# Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2015-33067 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** January 15, 2016 - **Citation:** 81 FR 2420 ## Text DEPARTMENT OF ENERGY 10 CFR Part 431 [Docket Numbers EERE-2013-BT-STD-0007 and EERE-2013-BT-STD-0021] RIN 1904-AC95 and 1904-AD11 Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces AGENCY: Office of Energy Efficiency and Renewable Energy, Department of Energy. ACTION: Direct final rule. SUMMARY: The Energy Policy and Conservation Act of 1975, as amended (EPCA), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including small, large, and very large air-cooled commercial package air conditioning and heating equipment and commercial warm air furnaces. EPCA also requires that the U.S. Department of Energy (DOE) periodically review and consider amending its standards for specified categories of industrial equipment, including commercial heating and air conditioning equipment, in order to determine whether more-stringent, amended standards would be technologically feasible and economically justified, and save a significant additional amount of energy. In this direct final rule, DOE is amending the energy conservation standards for both small, large, and very large air-cooled commercial package air conditioning and heating equipment and commercial warm air furnaces after determining that the amended energy conservation standards being adopted for these equipment would result in the significant conservation of energy and be technologically feasible and economically justified. DATES: The effective date of this rule is May 16, 2016 unless adverse comment is received by May 4, 2016. 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 amended standards in this final rule will be required for small, large, and very large air-cooled commercial package air conditioning and heating equipment as detailed in the SUPPLEMENTARY INFORMATION . Compliance with the amended standards established for commercial warm air furnaces in this final rule is required starting on January 1, 2023. ADDRESSES: The dockets, which include 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 dockets are listed in the www.regulations.gov index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available. A link to the docket Web page for small, large, and very large air-cooled commercial package air conditioning and heating equipment can be found at: www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0007 . A link to the docket Web page for commercial warm air furnaces can be found at: www.regulations.gov/#!docketDetail;D=EERE-2013-BT-STD-0021. The www.regulations.gov Web page will contain instructions on how to access all documents, including public comments, in the docket. For further information on how to review the dockets, contact Ms. Brenda Edwards at (202) 586-2945 or by email: Brenda.Edwards@ee.doe.gov . FOR FURTHER INFORMATION CONTACT: Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies, EE-5B, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 286-1692. Email: John.Cymbalsky@ee.doe.gov . SUPPLEMENTARY INFORMATION: Table of Contents I. Synopsis of the Direct Final Rule A. Benefits and Costs to Commercial Consumers B. Impact on Manufacturers 1. Commercial Unitary Air Conditioners and Heat Pumps 2. Commercial Warm Air Furnaces C. National Benefits and Costs 1. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment 2. Commercial Warm Air Furnaces 3. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces D. Conclusion II. Introduction A. Authority B. Background 1. Current Standards 2. History of Standards Rulemakings a. Commercial Unitary Air Conditioners and Heat Pumps b. Commercial Warm Air Furnaces III. General Discussion A. Combined Rulemaking B. Consensus Agreement 1. Background 2. Recommendations C. Compliance Dates 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 Equipment e. Impact of Any Lessening of Competition f. Need for National Energy Conservation g. Other Factors 2. Rebuttable Presumption G. Energy Efficiency Descriptors for Commercial Unitary Air Conditioners and Heat Pumps 1. Cooling Efficiency Metric 2. Heating Efficiency Metric H. Other Issues 1. Economic Justification of the Proposed Standards a. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment b. Commercial Warm Air Furnaces c. Response 2. ASHRAE 90.1 Process 3. Other IV. Methodology and Discussion of Related Comments A. Market and Technology Assessment 1. General 2. Scope of Coverage and Equipment Classes a. Commercial Unitary Air Conditioners and Heat Pumps b. Commercial Warm Air Furnaces 3. Technology Options a. Commercial Unitary Air Conditioners and Heat Pumps b. Commercial Warm Air Furnaces B. Screening Analysis 1. Commercial Unitary Air Conditioners and Heat Pumps 2. Commercial Warm Air Furnaces C. Engineering Analysis 1. Methodology 2. Efficiency Levels a. Baseline Efficiency Levels b. Incremental and Max-Tech Efficiency Levels 3. Equipment Testing, Reverse Engineering and Energy Modeling a. Commercial Unitary Air Conditioners and Heat Pumps b. Commercial Warm Air Furnaces 4. Cost Estimation Process 5. Manufacturing Production Costs a. Commercial Unitary Air Conditioners and Heat Pumps b. Commercial Warm Air Furnaces 6. Manufacturer Markup 7. Shipping Costs D. Markups Analysis 1. Distribution Channels 2. Markups and Sales Tax E. Energy Use Analysis 1. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment a. Energy Use Simulations b. Generalized Building Sample 2. Commercial Warm Air Furnaces F. Life-Cycle Cost and Payback Period Analysis 1. Equipment Cost 2. Installation Cost a. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment b. Commercial Warm Air Furnaces 3. Annual Energy Consumption 4. Energy Prices 5. Maintenance and Repair Costs 6. Equipment Lifetime a. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment b. Commercial Warm Air Furnaces 7. Discount Rates 8. Efficiency Distribution in the No-New-Standards Case a. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment b. Commercial Warm Air Furnaces 9. Payback Period Analysis G. Shipments Analysis 1. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment a. Shipments by Market Segment b. Shipment Market Shares by Efficiency Level 2. Commercial Warm Air Furnaces a. Impact of Standards on Shipments H. National Impact Analysis 1. Equipment Efficiency Trends 2. National Energy Savings 3. Net Present Value a. Total Annual Installed Cost b. Total Annual Operating Cost Savings c. Net Benefit I. Consumer Subgroup Analysis J. Manufacturer Impact Analysis 1. Overview 2. Government Regulatory Impact Model a. Government Regulatory Impact Model Key Inputs b. Government Regulatory Impact Model Scenarios 3. Discussion of Comments a. Employment Impacts on CUAC/CUHP Manufacturers b. Conversion Costs related to CUACs/CUHPs c. Small Business Impacts on CWAF Manufacturers K. Emissions Analysis L. Monetizing Carbon Dioxide and Other Emissions Impacts 1. Social Cost of Carbon a. Monetizing Carbon Dioxide Emissions b. Development of Social Cost of Carbon Values c. Current Approach and Key Assumptions 2. Social Cost of Other Air Pollutants M. Utility Impact Analysis N. Employment Impact Analysis V. Analytical Results and Conclusions A. Trial Standard Levels B. Economic Justification and Energy Savings 1. Economic Impacts on Individual Commercial Consumers a. Life-Cycle Cost and Payback Period b. Consumer Subgroup Analysis c. Rebuttable Presumption Payback 2. Economic Impacts on Manufacturers a. Industry Cash-Flow Analysis Results b. Impacts on Employment c. Impacts on Manufacturing Capacity d. Impacts on Subgroups of Manufacturers e. Cumulative Regulatory Burden 3. National Impact Analysis a. Significance of Energy Savings b. Net Present Value of Commercial Consumer Costs and Benefits c. Indirect Impacts on Employment 4. Impact on Utility or Performance of Equipment 5. Impact of Any Lessening of Competition 6. Need of the Nation To Conserve Energy 7. Other Factors 8. Summary of National Economic Impacts C. Conclusion 1. Benefits and Burdens of TSLs Considered for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment 2. Benefits and Burdens of TSLs Considered for Commercial Warm Air Furnaces VI. Procedural Issues and Regulatory Review A. Review Under Executive Orders 12866 and 13563 B. Review Under the Regulatory Flexibility Act 1. Commercial Unitary Air Conditioners and Heat Pumps a. Description of Estimated Number of Small Entities Regulated b. Description and Estimate of Compliance Requirements 2. Commercial Warm Air Furnaces a. Description of Estimated Number of Small Entities Regulated 3. Duplication, Overlap, and Conflict With Other Rules and Regulations 4. Significant Alternatives to the Rule C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under the Information Quality Bulletin for Peer Review M. Congressional Notification VII. Approval of the Office of the Secretary I. Synopsis of the Direct Final Rule Title III, Part C 1 of the Energy Policy and Conservation Act of 1975 (EPCA or the Act), Public Law 94-163 (December 22, 1975), coupled with Section 441(a) Title IV of the National Energy Conservation Policy Act, Public Law 95-619 (November 9, 1978), (collectively codified at 42 U.S.C. 6311-6317), established the Energy Conservation Program for Certain Industrial Equipment, which includes the small, large, and very large air-cooled commercial package air conditioning and heating equipment and commercial warm air furnaces (“CWAFs”) that are the subject of this rulemaking. 2 The former group of equipment ( i.e. air-cooled commercial package air conditioning and heating equipment) is referred to herein as air-cooled commercial unitary air conditioners and heat pumps (“CUACs” and “CUHPs”). 1 Part C was codified as Part A-1 of the corresponding portion of the U.S. Code. 2 All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015, Public Law 114-11 (April 30, 2015). DOE received a statement submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of the covered equipment at issue, States, and efficiency advocates) containing recommendations with respect to energy conservation standards for the above equipment (see section III.B for description of the jointly-submitted statement). DOE has determined that the recommended standards contained in that jointly-submitted statement (hereinafter “Joint Statement”) are in accordance with 42 U.S.C. 6313(a)(6)(B), which prescribes the conditions for adoption of a uniform national standard more stringent than the applicable levels prescribed by ASHRAE/IES Standard 90.1 for the above equipment. (The acronym “ASHRAE/IES” stands for the American Society of Heating, Refrigerating, and Air-Conditioning Engineers/Illuminating Engineering Society.) Under the authority provided by 42 U.S.C. 6295(p)(4) and 6316(b)(1), DOE is issuing this direct final rule establishing amended energy conservation standards for CUACs, CUHPs, and CWAFs. The amended minimum standards for CUACs and CUHPs are shown in Table I-1, with the CUAC and CUHP cooling efficiency standards presented in terms of an integrated energy efficiency ratio (“IEER”) and the CUHP heating efficiency standards presented as a coefficient of performance (“COP”). The IEER metric would replace the currently used energy efficiency ratio (“EER”) metric on which DOE's standards are currently based. The standards will adopt ASHRAE 90.1-2013 efficiency levels in that will apply starting on January 1, 2018 and a higher level that will apply starting on January 1, 2023 as recommended by the ASRAC Working Group's Joint Statement. The standards contained in the recommendations apply to all equipment listed in Table I-1 manufactured in, or imported into, the United States starting on the dates shown in that table. Table I-1—Amended Energy Conservation Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment Equipment type Heating type Proposed energy conservation standard Compliance date Small Commercial Packaged AC and HP (Air-Cooled)—≥65,000 Btu/h and <135,000 Btu/h Cooling Capacity: AC Electric Resistance Heating or No Heating 12.9 IEER 14.8 IEER January 1, 2018. January 1, 2023. All Other Types of Heating 12.7 IEER 14.6 IEER January 1, 2018. January 1, 2023. HP Electric Resistance Heating or No Heating 12.2 IEER, 3.3 COP 14.1 IEER, 3.4 COP January 1, 2018. January 1, 2023. All Other Types of Heating 12.0 IEER, 3.3 COP 13.9 IEER, 3.4 COP January 1, 2018. January 1, 2023. Large Commercial Packaged AC and HP (Air-Cooled)—≥135,000 Btu/h and <240,000 Btu/h Cooling Capacity: AC Electric Resistance Heating or No Heating 12.4 IEER 14.2 IEER January 1, 2018. January 1, 2023. All Other Types of Heating 12.2 IEER 14.0 IEER January 1, 2018. January 1, 2023. HP Electric Resistance Heating or No Heating 11.6 IEER, 3.2 COP 13.5 IEER, 3.3 COP January 1, 2018. January 1, 2023. All Other Types of Heating 11.4 IEER, 3.2 COP 13.3 IEER, 3.3 COP January 1, 2018. January 1, 2023. Very Large Commercial Packaged AC and HP (Air-Cooled)—≥240,000 Btu/h and <760,000 Btu/h Cooling Capacity: AC Electric Resistance Heating or No Heating 11.6 IEER 13.2 IEER January 1, 2018. January 1, 2023. All Other Types of Heating 11.4 IEER 13.0 IEER January 1, 2018. January 1, 2023. HP Electric Resistance Heating or No Heating 10.6 IEER, 3.2 COP 12.5 IEER, 3.2 COP January 1, 2018. January 1, 2023. All Other Types of Heating 10.4 IEER, 3.2 COP 12.3 IEER, 3.2 COP January 1, 2018. January 1, 2023. For CWAFs, the amended standards, which prescribe the minimum allowable thermal efficiency (“TE”), are shown in Table I-2. These standards apply to all equipment listed in Table I-2 manufactured in, or imported into, the United States starting on January 1, 2023. Table I-2—Energy Conservation Standards for Commercial Warm Air Furnaces Equipment class Input capacity * (Btu/h) Thermal efficiency ** (%) Gas-Fired Furnaces ≥225,000 81 Oil-Fired Furnaces ≥225,000 82 * In addition to being defined by input capacity, a CWAF is “a self-contained oil- or gas-fired furnace designed to supply heated air through ducts to spaces that require it and includes combination warm air furnace/electric air conditioning units but does not include unit heaters and duct furnaces.” CWAFs coverage is further discussed in section IV.A.2, “Scope of Coverage and Equipment Classes.” ** Thermal efficiency is at the maximum rated capacity (rated maximum input), and is determined using the DOE test procedure specified at 10 CFR 431.76. A. Benefits and Costs to Commercial Consumers Table I-3 presents DOE's evaluation of the economic impacts of the energy conservation standards on commercial consumers of CUACs and CUHPs, as measured by the average life-cycle cost (“LCC”) savings and the payback period (“PBP”). 3 The average LCC savings are positive for all equipment classes, and the PBP is less than the average lifetime of the equipment, which is estimated to be 22 years (see section IV.F.6). 3 The average LCC savings are measured relative to the efficiency distribution in the no-new-standards case, which depicts the market in the compliance year in the absence of standards (see section IV.F.8). The simple PBP, which is designed to compare specific CWAF efficiency levels, is measured relative to the baseline model (see section IV.C.2.a). Table I-3—Impacts of Amended Energy Conservation Standards on Commercial Consumers of Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment Equipment class Average LCC savings (2014$) Payback period (years) Small CUACs 104 13.4 Large CUACs 2,336 1.9 Very Large CUACs 2,468 6.2 Table I-4 presents DOE's evaluation of the economic impacts of the energy conservation standards on commercial consumers of CWAFs, as measured by the average LCC savings and the PBP. The average LCC savings are positive for both equipment classes, and the PBP is less than the average lifetime of the equipment, which is estimated to be 23 years for both gas-fired and oil-fired CWAFs (see section IV.F.6). Table I-4—Impacts of Amended Energy Conservation Standards on Commercial Consumers of Commercial Warm Air Furnaces Equipment class Average LCC savings (2014$) Simple payback period (years) Gas-Fired CWAFs 284 1.4 Oil-Fired CWAFs 400 1.9 DOE's analysis of the impacts of the adopted standards on commercial consumers of CUACs/CUHPs and CWAFs is described in section IV.F of this document. B. Impact on Manufacturers 1. Commercial Unitary Air Conditioners and Heat Pumps The industry net present value (“INPV”) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2015 to 2048). Using a real discount rate of 6.2 percent, DOE estimates that the INPV for CUAC/CUHP manufacturers is $1,638.2 million in 2014$. Under the standards adopted in this direct final rule, DOE expects INPV may change approximately −26.8 percent to −2.3 percent, which corresponds to approximately −$440.4 million and −$38.5 million in 2014$. In order to bring equipment into compliance with the standards adopted in this direct final rule, DOE expects the industry to incur $520.8 million in total conversion costs. 2. Commercial Warm Air Furnaces As indicated above, the INPV is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2015 to 2048). Using a real discount rate of 8.9 percent, DOE estimates that the INPV for CWAF manufacturers is $96.3 million in 2014$. Under the standards adopted in this direct final rule, DOE expects INPV may be reduced by approximately 13.9 percent to 6.1 percent, which corresponds to −$13.4 million and −$5.9 million in 2014$. In order to bring products into compliance with the standards in this direct final rule, DOE expects the industry to incur $22.2 million in conversion costs. DOE's analysis of the impacts of the standards in this direct final rule on manufacturers is described in section IV.J of this document. C. National Benefits and Costs 4 1. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment DOE's analyses indicate that energy conservation standards being adopted in this direct final rule for CUAC and CUHP equipment would save a significant amount of energy. Relative to the case without amended standards (referred to as the “no-new-standards case”), the lifetime energy savings for CUAC and CUHP equipment purchased in 2018-2048 amount to 14.8 quadrillion British thermal units (Btu), or “quads.” 5 This represents a savings of 24 percent relative to the energy use of these products in the no-new-standards case. 4 All monetary values in this section are expressed in 2014 dollars and, where appropriate, are discounted to 2015 unless explicitly stated otherwise. Energy savings in this section refer to the full-fuel-cycle savings (see section IV.H for discussion). 5 A quad is equal to 10 15 British thermal units (“Btu”). 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. The cumulative net present value (“NPV”) of total consumer costs and savings of the standards for CUACs and CUHPs ranges from $15.2 billion (at a 7-percent discount rate) to $50 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for CUACs and CUHPs purchased in 2018-2048. In addition, the CUAC and CUHP equipment standards that are being adopted in this direct final rule are projected to yield significant environmental benefits as a result of the improvement in the conservation of energy. DOE estimates that the standards would result in cumulative greenhouse gas (“GHG”) emission reductions (over the same period as for energy savings) of 873 million metric tons (Mt) 6 of carbon dioxide (CO 2 ), 454 thousand tons of sulfur dioxide (SO 2 ), 1,634 tons of nitrogen oxides (NO X ), 3,917 thousand tons of methane (CH 4 ), 9.54 thousand tons of nitrous oxide (N 2 O), and 1.68 tons of mercury (Hg). 3 The cumulative reduction in CO 2 emissions through 2030 amounts to 77 million Mt, which is equivalent to the emissions resulting from the annual electricity use of more than 10.6 million homes. 6 A metric ton is equivalent to 1.1 short tons. Results for NO X and Hg are presented in short tons. 3 DOE calculated emissions reductions relative to the no-new-standards-case, which reflects key assumptions in the Annual Energy Outlook 2015 ( AEO 2015 ) Reference case, which generally represents current legislation and environmental regulations for which implementing regulations were available as of October 31, 2014. The value of the CO 2 reductions is calculated using a range of values per metric ton of CO 2 (otherwise known as the “Social Cost of Carbon,” or “SCC”) developed by a Federal interagency working group. 7 The derivation of the SCC values is discussed in section IV.L. Using discount rates appropriate for each set of SCC values, DOE estimates that the net present monetary value of the CO 2 emissions reduction (not including CO 2 -equivalent emissions of other gases with global warming potential) is between $5.0 billion and $75.9 billion, with a value of $24.9 billion using the central SCC case represented by $40.0/t in 2015. DOE also estimates that the net present monetary value of the NO X emissions reduction to be $1.4 billion at a 7-percent discount rate, and $4.4 billion at a 3-percent discount rate. 8 7 Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866. Interagency Working Group on Social Cost of Carbon, United States Government (May 2013; revised July 2015) (Available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf ). 8 DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf ). See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for particulate matter emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. Note that DOE is currently investigating valuation of avoided and SO 2 and Hg emissions. Table I-5 summarizes the national economic benefits and costs expected to result from the adopted standards for CUACs and CUHPs. Table I-5—Summary of National Economic Benefits and Costs of Amended Energy Conservation Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment * Category Present value (billion 2014$) Discount rate (%) Benefits Consumer Operating Cost Savings 23.0 64.9 7 3 CO 2 Reduction Value ($12.2/t case) ** 5.0 5 CO 2 Reduction Value ($40.0/t case) ** 24.9 3 CO 2 Reduction Value ($62.3/t case) ** 40.2 2.5 CO 2 Reduction Value ($117/t case) ** 75.9 3 NO X Reduction Value † 1.4 4.4 7 3 Total Benefits †† 49.3 94.1 7 3 Costs Consumer Incremental Installed Costs 7.7 14.9 7 3 Net Benefits Including CO 2 and NO X Reduction Value †† 41.6 79.2 7 3 * This table presents the costs and benefits associated with equipment shipped in 2018-2048. These results include benefits to consumers which accrue after 2048 from the products purchased in 2018-2048. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. ** The CO 2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NO X are described in section IV.L.2. DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf .) See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for particulate matter emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.0/t case). The benefits and costs of the adopted CUAC and CUHP standards for equipment sold in 2018-2048 can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of (1) the national economic value of the benefits in reduced operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO 2 and NO X emission reductions, all annualized. 9 9 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2015, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur ( e.g., 2020 or 2030), and then discounted the present value from each year to 2015. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO 2 reductions, for which DOE used case-specific discount rates, as shown in Table I.3. Using the present value, DOE then calculated the fixed annual payment over the analysis period, starting in the compliance year, that yields the same present value. Although the value of operating cost savings and CO 2 emission reductions are both important, two issues are relevant. First, the national operating cost savings are domestic U.S. consumer monetary savings that occur as a result of market transactions, whereas the value of CO 2 reductions is based on a global value. Second, the assessments of operating cost savings and CO 2 savings are performed with different methods that use different time frames for analysis. The national operating cost savings is measured for the lifetime of CUACs and CUHPs shipped in 2018-2048. Because CO 2 emissions have a very long residence time in the atmosphere, 10 the SCC values in future years reflect future CO 2 -emissions impacts that continue beyond 2100. 10 The atmospheric lifetime of CO 2 is estimated of the order of 30-95 years. Jacobson, MZ (2005), “Correction to `Control of fossil-fuel particulate black carbon and organic matter, possibly the most effective method of slowing global warming,' ” 110 J. Geophys. Res. D14105. 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 benefits and costs other than CO 2 reduction, (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.0/t in 2015), 11 the estimated cost of the standards in this rule is $708 million per year in increased equipment costs, while the estimated annual benefits are $2,099 million in reduced equipment operating costs, $1,320 million in CO 2 reductions, and $132.0 million in reduced NO X emissions. In this case, the net benefit amounts to $2,843 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series that has a value of $40.0/t in 2015, the estimated cost of the standards is $792 million per year in increased equipment costs, while the estimated annual benefits are $3,441 million in reduced operating costs, $1,320 million in CO 2 reductions, and $231.3 million in reduced NO X emissions. In this case, the net benefit amounts to $4,201 million per year. 11 DOE used a 3% discount rate because the SCC values for the series used in the calculation were derived using a 3% discount rate (see section IV.L). Table I-6—Annualized Benefits and Costs of Amended Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment * Million 2014$/year Discount rate (%) Primary estimate Low net benefits estimate High net benefits estimate Benefits Consumer Operating Cost Savings 7 3 2,099 3,441 2,021 3,287 2,309 3,830. CO 2 Reduction Value ($12.2/t case) ** 5 357 355 361. CO 2 Reduction Value ($40.0/t case) ** 3 1,320 1,313 1,337. CO 2 Reduction Value ($62.3/t case) ** 2.5 1,973 1,964 1,999. CO 2 Reduction Value ($117/t case) ** 3 4,028 4,009 4,080. NO X Reduction Value † 7 132.0 131.3 299.1. 3 231.3 230.2 516.3. Total Benefits †† 7 plus CO 2 range 2,588 to 6,259 2,507 to 6,160 2,970 to 6,689. 7 3,551 3,465 3,946. 3 plus CO 2 range 4,029 to 7,701 3,872 to 7,525 4,708 to 8,427. 3 4,992 4,830 5,684. Costs Consumer Incremental Product Costs 7 3 708 792 888 1028 275 231. Net Benefits Total †† 7 plus CO 2 range 1,880 to 5,551 1,619 to 5,273 2,695 to 6,414. 7 2,843 2,578 3,671. 3 plus CO 2 range 3,238 to 6,909 2,843 to 6,497 4,477 to 8,196. 3 4,201 3,802 5,453. * This table presents the annualized costs and benefits associated with CUACs and CUHPs shipped in 2018-2048. These results include benefits to consumers which accrue after 2048 from the CUACs and CUHPs purchased in 2018-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a constant price trend in the Primary estimate, a slightly increasing price trend in the Low Benefits estimate, and a slightly decreasing price trend in the Low Benefits estimate. The methods used to project price trends are explained in section IV.D.1. ** The CO 2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NO X are described in section IV.L.2. DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis titled, “ Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants,” published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf .) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency used a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.0/t) case. In the rows labeled “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values. DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K and IV.L of this document. 2. Commercial Warm Air Furnaces DOE's analyses indicate that the adopted energy conservation standards for CWAFs would save a significant amount of energy. Relative to the case without amended standards (referred to as the “no-new-standards case”), the lifetime energy savings for CWAFs purchased in 2023-2048 amount to 0.23 quads. This represents a savings of 0.8 percent relative to the energy use of these products in the case without amended standards ( i.e. the no-new-standards case). The cumulative NPV of total consumer costs and savings of the standards for CWAFs ranges from $0.3 billion (at a 7-percent discount rate) to $1.0 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for CWAFs purchased in 2023-2048. In addition, the CWAF equipment standards that are being adopted in this direct final rule are projected to yield significant environmental benefits as a result of the improvement in the conservation of energy. Specifically, these standards are projected to result in cumulative GHG emission reductions (over the same period as for energy savings) of 12.4 Mt of CO 2 , 0.40 thousand tons of SO 2 , 41.2 tons of NO X , 146 thousand tons of CH 4 , 0.03 thousand tons of N 2 O, and 0.001 tons of mercury. The cumulative reduction in CO 2 emissions through 2030 amounts to 0.9 Mt, which is equivalent to the emissions resulting from the annual electricity use of about 79,000 homes. The value of the CO 2 reductions is calculated using a range of values per metric ton of CO 2 developed by the Federal interagency Working Group. The derivation of the SCC values is discussed in section IV.L. Using discount rates appropriate for each set of SCC values, DOE estimates that the net present monetary value of the CO 2 emissions reduction (not including CO 2 -equivalent emissions of other gases with global warming potential) ranges from $71.4 million to $1,078 million, with a value of $353 million using the central SCC case represented by $40.0/t in 2015. DOE also estimates that the net present monetary value of the NO X emissions reduction to be $36.1 million at a 7-percent discount rate, and $110 million at a 3-percent discount rate. Table I-7 summarizes the national economic benefits and costs expected to result from the adopted CWAF standards. Table I-7—Summary of National Economic Benefits and Costs of Amended Energy Conservation Standards for Commercial Warm Air Furnaces * Category Present value (billion 2014$) Discount Rate (%) Benefits Operating Cost Savings 0.4 7 1.0 3 CO 2 Reduction Value ($12.2/t case) ** 0.07 5 CO 2 Reduction Value ($40.0/t case) ** 0.35 3 CO 2 Reduction Value ($62.3/t case) ** 0.57 2.5 CO 2 Reduction Value ($117/t case) ** 1.08 3 NO X Reduction Value † 0.04 7 0.11 3 Total Benefits †† 0.75 7 1.5 3 Costs Consumer Incremental Installed Costs 0.03 7 0.06 3 Net Benefits Including CO 2 and NO X Reduction Monetized Value†† 0.72 1.4 7 3 * This table presents the costs and benefits associated with CWAFs shipped in 2023-2048. These results include benefits to commercial consumers which accrue after 2048 from the products purchased in 2023-2048. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. ** The CO 2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NO X are described in section IV.L.2. DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis titled, “Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants,” published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf. ) See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for particulate matter emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.0/t case). The benefits and costs of the adopted standards, for CWAFs sold in 2023-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of (1) the national economic value of the benefits in reduced operating costs, minus (2) the increases in product purchase prices and installation costs, plus (3) the value of the benefits of CO 2 and NO X emission reductions, all annualized. 12 12 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2015, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur ( e.g., 2020 or 2030), and then discounted the present value from each year to 2015. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO 2 reductions, for which DOE used case-specific discount rates, as shown in Table I.7. Using the present value, DOE then calculated the fixed annual payment over the analysis period, starting in the compliance year to 2048, that yields the same present value. Estimates of annualized benefits and costs of the adopted standards are shown in Table I-8. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO 2 reduction, (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.0/t in 2015), the estimated cost of the standards in this rule is $4.31 million per year in increased equipment costs, while the estimated annual benefits are $49 million in reduced equipment operating costs, $24 million in CO 2 reductions, and $4.91 million in reduced NO X emissions. In this case, the net benefit amounts to $74 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series has a value of $40.0/t in 2015, the estimated cost of the standards is $4.38 million per year in increased equipment costs, while the estimated annual benefits are $71 million in reduced operating costs, $24 million in CO 2 reductions, and $7.59 million in reduced NO X emissions. In this case, the net benefit amounts to $99 million per year. Table I-8—Annualized Benefits and Costs of Amended Standards for Commercial Warm Air Furnaces * Discount rate (%) Million 2014$/year Primary estimate Low estimate High estimate Benefits Operating Cost Savings 7 49 48 54. 3 71 70 81. CO 2 Reduction Value ($12.2/t case) ** 5 6.99 7.08 7.37. CO 2 Reduction Value ($40.0/t case) ** 3 24 25 26. CO 2 Reduction Value ($62.3/t case) ** 2.50 36 36 38. CO 2 Reduction Value ($117/t case) ** 3 74 75 79. NO X Reduction Value † 7 4.91 4.98 11.44. 3 7.59 7.70 17.61. Total Benefits †† 7 plus CO 2 range 61 to 128 60 to 128 73 to 144. 7 78 78 91. 3 plus CO 2 range 86 to 153 84 to 152 106 to 177. 3 103 102 124. Costs Consumer Incremental Product Costs 7 3 4.31 4.38 5.04 5.22 3.92 3.94. Net Benefits Total †† 7 plus CO 2 range 57 to 124 55 to 123 69 to 140. 7 74 72 87. 3 plus CO 2 range 82 to 149 79 to 147 102 to 173. 3 99 97 120. * This table presents the annualized costs and benefits associated with CWAFs shipped in 2023-2048. These results include benefits to commercial consumers which accrue after 2048 from the CWAFs purchased from 2023-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3. ** The CO 2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NO X are described in section IV.L.2. DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf .) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency used a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.0/t) case. In the rows labeled “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values. DOE's analysis of the national impacts of the adopted standards is described in sections IV.H, IV.K and IV.L of this document. 3. Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces DOE's analyses indicate that energy conservation standards being adopted in this direct final rule for CUAC and CUHP equipment and CWAFs would save a significant amount of energy. Relative to the no-new-standards case, the lifetime energy savings for CUAC and CUHP equipment purchased in 2018-2048 and CWAFs purchased in 2023-2048 amount to 15.0 quads. This represents a savings of 24 percent relative to the energy use of these products in the no-new-standards case. The cumulative NPV of total consumer costs and savings of the standards for CUACs and CUHPs and CWAFs ranges from $15.5 billion (at a 7-percent discount rate) to $51 billion (at a 3-percent discount rate). This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased product and installation costs for CUACs and CUHPs purchased in 2018-2048 and CWAFs purchased in 2023-2048. In addition, the standards that are being adopted in this direct final rule are projected to yield significant environmental benefits as a result of the improvement in the conservation of energy. DOE estimates that the standards would result in cumulative GHG emission reductions (over the same period as for energy savings) of 885 million Mt of CO 2 , 454 thousand tons of SO 2 , 1,675 tons of NO X , 4,063 thousand tons of CH 4 , 10 thousand tons of N 2 O, and 1.68 tons of Hg. The cumulative reduction in CO 2 emissions through 2030 amounts to 78 million Mt, which is equivalent to the emissions resulting from the annual electricity use of approximately 10.7 million homes. The value of the CO 2 reductions is calculated using a range of values per metric ton of CO 2 developed by a Federal interagency working group. The derivation of the SCC values is discussed in section IV.L. Using discount rates appropriate for each set of SCC values, DOE estimates that the net present monetary value of the CO 2 emissions reduction (not including CO 2 -equivalent emissions of other gases with global warming potential) is between $5.1 billion and $77 billion, with a value of $25.3 billion using the central SCC case represented by $40.0/t in 2015. DOE also estimates that the net present monetary value of the NO X emissions reduction to be $1.4 billion at a 7-percent discount rate, and $4.5 billion at a 3-percent discount rate. Table I-9 summarizes the combined national economic benefits and costs expected to result from the adopted standards for CUACs and CUHPs and CWAF. Table I-9—Summary of National Economic Benefits and Costs of Amended Energy Conservation Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces * Category Present value (billion 2014$) Discount rate (%) Benefits Operating Cost Savings 23.3 7 65.9 3 CO 2 Reduction Value ($12.2/t case) ** 5.1 5 CO 2 Reduction Value ($40.0/t case) ** 25.2 3 CO 2 Reduction Value ($62.3/t case) ** 40.8 2.5 CO 2 Reduction Value ($117/t case) ** 77.0 3 NO X Reduction Value † 1.5 7 4.5 3 Total Benefits †† 50.1 7 95.6 3 Costs Consumer Incremental Installed Costs 7.8 7 15.0 3 Net Benefits Including CO 2 and NO X Reduction Value †† 42.3 7 80.6 3 * This table presents the costs and benefits associated with CUACs and CUHPs shipped in 2018-2048 and CWAFs shipped in 2023-2048. These results include benefits to commercial consumers which accrue after 2048. The costs account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. ** The CO 2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NO X are described in section IV.L.2. DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf. ) See section IV.L.2 for further discussion. Note that the agency is primarily using a national benefit-per-ton estimate for particulate matter emitted from the Electricity Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). If the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), the values would be nearly two-and-a-half times larger. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emissions, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate ($40.0/t case). The benefits and costs of the adopted standards for CUAC and CUHP and CWAFs can also be expressed in terms of annualized values. Estimates of annualized benefits and costs of the adopted standards are shown in Table I-10. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO 2 reduction (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.0/t in 2015), the estimated cost of the standards in this rule is $711 million per year in increased equipment costs, while the estimated annual benefits are $2,132 million in reduced equipment operating costs, $1,339 million in CO 2 reductions, and $135 million in reduced NO X emissions. In this case, the net benefit amounts to $2,895 million per year. Using a 3-percent discount rate for all benefits and costs and the SCC series has a value of $40.0/t in 2015, the estimated cost of the standards is $795 million per year in increased equipment costs, while the estimated annual benefits are $3,496 million in reduced operating costs, $1,339 million in CO 2 reductions, and $237 million in reduced NO X emissions. In this case, the net benefit amounts to $4,277 million per year. Table I-10—Annualized Benefits and Costs of Amended Standards for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces * Million 2014$/year Discount rate (%) Primary estimate Low estimate High estimate Benefits Operating Cost Savings 7 2,132 2,053 2,346. 3 3,496 3,340 3,892. CO 2 Reduction Value ($12.2/t case) ** 5 362 360 367. CO 2 Reduction Value ($40.0/t case) ** 3 1,339 1,332 1,357. CO 2 Reduction Value ($62.3/t case) ** 2.50 2,002 1,992 2,029. CO 2 Reduction Value ($117/t case) ** 3 4,085 4,067 4,141. NO X Reduction Value † 7 135 135 307. 3 237 236 530. Total Benefits †† 7 plus CO 2 range 2,629 to 6,353 2,548 to 6,254 3,019 to 6,794. 7 3,606 3,520 4,010. 3 plus CO 2 range 4,095 to 7,819 3,937 to 7,643 4,789 to 8,563. 5,072 4,909 5,779. Costs Consumer Incremental Product Costs 7 711 891 277. 3 795 1033 234. Net Benefits Total †† 7 plus CO 2 range 1,918 to 5,642 1,657 to 5,363 2,742 to 6,516. 7 2,895 2,629 3,732. 3 plus CO 2 range 3,300 to 7,024 2,904 to 6,610 4,555 to 8,330. 3 4,277 3,876 5,545. * This table presents the annualized costs and benefits associated with CUACs and CUHPs shipped in 2018-2048 and CWAFs shipped in 2023-2048. These results include benefits to commercial consumers which accrue after 2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a medium decline rate in the Primary Estimate, a low decline rate in the Low Benefits Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.H.3. ** The CO 2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † The $/ton values used for NO X are described in section IV.L.2. DOE estimated the monetized value of NO X emissions reductions using benefit per ton estimates from the Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants, published in June 2014 by EPA's Office of Air Quality Planning and Standards. (Available at: http://www3.epa.gov/ttnecas1/regdata/RIAs/111dproposalRIAfinal0602.pdf .) For DOE's Primary Estimate and Low Net Benefits Estimate, the agency is primarily using a national benefit-per-ton estimate for particulate matter emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al., 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al., 2011), which are nearly two-and-a-half times larger than those from the ACS study. Because of the sensitivity of the benefit-per-ton estimate to the geographical considerations of sources and receptors of emission, DOE intends to investigate refinements to the agency's current approach of one national estimate by assessing the regional approach taken by EPA's Regulatory Impact Analysis for the Clean Power Plan Final Rule. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.0/t) case. In the rows labeled “7% plus CO 2 range” and “3% plus CO 2 range,” the operating cost and NO X benefits are calculated using the labeled discount rate, and those values are added to the full range of CO 2 values. D. Conclusion DOE has determined that the statement containing recommendations with respect to energy conservation standards for CUACs, CUHPs and CWAFs 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) and 6313(a)(6)(B). 13 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. 6313(a)(6)(B), which contains provisions for adopting a uniform national standard more stringent than the amended ASHRAE Standard 90.1 for the equipment considered in this document. Specifically, the Secretary has determined, supported by clear and convincing evidence, that the adoption of the recommended standards would result in significant additional 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, given that, 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. 13 See 42 U.S.C. 6313(b) (applying 42 U.S.C. 6295(p)(4) to energy conservation standard rulemakings involving a variety of industrial equipment, including CUACs, CUHPs, and CWAFs). Under the authority provided by 42 U.S.C. 6295(p)(4) and 6316(b)(1), DOE is issuing this direct final rule establishing amended energy conservation standards for CUACs/CUHPs and CWAFs. 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. 14 See 42 U.S.C. 6295(p)(4)(A)(i). 14 Because DOE has already published initial notices of proposed rulemaking for CUACs, CUHPs, and CWAFs, DOE is publishing a supplemental notice of proposed rulemaking that proposes the identical energy conservation standards detailed in this direct final rule. 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 small, large, and very large, CUAC/CUHP and CWAF equipment. A. Authority As indicated above, EPCA includes provisions covering the equipment addressed by this document. 15 EPCA addresses, among other things, the energy efficiency of certain types of commercial and industrial equipment. Relevant provisions of the Act specifically include definitions (42 U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test procedures (42 U.S.C. 6314), labeling provisions (42 U.S.C. 6315), and the authority to require information and reports from manufacturers (42 U.S.C. 6316). 15 All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015, Public Law 114-11 (April 30, 2015). Section 342(a) of EPCA concerns energy conservation standards for small, large, and very large, CUACs and CUHPs. (42 U.S.C. 6313(a)) This category of equipment has a rated capacity between 65,000 Btu/h and 760,000 Btu/h. This equipment is designed to heat and cool commercial buildings and is often located on the building's rooftop. The initial Federal energy conservation standards for CWAFs were added to EPCA by the Energy Policy Act of 1992 (EPACT 1992), Public Law No. 102-486 (Oct. 24, 1992). See 42 U.S.C. 6313(a)(4). These types of covered equipment have a rated capacity (rated maximum input 16 ) greater than or equal to 225,000 Btu/h, can be gas-fired or oil-fired, and are designed to heat commercial and industrial buildings. Id. 16 “Rated maximum input” means the maximum gas-burning capacity of a CWAF in Btus per hour, as specified by the manufacturer. Pursuant to section 342(a)(6) of EPCA, DOE is to consider amending the energy efficiency standards for certain types of commercial and industrial equipment whenever ASHRAE amends the standard levels or design requirements prescribed in ASHRAE/IES Standard 90.1, and whenever more than 6 years had elapsed since the issuance of the most recent final rule establishing or amending a standard for the equipment as of the date of AEMTCA's enactment, December 18, 2012. (42 U.S.C. 6313(a)(6)(C)(vi)) Because more than six years had elapsed since DOE issued a final rule with standards for CUACs and CUHPs or CWAFs on October 18, 2005 (see 70 FR 60407), DOE initiated the process to review these standards. Pursuant to EPCA, DOE's energy conservation program for covered equipment consists essentially of four parts: (1) Testing; (2) labeling; (3) the establishment of Federal energy conservation standards; and (4) certification and enforcement procedures. 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 covered equipment. (42 U.S.C. 6314) Manufacturers of covered equipment must use the prescribed DOE test procedure as the basis for certifying to DOE that their equipment comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding their energy use or efficiency. (42 U.S.C. 6314(d)) Similarly, DOE must use these test procedures to determine whether a given manufacturer's equipment complies with standards adopted pursuant to EPCA. The DOE test procedures for small, large, and very large CUACs/CUHPs and CWAFs currently appear at title 10 of the Code of Federal Regulations (“CFR”) parts 431.96 and 431.76, respectively. When setting standards for the equipment addressed by this document, EPCA prescribes specific statutory criteria for DOE to consider. See generally 42 U.S.C. 6313(a)(6)(A)-(C). In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. DOE must make this determination after receiving comments on the proposed standard, and by considering, to the maximum extent practicable, the following seven statutory factors: 1. The economic impact of the standard on manufacturers and consumers of 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 which are likely to result from the standard; 3. The total projected amount of energy savings likely to result directly from the standard; 4. Any lessening of the utility or the performance of the covered 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 conservation; and 7. Other factors the Secretary of Energy considers relevant. (42 U.S.C. 6313(a)(6)(B)(ii)) With respect to the types of equipment at issue in this rule, EPCA 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. 6313(a)(6)(B)(iii)(I)) 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 of any covered product type (or class) of performance characteristics (including reliability, features, sizes, capacities, and volumes) that are substantially the same as those generally available in the United States. (42 U.S.C. 6313(a)(6)(B)(iii)(II))(aa) With respect to the equipment addressed by this direct final rule, DOE notes that EPCA prescribes limits on the Agency's ability to promulgate a standard if DOE has made a finding that interested persons have established by a preponderance of the evidence that a standard is likely to result in the unavailability of any product type (or class) of performance characteristics that are substantially the same as those generally available in the United States at the time of the finding. See 42 U.S.C. 6313(B)(iii)(II). With particular regard to direct final rules, the Energy Independence and Security Act of 2007 (“EISA 2007”), Public Law 110-140 (December 19, 2007), amended EPCA, in relevant part, to grant DOE authority to issue a type of final rule ( i.e., a “direct final rule”) establishing an energy conservation standard for a product on receipt of a statement that is 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, and that contains recommendations with respect to an energy or water conservation standard. If the Secretary determines that the recommended standard contained in the statement is in accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable, the Secretary may issue a final rule establishing the recommended standard. A notice of proposed rulemaking (“NOPR”) that proposes an identical energy efficiency standard is published simultaneously with the direct final rule. A public comment period of at least 110 days is provided. See 42 U.S.C. 6295(p)(4). Not later than 120 days after the date on which a direct final rule issued under this authority is published in the Federal Register , the Secretary shall withdraw the direct final rule if the Secretary receives 1 or more adverse public comments relating to the direct final rule or any alternative joint recommendation and based on the rulemaking record relating to the direct final rule, the Secretary determines that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule under subsection 42 U.S.C. 6295(o), 6313(a)(6)(B), or any other applicable law. On withdrawal of a direct final rule, the Secretary shall 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. This direct final rule provision applies to the equipment at issue in this direct final rule. See 42 U.S.C. 6316(b)(1). B. Background 1. Current Standards DOE last amended its standards for small, large, and very large, CUACs/CUHPs on October 18, 2005. At that time, DOE codified both the amended standards for small and large equipment and the then-new standards for very large equipment set by the Energy Policy Act of 2005 (“EPAct 2005”), Pub. L. 109-58. See also 70 FR 60407 (August 8, 2005). The current standards are set forth in Table II-1. Table II-1—Minimum Cooling and Heating Efficiency Levels for Small, Large, and Very Large Commercial Package Air Conditioning and Heating Equipment Equipment type Cooling capacity Sub-category Heating type Efficiency level Compliance date Small Commercial Packaged Air-Conditioning and Heating Equipment (Air-Cooled) >=65,000 Btu/h and <135,000 Btu/h AC Electric Resistance Heating or No Heating EER = 11.2 1/1/2010 All Other Types of Heating EER = 11.0 1/1/2010 HP Electric Resistance Heating or No Heating EER = 11.0 COP = 3.3 1/1/2010 All Other Types of Heating EER = 10.8 COP = 3.3 1/1/2010 Large Commercial Packaged Air-Conditioning and Heating Equipment (Air-Cooled) >=135,000 Btu/h and <240,000 Btu/h AC Electric Resistance Heating or No Heating EER = 11.0 1/1/2010 All Other Types of Heating EER = 10.8 1/1/2010 HP Electric Resistance Heating or No Heating EER = 10.6 COP = 3.2 1/1/2010 All Other Types of Heating EER = 10.4 COP = 3.2 1/1/2010 Very Large Commercial Packaged Air-Conditioning and Heating Equipment (Air-Cooled) >=240,000 Btu/h and <760,000 Btu/h AC Electric Resistance Heating or No Heating EER = 10.0 1/1/2010 All Other Types of Heating EER = 9.8 1/1/2010 HP Electric Resistance Heating or No Heating EER = 9.5 COP = 3.2 1/1/2010 All Other Types of Heating EER = 9.3 COP = 3.2 1/1/2010 As noted above, EPACT 1992 amended EPCA to set the current minimum energy conservation standards for CWAFs. (42 U.S.C. 6313(a)(4)(A) and (B)) These standards, which apply to all CWAFs manufactured on or after January 1, 1994, are set forth in Table II-2. Table II-2—Federal Energy Efficiency Standards for CWAFs Equipment type Input capacity (Btu/h) Thermal efficiency * % Compliance date Gas-Fired Furnaces ≥225,000 80 1/1/1994 Oil-Fired Furnaces ≥225,000 81 1/1/1994 * At the maximum rated capacity (rated maximum input). 2. History of Standards Rulemakings a. Commercial Unitary Air Conditioners and Heat Pumps On October 29, 1999, the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE)/Illuminating Engineering Society of North America (IESNA) adopted Standard 90.1-1999, “Energy Standard for Buildings Except Low-Rise Residential Building,” which included amended efficiency levels for CUACs and CUHPs. On June 12, 2001, the Department published a Framework Document that described a series of analytical approaches to evaluate energy conservation standards for CUACs and CUHPs with rated capacities between 65,000 Btu/h and 240,000 Btu/h, and presented this analytical framework to stakeholders at a public workshop. On July 29, 2004, DOE issued an Advance Notice of Proposed Rulemaking (“ANOPR”) (hereafter referred to as the “2004 ANOPR”) to solicit public comments on its preliminary analyses for this equipment. 69 FR 45460. Subsequently, Congress enacted EPAct 2005, which, among other things, established amended standards for small and large CUACs and CUHPs and new standards for very large CUACs and CUHPs. As a result, EPAct 2005 displaced the rulemaking effort that DOE had already begun. DOE codified these new statutorily-prescribed standards on October 18, 2005. 70 FR 60407. Section 5(b) of AEMTCA amended Section 342(a)(6) of EPCA (42 U.S.C. 6313(a)(6)) by requiring DOE to initiate a rulemaking to consider amending the standards for any covered equipment as to which more than 6 years has elapsed since the issuance of the most recent final rule establishing or amending a standard for the equipment as of the date of AEMTCA's enactment, December 18, 2012. (42 U.S.C. 6313(a)(6)(C)(vi)) Under this provision, DOE was also obligated to publish a notice of proposed rulemaking to amend the applicable standards by December 31, 2013. See 42 U.S.C. 6313(a)(6)(C)(vi). Consequently, DOE initiated a rulemaking effort to determine whether to amend the current standards for CUACs and CUHPs. On February 1, 2013, DOE published a request for information (“RFI”) and notice of document availability for small, large, and very large, air cooled CUACs and CUHPs. 78 FR 7296. The document sought to solicit information from the public to help DOE determine whether national standards more stringent than those already in place would result in a significant amount of additional energy savings and whether those national standards would be technologically feasible and economically justified. Separately, DOE also sought information on the merits of adopting the IEER metric as the energy efficiency descriptor characterizing cooling-mode efficiency for small, large, and very large CUACs and CUHPs, rather than the current EER metric. (See section III.G for more details). DOE notes that in October 2010, ASHRAE published ASHRAE Standard 90.1-2010, which amended its requirements for CUACs and CUHPs to include, among other things, new requirements for IEER. In October 2013, ASHRAE published ASHRAE Standard 90.1-2013, which further amended those IEER requirements. The provisions relating to EER and COP contained in ASHRAE Standard 90.1-2010 and ASHRAE Standard 90.1-2013, however, remained the same as the current DOE standards for this equipment. As discussed in section IV.C.2, DOE considered efficiency levels associated with the IEER requirements in both ASHRAE Standard 90.1-2010 and ASHRAE Standard 90.1-2013. On September 30, 2014, DOE published a NOPR for small, large, and very large CUACs and CUHPs. 79 FR 58948. The document solicited information from the public to help DOE determine whether more-stringent energy conservation standards for small, large, and very large CUACs and CUHPs would result in a significant additional amount of energy savings and whether those standards would be technologically feasible and economically justified. The September 2014 document also announced that a public meeting would be held on November 6, 2014 at DOE headquarters in Washington, DC At this meeting, DOE presented the methodologies and results of the analyses set forth in the NOPR, and interested parties that participated in the public meeting discussed a variety of topics. DOE also received a number of written comments from interested parties in response to the NOPR. DOE considered these comments, as well as comments from the public meeting, in preparing the direct final rule. The commenters are summarized in Table II-3. Relevant comments, and DOE's responses, are provided in the appropriate sections of this document. Table II-3—Interested Parties Providing Written Comment on the NOPR for Small, Large, and Very Large Air-Cooled CUACs and CUHPs Name Acronyms Type A2H, Inc A2H E Air-Conditioning, Heating and Refrigeration Institute AHRI TA Appliance Standards Awareness Project (ASAP), Alliance to Save Energy (ASE), American Council for an Energy-Efficient Economy (ACEEE), Natural Resources Defense Council (NRDC), Northeast Energy Efficiency Partnerships (NEEP), and Northwest Energy Efficiency Alliance (NEEA) Joint Efficiency Advocates EA Applied Engineering of East Tennessee, Inc Applied Engineering E American Society of Heating, Refrigerating and Air-Conditioning Engineers ASHRAE TA Balanced Principles, LLC Balanced Principles E Pacific Gas and Electric Company (PG&E), Southern California Gas Company (SCGC), San Diego Gas and Electric (SDG&E), and Southern California Edison (SCE) California IOUs U Cato Institute PP Coradini, Michael; Doss, Eddie; Heinrich; Michael; Huntley, John; Long, Robert I Danfoss Danfoss CS Environmental Investigation Agency EIA Global EA Gardiner Trane, H & H Sales Associates, Inc., Havtech, Heat Transfer Solutions, HVAC Equipment Sales, Inc., MWSK Equipment Sales Inc., Slade Ross, Inc D Goodman Manufacturing Goodman M Sofie Miller (George Washington University Regulatory Studies Center) Miller EI I.C. Thomasson Associates, Inc IC Thomasson E Ingersoll Rand (Trane) Trane M KJWW KJWW E Lennox International Inc Lennox M Merryman-Farr, LLC Merryman-Farr C Nidec Motor Corporation Nidec CS Nortek Global HVAC LLC Nordyne M Policy Navigation Group PP Regal-Beloit Corporation Regal-Beloit CS Rheem Manufacturing Company Rheem M Smith-Goth Engineers, Inc Smith-Goth E Southern Company Southern Company U Thompson Engineers, Inc Thompson E United Technologies Corporation Carrier M University of Michigan Plant Operations UM EI Viridis Engineering Viridis E C: Mechanical Contractor; CS: Component Supplier; D: Equipment Distributor: E: Engineering Consulting Firm; EA: Efficiency/Environmental Advocate; EI: Educational Institution; I: Individual; M: Manufacturer; PP: Public Policy Research Organization; TA: Trade Association; U: Utility; UR: Utility Representative. b. Commercial Warm Air Furnaces On October 21, 2004, DOE published a final rule in the Federal Register that adopted definitions for “commercial warm air furnace” and “TE,” promulgated test procedures for this equipment, and recodified the energy conservation standards to place them contiguously with the test procedures in the Code of Federal Regulations (“CFR”). 69 FR 61916, 61917, 61939-41. In the same final rule, DOE incorporated by reference (see 10 CFR 431.75) a number of industry test standards relevant to commercial warm air furnaces, including: (1) American National Standards Institute (“ANSI”) Standard Z21.47-1998, “Gas-Fired Central Furnaces,” for gas-fired CWAFs; (2) Underwriters Laboratories (“UL”) Standard 727-1994, “Standard for Safety Oil-Fired Central Furnaces,” for oil-fired CWAFs; (3) provisions from Hydronics Institute (HI) Standard BTS-2000, “Method to Determine Efficiency of Commercial Space Heating Boilers,” to calculate flue loss for oil-fired CWAFs, and (4) provisions from the American Society of Heating, Refrigerating, and Air-conditioning Engineers (“ASHRAE”) Standard 103- 1993, “Method of Testing for Annual Fuel Utilization Efficiency of Residential Central Furnaces and Boilers,” to determine the incremental efficiency of condensing furnaces under steady-state conditions. Id. at 61940. DOE later updated the test procedures for CWAFs to match the procedures specified in ASHRAE Standard 90.1-2010, which referenced ANSI Z21.47-2006, “Gas-Fired Central Furnaces,” for gas-fired CWAFs, and UL 727-2006, “Standard for Safety for Oil-Fired Central Furnaces,” for oil-fired furnaces. 77 FR 28928, 28987-88 (May 16, 2012). As with CUACs and CUHPs, DOE was obligated to publish either: (1) A notice of determination that the current standards do not need to be amended, or (2) a notice of proposed rulemaking containing proposed standards for CWAFs by December 31, 2013. (42 U.S.C. 6313(a)(6)(C)(i) and (vi)) Consequently, DOE initiated a rulemaking to determine whether to amend the current standards for CWAFs. In starting this rulemaking process, DOE published an RFI and notice of document availability for CWAFs. See 78 FR 25627 (May 2, 2013). The document solicited information from the public to help DOE determine whether more-stringent energy conservation standards for CWAFs would result in a significant additional amount of energy savings and whether those standards would be technologically feasible and economically justified. Based on feedback and additional analysis, on February 4, 2015, DOE published a NOPR for CWAFs. See 80 FR 6182. The NOPR, in addition to announcing a public meeting to discuss the proposal's details, solicited information from the public to help DOE determine whether more-stringent energy conservation standards for CWAFs would result in a significant additional amount of energy savings and whether those standards would be technologically feasible and economically justified. The public meeting, which took place on March 2, 2015 at DOE headquarters in Washington, DC, centered on the methodologies and results of the analyses set forth in the NOPR. Participating interested parties also raised a variety of topics, which are discussed throughout this document. DOE received a number of written comments from interested parties in response to the NOPR. DOE considered these comments, as well as comments from the public meeting, in the preparation of this final rule. The commenters are identified in Table II-4. Relevant comments, and DOE's responses, are provided in the appropriate sections of this document. Table II-4—Interested Parties Providing Written Comments on the NOPR for Commercial Warm Air Furnaces Name Acronyms Commenter Type * Air-Conditioning, Heating and Refrigeration Institute AHRI TA American Council for an Energy-Efficient Economy ACEEE EA American Gas Association AGA IR Appliance Standards Awareness Project, Alliance to Save Energy, American Council for an Energy-Efficient Economy, Natural Resources Defense Council ASAP, ASE, ACEEE, NRDC (The Advocates) EA Gas Technology Institute GTI RO Goodman Global, Inc Goodman M Ingersoll Rand Trane M Lennox International Inc Lennox M Nortek Global HVAC LLC Nordyne M Rheem Manufacturing Company Rheem M United Technologies Corporation Carrier M The U.S. Chamber of Commerce, the American Chemistry Council, the American Coke and Coal Chemicals Institute, the American Forest & Paper Association, the American Fuel & Petrochemical Manufacturers, the American Petroleum Institute, the Brick Industry Association, the Council of Industrial Boiler Owners, the National Association of Manufacturers, the National Mining Association, the National Oilseed Processors Association, and the Portland Cement Association U.S. Chamber of Commerce TA U.S. Small Business Administration's Office of Advocacy SBA GA * EA: Efficiency Advocate; GA: Government Agency; IR: Industry Representative; M: Manufacturer; RO: Research Organization; TA: Trade Association. III. General Discussion A. Combined Rulemaking As discussed in section II.B.2, DOE had been conducting separate standards rulemakings for two sets of interrelated equipment: (1) Small, large, and very large, CUACs and CUHPs; and (2) CWAFs. In response to the CUAC/CUHP NOPR, Lennox and Goodman requested that DOE align the rulemakings for these equipment because of their inherent impact on each other. The commenters asserted that combining the rulemakings would reduce manufacturer burden by allowing manufacturers to consider both of these regulatory changes in one design cycle. (CUAC: Lennox, No. 60 at p. 8; Goodman, No. 65 at p. 5) 17 17 In this direct final rule, DOE discusses comments received in regards to both the CUAC/CHUP and CWAF rulemakings. Comments received in regards to the CUAC/CUHP rulemaking and filed in the docket for this standards rulemaking (Docket No. EERE-2013-BT-STD-0007) are identified by “CUAC” preceding the comment citation. Comments received in regards to the CWAF rulemaking and filed in the docket for this standards rulemaking (Docket No. EERE-2013-BT-STD-0021) are identified by “CWAF” preceding the comment citation. Comments received in regards to the ASRAC Working Group activities (discussed in section III.B), while filed in the dockets for both the CUAC/CUHP and CWAF rulemakings, are identified by the equipment in regards to which the comment was made. In light of the broad overlap between these equipment, DOE agreed that a combined rulemaking for small, large, and very large, CUACs and CUHPs and CWAFs had certain advantages. For example, DOE observed that a large fraction of CWAFs are part of combined single-package CUACs/CWAF equipment, combining both air conditioning and gas-fired heating. Combining the rulemakings allowed simultaneous consideration of both functions of what is generally a single piece of equipment, thus allowing DOE to accurately account for the relations between the different systems. This approach also ensured that there would be no divergence of equipment development timelines for the separate functions, thus reducing costs and manufacturer impacts. As a result, DOE is setting standards for these equipment that aligns the effective dates of the CUAC/CUHP and CWAF rulemakings. DOE expects that aligning the effective dates will reduce total conversion costs and cumulative regulatory burden, while also allowing industry to gain clarity on potential regulations that could affect refrigerant availability before the higher appliance standard takes effect in 2023. Approximately 68.5 percent of industry equipment listings currently meet the 2018 standard, while 20.4 percent of current industry equipment listings meet the 2023 standard level. B. Consensus Agreement 1. Background In response to the September 2014 CUAC/CUHP NOPR, Lennox suggested that DOE adopt the ASHRAE 90.1-2013 standards for the equipment subject to this rulemaking but also offered in the alternative that DOE should convene a negotiated rulemaking to address potential amendments to the current standards, which would enhance stakeholder input into the discussion, analysis and outcome of the rulemaking. (CUAC: Lennox, No. 60 at p. 3) Other manufacturers made similar suggestions. (CUAC: Trane, No. 63 at p. 14; Goodman, No. 65 at p. 22) In response to the CWAF NOPR, AHRI stated that the best approach to resolve the issues it identified, as well as the concerns of other stakeholders on this rulemaking and on the CUAC rulemaking, would be for DOE to conduct a negotiated rulemaking at which stakeholders can work together to develop standards that will result in energy savings using technology that is feasible and economically justified. (CWAF: AHRI, No. 26 at p. 15) In addition, AHRI and ACEEE submitted a joint letter to the Appliance Standards and Rulemaking Federal Advisory Committee (“ASRAC”) requesting that it consider approving a recommendation that DOE initiate a negotiated rulemaking for commercial package air conditioners and commercial furnaces. (EERE-2013-BT-STD-0007-0080) ASRAC carefully evaluated this request and the Committee voted to charter a working group to support the negotiated rulemaking effort requested by these parties. Subsequently, after careful consideration, DOE determined that, given the complexity of the CUAC/CUHP rulemaking and the logistical challenges presented by the related CWAF proposal, a combined effort to address these equipment types was appropriate to ensure a comprehensive vetting of issues and related analyses that would support any final rule settting standards for this equipment. To this end while highly unusual to do so after issuing a proposed rule, DOE solicited the public for membership nominations to the working group that would be formed under the ASRAC charter by issuing a Notice of Intent to Establish the Commercial Package Air Conditioners and Commercial Warm Air Furnaces Working Group To Negotiate Potential Energy Conservation Standards for Commercial Package Air Conditioners and Commercial Warm Air Furnaces. 80 FR 17363 (April 1, 2015). The CUAC/CUHP-CWAF Working Group (in context, “the Working Group”) was established under ASRAC in accordance with the Federal Advisory Committee Act and the Negotiated Rulemaking Act—with the purpose of discussing and, if possible, reaching consensus on a set of energy conservation standards to propose or finalize for CUACs, CUHPs and CWAFs. The Working Group was to consist of fairly representative parties having a defined stake in the outcome of the proposed standards, and would consult, as appropriate, with a range of experts on technical issues. DOE received 17 nominations for membership. Ultimately, the Working Group consisted of 17 members, including one member from ASRAC and one DOE representative. 18 The Working Group met six times (five times in-person and once by teleconference). The meetings were held on April 28, May 11-12, May 20-21, June 1-2, June 9-10, and June 15, 2015. 19 As a result of these efforts, the Working Group successfully reached consensus on energy conservation standards for CUACs, CUHPs, and CWAFs. On June 15, 2015, it submitted a Term Sheet to ASRAC outlining its recommendations, which ASRAC subsequently adopted. 20 18 The group members were John Cymbalsky (U.S. Department of Energy), Marshall Hunt (Pacific Gas & Electric Company, San Diego Gas & Electric Company, Southern California Edison, and Southern California Gas Company), Andrew deLaski (Appliance Standards Awareness Project), Louis Starr (Northwest Energy Efficiency Alliance), Meg Waltner (Natural Resources Defense Council), Jill Hootman (Trane), John Hurst (Lennox), Karen Meyers (Rheem Manufacturing Company), Charlie McCrudden (Air Conditioning Contractors of America), Harvey Sachs (American Council for an Energy Efficient Economy), Paul Doppel (Mitsubishi Electric), Robert Whitwell (United Technologies Corporation (Carrier)), Michael Shows (Underwriters Laboratories), Russell Tharp (Goodman Manufacturing), Sami Zendah (Emerson Climate Technologies), Mark Tezigni (Sheet Metal and Air Conditioning Contractors National Association, Inc.), Nick Mislak (Air-Conditioning, Heating, and Refrigeration Institute). 19 In addition, most of the members of the ASRAC Working Group held several informal meetings on March 19-20, 2015, March 30, 2015, and April 13, 2015. The purpose of these meetings was to initiate work on some of the analytical issues raised in stakeholder comments on the CUAC NOPR. 20 Available at http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0007-0093. The following individuals served as members of ASRAC that received and approved the Term Sheet: Co-Chair John Mandyck (Carrier/United Technologies Corporation), Co-Chair Andrew deLaski (Appliance Standards Awareness Project), Ashley Armstrong (U.S. Department of Energy), John Caskey (National Electrical Manufacturers Association), Jennifer Cleary (Association of Home Appliance Manufacturers), Thomas Eckman (Northwest Power and Conservation Council), Charles Hon (True Manufacturing Company), Dr. David Hungerford (California Energy Commission), Dr. Diane Jakobs (Rheem Manufacturing Company), Kelley Kline (General Electric, Appliances), Deborah Miller (National Association of State Energy Officials), and Scott Blake Harris (Harris, Wiltshire & Grannis, LLP). DOE carefully considered the consensus recommendations submitted by the Working Group in the form of a single Term Sheet, and adopted by ASRAC, related to amending the energy conservation standards for CUACs, CUHPs, and CWAFs. Based on this consideration, DOE has determined that these recommendations comprise a statement submitted by interested persons that are fairly representative of relevant points of view, consistent with 42 U.S.C. 6295(p)(4). In reaching this determination, DOE took into consideration the fact that the Working Group, in conjunction with ASRAC members who approved the recommendations, consisted of representatives of manufacturers of the covered equipment at issue, States, and efficiency advocates. Thus all of the groups specifically identified by Congress as potentially relevant parties to any consensus recommendation submitted by ASRAC participated in approving the recommendations submitted to DOE. (42 U.S.C. 6295(p)(4)(A)) As delineated above, the Term Sheet was signed and submitted by a broad cross-section of interests, including the manufacturers of the subject equipment, trade associations representing these manufacturers and installation contractors, environmental and energy-efficiency advocacy organizations, and electric utility companies. The ASRAC Committee approving the Working Group's recommendations included at least two members representing States—one representing the National Association of State Energy Officials (NASEO) and one representing the State of California. 21 DOE is not aware of a relevant point of view that was not represented by one or more of the participants in the Working Group or ASRAC. 21 These individuals were Deborah E. Miller (NASEO) and David Hungerford (California Energy Commission). By its plain terms, the statute contemplates that the Secretary will exercise discetion to determine whether a given statement is “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).” In this case, given the broad range of persons participating in the process that led to the submission—in the Working Group and in ASRAC—and given the breadth of perspectives expressed in that process, DOE has determined that the statement it received meets this criterion. 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. In making this determination, DOE has conducted an analysis to evaluate whether the potential energy conservation standards under consideration would meet these requirements. This evaluation is similar to the comprehensive approach that DOE typically conducts whenever it considers potential energy conservation standards for a given type of product or equipment. DOE applies these principles to any consensus recommendations it may receive to satisfy its statutory obligation to ensure that any energy conservation standard that it adopts achieves the maximum improvement in energy efficiency that is technologically feasible and economically justified and will result in the significant conservation of energy. Upon review, the Secretary determined that the Term Sheet's recommendations submitted in the instant rulemaking comports with the standard-setting criteria set forth under 42 U.S.C. 6313(a)(6)(B). Accordingly, the efficiency levels recommended to DOE by the Working Group through ASRAC were included as the “recommended trial standard level (TSL)” for CUACs/CUHPs and as TSL 2 for CWAFs in this rule (see section V.A for description of all of the considered TSLs). The details regarding how the consensus-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 amended energy conservation standards recommended in the Joint Statement for CUACs, CUHPs, and CWAFs through this direct final rule. Pursuant to the same statutory provision, DOE is also 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 both the direct final rule and the NOPR. Based on the comments received during this period, the direct final rule will either become effective or DOE will withdraw it 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. 6313(a)(6)(B) and for DOE to continue this rulemaking under the NOPR. (Receipt of an alternative joint recommendation may also trigger a DOE withdrawal of the direct final rule in the same manner.) See 42 U.S.C. 6295(p)(4)(C). 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. 2. Recommendations For commercial package air conditioners and heat pumps ( i.e. CUACs/CUHPs), the Working Group recommended two sets of standards along with two sets of compliance dates—one would apply starting on January 1, 2018, and the other would apply on January 1, 2023. The 2018 standards for CUACs and CUHPs—excluding double-duct air conditioners and heat pumps (see discussion below)—recommended by the Working Group are contained in Table III-1 and Table III-2. The 2023 standards for the same equipment are contained in Table III-3 and Table III-4. Table III-1—Consensus Recommended Minimum Cooling Efficiency Standards for Commercial Package Air-Cooled Air Conditioners and Heat Pumps Manufactured Starting on January 1, 2018 Equipment category Rated cooling capacity Subcategory Heating type Minimum energy efficiency standard Small Commercial Split and Single Package Air-Conditioners and Heat Pumps (Air-Cooled) ≥65,000 Btu/h and <135,000 Btu/h AC Electric Resistance Heating or No Heating All Other Types of Heating IEER = 12.9. IEER = 12.7. HP Electric Resistance Heating or No Heating ll Other Types of Heating IEER = 12.2. IEER = 12.0. Large Commercial Split and Single Package Air-Conditioners and Heat Pumps (Air-Cooled) ≥135,000 Btu/h and <240,000 Btu/h AC Electric Resistance Heating or No Heating All Other Types of Heating IEER = 12.4. IEER = 12.2. HP Electric Resistance Heating or No Heating All Other Types of Heating IEER = 11.6. IEER = 11.4. Very Large Commercial Split and Single Package Air-Conditioners and Heat Pumps (Air-Cooled) ≥240,000 Btu/h and <760,000 Btu/h AC Electric Resistance Heating or No Heating All Other Types of Heating IEER = 11.6. IEER = 11.4. HP Electric Resistance Heating or No Heating All Other Types of Heating IEER = 10.6. IEER = 10.4 Table III-2—Consensus Recommended Minimum Heating Efficiency Standards for Air-Cooled Heat Pumps Manufactured Starting on January 1, 2018 Equipment category Rated cooling capacity Heating type Minimum energy efficiency standard Small Commercial Split and Single Package Heat Pumps (Air-Cooled) ≥65,000 Btu/h and <135,000 Btu/h Electric Resistance Heating or No Heating All Other Types of Heating COP = 3.3. Large Commercial Split and Single Package Heat Pumps (Air-Cooled) (Air-Cooled) ≥135,000 Btu/h and <240,000 Btu/h Resistance Heating or No Heating All Other Types of Heating COP = 3.2. Very Large Commercial Split and Single Package Heat Pumps (Air-Cooled) ≥240,000 Btu/h and <760,000 Btu/h Resistance Heating or No Heating All Other Types of Heating COP = 3.2 Table III-3—Consensus Recommended Minimum Cooling Efficiency Standards for Commercial Package Air-Cooled Air Conditioners and Heat Pumps Manufactured Starting on January 1, 2023 Equipment category Rated cooling capacity Subcategory Heating type Minimum energy efficiency standard Small Commercial Split and Single Package Air-Conditioners and Heat Pumps (Air-Cooled) ≥65,000 Btu/h and <135,000 Btu/h AC Electric Resistance Heating or No Heating All Other Types of Heating IEER = 14.8. EER = 14.6. HP Electric Resistance Heating or No Heating All Other Types of Heating IEER = 14.1. IEER = 13.9. Large Commercial Split and Single Package Air-Conditioners and Heat Pumps (Air-Cooled) ≥135,000 Btu/h and <240,000 Btu/h AC Electric Resistance Heating or No Heating All Other Types of Heating IEER = 14.2. IEER = 14.0. HP Electric Resistance Heating or No Heating All Other Types of Heating IEER = 13.5. IEER = 13.3. Very Large Commercial Split and Single Package Air-Conditioners and Heat Pumps (Air-Cooled) ≥240,000 Btu/h and <760,000 Btu/h AC Electric Resistance Heating or No Heating All Other Types of Heating IEER = 13.2. IEER = 13.0. HP Electric Resistance Heating or No Heating All Other Types of Heating IEER = 12.5. IEER = 12.3 Table III-4—Consensus Recommended Minimum Cooling Efficiency Standards for Commercial Package Air-Cooled Air Conditioners and Heat Pumps Manufactured Starting on January 1, 2023 Equipment category Rated cooling capacity Heating type Minimum energy efficiency standard Small Commercial Split and Single Package Heat Pumps (Air-Cooled) ≥65,000 Btu/h and <135,000 Btu/h Electric Resistance Heating or No Heating All Other Types of Heating COP = 3.4. Large Commercial Split and Single Package Heat Pumps (Air-Cooled) ≥135,000 Btu/h and <240,000 Btu/h Resistance Heating or No Heating All Other Types of Heating COP = 3.3. Very Large Commercial Split and Single Package Heat Pumps (Air-Cooled) ≥240,000 Btu/h and <760,000 Btu/h Resistance Heating or No Heating All Other Types of Heating COP = 3.2 The ASRAC Working Group also recommended that DOE separately define double-duct air conditioners and heat pumps, as discussed further in section IV.A.2.a, and that the current energy conservation standards continue to apply to these equipment. See 10 CFR 431.97, Table 1. For CWAFs, the Working Group recommended that the standards provided in Table III-5 apply to equipment manufactured starting on January 1, 2023. Table III-5—Consensus Recommended Minimum Energy Conservation Standards for Commercial Warm Air Furnaces Equipment category Minimum energy efficiency standard (%) Gas-fired Commercial Warm Air Furnaces Thermal efficiency * = 81. Oil-fired Commercial Warm Air Furnaces Thermal efficiency * = 82. * At the maximum rated capacity (rated maximum input). C. Compliance Dates When DOE amends the standards for CUACs, CUHPs, and CWAFs through an ordinary notice-and-comment process, EPCA prescribes a set of timelines based on the particular circumstances surrounding that amendment. The proposed rule that eventually led to the formation of the Working Group was the beginning of DOE's six-year evaluation of the standards for these products. Consistent with 42 U.S.C. 6313(a)(6)(C)(iv), DOE originally proposed a compliance date of December 2018. 22 22 For purposes of its analysis, DOE used 2019, which would be the first full year of compliance. Commenting on the CUAC/CUHP NOPR, AHRI, Nordyne and Goodman disagreed with DOE's interpretation of the statutory lead time requirements for amended standards for CUACs and CUHPs. They argued that section 6313(a)(6)(D), which specifies a lead time of four years, should apply to any new standard that DOE promulgates. (CUAC: AHRI, No. 68 at pp. 14-17; Nordyne, No. 61 at pp. 11-15; Goodman, No. 65 at p. 3) Lennox added that DOE's proposed 3-year time frame is not feasible and stated that at least a 5-year development cycle would be required to meet the proposed standard. (CUAC: Lennox, No. 60 at p. 8) In resolving these timeline differences, the Working Group gave careful consideration to these concerns and recommended to ASRAC, which ASRAC then adopted, a set of jointly-submitted recommendations that specified a compliance date of January 1, 2018, for the first tier of standards, and January 1, 2023 for the second tier. These tiered dates were accepted and recommended by the signatories to the Term Sheet, which included manufacturers who critiqued the initial proposed lead times presented by DOE. While the January 1, 2018 compliance date is earlier than the proposed three-year lead time, DOE has the authority under section 325(p)(4) to accept recommendations for compliance dates contained in a joint submission recommending amended standards. In DOE's view, the direct final rule authority provision specifies the finding DOE has to make. Specifically, Congress specified that if DOE determines that the recommended standard is in accordance with 42 U.S.C. 6295(o) or section 342(a)(6)(B) of EPCA ( i.e. 42 U.S.C. 6313(a)(6)(B)), DOE may issue a final rule establishing those standards. See 42 U.S.C. 6295(p)(4)(A)(i). Applying the direct final rule provision in this manner meets Congress's goal to promote consensus agreements that reflect broad input from interested parties who can fashion agreements that best promote the aims of the statute. In the absence of that kind of agreement, DOE notes that the more specific prescriptions of EPCA would ordinarily prevail. However, when DOE receives a recommendation resulting from the appropriate process—in this case, the detailed procedure laid out in the direct final rule provision of EPCA—that process provides the necessary fidelity to the statute, along with compliance with section 6295(o) (or, in this case, 42 U.S.C. 6313(a)(6)(B)), that Congress instructed DOE to apply. DOE also notes that the January 1, 2018 standard levels are the same as the efficiency levels already adopted in ASHRAE Standard 90.1-2013, which has an effective date of January 1, 2016. In light of this fact, most manufacturers are already developing equipment designs and planning the production of equipment that will meet this efficiency level. For CWAFs, the consensus agreement specifies a compliance date of January 1, 2023. As with the lead time for CUACs and CUHPs, DOE has the authority when adopting recommended standards submitted in a consensus agreement pursuant to section 325(p)(4), to accept recommendations regarding compliance dates. See 42 U.S.C. 6295(p)(4) and 6316(b)(1). See also 76 FR at 37426. DOE has made the determination that the rulemaking record in this case supports the adoption of this recommended lead time for CWAFs. In its analysis of the other TSLs considered for the direct final rule, DOE used a compliance date that is 3 years after the expected publication of the final rule establishing amended standards (see discussion at the beginning of this section). 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. See chapter 3 of the direct final rule's Technical Support Documents (“TSDs”) for a discussion of the list of technology options that were identified. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially-available equipment or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i). After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on equipment utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Section IV.B of this document discusses the results of the screening analysis, particularly the designs DOE considered, those it screened out, and those that are the basis for the trial standard levels (TSLs) in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the direct final rule TSDs. Additionally, DOE notes that these screening criteria do not directly address the proprietary status of design options. DOE only considers efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level ( i.e., if there are other non-proprietary technologies capable of achieving the same efficiency). DOE believes the amended standards for the equipment covered in this rulemaking would not mandate the use of any proprietary technologies, and that all manufacturers would be able to achieve the amended levels through the use of non-proprietary designs. Specifically, the efficiency levels considered in the analysis are all represented by commercially-available equipment examples. Further, the technologies used in these equipment are available to all manufacturers. 2. Maximum Technologically Feasible Levels DOE assessed the recommended standards by accounting for the elements contained in 42 U.S.C. 6313(a)(6)(B). That provision requires DOE to determine in cases where standards more stringent than those already prescribed by ASHRAE 90.1 whether those more stringent standards will yield a significant amount of additional conservation of energy and will be technologically feasible and economically justified. In determining whether the “economically justified” prong is met, DOE must, after receiving views and comments on the standard, determine whether the benefits of the standard exceed the burdens that the standard would impose by, to the maximum extent practiable, considering seven different factors. See generally, 42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII). Consistent with this approach, DOE's engineering analysis helped identify the maximum technologically feasible (“max-tech”) improvements in energy efficiency for CUACs/CUHPs and CWAFs by using the design parameters for the most efficient equipment available on the market. (See chapter 5 of the direct final rule TSDs.) The max-tech levels that DOE determined for this rulemaking are described in section IV.C.2.b of this direct final rule. E. Energy Savings 1. Determination of Savings For the adopted standards, DOE projected energy savings over the entire lifetime of equipment purchased in 2018-2048 for CUACs/CUHPs and 2023-2048 for CWAFs. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case. The no-new-standards case represents a projection of energy consumption that reflects how the market for a type of equipment would likely evolve in the absence of amended energy conservation standards. DOE used its national impact analysis (“NIA”) spreadsheet model to estimate energy savings from potential amended standards for CUACs/CUHPs and CWAFs. The NIA spreadsheet model (described in section IV.H of this document) calculates savings in site energy, which is the energy directly consumed by products at the locations where they are used. Based on the calculated site energy, DOE calculates national energy savings (“NES”) in terms of primary energy savings at the site or at power plants, and also in terms of full-fuel-cycle (“FFC”) energy savings. The FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels ( i.e., coal, natural gas, petroleum fuels), and thus, presents a more complete picture of the impacts of energy conservation standards. 23 DOE's approach is based on the calculation of an FFC multiplier for each of the energy types used by covered products or equipment. For more information on FFC energy savings, see section IV.H of this document. For CWAFs, the energy savings are primarily in the form of natural gas, of which the primary energy savings are considered to be equal to the site energy savings. 24 23 The FFC metric is discussed in DOE's statement of policy and notice of policy amendment. 76 FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 17, 2012). 24 Primary energy consumption refers to the direct use at the source, or supply to users without transformation, of crude energy; that is, energy that has not been subjected to any conversion or transformation process. 2. Significance of Savings To adopt more-stringent standards for the covered equipment at issue, DOE must determine on the basis of clear and convincing evidence that such action would result in the significant additional conservation of energy over levels that would be achieved through the adoption of the relevant ASHRAE standards. (42 U.S.C. 6313(a)(6)(A)(ii)(II)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals, in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that Congress intended “significant” energy savings in the context of EPCA to be savings that were not “genuinely trivial.” The energy savings for all the TSLs considered in the rulemakings for CUACs/CUHPs and CWAFs, including the adopted standards, are nontrivial, and, therefore, DOE considers them “significant” within the meaning of section 325 of EPCA. To this end, DOE views the considerable data and analysis in support of the standards being adopted as satisfying the clear and convincing threshold set out in EPCA for the adoption of energy conservation standards more stringent that the relevant ASHRAE levels. F. Economic Justification 1. Specific Criteria As noted above, EPCA provides seven factors to be evaluated in determining whether a potentially more-stringent energy conservation standard for the equipment addressed by this direct final rule is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking. Commenting on the CUAC/CUHP NOPR, AHRI stated that DOE is not performing the full cost-benefit analysis that EPCA Section 6313(a)(6)(B)(ii) requires. It stated that DOE performed cost-benefit considerations at various points of its analysis yet never fully reconciled those analyses or the assumptions and scope of coverage underlying them. It added that DOE's cost-benefit analyses to the Nation, to manufacturers, and on employment take very different geographic scopes, ignore the immediately apparent effects on employment, and rely on unsupported analyses for effects on the general economy. In its view, DOE must reconcile these various approaches and their assumptions and also make available any models or inputs/outputs it relies upon. AHRI stated that DOE should remedy these shortcomings by performing an integrated, full cost-benefit analysis considering all factors including the effects on all directly related domestic industries. (CUAC: AHRI, No. 68 at pp. 26-29) As noted above, EPCA Section 6313(a)(6)(B)(ii) lays out the factors DOE shall, to the maximum extent practicable, consider in determining whether the benefits of a given standard exceed the burdens. EPCA does not mention or require the type of integrated cost-benefit analysis that AHRI envisions. It does not state or imply that all of the benefits and burdens need to be quantified in monetary terms. DOE's historical practice has been to analyze each of the factors to the maximum extent practicable. EPCA does not provide guidance as to the relative importance that DOE should attach to the listed factors. Therefore, in considering the factors listed in EPCA, DOE has historically used data and analysis to determine whether standards that satisfy other EPCA requirements are also economically justified. DOE also notes that it laid out a process to elaborate on the procedures, interpretations and policies that will guide the Department in establishing new or revised energy efficiency standards for consumer products. 61 FR 36974 (July 15, 1996). That process provides for greatly enhanced opportunities for public input, improved analytical approaches, and encouragement of consensus-based standards. This enhanced approach was developed by the Department on the basis of extensive consultations with many stakeholders. a. Economic Impact on Manufacturers and Consumers In determining the impacts of a potential amended standard on manufacturers, DOE conducts a manufacturer impact analysis (“MIA”), as discussed in section IV.J. (42 U.S.C. 6313(a)(6)(B)(ii)(I)) 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 the analysis period. The industry-wide impacts analyzed include: (1) Industry net present value (“INPV”), which values the industry on the basis of expected future cash flows; (2) cash flows by year; (3) changes in revenue and income; and (4) other measures of impact, as appropriate. Second, DOE analyzes and reports the impacts on different subgroups 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 commercial consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of consumers that may be affected disproportionately by a national standard. b. Savings in Operating Costs Compared to Increase in Price (LCC and PBP) EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of the covered equipment in the type (or class) compared to any increase in the price of, or in the initial charges for, or maintenance expenses of, the covered product that are likely to result from a standard. (42 U.S.C. 6313(a)(6)(B)(ii)(II)) DOE conducts this comparison in its LCC and PBP analysis. The LCC is the sum of the purchase price of [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2015-33067. Public record. Not legal advice.