSL 2. Based on the shipments analysis used in the NIA, DOE estimates 
that approximately 96.2 percent of all electric motor shipments will 
meet or exceed the efficiency levels required at TSL 2, in the no-new-
standards case in 2027, the compliance year of new and amended 
standards.
    Under 42 U.S.C. 6295(o)(2)(B)(i), DOE determines whether a standard 
is economically justified after considering seven factors. Based on 
these factors, the Secretary concludes that a standard set at TSL 2 for 
electric motors would be economically justified. At this TSL, the 
average LCC savings is positive. Only an estimated 14.9 percent of 
electric motor consumers experience a net cost. The FFC national energy 
savings are significant and the NPV of consumer benefits is positive 
using both a 3-percent and 7-percent discount rate. Notably, the 
benefits to consumers vastly outweigh the cost to manufacturers. 
Notably, at TSL 2, the NPV of consumer benefits, even measured at the 
more conservative discount rate of 7 percent, is over 6 times higher 
than the maximum estimated manufacturers' loss in INPV. The standard 
levels at TSL 2 are economically justified even without weighing the 
estimated monetary value of emissions reductions. When those emissions 
reductions are included--representing $3.14 billion in climate benefits 
(associated with the average SC-GHG at a 3-percent discount rate), and 
$5.72 billion (using a 3-percent discount rate) or $1.76 billion (using 
a 7-percent discount rate) in health benefits--the rationale becomes 
stronger still.
    As stated, DOE conducts the walk-down analysis to determine the TSL 
that represents the maximum improvement in energy efficiency that is 
technologically feasible and economically justified as required under 
EPCA. The walk-down is not a comparative analysis, as a comparative 
analysis would result in the maximization of net benefits instead of 
energy savings that are technologically feasible and economically 
justified, which would be contrary to the statute. 86 FR 70892, 70908. 
Although DOE has not conducted a comparative analysis to select the 
energy conservation standards, DOE notes that as compared to TSL 3 and 
TSL 4, TSL 2 has higher average LCC savings for consumers, 
significantly smaller percentages of electric motor consumers 
experiencing a net cost, a lower maximum decrease in INPV, and lower 
manufacturer conversion costs.
    Although DOE considered amended standard levels for electric motors 
by grouping the efficiency levels for each equipment class groups and 
horsepower ranges into TSLs, DOE evaluates all analyzed efficiency 
levels in its analysis. For all equipment class groups and horsepower 
ranges, TSL 2 represents the maximum energy savings that does not 
result in the majority of consumers experiencing a net LCC cost. The 
ELs at the adopted TSL result in average positive LCC savings for all 
equipment class groups and horsepower ranges, significantly reduce the 
number of consumers experiencing a net cost, and reduce the decrease in 
INPV and conversion costs to the point where DOE has concluded they are 
economically justified, as discussed for TSL 2 in the preceding 
paragraphs.
    Therefore, based on the previous considerations, DOE adopts the 
energy conservation standards for electric motors at TSL 2. The new and 
amended energy conservation standards for electric motors, which are 
expressed as full-load nominal efficiency values are shown in Table V-
44, Table V-45 and Table V-46.

 Table V-44--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Motors (Excluding Fire Pump Electric Motors
                                                         and Air-Over Electric Motors) at 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       77.0       77.0       85.5       85.5       82.5       82.5       75.5       75.5
1.5/1.1.........................................................       84.0       84.0       86.5       86.5       87.5       86.5       78.5       77.0
2/1.5...........................................................       85.5       85.5       86.5       86.5       88.5       87.5       84.0       86.5
3/2.2...........................................................       86.5       85.5       89.5       89.5       89.5       88.5       85.5       87.5
5/3.7...........................................................       88.5       86.5       89.5       89.5       89.5       89.5       86.5       88.5
7.5/5.5.........................................................       89.5       88.5       91.7       91.0       91.0       90.2       86.5       89.5
10/7.5..........................................................       90.2       89.5       91.7       91.7       91.0       91.7       89.5       90.2
15/11...........................................................       91.0       90.2       92.4       93.0       91.7       91.7       89.5       90.2
20/15...........................................................       91.0       91.0       93.0       93.0       91.7       92.4       90.2       91.0
25/18.5.........................................................       91.7       91.7       93.6       93.6       93.0       93.0       90.2       91.0
30/22...........................................................       91.7       91.7       93.6       94.1       93.0       93.6       91.7       91.7
40/30...........................................................       92.4       92.4       94.1       94.1       94.1       94.1       91.7       91.7
50/37...........................................................       93.0       93.0       94.5       94.5       94.1       94.1       92.4       92.4
60/45...........................................................       93.6       93.6       95.0       95.0       94.5       94.5       92.4       93.0
75/55...........................................................       93.6       93.6       95.4       95.0       94.5       94.5       93.6       94.1
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4

[[Page 36145]]

 
300/224.........................................................       95.8       95.4       96.2       95.8       95.8       95.8  .........  .........
350/261.........................................................       95.8       95.4       96.2       95.8       95.8       95.8  .........  .........
400/298.........................................................       95.8       95.8       96.2       95.8  .........  .........  .........  .........
450/336.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
500/373.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
550/410.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
600/447.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
650/485.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
700/522.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
750/559.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------


 Table V-45--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Standard Frame Size Air-Over Electric Motors
                                                     (Excluding Fire Pump Electric Motors) at 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       77.0       77.0       85.5       85.5       82.5       82.5       75.5       75.5
1.5/1.1.........................................................       84.0       84.0       86.5       86.5       87.5       86.5       78.5       77.0
2/1.5...........................................................       85.5       85.5       86.5       86.5       88.5       87.5       84.0       86.5
3/2.2...........................................................       86.5       85.5       89.5       89.5       89.5       88.5       85.5       87.5
5/3.7...........................................................       88.5       86.5       89.5       89.5       89.5       89.5       86.5       88.5
7.5/5.5.........................................................       89.5       88.5       91.7       91.0       91.0       90.2       86.5       89.5
10/7.5..........................................................       90.2       89.5       91.7       91.7       91.0       91.7       89.5       90.2
15/11...........................................................       91.0       90.2       92.4       93.0       91.7       91.7       89.5       90.2
20/15...........................................................       91.0       91.0       93.0       93.0       91.7       92.4       90.2       91.0
25/18.5.........................................................       91.7       91.7       93.6       93.6       93.0       93.0       90.2       91.0
30/22...........................................................       91.7       91.7       93.6       94.1       93.0       93.6       91.7       91.7
40/30...........................................................       92.4       92.4       94.1       94.1       94.1       94.1       91.7       91.7
50/37...........................................................       93.0       93.0       94.5       94.5       94.1       94.1       92.4       92.4
60/45...........................................................       93.6       93.6       95.0       95.0       94.5       94.5       92.4       93.0
75/55...........................................................       93.6       93.6       95.4       95.0       94.5       94.5       93.6       94.1
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table V-46--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Specialized Frame Size Air-Over Electric
                                                  Motors (Excluding Fire Pump Electric Motors) at 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       74.0  .........       82.5       82.5       80.0       80.0       74.0       74.0
1.5/1.1.........................................................       82.5       82.5       84.0       84.0       85.5       84.0       77.0       75.5
2/1.5...........................................................       84.0       84.0       84.0       84.0       86.5       85.5       82.5       85.5
3/2.2...........................................................       85.5       84.0       87.5       86.5       87.5       86.5       84.0       86.5
5/3.7...........................................................       87.5       85.5       87.5       87.5       87.5       87.5       85.5       87.5
7.5/5.5.........................................................       88.5       87.5       89.5       88.5       89.5       88.5       85.5       88.5
10/7.5..........................................................       89.5       88.5       89.5       89.5       89.5       90.2  .........  .........
15/11...........................................................       90.2       89.5       91.0       91.0  .........  .........  .........  .........
20/15...........................................................       90.2       90.2       91.0       91.0  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 36146]]

2. Annualized Benefits and Costs of the Standards
    The benefits and costs of the adopted standards can also be 
expressed in terms of annualized values. The annualized net benefit is 
(1) the annualized national economic value (expressed in 2021$) of the 
benefits from operating equipment that meet the adopted standards 
(consisting primarily of operating cost savings from using less energy, 
minus increases in equipment purchase costs, and (2) the annualized 
monetary value of the climate and health benefits from emission 
reductions.
    Table V-47 shows the annualized values for electric motors under 
TSL 2, expressed in 2021$. The results under the primary estimate are 
as follows.
    Using a 7-percent discount rate for consumer benefits and costs and 
NOX and SO2 reduction benefits, and a 3-percent 
discount rate case for GHG social costs, the estimated cost of the 
standards for electric motors is $62.1 million per year in increased 
equipment costs, while the estimated annual benefits are $254.8 million 
in reduced equipment operating costs, $164.8 million in climate 
benefits, and $151.4 million in health benefits. In this case, the net 
benefit amounts to $508.9 million per year.
    Using a 3-percent discount rate for all benefits and costs, the 
estimated cost of the standards for electric motors is $71.0 million 
per year in increased equipment costs, while the estimated annual 
benefits are $463.6 million in reduced operating costs, $164.8 million 
in climate benefits, and $300.7 million in health benefits. In this 
case, the net benefit amounts to $858.2 million per year.

     Table V-47--Annualized Benefits and Costs of Amended Energy Conservation Standards for Electric Motors
                                                     [TSL 2]
----------------------------------------------------------------------------------------------------------------
                                                                                Million 2021$/year
                                                                 -----------------------------------------------
                                                                                     Low-net-        High-net-
                                                                      Primary        benefits        benefits
                                                                     estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                                3% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           463.6           405.1           542.9
Climate Benefits *..............................................           164.8           148.0           186.5
Health Benefits **..............................................           300.7           269.5           341.0
Total Benefits [dagger].........................................           929.1           822.5          1070.4
Consumer Incremental Equipment Costs [Dagger]...................            71.0            73.7            73.0
Net Benefits....................................................           858.2           748.8           997.4
----------------------------------------------------------------------------------------------------------------
                                                7% discount rate
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.................................           254.8           225.3           293.6
Climate Benefits * (3% discount rate)...........................           164.8           148.0           186.5
Health Benefits **..............................................           151.4           137.1           169.5
Total Benefits [dagger].........................................           571.0           510.4           649.6
Consumer Incremental Product Costs..............................            62.1            63.8            63.9
Net Benefits....................................................           508.9           446.6           585.6
----------------------------------------------------------------------------------------------------------------
Note: This table presents the costs and benefits associated with electric motors shipped in 2027-2056. These
  results include benefits to consumers which accrue after 2056 from the products shipped in 2027-2056. The
  Primary, Low Net Benefits, and High Net Benefits Estimates utilize projections of energy prices from the
  AEO2022 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition,
  incremental equipment costs reflect a constant rate in the Primary Estimate, an increasing rate in the Low Net
  Benefits Estimate, and a declining rate in the High Net Benefits Estimate. The methods used to derive
  projected price trends are explained in section IV.H.3 of this document. Note that the Benefits and Costs may
  not sum to the Net Benefits due to rounding.
* Climate benefits are calculated using four different estimates of the global SC-GHG (see section IV.L of this
  notice). For presentational purposes of this table, the climate benefits associated with the average SC-GHG at
  a 3 percent discount rate are shown, but the Department does not have a single central SC-GHG point estimate,
  and it emphasizes the importance and value of considering the benefits calculated using all four SC-GHG
  estimates. To monetize the benefits of reducing GHG emissions this analysis uses the interim estimates
  presented in the Technical Support Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim
  Estimates Under Executive Order 13990 published in February 2021 by the Interagency Working Group on the
  Social Cost of Greenhouse Gases (IWG).
** Health benefits are calculated using benefit-per-ton values for NOX and SO2. DOE is currently only monetizing
  (for SO2 and NOX) PM2.5 precursor health benefits and (for NOX) ozone precursor health benefits, but will
  continue to assess the ability to monetize other effects such as health benefits from reductions in direct
  PM2.5 emissions. The health benefits are presented at real discount rates of 3 and 7 percent. See section IV.L
  of this document for more details.
[dagger] Total benefits for both the 3-percent and 7-percent cases are presented using the average SC-GHG with 3-
  percent discount rate, but the Department does not have a single central SC-GHG point estimate.
[Dagger] Costs include incremental equipment costs as well as installation costs.

D. Reporting, Certification, and Sampling Plan

    Manufacturers, including importers, must use product-specific 
certification templates to certify compliance to DOE. For electric 
motors, the certification template reflects the general certification 
requirements specified at 10 CFR 429.64 and the product-specific 
requirements specified at 10 CFR 429.64. DOE is not amending the 
product-specific certification requirements for this equipment in this 
direct final rule.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866, 13563, and 14094

    Executive Order (``E.O.'') 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), as supplemented and reaffirmed by 
E.O. 13563, ``Improving Regulation and

[[Page 36147]]

Regulatory Review,'' 76 FR 3821 (Jan. 21, 2011) and amended by E.O. 
14094, ``Modernizing Regulatory Review,'' 88 FR 21879 (April 11, 2023), 
requires agencies, to the extent permitted by law, 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, the 
Office of Information and Regulatory Affairs (``OIRA'') in the Office 
of Management and Budget (``OMB'') 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, this final regulatory action is 
consistent with these principles.
    Section 6(a) of E.O. 12866 also requires agencies to submit 
``significant regulatory actions'' to OIRA for review. OIRA has 
determined that this final regulatory action constitutes a significant 
regulatory action within the scope of section 3(f)(1) of E.O. 12866. 
Accordingly, pursuant to section 6(a)(3)(C) of E.O. 12866, DOE has 
provided to OIRA an assessment, including the underlying analysis, of 
benefits and costs anticipated from the final 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 are summarized in this preamble and 
further detail can be found in the technical support document for this 
rulemaking.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (``IRFA'') 
and a final regulatory flexibility analysis (``FRFA'') for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by E.O. 13272, ``Proper Consideration of Small Entities in Agency 
Rulemaking,'' 67 FR 53461 (Aug. 16, 2002), DOE published procedures and 
policies on February 19, 2003, to ensure that the potential impacts of 
its rules on small entities are properly considered during the 
rulemaking process. 68 FR 7990. DOE has made its procedures and 
policies available on the Office of the General Counsel's website 
(www.energy.gov/gc/office-general-counsel).
    DOE is not obligated to prepare a regulatory flexibility analysis 
for this rulemaking because there is not a requirement to publish a 
general notice of proposed rulemaking under the Administrative 
Procedure Act. See 5 U.S.C. 601(2), 603(a). As discussed previously, 
DOE has determined that the November 2022 Joint Recommendation meets 
the necessary requirements under EPCA to issue this direct final rule 
for energy conservation standards for electric motors under the 
procedures in 42 U.S.C. 6295(p)(4). DOE notes that the NOPR for energy 
conservation standards for electric motors published elsewhere in this 
Federal Register contains an IRFA.

C. Review Under the Paperwork Reduction Act

    Under the procedures established by the Paperwork Reduction Act of 
1995 (``PRA''), a person is not required to respond to a collection of 
information by a Federal agency unless that collection of information 
displays a currently valid OMB Control Number.
    OMB Control Number 1910-1400, Compliance Statement Energy/Water 
Conservation Standards for Appliances, is currently valid and assigned 
to the certification reporting requirements applicable to covered 
equipment, including electric motors.
    DOE's certification and compliance activities ensure accurate and 
comprehensive information about the energy and water use 
characteristics of covered products and covered equipment sold in the 
United States. Manufacturers of all covered products and covered 
equipment must submit a certification report before a basic model is 
distributed in commerce, annually thereafter, and if the basic model is 
redesigned in such a manner to increase the consumption or decrease the 
efficiency of the basic model such that the certified rating is no 
longer supported by the test data. Additionally, manufacturers must 
report when production of a basic model has ceased and is no longer 
offered for sale as part of the next annual certification report 
following such cessation. DOE requires the manufacturer of any covered 
product or covered equipment to establish, maintain, and retain the 
records of certification reports, of the underlying test data for all 
certification testing, and of any other testing conducted to satisfy 
the requirements of part 429, part 430, and/or part 431. Certification 
reports provide DOE and consumers with comprehensive, up-to date 
efficiency information and support effective enforcement.
    New certification data would be required for electric motors were 
this direct final rule to be finalized as proposed; however, DOE is not 
proposing new or amended certification or reporting requirements for 
electric motors in this direct final rule. Instead, DOE may consider 
proposals to establish certification requirements and reporting for 
electric motors under a separate rulemaking regarding appliance and 
equipment certification. DOE will address changes to OMB Control Number 
1910-1400 at that time, as necessary.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act of 1969 
(``NEPA''), DOE has analyzed this rule in accordance with NEPA and 
DOE's NEPA implementing regulations (10 CFR part 1021). DOE has 
determined that this rule qualifies for categorical exclusion under 10 
CFR part 1021, subpart D, appendix B5.1 because it is a rulemaking that 
establishes energy

[[Page 36148]]

conservation standards for consumer products or industrial equipment, 
none of the exceptions identified in B5.1(b) apply, no extraordinary 
circumstances exist that require further environmental analysis, and it 
meets the requirements for application of a categorical exclusion. See 
10 CFR 1021.410. Therefore, DOE has determined that promulgation of 
this rule is not a major Federal action significantly affecting the 
quality of the human environment within the meaning of NEPA, and does 
not require an environmental assessment or an environmental impact 
statement.

E. Review Under Executive Order 13132

    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 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 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. 6316(a) and (b); 42 U.S.C. 6297) Therefore, no further 
action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of 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 direct final rule meets the relevant standards of E.O. 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (``UMRA'') 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a regulatory action likely to result in a rule that may cause the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector of $100 million or more in any one year 
(adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect them. On March 18, 1997, DOE published 
a statement of policy on its process for intergovernmental consultation 
under UMRA. 62 FR 12820. DOE's policy statement is also available at 
www.energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    DOE has concluded that this direct 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 electric motor manufacturers 
in the years between the direct final rule and the compliance date for 
the new standards and (2) incremental additional expenditures by 
consumers to purchase higher-efficiency electric motors, 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 direct 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 with the economic analysis requirements 
that apply under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this document and the TSD for this 
direct final rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(m) 
and 42 U.S.C. 6316(a), this rule establishes new and amended energy 
conservation standards for electric motors 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. 6316(a); 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 rule.

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

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule

[[Page 36149]]

that may affect family well-being. This rule will not have any impact 
on the autonomy or integrity of the family as an institution. 
Accordingly, DOE has concluded that it is not necessary to prepare a 
Family Policymaking Assessment.

I. Review Under Executive Order 12630

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

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review 
most disseminations of information to the public under information 
quality guidelines established by each agency pursuant to general 
guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 
(Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 
(Oct. 7, 2002). Pursuant to OMB Memorandum M-19-15, Improving 
Implementation of the Information Quality Act (April 24, 2019), DOE 
published updated guidelines which are available at www.energy.gov/sites/prod/files/2019/12/f70/DOE%20Final%20Updated%20IQA%20Guidelines%20Dec%202019.pdf. DOE has 
reviewed this direct final rule under the OMB and DOE guidelines and 
has concluded that it is consistent with applicable policies in those 
guidelines.

K. Review Under Executive Order 13211

    E.O. 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 concludes that this regulatory action, which sets forth new and 
amended energy conservation standards for electric motors, is not a 
significant energy action because 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 direct final rule.

L. Information Quality

    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.'' 70 FR 2664, 2667.
    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 has prepared a report describing that peer 
review.\98\ 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. 
Because available data, models, and technological understanding have 
changed since 2007, DOE has engaged with the National Academy of 
Sciences to review DOE's analytical methodologies to ascertain whether 
modifications are needed to improve the Department's analyses. DOE is 
in the process of evaluating the resulting report.\99\
---------------------------------------------------------------------------

    \98\ The 2007 ``Energy Conservation Standards Rulemaking Peer 
Review Report'' is available at the following website: energy.gov/eere/buildings/downloads/energy-conservation-standards-rulemaking-peer-review-report-0 (last accessed December 12, 2022).
    \99\ The report is available at www.nationalacademies.org/our-work/review-of-methods-for-setting-building-and-equipment-performance-standards.
---------------------------------------------------------------------------

    NEMA MG 1-2016 was previously approved for incorporation by 
reference in the section where it appears in this proposed rule and no 
change is made.

M. Congressional Notification

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

VII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation test procedures, Incorporation by 
reference, Reporting and recordkeeping requirements.

Signing Authority

    This document of the Department of Energy was signed on May 1, 
2023, Francisco Alejandro Moreno, Acting Assistant Secretary for Energy 
Efficiency and Renewable Energy. That document with the original 
signature and date is maintained by DOE. For administrative purposes 
only, and in compliance with requirements of the Office of the Federal 
Register, the undersigned DOE Federal Register Liaison Officer has been 
authorized to sign and submit the document in electronic format for 
publication, as an official document of the Department of Energy. This 
administrative process in no way alters the legal effect of this 
document upon publication in the Federal Register.

    Signed in Washington, DC, on May 5, 2023.
Treena V. Garrett,
Federal Register Liaison Officer, U.S. Department of Energy.

    For the reasons stated in the preamble, DOE amends part 431 of 
chapter II of title 10 of the Code of Federal Regulations, as set forth 
below:

[[Page 36150]]

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

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

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


0
2. Amend Sec.  431.12 by adding, in alphabetical order, definitions for 
``Specialized frame size'' and ``Standard frame size,'' to read as 
follows:


Sec.  431.12  Definitions.

* * * * *
    Specialized frame size means an electric motor frame size for which 
the rated output power of the motor exceeds the motor frame size limits 
specified for standard frame size. Specialized frame sizes have maximum 
diameters corresponding to the following NEMA Frame Sizes:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               Maximum NEMA frame diameters
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................         48  .........         48         48         48         48        140        140
1.5/1.1.........................................................         48         48         48         48        140        140        140        140
2/1.5...........................................................         48         48         48         48        140        140        180        180
3/2.2...........................................................        140         48        140        140        180        180        180        180
5/3.7...........................................................        140        140        140        140        180        180        210        210
7.5/5.5.........................................................        180        140        180        180        210        210        210        210
10/7.5..........................................................        180        180        180        180        210        210  .........  .........
15/11...........................................................        210        180        210        210  .........  .........  .........  .........
20/15...........................................................        210        210        210        210  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Standard frame size means a motor frame size that aligns with the 
specifications in NEMA MG 1-2016, section 13.2 for open motors, and 
NEMA MG 1-2016, section 13.3 for enclosed motors (incorporated by 
reference, see Sec.  431.15).
* * * * *

0
3. Amend Sec.  431.25 by:
0
a. Revising paragraph (h) introductory text; and
0
b. Adding paragraphs (m) through (r).
    The revision and additions read as follows:


Sec.  431.25  Energy conservation standards and effective dates.

* * * * *
    (h) Each NEMA Design A motor, NEMA Design B motor, and IEC Design N 
(including NE, NEY, or NY variants) motor that is an electric motor 
meeting the criteria in paragraph (g) of this section and with a power 
rating from 1 horsepower through 500 horsepower, but excluding fire 
pump electric motors, manufactured (alone or as a component of another 
piece of equipment) on or after June 1, 2016, but before June 1, 2027, 
shall have a nominal full-load efficiency of not less than the 
following:
* * * * *
    (m) The standards in tables 8 through 10 of this section apply only 
to electric motors, including partial electric motors, that satisfy the 
following criteria:
    (1) Are single-speed, induction motors;
    (2) Are rated for continuous duty (MG 1) operation or for duty type 
S1 (IEC);
    (3) Contain a squirrel-cage (MG 1) or cage (IEC) rotor;
    (4) Operate on polyphase alternating current 60-hertz sinusoidal 
line power;
    (5) Are rated 600 volts or less;
    (6) Have a 2-, 4-, 6-, or 8-pole configuration,
    (7) Are built in a three-digit or four-digit NEMA frame size (or 
IEC metric equivalent), including those designs between two consecutive 
NEMA frame sizes (or IEC metric equivalent), or an enclosed 56 NEMA 
frame size (or IEC metric equivalent),
    (8) Produce at least one horsepower (0.746 kW) but not greater than 
750 horsepower (559 kW), and
    (9) Meet all of the performance requirements of one of the 
following motor types: A NEMA Design A, B, or C motor or an IEC Design 
N, NE, NEY, NY or H, HE, HEY, HY motor.
    (n) Starting on June 1, 2027, each NEMA Design A motor, NEMA Design 
B motor, and IEC Design N (including NE, NEY, or NY variants) motor 
that is an electric motor meeting the criteria in paragraph (m) of this 
section and with a power rating from 1 horsepower through 750 
horsepower, but excluding fire pump electric motors and air-over 
electric motors, manufactured (alone or as a component of another piece 
of equipment) shall have a nominal full-load efficiency of not less 
than the following:

  Table 8 to Paragraph (n)--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Motors (Excluding Fire Pump
                                                 Electric Motors and Air-Over Electric Motors) at 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       77.0       77.0       85.5       85.5       82.5       82.5       75.5       75.5
1.5/1.1.........................................................       84.0       84.0       86.5       86.5       87.5       86.5       78.5       77.0
2/1.5...........................................................       85.5       85.5       86.5       86.5       88.5       87.5       84.0       86.5
3/2.2...........................................................       86.5       85.5       89.5       89.5       89.5       88.5       85.5       87.5
5/3.7...........................................................       88.5       86.5       89.5       89.5       89.5       89.5       86.5       88.5
7.5/5.5.........................................................       89.5       88.5       91.7       91.0       91.0       90.2       86.5       89.5
10/7.5..........................................................       90.2       89.5       91.7       91.7       91.0       91.7       89.5       90.2

[[Page 36151]]

 
15/11...........................................................       91.0       90.2       92.4       93.0       91.7       91.7       89.5       90.2
20/15...........................................................       91.0       91.0       93.0       93.0       91.7       92.4       90.2       91.0
25/18.5.........................................................       91.7       91.7       93.6       93.6       93.0       93.0       90.2       91.0
30/22...........................................................       91.7       91.7       93.6       94.1       93.0       93.6       91.7       91.7
40/30...........................................................       92.4       92.4       94.1       94.1       94.1       94.1       91.7       91.7
50/37...........................................................       93.0       93.0       94.5       94.5       94.1       94.1       92.4       92.4
60/45...........................................................       93.6       93.6       95.0       95.0       94.5       94.5       92.4       93.0
75/55...........................................................       93.6       93.6       95.4       95.0       94.5       94.5       93.6       94.1
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4
300/224.........................................................       95.8       95.4       96.2       95.8       95.8       95.8  .........  .........
350/261.........................................................       95.8       95.4       96.2       95.8       95.8       95.8  .........  .........
400/298.........................................................       95.8       95.8       96.2       95.8  .........  .........  .........  .........
450/336.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
500/373.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
550/410.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
600/447.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
650/485.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
700/522.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
750/559.........................................................       95.8       96.2       96.2       96.2  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (o) Starting on June 1, 2027, each NEMA Design A motor, NEMA Design 
B motor, and IEC Design N (including NE, NEY, or NY variants) motor 
that is an air-over electric motor meeting the criteria in paragraph 
(m) of this section and with a power rating from 1 horsepower through 
250 horsepower, built in a standard frame size, but excluding fire pump 
electric motors, manufactured (alone or as a component of another piece 
of equipment) shall have a nominal full-load efficiency of not less 
than the following:

  Table 9 to Paragraph (o)--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Standard Frame Size Air-Over
                                             Electric Motors (Excluding Fire Pump Electric Motors) at 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       77.0       77.0       85.5       85.5       82.5       82.5       75.5       75.5
1.5/1.1.........................................................       84.0       84.0       86.5       86.5       87.5       86.5       78.5       77.0
2/1.5...........................................................       85.5       85.5       86.5       86.5       88.5       87.5       84.0       86.5
3/2.2...........................................................       86.5       85.5       89.5       89.5       89.5       88.5       85.5       87.5
5/3.7...........................................................       88.5       86.5       89.5       89.5       89.5       89.5       86.5       88.5
7.5/5.5.........................................................       89.5       88.5       91.7       91.0       91.0       90.2       86.5       89.5
10/7.5..........................................................       90.2       89.5       91.7       91.7       91.0       91.7       89.5       90.2
15/11...........................................................       91.0       90.2       92.4       93.0       91.7       91.7       89.5       90.2
20/15...........................................................       91.0       91.0       93.0       93.0       91.7       92.4       90.2       91.0
25/18.5.........................................................       91.7       91.7       93.6       93.6       93.0       93.0       90.2       91.0
30/22...........................................................       91.7       91.7       93.6       94.1       93.0       93.6       91.7       91.7
40/30...........................................................       92.4       92.4       94.1       94.1       94.1       94.1       91.7       91.7
50/37...........................................................       93.0       93.0       94.5       94.5       94.1       94.1       92.4       92.4
60/45...........................................................       93.6       93.6       95.0       95.0       94.5       94.5       92.4       93.0
75/55...........................................................       93.6       93.6       95.4       95.0       94.5       94.5       93.6       94.1
100/75..........................................................       95.0       94.5       96.2       96.2       95.8       95.8       94.5       95.0
125/90..........................................................       95.4       94.5       96.2       96.2       95.8       95.8       95.0       95.0
150/110.........................................................       95.4       94.5       96.2       96.2       96.2       95.8       95.0       95.0
200/150.........................................................       95.8       95.4       96.5       96.2       96.2       95.8       95.4       95.0
250/186.........................................................       96.2       95.4       96.5       96.2       96.2       96.2       95.4       95.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 36152]]

    (p) Starting on June 1, 2027, each NEMA Design A motor, NEMA Design 
B motor, and IEC Design N (including NE, NEY, or NY variants) motor 
that is an air-over electric motor meeting the criteria in paragraph 
(m) of this section and with a power rating from 1 horsepower through 
20 horsepower, built in a specialized frame size, but excluding fire 
pump electric motors, manufactured (alone or as a component of another 
piece of equipment) shall have a nominal full-load efficiency of not 
less than the following:

  Table 10 to Paragraph (p)--Nominal Full-Load Efficiencies of NEMA Design A, NEMA Design B and IEC Design N, NE, NEY or NY Specialized Frame Size Air-
                                           Over Electric Motors (Excluding Fire Pump Electric Motors) at 60 Hz
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Nominal full-load efficiency (%)
                                                                 ---------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent                  2 Pole                4 Pole                6 Pole                8 Pole
                                                                 ---------------------------------------------------------------------------------------
                                                                   Enclosed     Open     Enclosed     Open     Enclosed     Open     Enclosed     Open
--------------------------------------------------------------------------------------------------------------------------------------------------------
1/.75...........................................................       74.0  .........       82.5       82.5       80.0       80.0       74.0       74.0
1.5/1.1.........................................................       82.5       82.5       84.0       84.0       85.5       84.0       77.0       75.5
2/1.5...........................................................       84.0       84.0       84.0       84.0       86.5       85.5       82.5       85.5
3/2.2...........................................................       85.5       84.0       87.5       86.5       87.5       86.5       84.0       86.5
5/3.7...........................................................       87.5       85.5       87.5       87.5       87.5       87.5       85.5       87.5
7.5/5.5.........................................................       88.5       87.5       89.5       88.5       89.5       88.5       85.5       88.5
10/7.5..........................................................       89.5       88.5       89.5       89.5       89.5       90.2  .........  .........
15/11...........................................................       90.2       89.5       91.0       91.0  .........  .........  .........  .........
20/15...........................................................       90.2       90.2       91.0       91.0  .........  .........  .........  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (q) For purposes of determining the required minimum nominal full-
load efficiency of an electric motor that has a horsepower or kilowatt 
rating between two horsepower or two kilowatt ratings listed in any 
table of energy conservation standards in paragraphs (n) through (p) 
through of this section, each such motor shall be deemed to have a 
listed horsepower or kilowatt rating, determined as follows:
    (1) A horsepower at or above the midpoint between the two 
consecutive horsepowers shall be rounded up to the higher of the two 
horsepowers;
    (2) A horsepower below the midpoint between the two consecutive 
horsepowers shall be rounded down to the lower of the two horsepowers; 
or
    (3) A kilowatt rating shall be directly converted from kilowatts to 
horsepower using the formula 1 kilowatt = (\1/0.746\) horsepower. The 
conversion should be calculated to three significant decimal places, 
and the resulting horsepower shall be rounded in accordance with 
paragraphs (q)(1) or (2) of this section, whichever applies.
    (r) The standards in tables 8 through 10 of this section do not 
apply to the following electric motors exempted by the Secretary, or 
any additional electric motors that the Secretary may exempt:
    (1) Component sets of an electric motor;
    (2) Liquid-cooled electric motors;
    (3) Submersible electric motors; and
    (4) Inverter-only electric motors.

[FR Doc. 2023-10019 Filed 5-31-23; 8:45 am]
BILLING CODE 6450-01-P