[Federal Register Volume 75, Number 45 (Tuesday, March 9, 2010)]
[Rules and Regulations]
[Pages 10874-10948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4358]



[[Page 10873]]

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Part II





Department of Energy





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10 CFR Part 431



Energy Conservation Program: Energy Conservation Standards for Small 
Electric Motors; Final Rule

Federal Register / Vol. 75, No. 45 / Tuesday, March 9, 2010 / Rules 
and Regulations

[[Page 10874]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket Number EERE-2007-BT-STD-0007]
RIN 1904-AB70


Energy Conservation Program: Energy Conservation Standards for 
Small Electric Motors

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

ACTION: Final rule.

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SUMMARY: The U.S. Department of Energy (DOE) is adopting energy 
conservation standards for small electric motors. DOE has determined 
that these standards will result in significant conservation of energy, 
and are technologically feasible and economically justified.

DATES: Effective Date: The effective date of this rule is April 8, 
2010. The standards established in today's final rule will be 
applicable starting March 9, 2015.

ADDRESSES: For access to the docket to read background documents, the 
technical support document, transcripts of the public meetings in this 
proceeding, or comments received, visit the U.S. Department of Energy, 
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, 
SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. 
and 4 p.m., Monday through Friday, except Federal holidays. Please call 
Ms. Brenda Edwards at the above telephone number for additional 
information regarding visiting the Resource Room. (Note: DOE's Freedom 
of Information Reading Room no longer houses rulemaking materials.) You 
may also obtain copies of certain previous rulemaking documents in this 
proceeding (i.e., framework document, notice of public meeting and 
availability of preliminary technical support document, notice of 
proposed rulemaking, draft analyses, public meeting materials, and 
related test procedure documents from the Office of Energy Efficiency 
and Renewable Energy's Web site at http://www.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html).

FOR FURTHER INFORMATION CONTACT: Mr. James Raba, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Program, EE-2J, 1000 Independence Avenue, SW., Washington, 
DC 20585-0121, (202) 586-8654, e-mail: <a href="/cdn-cgi/l/email-protection#cf85a6a2e19daeadae8faaaae1aba0aae1a8a0b9"><span class="__cf_email__" data-cfemail="0a40636724586b686b4a6f6f246e656f246d657c">[email protected]</span></a>.
    Mr. Michael Kido, U.S. Department of Energy, Office of General 
Counsel, GC-72, 1000 Independence Avenue, SW., Washington, DC 20585, 
(202) 586-8145, e-mail: <a href="/cdn-cgi/l/email-protection#b3fedad0dbd2d6df9df8dad7dcf3dbc29dd7dcd69dd4dcc5"><span class="__cf_email__" data-cfemail="f4b99d979c959198dabf9d909bb49c85da909b91da939b82">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits
    A. Energy Conservation Standards Levels
    B. Benefits and Burdens to Customers of Small Electric Motors
    C. Impact on Manufacturers
    D. National Benefits
    E. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. Current Energy Conservation Standards
    2. History of Standards Rulemaking for Small Electric Motors
III. General Discussion
    A. Test Procedures
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    D. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Motor Customers and Manufacturers
    b. Life-Cycle Costs
    c. Energy Savings
    d. Lessening of Utility or Performance of Equipment
    e. Impact of Any Lessening of Competition
    f. Need of the Nation to Conserve Energy
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Comments on Methodology
    A. Market and Technology Assessment
    1. Definition of Small Electric Motor
    a. Motor Categories
    b. Horsepower Ratings
    c. Performance Requirements
    d. Motor Enclosures
    e. Frame Sizes
    f. Insulation Class Systems
    g. Service Factors
    h. Metric Equivalents and Non-Standard Horsepower and Kilowatt 
Ratings
    i. Summary
    2. Product Classes
    B. Screening Analysis
    C. Engineering Analysis
    1. Product Classes Analyzed
    2. Baseline Models
    a. Baseline Efficiencies
    b. Baseline Temperature Rise
    c. Baseline Motor Performance
    3. Higher Efficiency Motor Designs
    a. Electrical Steel
    b. Thermal Analysis
    c. Performance Requirements
    d. Stray Load Loss
    e. Stack Length and Core Diameter
    4. Cost Model
    5. Efficiency Scaling
    6. Cost-Efficiency Results
    D. Markups to Determine Equipment Price
    E. Energy Use Characterization
    1. Applications
    2. Annual Hours of Operation and Motor Loading
    F. Life-Cycle Cost and Payback Period Analysis
    1. Installation Cost
    2. Energy Prices
    3. Energy Price Trend
    4. Maintenance and Repair Costs
    5. Equipment Lifetime
    6. Discount Rates
    7. Space-Constrained Applications and the After-Market
    8. Standard Compliance Date
    G. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    1. General
    2. Shipments
    3. Space Constraints
    4. Base-Case and Standards-Case Efficiency Distributions
    5. Annual Energy Consumption per Unit
    H. Customer Sub-Group Analysis
    I. Manufacturer Impact Analysis
    1. Capital Conversion and Equipment Conversion Costs
    2. Manufacturer Selling Prices
    3. Markup Scenarios
    4. Premium Electrical Steels
    J. Employment Impact Analysis
    K. Utility Impact Analysis
    L. Environmental Assessment
    M. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    c. Approach and Key Assumptions
    2. Monetary Values of Non-Carbon Emissions
V. Discussion of Other Comments
    A. Trial Standard Levels
    B. Enforcement
    C. Nominal Full-Load Efficiency
VI. Analytical Results and Conclusions
    A. Trial Standard Levels
    B. Significance of Energy Savings
    C. Economic Justification
    1. Economic Impact on Motor Customers
    a. Life-Cycle Costs and Payback Period
    b. Life-Cycle Cost Sensitivity Calculations
    c. Customer Subgroup Analysis
    d. Rebuttable Presumption Payback
    2. Economic Impact 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 Net Present Value and Net National 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
    D. Conclusion
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988

[[Page 10875]]

    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

 A. Energy Conservation Standards Levels

    The Energy Policy and Conservation Act, as amended (42 U.S.C. 6291 
et seq.; EPCA or the Act), directs the U.S. Department of Energy (DOE) 
to adopt energy conservation standards for those small electric motors 
for which standards would be technologically feasible and economically 
justified, and would result in significant energy savings (42 U.S.C. 
6317(b)(1)-(2)). The standards in today's final rule satisfy these 
requirements and will achieve the maximum improvements in energy 
efficiency that are technologically feasible and economically 
justified. Table I.1 and Table I.2 show these standard levels, which 
will apply to all small electric motors manufactured for sale in the 
United States, or imported into the United States, starting five years 
after publication of this final rule.

                          Table I.1--Standard Levels for Polyphase Small Electric Motor
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                    Motor output power                          Six poles        Four poles         Two poles
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0.25 Hp/0.18 kW...........................................              67.5              69.5              65.6
0.33 Hp/0.25 kW...........................................              71.4              73.4              69.5
0.5 Hp/0.37 kW............................................              75.3              78.2              73.4
0.75 Hp/0.55 kW...........................................              81.7              81.1              76.8
1 Hp/0.75 kW..............................................              82.5              83.5              77.0
1.5 Hp/1.1 kW.............................................              83.8              86.5              84.0
2 Hp/1.5 kW...............................................               N/A              86.5              85.5
3 Hp/2.2 kW...............................................               N/A              86.9             85.5
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* Standard levels are expressed in terms of average full-load efficiency.
** These efficiencies correspond to a modified Trial Standard Level 4b for polyphase motors. For horsepower/pole
  configurations with efficiency standards higher than the for general purpose electric motors (subtype I), DOE
  reduced the standard level to align with regulations in 10 CFR 431.25. See section VI for further discussion.


  Table I.2--Standard Levels for Capacitor-Start Induction-Run and Capacitor-Start Capacitor-Run Small Electric
                                                     Motors
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                    Motor output power                          Six poles        Four poles         Two poles
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0.25 Hp/0.18 kW...........................................              62.2              68.5              66.6
0.33 Hp/0.25 kW...........................................              66.6              72.4              70.5
0.5 Hp/0.37 kW............................................              76.2              76.2              72.4
0.75 Hp/0.55 kW...........................................              80.2              81.8              76.2
1 Hp/0.75 kW..............................................              81.1              82.6              80.4
1.5 Hp/1.1 kW.............................................               N/A              83.8              81.5
2 Hp/1.5 kW...............................................               N/A              84.5              82.9
3 Hp/2.2 kW...............................................               N/A               N/A             84.1
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* Standard levels are expressed in terms of full-load efficiency.
** These efficiencies correspond to a modified Trial Standard Level 7 for capacitor-start motors. DOE reduced
  efficiency standards for capacitor-start induction run motors such that they harmonize with adopted capacitor-
  start capacitor-run motor efficiency standards. See section VI for further discussion.

 B. Benefits and Burdens to Customers of Small Electric Motors

    Table I.3 presents the implications of today's standards for 
consumers of small electric motors. The economic impacts of the 
standards on consumers as measured by the average life-cycle cost (LCC) 
savings are positive, even though the standards may increase some 
initial costs. For example, a typical polyphase motor has an average 
installed price of $517 and average lifetime operating costs 
(discounted) of $751. To meet the amended standards, DOE estimates that 
the average installed price of such equipment will increase by $72, 
which will be more than offset by savings of $100 in average lifetime 
operating costs (discounted).

                          Table I.3--Implications of Standards for Commercial Consumers
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                                                                      Average
                                      Energy          Average        installed     Average life-  Median payback
         Equipment class           conservation      installed    price increase    cycle cost     period years
                                    standard %       price* $            %           savings $
----------------------------------------------------------------------------------------------------------------
Polyphase, 1-horsepower, 4-pole.            83.5             589              72              28             7.8
Capacitor-start induction-run,              76.2             996             502            -369            12.4
 \1/2\-horsepower, 4-pole.......
Capacitor-start capacitor-run,              81.8             599              51              24            5.9
 \3/4\-horsepower, 4-pole.......
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* For a baseline model.


[[Page 10876]]

 C. Impact on Manufacturers

    Using a real corporate discount rate of 9.7 percent, which DOE 
calculated by examining the financial statements of motor 
manufacturers, DOE estimates the industry net present value (INPV) of 
the small electric motor manufacturing industry to be $70 million for 
polyphase small electric motors and $279 million for capacitor-start, 
or single-phase motors (both figures in 2009$). DOE expects the impact 
of the standards on the INPV of manufacturers of small electric motors 
to range from a increase of 4.8 percent to a loss of 7.8 percent (an 
increase of $3.4 million to a loss of $5.4 million) for polyphase 
motors and an increase of 6.6 percent to a loss of 12.2 percent (an 
increase of $32.2 million to a loss of $42.2 million) for single-phase 
motors. Based on DOE's interviews with the major manufacturers of small 
electric motors, DOE expects minimal plant closings or loss of 
employment as a result of the standards.

 D. National Benefits

    The standards will provide significant benefits to the Nation. DOE 
estimates the standards will save approximately 2.2 quads (quadrillion 
(10\15\) British thermal units (BTU)) of energy over 30 years (2015-
2045). This is equivalent to about 2.2% of total annual U.S. energy 
consumption.
    By 2045, DOE expects the energy savings from the standards to 
eliminate the need for approximately eight new 250-megawatt (MW) power 
plants. These energy savings will result in cumulative greenhouse gas 
emission reductions of approximately 112 million tons (Mt) of carbon 
dioxide (CO<INF>2</INF>), or an amount equal to that produced by 
approximately 25 million new cars in a year. Additionally, the 
standards will help alleviate air pollution by resulting in 
approximately 81 thousand tons (kt) of nitrogen oxides (NO<INF>X</INF>) 
emission reductions and approximately 0.49 ton of cumulative mercury 
(Hg) emission reductions from 2015 through 2045. The estimated net 
present monetary value of these emissions reductions is between $385 
and $6,081 million for CO<INF>2</INF>, (expressed in 2009$). The 
estimated net present monetary values of these emissions reductions are 
between $13.2 and $63.4 million for NO<INF>X</INF> (expressed in 2009$) 
and $0.12 and $5.14 million for Hg (expressed in 2009$) at a 7-percent 
discount rate (discounted to 2010). At a 3 percent discount rate, the 
estimated net present values of these emissions reductions are between 
$17.1 and $175.5 million (2009$) for NO<INF>X</INF> and $0.22 and $9.66 
million (2009$) for Hg.
    The national NPV of the standards is $5.3 billion using a seven-
percent discount rate and $12.5 billion using a three-percent discount 
rate, cumulative from 2015 to 2045 in 2009$. This is the estimated 
total value of future savings minus the estimated increased equipment 
costs, discounted to the year 2009.
    The benefits and costs of today's rule can also be expressed in 
terms of annualized (2009$) values from 2015-2045. Estimates of 
annualized values are shown in Table I.4. The annualized monetary 
values are the sum of the annualized national economic value of 
operating savings benefits (energy, maintenance and repair), expressed 
in 2009$, plus the monetary value of the benefits of CO<INF>2</INF> 
emission reductions, otherwise known as the Social Cost of Carbon 
(SCC), calculated using the average value derived using a 3% discount 
rate (equivalent to $21.40 per metric ton of CO<INF>2</INF> emitted in 
2010, in 2007$). This value is a central value from a recent 
interagency process. The monetary benefits of cumulative emissions 
reductions are reported in 2009$ so that they can be compared with the 
other costs and benefits in the same dollar units. The derivation of 
this value is discussed in section IV.M. Although comparing the value 
of operating savings to the value of CO<INF>2</INF> reductions provides 
a valuable perspective, please note the following: (1) The national 
operating savings are domestic U.S. consumer monetary savings found in 
market transactions while the value of CO<INF>2</INF> reductions is 
based on a global value. Also, note that the central value is only one 
of four SCC developed by the interagency workgroup. Other marginal SCC 
values for 2010 are $4.70, $35.10, and $64.90 per metric ton (2007$ for 
emissions in 2010), which reflect different discount rates and, for the 
highest value, the possibility of higher-than-expected impacts further 
out in the tails of the SCC distribution. (2) The assessments of 
operating savings and CO<INF>2</INF> savings are performed with 
different computer models, leading to different time frames for 
analysis. The national operating cost savings is measured for the 
lifetime of small electric motors shipped in the 31-year period 2015-
2045. The value of CO<INF>2</INF>, on the other hand, reflects the 
present value of all future climate related impacts due to emitting a 
ton of carbon dioxide in that year, out to 2300.
    Using a 7-percent discount rate for the annualized cost analysis, 
the combined cost of the standards proposed in today's proposed rule 
for small electric motors is $263.9 million per year in increased 
equipment and installation costs, while the annualized benefits are 
$855.1 million per year in reduced equipment operating costs, $115.6 
million in CO<INF>2</INF> reductions, $3.89 million in reduced 
NO<INF>X</INF> emissions, and $0.30 million in reduced Hg emissions, 
for a net benefit of $711.0 million per year. Using a 3-percent 
discount rate, the cost of the standards proposed in today's rule is 
$263.7 million per year in increased equipment and installation costs, 
while the benefits of today's standards are $989.5 million per year in 
reduced operating costs, $115.6 million in CO<INF>2</INF> reductions, 
$5.58 million in reduced NO<INF>X</INF> emissions, and $0.29 million in 
reduced Hg emissions, for a net benefit of $847.3 million per year.

                                           Table I.4--Annualized Benefits and Costs for Small Electric Motors
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                                                                                                                             Units
            Category             Primary estimate (AEO    Low estimate (low     High estimate (high  ---------------------------------------------------
                                    reference case)       energy price case)     energy price case)    Year dollars       Disc. rate      Period covered
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                                                                        Benefits
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Energy Annualized Monetized      855.1................  831.8................  870.3................            2009  7%................              31
 (millions$/year).               989.5................  964.8................  1000.5...............            2009  3%................              31
Annualized Quantified..........  2.29 CO2 (Mt)........  2.29 CO2 (Mt)........  2.29 CO2 (Mt)........              NA  7%................              31
                                 1.55 NOX (kt)........  1.55 NOX (kt)........  1.55 NOX (kt)........              NA  7%................              31
                                 0.017 Hg (t).........  0.017 Hg (t).........  0.017 Hg (t).........              NA  7%................              31
                                 3.13 CO2 (Mt)........  3.13 CO2 (Mt)........  3.13 CO2 (Mt)........              NA  3%................              31
                                 2.22 NOX (kt)........  2.22 NOX (kt)........  2.22 NOX (kt)........              NA  3%................              31
                                 0.017 Hg (t).........  0.017 Hg (t).........  0.017 Hg (t).........              NA  3%................              31

[[Page 10877]]

 
CO2 Monetized Value (at $4.7/    31.5.................  31.5.................  31.5.................            2009  5%................              31
 Metric Ton, millions$/year)*.
CO2 Monetized Value (at $21.4/   115.6................  115.6................  115.6................            2009  3%................              31
 Metric Ton, millions$/year)*.
CO2 Monetized Value (at $35.1/   179.2................  179.2................  179.2................            2009  2.5%..............              31
 Metric Ton, millions$/year)*.
CO2 Monetized Value (at $64.9/   352.5................  352.5................  352.5................            2009  3%................              31
 Metric Ton, millions$/year)*.
NOX Monetized Value (at $2,437/  3.89.................  3.89.................  3.89.................            2009  7%................              31
 Metric Ton, millions$/year).    5.58.................  5.58.................  5.58.................            2009  3%................              31
Hg Monetized Value (at $17       0.3..................  0.3..................  0.3..................            2009  7%................              31
 million/Metric Ton, millions$/  0.29.................  0.29.................  0.29.................            2009  3%................              31
 year).
Total Monetary Benefits          890.8-1211.8.........  867.5-1188.5.........  906.0-1227.0.........            2009  7% Range..........              31
 (millions$/year)**.             974.9................  951.6................  990.1................            2009  7%................              31
                                 1111.0...............  1086.3...............  1121.9...............            2009  3%................              31
                                 1026.9-1347.9........  1002.2-1323.2........  1037.8-1358.8........            2009  3% Range..........              31
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                                                                          Costs
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Annualized Monetized (millions$/ 263.9................  263.9................  263.9................            2009  7%................              31
 year).
                                 263.7................  263.7................  263.7................            2009  3%................              31
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                                                                   Net Benefits/Costs
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Annualized Monetized, including  626.9-947.9..........  603.6-924.6..........  642.1-963.1..........            2009  7% Range..........              31
 CO2 Benefits (million$/year)**. 711.0................  687.7................  726.2................            2009  7%................              31
                                 847.3................  822.6................  858.3................            2009  3%................              31
                                 763.2-1084.3.........  738.5-1059.6.........  774.2-1095.2.........            2009  3% Range..........             31
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* These values represent global values (in 2007$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.7, $21.4, and
  $35.1 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $64.9 per ton
  represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. See section IV.M for details.
** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO2 emissions calculated at a 3% discount rate
  (averaged across three IAMs), which is equal to $21.4/ton in 2010 (in 2007$). The rows labeled as ``7% Range'' and ``3% Range'' calculate consumer,
  Hg, and NOX cases with the labeled discount rate but add these values to the full range of CO2 values with the $4.7/ton value at the low end, and the
  $64.9/ton value at the high end.

E. Conclusion

    DOE has concluded that the benefits (energy savings, consumer LCC 
savings, national NPV increases, and emissions reductions) to the 
Nation of today's standards for small electric motors outweigh their 
costs (loss of manufacturer INPV and consumer LCC increases for some 
users of small electric motors). DOE has also concluded that these 
standards are technologically feasible and economically justified, and 
will result in significant energy savings. Small electric motors that 
are commercially available or working prototypes use or have used the 
technologies needed to meet the new standard levels.

II. Introduction

A. Authority

    Title III of EPCA sets forth a variety of provisions designed to 
improve energy efficiency. Part A of Title III (42 U.S.C. 6291-6309) 
provides for the Energy Conservation Program for Consumer Products 
Other than Automobiles. Part A-1 of Title III (42 U.S.C. 6311-6317) 
establishes a similar program for ``Certain Industrial Equipment,'' 
which includes small electric motors, the subject of this 
rulemaking.\1\ DOE publishes today's final rule pursuant to Part A-1 of 
Title III, which provides for test procedures, labeling, and energy 
conservation standards for small electric motors and certain other 
equipment, and authorizes DOE to require information and reports from 
manufacturers. The test procedures DOE recently adopted for small 
electric motors, 74 FR 32059 (July 7, 2009), appear at Title 10, Code 
of Federal Regulations (CFR), sections 431.443, 431.444, and 431.445.
---------------------------------------------------------------------------

    \1\ These two parts were titled Parts B and C in EPCA, but were 
codified as Parts A and A-1 in the United States Code for editorial 
reasons.
---------------------------------------------------------------------------

    The Act defines ``small electric motor'' as follows:

    [A] NEMA [National Electrical Manufacturers Association] general 
purpose alternating current single-speed induction motor, built in a 
two-digit frame number series in accordance with NEMA Standards 
Publication MG1-1987.

(42 U.S.C. 6311(13)(G)) EPCA requires DOE to prescribe energy 
conservation standards for those small electric motors for which DOE: 
(1) Has determined that standards would be technologically feasible and 
economically justified and would result in significant energy savings, 
and (2) has prescribed test procedures. (42 U.S.C. 6317(b)) However, 
pursuant to section 346(b)(3) of EPCA (42 U.S.C. 6317(b)(3)), no 
standard prescribed for small electric motors shall apply to any such 
motor that is a component of a covered product under section 322(a) of 
EPCA (42 U.S.C. 6292(a)), or of covered equipment under section 340 (42 
U.S.C. 6311).
    Additionally, EPCA requires DOE, in establishing standards for 
small electric motors, to consider whether the standards themselves 
will result in a significant conservation of energy, are 
technologically feasible, and are cost effective as described in 42 
U.S.C. 6295(o)(2)(B)(i). (42 U.S.C. 6316(a)) These criteria, along with 
requirements that any standards be economically justified, are largely 
incorporated into

[[Page 10878]]

42 U.S.C. 6295(o), which sets forth the criteria for prescribing 
standards for ``covered products,'' i.e., consumer products as defined 
in EPCA. (42 U.S.C. 6291(1) and (2)) Under 42 U.S.C. 6316(a), portions 
of 42 U.S.C. 6295, including subsection (o), also apply when DOE 
promulgates standards for certain specified commercial and industrial 
equipment--``covered equipment'' as defined in EPCA (42 U.S.C. 
6311(1))--including small electric motors. (EPCA states that the term 
``equipment'' shall be substituted for ``product'' in applying the 
consumer product-related provisions of EPCA to commercial and 
industrial equipment. (42 U.S.C. 6316(a)(3))
    Therefore, as indicated above, DOE analyzed whether today's 
standards for small electric motors will achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) Additionally, DOE 
examined whether each of today's standards for this equipment is 
economically justified, after receiving comments on the proposed 
standards, by determining whether the benefits of the standard exceed 
its burdens by considering, to the greatest extent practicable, the 
following seven factors that are set forth in 42 U.S.C. 
6295(o)(2)(B)(i):
    1. The economic impact of the standard on manufacturers and 
consumers of the equipment subject to the standard;
    2. 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, initial charges, or maintenance expenses for the 
covered equipment that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy savings likely to result 
directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the covered 
equipment likely to result from the imposition of 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 
imposition of the standard;
    6. The need for national energy conservation; and
    7. Other factors the Secretary [of Energy] considers relevant.
    In developing today's energy conservation standards, DOE also has 
applied certain other provisions of 42 U.S.C. 6295 as it is required to 
do. First, DOE would not prescribe a standard for small electric motors 
if interested persons established by a preponderance of the evidence 
that the standard is likely to result in the unavailability in the 
United States of any type (or class) of this product with performance 
characteristics, features, sizes, capacities, and volume that are 
substantially the same as those generally available in the United 
States. (42 U.S.C. 6295(o)(4))
    Second, DOE has applied 42 U.S.C. 6295(o)(2)(B)(iii), which 
establishes a rebuttable presumption that a standard is economically 
justified if the Secretary finds that ``the additional cost to the 
consumer of purchasing a product complying with an energy conservation 
standard level will be less than three times the value of the energy * 
* * savings during the first year that the consumer will receive as a 
result of the standard, as calculated under the applicable test 
procedure.''
    Third, in setting standards for a type or class of equipment that 
has two or more subcategories, DOE specifies a different standard level 
than that which applies generally to such type or class of equipment 
``for any group of covered products which have the same function or 
intended use, if * * * products within such group--(A) consume a 
different kind of energy from that consumed by other covered products 
within such type (or class); or (B) have a capacity or other 
performance-related feature which other products within such type (or 
class) do not have and such feature justifies a higher or lower 
standard'' than applies or will apply to the other products. (42 U.S.C. 
6295(q)(1)) In determining whether a performance-related feature 
justifies such a different standard for a group of products, DOE 
considers such factors as the utility to the consumer of such a feature 
and other factors DOE deems appropriate. Any rule prescribing such a 
standard must include an explanation of the basis on which DOE 
establishes such higher or lower level. (42 U.S.C. 6295(q)(2))
    Federal energy efficiency requirements for equipment covered under 
EPCA generally supersede State laws or regulations concerning energy 
conservation testing, labeling, and standards. (42 U.S.C. 6297(a)-(c) 
and 42 U.S.C. 6316(a)) DOE can, however, grant waivers of preemption 
for particular State laws or regulations, in accordance with the 
procedures and other provisions of section 327(d) of the Act. (42 
U.S.C. 6297(d) and 42 U.S.C. 6316(a))

B. Background

1. Current Energy Conservation Standards
    As indicated above, at present there are no national energy 
conservation standards for small electric motors.
2. History of Standards Rulemaking for Small Electric Motors
    To determine the small electric motors for which energy 
conservation standards would be technologically feasible and 
economically justified, and would result in significant energy savings, 
DOE first concluded that the EPCA definition of ``small electric 
motor'' covers only those motors that meet the definition's frame-size 
requirements, and that are either three-phase, non-servo motors 
(referred to below as polyphase motors) or single-phase, capacitor-
start motors, including both capacitor-start, induction run (CSIR) and 
capacitor-start, capacitor-run (CSCR) motors. 71 FR 38799, 38800-01 
(July 10, 2006). In June 2006, DOE issued a report in which it analyzed 
and estimated the likely range of energy savings and economic benefits 
that would result from standards for these motors.\2\ The report did 
not address motors that are a component of a covered product or 
equipment, consistent with 42 U.S.C. 6317. After receiving comments on 
the report, DOE performed further analysis to determine whether 
standards are warranted for small electric motors and then issued the 
following determination on June 27, 2006:
---------------------------------------------------------------------------

    \2\ http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/small_motors_tsd.pdf.

    Based on its analysis of the information now available, the 
Department [of Energy] has determined that energy conservation 
standards for certain small electric motors appear to be 
technologically feasible and economically justified, and are likely 
to result in significant energy savings. Consequently, the 
Department [of Energy] will initiate the development of energy 
efficiency test procedures and standards for certain small electric 
---------------------------------------------------------------------------
motors. 71 FR 38807.

    Thereafter, in 2007, DOE initiated this rulemaking by issuing and 
seeking public comment on the ``Energy Conservation Standards 
Rulemaking Framework Document for Small Electric Motors,'' which 
described the approaches DOE anticipated using to develop energy 
conservation standards for small electric motors and the issues to be 
resolved in the rulemaking. See 72 FR 44990 (August 10, 2007). This 
document is also available on the aforementioned DOE Web site. On 
September 13, 2007, DOE held a public

[[Page 10879]]

meeting to present the contents of the framework document, describe the 
analyses DOE planned to conduct during the rulemaking, obtain public 
comment on these subjects, and facilitate the public's involvement in 
the rulemaking. Manufacturers, trade associations, electric utilities, 
environmental advocates, regulators, and other interested parties 
provided comments at this meeting, and submitted written comments, on 
the Framework Document. They addressed a range of issues.
    On December 19, 2008, after having considered these comments, 
gathering additional information, and performing preliminary analyses 
as to standards for small electric motors, DOE announced an informal 
public meeting and the availability on its Web site of a preliminary 
technical support document (preliminary TSD). 73 FR 79723 (December 30, 
2008). The preliminary TSD discussed the comments DOE had received in 
this rulemaking and described the actions DOE had taken, the analytical 
framework DOE was using, and the content and results of DOE's 
preliminary analyses. Id. at 79724-25. DOE's preliminary analyses were 
largely based on comments received from industry; including those 
focusing on what constitutes small electric motors and corresponding 
shipment estimates. DOE convened the public meeting to discuss, and 
receive comments on, these subjects, DOE's proposed product classes, 
potential standard levels that DOE might consider, and other issues 
participants believed were relevant to the rulemaking. Id. at 79723, 
79725. DOE also invited written comments on all of these matters. The 
public meeting took place on January 30, 2009. Eighteen interested 
parties participated, and ten submitted written comments during the 
comment period.
    On November 24, 2009, DOE published a notice of proposed rulemaking 
(NOPR) to establish small electric motor energy conservation standards. 
74 FR 61410. Shortly after, DOE also published on its Web site the 
complete technical support document (TSD) for the proposed rule, which 
incorporated the completed analyses DOE conducted and technical 
documentation for each analysis. These analyses were developed using, 
in part, NEMA-supplied data. The TSD included the LCC spreadsheet, the 
national impact analysis spreadsheet, and the manufacturer impact 
analysis (MIA) spreadsheet--all of which are available at http://www.eere.energy.gov/buildings/appliance_standards/commercial/small_electric_motors.html. The energy efficiency standards DOE proposed in 
the NOPR were as follows:

                    Table II.1--Proposed Standard Levels for Polyphase Small Electric Motors
----------------------------------------------------------------------------------------------------------------
                    Motor output power                          Six poles        Four poles         Two poles
----------------------------------------------------------------------------------------------------------------
0.25 Hp/0.18 kW...........................................              77.4              72.7              69.8
0.33 Hp/0.25 kW...........................................              79.1              75.6              73.7
0.5 Hp/0.37 kW............................................              81.1              80.1              76.0
0.75 Hp/0.55 kW...........................................              84.0              83.5              81.6
1 Hp/0.75 kW..............................................              84.2              85.2              83.6
1.5 Hp/1.1 kW.............................................              85.2              87.1              86.6
2 Hp/1.5 kW...............................................              89.2              88.0              88.2
>= 3 Hp/2.2 kW............................................              90.8              90.0              90.5
----------------------------------------------------------------------------------------------------------------
* Standard levels are expressed in terms of full-load efficiency.
** These efficiencies corresponded to NOPR Trial Standard Level 5 for polyphase motors.


          Table II.2--Proposed Standard Levels for Capacitor-Start Induction-Run Small Electric Motors
----------------------------------------------------------------------------------------------------------------
                    Motor output power                          Six poles        Four poles         Two poles
----------------------------------------------------------------------------------------------------------------
0.25 Hp/0.18 kW...........................................              65.4              69.8              71.4
0.33 Hp/0.25 kW...........................................              70.7              72.8              74.2
0.5 Hp/0.37 kW............................................              77.0              77.0              76.3
0.75 Hp/0.55 kW...........................................              81.0              80.9              78.1
1 Hp/0.75 kW..............................................              84.1              82.8              80.0
1.5 Hp/1.1 kW.............................................              87.7              85.5              82.2
2 Hp/1.5 kW...............................................              89.8              86.5              85.0
>= 3 Hp/2.2 kW............................................              92.2              88.9              85.6
----------------------------------------------------------------------------------------------------------------
* Standard levels are expressed in terms of full-load efficiency.
** These efficiencies corresponded to NOPR Trial Standard Level 7 for capacitor-start motors.


          Table II.3--Proposed Standard Levels for Capacitor-Start Capacitor-Run Small Electric Motors
----------------------------------------------------------------------------------------------------------------
                    Motor output power                          Six poles        Four poles         Two poles
----------------------------------------------------------------------------------------------------------------
0.25 Hp/0.18 kW...........................................              63.9              68.3              70.0
0.33 Hp/0.25 kW...........................................              69.2              71.6              72.9
0.5 Hp/0.37 kW............................................              75.8              76.0              75.1
0.75 Hp/0.55 kW...........................................              79.9              80.3              77.0
1 Hp/0.75 kW..............................................              83.2              82.0              79.0
1.5 Hp/1.1 kW.............................................              87.0              84.9              81.4
2 Hp/1.5 kW...............................................              89.1              86.1              84.2
>= 3 Hp/2.2 kW............................................              91.7              88.5              84.9
----------------------------------------------------------------------------------------------------------------
* Standard levels are expressed in terms of full-load efficiency.
** These efficiencies corresponded to NOPR Trial Standard Level 7 for capacitor-start motors.


[[Page 10880]]

    In the NOPR, DOE also identified issues on which it was 
particularly interested in receiving the comments and views of 
interested parties. DOE requested comment on the proposed energy 
efficiency levels for polyphase and single-phase motors, product 
classes, covered insulation class systems, its selection of baseline 
models, markups used in the engineering analysis, design option and 
limitations used in the engineering analysis, the approach to scaling 
the results of the engineering analysis, the proposed definition of 
nominal efficiency, the manufacturer impact analysis scenarios, capital 
investment costs used, market interaction between CSIR and CSCR motors, 
market response to standards, behavior of customers with space 
constraints, the combined effect of certain market assumptions, the 
appropriateness of other discount rates besides seven and three percent 
to discount future emissions, and the anticipated environmental 
impacts. The NOPR also included additional background information on 
the history of this rulemaking. 74 FR 61416-17.
    DOE held a public meeting in Washington, DC on December 17, 2009, 
to hear oral comments on, and solicit information relevant to, the 
proposed rule. DOE has also received written comments and information 
in response to the NOPR.

III. General Discussion

A. Test Procedures

    On July 7, 2009, DOE published a final rule that incorporated by 
reference Institute of Electrical and Electronics Engineers, Inc. 
(IEEE) Standard 112-2004 (Test Method A and Test Method B), IEEE 
Standard 114-2001, and Canadian Standards Association Standard C747-94 
as the DOE test procedures to measure energy efficiency small electric 
motors. 74 FR 32059.
    In addition to incorporating by reference the above industry 
standard test procedures, the small electric motors test procedure 
final rule also codified the statutory definition for the term ``small 
electric motor;'' clarified the definition of the term ``basic model''; 
and the relationship of the term to certain product classes and 
compliance certification reporting requirements; and codified the 
ability of manufacturers to use an alternative efficiency determination 
method (AEDM) to reduce testing burden when certifying their equipment 
as compliant but maintaining efficiency measurement accuracy and 
ensuring compliance with potential future energy conservation 
standards. The test procedure notice also discussed matters of 
laboratory accreditation, compliance certification, and enforcement of 
energy conservation standards for small electric motors.
    DOE notes that complete certification and enforcement provisions 
for small electric motors have not yet been developed. DOE intends to 
propose such provisions in a separate test procedure supplementary 
NOPR, at which time DOE will invite comments on how small electric 
motor efficiency standards can be effectively enforced. Section V.B of 
this final rule summarizes comments received in response to the NOPR 
that will be further addressed in the test procedure supplemental NOPR.

B. Technological Feasibility

1. General
    As stated above, any standards that DOE establishes for small 
electric motors must be technologically feasible. (42 U.S.C. 
6295(o)(2)(A); 42 U.S.C. 6316(a)) DOE considers a design option to be 
technologically feasible if it is in use by the respective industry or 
if research has progressed to the development of a working prototype. 
``Technologies incorporated in commercially available equipment or in 
working prototypes will be considered technologically feasible.'' 10 
CFR part 430, subpart C, appendix A, section 4(a)(4)(i). This final 
rule considers the same design options as those evaluated in the NOPR. 
(See chapter 5 of the TSD.) All the evaluated technologies have been 
used (or are being used) in commercially available products or working 
prototypes. Therefore, DOE has determined that all of the efficiency 
levels evaluated in this notice are technologically feasible.
2. Maximum Technologically Feasible Levels
    As required by EPCA, (42 U.S.C. 6295(p)(1) and 42 U.S.C. 6316(a)), 
in developing the NOPR, DOE identified the efficiency levels that would 
achieve the maximum improvements in energy efficiency that are 
technologically feasible (max-tech levels) for small electric motors. 
74 FR 61418. Table III.1 lists the max-tech levels that DOE determined 
for this rulemaking. DOE identified these levels as part of the 
engineering analysis (chapter 5 of the TSD), using the most efficient 
design parameters that lead to the highest full-load efficiencies for 
small electric motors.

                  Table III.1--Max-Tech Efficiency Levels for Representative Product Classes *
----------------------------------------------------------------------------------------------------------------
                    Motor category                            Poles            Horsepower         Efficiency %
----------------------------------------------------------------------------------------------------------------
Polyphase.............................................                  4                1                  87.7
CSIR..................................................                  4                0.5                77.6
CSCR..................................................                  4                0.75               87.5
----------------------------------------------------------------------------------------------------------------
* These max-tech efficiency levels are only for the representative product classes described in section IV.C.2.
  Max-tech efficiency levels for the remaining product classes are determined using the scaling methodology
  outlined in section IV.C.5.

    DOE developed maximum technologically feasible efficiencies by 
creating motor designs for each product class analyzed, which use all 
the viable design options that DOE considered. The efficiency levels 
shown in Table III.1 correspond to designs that use a maximum increase 
in stack length, a copper rotor design, a premium electrical steel 
(Hiperco 50), a maximum slot-fill percentage (65-percent), a change in 
run-capacitor rating (CSCR motors only), and an optimized end ring 
design. All of the design options used to create these max-tech motors 
remain in the analysis and are options that DOE considers 
technologically feasible.

C. Energy Savings

    DOE forecasted energy savings in its national energy savings (NES) 
analysis, through the use of an NES spreadsheet tool, as discussed in 
the NOPR. 74 FR 61418, 61440-42, 61470-72.
    One of the criteria that govern DOE's adoption of standards for 
small electric motors is that the standard must result in 
``significant'' energy savings. (42 U.S.C. 6317(b)) While the term 
``significant'' is not defined by EPCA, a D.C. Circuit indicated that 
Congress intended ``significant'' energy savings to be savings that 
were not ``genuinely

[[Page 10881]]

trivial.'' Natural Resources Defense Council v. Herrington, 768 F.2d 
1355, 1373 (D.C. Cir. 1985) The energy savings for the standard levels 
DOE is adopting today are non-trivial, and therefore DOE considers them 
``significant'' as required by 42 U.S.C. 6317.

D. Economic Justification

1. Specific Criteria
    The following section discusses how DOE has addressed each of the 
seven factors that it uses to determine if energy conservation 
standards are economically justified.
a. Economic Impact on Motor Customers and Manufacturers
    DOE considered the economic impact of today's new standards on 
purchasers and manufacturers of small electric motors. For purchasers 
of small electric motors, DOE measured the economic impact as the 
change in installed cost and life-cycle operating costs, i.e., the LCC. 
(See section IV.F of this preamble, and chapter 12 of the TSD.) DOE 
investigated the impacts on manufacturers through the manufacturer 
impact analysis (MIA). (See sections IV.I and VI.C.2 of this preamble 
and chapter 13 of the TSD.) The economic impact on purchasers and 
manufacturers is discussed in detail in the NOPR. 74 FR 61418-19, 
61436-40, 61442-46, and 61454-70.
b. Life-Cycle Costs
    DOE considered life-cycle costs of small electric motors, as 
discussed in the NOPR. 74 FR 61436-40, 61442, 61454-64. In considering 
these costs, DOE calculated the sum of the purchase price and the 
operating expense--discounted over the lifetime of the equipment--to 
estimate the range in LCC savings that small motors purchasers would 
expect to achieve due to the standards.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, EPCA also 
requires DOE, in determining the economic justification of a standard, 
to consider the total projected energy savings that are expected to 
result directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 
42 U.S.C. 6316(a)) As in the NOPR (74 FR 61440-42, 61470-72), for 
today's final rule, DOE used the NES spreadsheet results in its 
consideration of total projected energy savings that are directly 
attributable to the standard levels DOE considered.
d. Lessening of Utility or Performance of Equipment
    In selecting today's standard levels, DOE avoided selection of 
standards that lessen the utility or performance of the equipment under 
consideration in this rulemaking. (See 42 U.S.C. 6295(o)(2)(B)(i)(IV) 
and 42 U.S.C. 6316(a)) 74 FR 61419, 61476. The efficiency levels DOE 
considered maintain both motor performance and power factor in order to 
preserve consumer utility. DOE considered end-user size constraints by 
developing designs with size increase restrictions (limited to a 20-
percent increase in stack length), as well as designs with less 
stringent constraints (100-percent increase in stack length). The 
designs adhering to the 20-percent increase in stack length maintain 
all aspects of consumer utility and were created for all efficiency 
levels, but these designs may become very expensive at higher 
efficiency levels when compared with DOE's other designs.
e. Impact of Any Lessening of Competition
    DOE considered any lessening of competition that is likely to 
result from standards. As discussed in the NOPR, 74 FR 61419, 61476, 
and as required under EPCA, DOE requested that the Attorney General 
transmit to the Secretary a written determination of the impact, if 
any, of any lessening of competition likely to result from the 
standards proposed in the NOPR, together with an analysis of the nature 
and extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii) 
and 42 U.S.C. 6316(a))
    To assist the Attorney General in making such a determination, DOE 
provided the Department of Justice (DOJ) with copies of the November 
24, 2009 proposed rule and the NOPR TSD for review. The Attorney 
General's response is discussed in IV.F.7 below, and is reprinted at 
the end of this rule. DOJ concluded that TSL 5 for polyphase small 
electric motors and TSL 7 for single-phase small electric motors are 
likely to affect the replacement market for certain applications. DOJ 
requested that DOE consider this potential impact and, as warranted, 
allow exemptions from the proposed standard levels the manufacture and 
marketing of certain replacement small electric motors.
f. Need of the Nation To Conserve Energy
    In considering standards for small electric motors, the Secretary 
must consider the need of the Nation to conserve energy. (42 U.S.C. 
6295(o)(2)(B)(i)(VI) and 42 U.S.C. 6316(a)) The Secretary recognizes 
that energy conservation benefits the Nation in several important ways. 
The non-monetary benefits of the standard are likely to be reflected in 
improvements to the security and reliability of the Nation's energy 
system. Today's standard will also result in environmental benefits. As 
discussed in the NOPR, 74 FR 61419, 61447-61453, 61476-61484, and in 
section VI.C.6 of this final rule, DOE considered these factors in 
adopting today's standards.
g. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, considers any other factors that the Secretary 
of Energy deems relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 42 
U.S.C. 6316(a)) In adopting today's standards, the Secretary considered 
the following: (1) Harmonization of standards for small electric motors 
with existing standards under EPCA for medium-sized polyphase general 
purpose motors; (2) the impact, on consumers who need to use CSIR 
motors, and on the prices for such motors at potential standard levels; 
and (3) the potential for standards to reduce reactive power demand and 
thereby lower costs for supplying electricity.\3\ 74 FR 61419-20, 
61484. These issues are addressed in section VI.C.7 below.
---------------------------------------------------------------------------

    \3\ In an alternating current power system, the reactive power 
is the root mean square (RMS) voltage multiplied by the RMS current, 
multiplied by the sine of the phase difference between the voltage 
and the current. Reactive power occurs when the inductance or 
capacitance of the load shifts the phase of the voltage relative to 
the phase of the current. While reactive power does not consume 
energy, it can increase losses and costs for the electricity 
distribution system. Motors tend to create reactive power because 
the windings in the motor coils have high inductance.
---------------------------------------------------------------------------

2. Rebuttable Presumption
    Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased installed cost for a product that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard, as calculated under the applicable 
DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 
6316(a)) DOE's LCC and payback period (PBP) analyses generate values 
that calculate the PBP of potential energy conservation standards. The 
calculation includes, but is not limited to, the three-year PBP 
contemplated under the rebuttable presumption test just described. 
However, DOE routinely

[[Page 10882]]

conducts a full economic analysis that considers the full range of 
impacts, including those to the customer, manufacturer, Nation, and 
environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 
6316(a). The results of this analysis serve as the basis for DOE to 
evaluate definitively the economic justification for a potential 
standard level (thereby supporting or rebutting any presumption of 
economic justification).

IV. Methodology and Discussion of Comments on Methodology

    DOE used several analytical tools that it developed previously and 
adapted for use in this rulemaking. One is a spreadsheet that 
calculates LCC and PBP. Another tool calculates national energy savings 
and national NPV that would result from the adoption of energy 
conservation standards. DOE also used the Government Regulatory Impact 
Model (GRIM), along with other data obtained from interviews with 
manufacturers, in its MIA to determine the impacts of standards on 
manufacturers. Finally, DOE developed an approach using the National 
Energy Modeling System (NEMS) to estimate impacts of standards for 
small electric motors on electric utilities and the environment. The 
NOPR discusses each of these analytical tools in detail, 74 FR 61420, 
61436-53, as does the TSD.
    As a basis for this final rule, DOE has continued to use the 
spreadsheets and approaches explained in the NOPR. DOE used the same 
general methodology as applied in the NOPR, but revised some of the 
assumptions and inputs for the final rule in response to public 
comments. DOE also added new analysis based on the comments it received 
from interested parties. The following paragraphs address these 
revisions.

A. Market and Technology Assessment

    When beginning an energy conservation standards rulemaking, DOE 
develops information that provides an overall picture of the market for 
the equipment concerned, including the purpose of the equipment, the 
industry structure, and market characteristics. This activity includes 
both quantitative and qualitative assessments based primarily on 
publicly available information. The subjects addressed in the market 
and technology assessment for this rulemaking include scope of 
coverage, product classes, manufacturers, quantities, and types of 
equipment sold and offered for sale; retail market trends; and 
regulatory and non-regulatory programs. See chapter 3 of the TSD for 
further discussion of the market and technology assessment.
1. Definition of Small Electric Motor
    EPCA defines a small electric motor as ``a NEMA general purpose 
alternating current single-speed induction motor, built in a two-digit 
frame number series in accordance with NEMA Standards Publication MG1-
1987.'' 42 U.S.C. 6311(13)(G). NEMA Standards Publication MG1-1987 is 
an industry guidance document that addresses, among other things, 
various aspects related to small and medium electric motors. As denoted 
in the title, this version of MG1 was prepared in 1987, more than 20 
years before the date of today's final rule. NEMA has since published 
updated versions of this document, the latest of which was released in 
2006. Of particular significance is the difference in what was 
considered in 1987 a general purpose, alternating current motor (only 
open construction motors) compared to what NEMA currently considers a 
general purpose alternating current motor (both open and enclosed 
construction motors).\4\
---------------------------------------------------------------------------

    \4\ An open motor is constructed with ventilating openings that 
permit external cooling air to pass over and around the windings of 
the motor. An enclosed motor is constructed to prevent the free 
exchange of air between the inside and outside of the housing.
---------------------------------------------------------------------------

    DOE explained its view in the NOPR as to how it currently reads 42 
U.S.C. 6311(13)(G). 74 FR 61421. DOE indicated that the statute refers 
to MG1-1987 for purposes of ascertaining what constitutes a small 
electric motor. The agency explained and articulated certain 
assumptions in the NOPR regarding the scope of categories of motors, 
frame sizes, performance characteristics, insulation systems, and motor 
enclosures that it examined within the proposed scope of this 
rulemaking.
    DOE received several comments criticizing the scope of DOE's 
coverage in its analyses. Manufacturers indicated that DOE's scope was 
too broad because, in their view, many of the motors DOE examined in 
ascertaining the energy savings potential for small electric motors, 
were not small electric motors under MG1-1987. For example, Emerson 
commented that in order for standards to be enforceable, DOE should 
adhere strictly to MG1-1987 in defining scope. (Emerson, No. 28 at p. 
2) NEMA made similar comments echoing the same concern and argued that 
DOE's analysis should have been limited to the performance 
characteristics contained in MG1-1987. (See, e.g., NEMA, No. 8 at pp. 
2-5)
    In contrast, Earthjustice and UL both commented that DOE was 
unnecessarily constraining itself by adhering to NEMA MG1-1987. See 
Earthjustice, Public Meeting Transcript, No. 20.4 at pp. 49-50; UL, 
Public Meeting Transcript, No. 20.4 at pp. 89-90. UL asserted that 
DOE's scope would create a negligible impact on the market, which has 
been shifting from the motors covered under the NOPR to other motor 
types (such as electronically commutated motors). (UL, Public Meeting 
Transcript, No. 20.4 at p. 182, UL, No. 21 at pp. 2) Earthjustice 
advised DOE that it should expand the scope of the rulemaking to 
include any ``covered equipment'' that it finds are justified. 
(Earthjustice, No. 22 at pp. 1-3) It had also noted during the 
preliminary analysis public meeting, that DOE could adopt a different 
reading of the definition by applying the phrase MG1-1987 only to the 
two digit frame number series requirement. Earthjustice, Public Meeting 
Transcript, at 47-49 (January 30, 2009).
    After careful consideration of all of the comments, DOE believes 
that its scope of coverage in this final rule is appropriate. As such, 
DOE is declining to revise its scope of coverage for this equipment 
within this rulemaking. While DOE is continuing to adhere to the 
approach proposed in its NOPR and accompanying TSD, DOE may revisit 
this issue in the future and re-examine its interpretation of the small 
electric motor definition in 42 U.S.C. 6311(13)(G). Any such re-
examination would be performed within the context of the rulemaking 
process and offer an opportunity for public comment.
a. Motor Categories
    The motor categories examined by DOE are tied in part to the 
terminology and performance requirements in NEMA MG1-1987. These 
requirements were established for (1) general-purpose alternating-
current motors, (2) single-speed induction motors, and (3) the NEMA 
system for designating (two-digit) frame sizes. Single-speed induction 
motors, as delineated and described in MG1-1987, fall into five 
categories: split-phase, shaded-pole, capacitor-start (both CSIR and 
CSCR), permanent-split capacitor (PSC), and polyphase. Of these five 
motor categories, DOE determined for purposes of this rulemaking that 
only CSIR, CSCR, and polyphase motors are able to meet performance 
requirements in NEMA MG1 and are widely considered general purpose 
alternating current motors, as shown by the listings found in 
manufacturers' catalogs. Therefore, in the NOPR DOE proposed

[[Page 10883]]

to only cover those three motor categories.
    Underwriters Laboratories stated that they believe DOE should cover 
the split-phase, shaded-pole, and PSC motor categories because they are 
much more common in the current market. (Underwriters Laboratories, No. 
21 at p. 2) It is DOE's understanding that the motors suggested for 
coverage by UL do not meet the requirements for a NEMA general purpose 
motors and, consequently, are outside the scope of this rulemaking 
despite being more common. As a result, DOE continues to maintain that 
CSIR, CSCR, and polyphase motors are the only motor categories that are 
general purpose motors for purposes of this rulemaking.
b. Horsepower Ratings
    In DOE's preliminary and NOPR analyses on small electric motors, 
DOE presented a range of horsepower ratings from \1/4\-horsepower up to 
3-horsepower. The range of horsepower ratings was the same for all 
three motor categories covered: CSIR, CSCR, and polyphase motors as 
well as all three pole configurations: Two, four, and six. This range 
of horsepower ratings was consistent with what DOE believed to be the 
range of ratings where manufacturers build NEMA general purpose motors 
in a two-digit frame number series.
    In response to the NOPR, NEMA and Baldor commented that the 
horsepower range for the products classes DOE proposed was incorrect. 
Baldor stated that horsepower ratings higher than \1/2\-horsepower for 
six-pole motors, \3/4\-horsepower for four-pole motors, and 1-
horsepower for two-pole motors are not standard ratings for small 
electric motors as defined in NEMA MG1, in particular, as listed in 
Table 10-1 of MG1-1987. Therefore, NEMA and Baldor stated that motors 
with such ratings are not NEMA general purpose motors and should be 
excluded from DOE's scope of coverage. (Baldor, Public Meeting 
Transcript, No. 20.4 at pp. 38-41; NEMA, No. 24 at pp. 1-5, 7)
    DOE understands that NEMA MG1-1987 does not provide ratings for 
small motors of the identified higher horsepower ratings. However, DOE 
does not believe this precludes certain higher horsepower ratings built 
in a two-digit NEMA frame consistent with NEMA MG1-1987 from coverage. 
In addition, upon review of NEMA manufacturer product catalogs, DOE 
noted that two-digit frame size motors of higher horsepower ratings are 
commonly marketed as general purpose. DOE also observed from NEMA 
shipment data provided to DOE for the determination analysis that when 
NEMA surveyed its members and requested shipments of general purpose 
motors built in a two-digit frame number series, responding 
manufacturers provided shipments data in horsepower ratings exceeding 
those listed in the comments above. Although NEMA argued that these 
motors do not fall within this rulemaking, NEMA did not deny that these 
motors are considered general purpose motors. Thus, DOE believes that 
even though NEMA MG1-1987 does not provide standard ratings for higher 
horsepower small electric motors, many of these motors are considered 
NEMA general purpose motors that could be considered for coverage by 
DOE.
    DOE notes that there is precedent for clarifying the scope of 
coverage of these motors. At industry's request during the test 
procedure rulemaking for small electric motors, DOE clarified the small 
electric motor definition to incorporate metric-equivalent motors that 
are built in accordance with the International Electrotechnical 
Commission's requirements. See Baldor, Public Meeting Transcript, No. 8 
at p. 75; NEMA, No. 12 at p. 2. This expansion of the small electric 
motor definition, which was added to ensure that DOE provided adequate 
coverage over small electric motors generally, was incorporated into 10 
CFR 431.442. See also 74 FR 32061-62 and 32072.
    While DOE believes that many of the horsepower ratings recommended 
for exclusion by NEMA and Baldor could be included in the definition of 
small electric motors, upon examining manufacturer catalogs, DOE found 
that motors did not exist for some horsepower ratings/pole 
configuration combinations included in NOPR. Specifically, DOE found 
that no open construction, two-digit frame size motors have horsepower 
ratings greater than 3-horsepower. In addition, DOE found no small 
electric polyphase motors built with a 2- or 3-horsepower rating and a 
six-pole configuration. DOE also found that small electric single-phase 
motors (CSIR and CSCR) do not exist with a 1\1/2\-horsepower rating or 
higher for six-poles or a 3-horsepower rating for four-poles. As there 
is no evidence that these motors, if manufactured, would be considered 
general purpose motors, and because DOE lacks data on which to base 
energy conservation standards for these motors, DOE is not including 
them in the scope of this rulemaking. Today's final rule reflects this 
decision as no standards are being adopted in those product classes. 
Table IV.1 presents the horsepower ratings for which DOE believes no 
small electric motors are currently commercially available.

                            Table IV.1--Horsepower Ratings for Which No Motors Exist
----------------------------------------------------------------------------------------------------------------
           Motor category                     Two-pole                Four-pole                 Six-pole
----------------------------------------------------------------------------------------------------------------
Polyphase...........................  .......................  .......................  >= 2 Hp.
Single-Phase........................  .......................  >= 3 Hp................  >= 1.5 Hp.
----------------------------------------------------------------------------------------------------------------

c. Performance Requirements
    NEMA defines several performance requirements, including breakdown 
torque, locked rotor torque, and locked rotor current that motors must 
meet in order to be considered general-purpose. Because DOE's 
assessment of the small electric motors market (through analysis of 
commercially-available products sold) indicates that the vast majority 
of motors meet the previously listed requirements, DOE believes that a 
motor must meet these performance characteristics as a condition for 
coverage.
    PG&E commented that a loophole exists in the rulemaking since the 
current definition of a small general purpose motor is so narrow with 
respect to design and performance characteristics. (PG&E, Public 
Meeting Transcript, No. 20.4 at pp. 259-60) PG&E added that DOE's 
reliance on MG1-1987 provides another loophole where NEMA could update 
its standards such that manufacturers could still make a NEMA general 
purpose motor that is not covered under today's rulemaking. (PG&E, 
Public Meeting Transcript, No. 20.4 at pp. 260-61) NEEA/NPCC agreed 
with PG&E that a manufacturer could easily circumvent any standards 
whose coverage was based around NEMA performance requirements, by 
simply constructing the motor such that it slightly deviates from NEMA 
requirements, but still provides similar utility to the consumer. 
(NEEA/NPCC, No. 27, pp. 2-3) Baldor

[[Page 10884]]

stated that the tables of performance requirements in NEMA MG1 are 
designed to let customers know how motors will perform from 
manufacturer to manufacturer and they have been established for many 
years and there would be no reason to change them. (Baldor, Public 
Meeting Transcript, No. 20.4 at pp. 266-67)
    DOE understands the concerns expressed by PG&E, but agrees with 
Baldor that considering that the relevant performance requirements in 
NEMA MG1 have not changed substantially in over 20 years, these 
performance standards are unlikely to change should NEMA develop a new 
version of MG1. DOE believes that to do so would constitute a major 
change to the industry and performance characteristics that customers 
have been accustomed to over the years. Therefore, DOE believes that 
small electric motors must meet certain requirements in NEMA MG1-1987 
shown in Table IV.6. For those combinations of horsepower rating and 
pole configuration that do not have performance requirements for two-
digit frame sizes, DOE has no performance requirements. Instead, DOE 
will cover only those motors widely considered general purpose and 
marketed as such in manufacturer catalogs.
d. Motor Enclosures
    In the NOPR, DOE stated that in ascertaining what constitutes a 
small electric motor, only the 1987 version of MG1 applies within the 
context of the statutory definition. Under that interpretation, DOE 
stated that only open construction motors were considered covered 
products. DOE is continuing to adhere to this approach.
    As DOE's proposed scope did not extend beyond open motors as 
covered products, Baldor and NEMA commented that the revision to 10 CFR 
Part 431 proposed in the NOPR should clearly mention that the table of 
efficiency values for section 431.446 applies only to open motors. 
(Baldor, Public Meeting Transcript, No. 20.4 at pp. 47-48, NEMA, No. 24 
at p. 5) To clarify the application of the new efficiency values, DOE 
is modifying the efficiency standards tables in section 431.446 from 
today's final rule to include the words, ``open motors'' in the 
headings.
e. Frame Sizes
    As for the frame sizes of motors that are covered by DOE standards 
for small electric motors, EPCA defines a small electric motor, in 
relevant part, as a motor ``built in a two-digit frame number series in 
accordance with NEMA Standards Publication MG1-1987.'' (42 U.S.C. 
6311(13)(G)) MG1-1987 establishes a system for designating motor frames 
that consisting of a series of numbers in combination with letters that 
correspond to a specific size. The 1987 version of MG1 designates three 
two-digit frame series: 42, 48, and 56. These frame series have 
standard dimensions and tolerances necessary for mounting and 
interchangeability that are specified in sections MG1-11.31 and MG1-
11.34.
    DOE understands that manufacturers produce motors in other two-
digit frame sizes, namely a 66 frame size. The 66 frame size is used 
for definite-purpose or special-purpose motors and not used in general-
purpose applications and are not covered under the EPCA definition of 
``small electric motor.'' In the NOPR, DOE stated that it was unaware 
of any other motors with two-digit frame sizes that are built in 
accordance with NEMA MG1-1987. Should such frame sizes appear on the 
market, DOE will consider evaluating whether to include that equipment. 
For the NOPR, DOE received no comments regarding this issue and as a 
result, is maintaining its stance on this topic for this final rule.
f. Insulation Class Systems
    Because DOE's interpretation of the statutory definition of a small 
electric motor is largely influenced by what NEMA defines as a general-
purpose alternating-current motor under MG1-1987, DOE has taken into 
account the criteria that comprise a general purpose motor. Among these 
criteria are the applicable insulation classes. NEMA MG1-1987 paragraph 
1-1.05, provides that a general-purpose motor must incorporate a 
``Class A insulation system with a temperature rise as specified in MG 
1-12.42 for small motors or Class B insulation system with a 
temperature rise as specified in MG 1-12.43 for medium motors.''
    In NEMA MG1-1987, paragraphs 1.66 and 12.42.1 define four 
insulation class systems: Class A, Class B, Class F, and Class H. They 
are divided into classes based on the thermal endurance and each system 
has a different temperature rise \5\ that the insulating material must 
be able to withstand without degradation. The temperature rise 
requirement for Class A systems is the lowest of the four systems 
defined in NEMA MG1-1987, which means that all other insulation classes 
meet Class A requirements. Because all insulation class systems meet 
the Class A requirements, DOE proposed to cover motors that incorporate 
any of the other insulation class systems in the NOPR. A joint comment 
submitted by Pacific Gas and Electric Company (PG&E), Southern 
California Edison (SCE), Southern California Gas Company (SCGC), and 
San Diego Gas and Electric Company (SDGE) supported DOE's decision to 
include insulation Classes B, F, and H in addition to Class A. (Joint 
Comment, No. 23 at p. 2) NEMA and Baldor commented that although it is 
prudent to cover insulation class systems other than Class A, in order 
for a motor to be considered covered it must adhere to the temperature 
rise limits required of Class A motors by NEMA MG1. For example, if a 
motor contains a Class B insulation system, but the temperature rise 
exceeds the threshold for Class A insulation systems, the commenters 
stated that that motor should be excluded from coverage. (Baldor, 
Public Meeting Transcript, No. 20.4 at pp. 25-26; Baldor, No. 15 at p. 
3-4, NEMA, No. 24 at pp. 5-7)
---------------------------------------------------------------------------

    \5\ Temperature rise refers to the increase in temperature over 
the ambient temperature of the motor when operated at service factor 
load. NEMA MG1 provides maximum temperature rises (as measured on 
the windings of the motor) for each insulation class system.
---------------------------------------------------------------------------

    DOE disagrees with Baldor and NEMA's assessment regarding 
temperature rise and in today's final rule maintains that the scope of 
coverage includes motors with any insulation class system Class A or 
higher, regardless of whether a motor meets the Class A temperature 
rise requirements. First, DOE notes that NEMA MG1 does not require 
small motors to meet the temperature rise for a Class A insulation 
system. Rather, it only requires that the motor incorporates an 
insulation system that meets Class A requirements, which DOE has 
determined could be Class A, B, F, or H.
    Second, DOE believes that it is unreasonable to apply a more 
stringent temperature rise requirement on motors with higher insulation 
class systems. These motors often incorporate the higher insulation 
class systems in order to protect the motors from degradation at high 
temperatures. As a result, the accompanying temperature rise, which 
serves as a marker of how much heat a particular insulation class can 
withstand to prevent the motor from damage, will generally increase as 
a higher grade of insulation is used. Baldor's suggestion that a lower 
temperature rise (70 [deg]C) must be used for each higher grade of 
insulation that offers protection at higher temperatures is one that 
DOE declines to adopt.
    Furthermore, according to NEMA Standards publication MG1-1987, 
paragraph 10.39.1, although insulation class system designation is a 
required

[[Page 10885]]

marking on the nameplate of small electric motors, temperature rise is 
not. If DOE were to limit scope based on the temperature rise 
requirements of Class A systems, DOE would have no way of determining 
whether motors of insulation class systems greater than Class A meet 
the required temperature rise and are therefore subject to energy 
conservation standards. As only 2 percent of small electric motor 
models sold are labeled with Class A insulation systems, 98 percent of 
small electric models would have unknown temperature rises (relative to 
Class A requirements). DOE believes that including all insulation 
classes and temperature rises satisfies the statutory definition and 
avoids creating an unenforceable standard for a large number of motors 
that do not list temperature rise.
g. Service Factors
    Some CSIR, CSCR, and polyphase motors may fail to meet the NEMA 
definition of general purpose alternating current motor because they do 
not meet NEMA service factor requirements. See, e.g. NEMA MG1-1987 
Table 12-2. Service factor is a measure of the overload capacity at 
which a motor can operate without thermal damage, while operating 
normally within the correct voltage tolerances. The rated horsepower 
multiplied by the service factor determines that overload capacity. For 
example, a 1-horsepower motor with a 1.25 service factor can operate at 
1.25 horsepower (1-horsepower x 1.25 service factor). For the NOPR, DOE 
concluded that motors that fail to meet service factor requirements in 
MG1-12.47 of MG1-1987 (now 12.51.1 of MG1-2006) are not ``small 
electric motors'' as EPCA uses that term. Receiving no comments to the 
contrary, DOE maintains that position in today's final rule and energy 
efficiency standards do not apply to them.
h. Metric Equivalents and Non-Standard Horsepower and Kilowatt Ratings
    DOE's interpretation of a small electric motor is largely based on 
the construction and rating system in NEMA MG1-1987. (42 U.S.C. 
6311(13)(G)) This system uses English units of measurement and power 
output ratings in horsepower. In contrast, general-purpose electric 
motors manufactured outside the United States and Canada are defined 
and described with reference to the International Electrotechnical 
Commission (IEC) Standard 60034-1 series, ``Rotating electrical 
machines,'' which employs terminology and criteria different from those 
in EPCA. The performance attributes of these IEC motors are rated 
pursuant to IEC Standard 60034-1 Part 1: ``Rating and performance,'' 
which uses metric units of measurement and construction standards 
different from MG1, and a rating system based on power output in 
kilowatts instead of power output in horsepower. The Institute of 
Electrical and Electronics Engineers (IEEE) Standard 112 recognizes 
this difference in the market and defines the relationship between 
horsepower and kilowatts. Furthermore, in 10 CFR 431.12, DOE defined 
``electric motor'' in terms of both NEMA and IEC equivalents even 
though EPCA's corresponding definition and standards were articulated 
in terms of MG1 criteria and English units of measurement. 64 FR 54114 
(October 5, 1999) The test procedure final rule adopted a definition 
for small electric motor that explicitly indicated that IEC equivalent 
motors are considered small electric motors. 10 CFR 431.442. 74 FR 
32062, 72.
    In the NOPR, DOE addressed how IEC metric or kilowatt-equivalent 
motors can perform identical functions as NEMA small electric motors 
and provide comparable rotational mechanical power to the same machines 
or equipment. Moreover, IEC metric or kilowatt-equivalent motors can 
generally be interchangeable with covered small electric motors. 
Consistent with the codified definition of ``small electric motor in 10 
CFR 431.442, DOE interpreted EPCA to apply the term ``small electric 
motor'' to any motor that is identical or equivalent to a motor 
constructed and rated in accordance with NEMA MG1, which includes IEC 
metric motors. DOE also proposed that motors with non-standard kilowatt 
and horsepower ratings would be required to meet small electric motor 
energy conservation standards. 74 FR 61422.
    A joint comment submitted by PG&E, SCE, SCGC, and SDGE indicated 
support for DOE's decision to include IEC-rated motors in today's 
rulemaking. (Joint Comment, No. 23 at p. 2) NEMA and Baldor commented 
that, even though they agreed with DOE's approach in the NOPR, they 
believed that given the statutory definition's dependence on MG1-1987 
(and the ratings contained in that standard) more justification is 
needed to include non-standard metric or English-rated motors in its 
scope of coverage. (Public Meeting Transcript, No. 20.4 at pp. 288-89; 
NEMA, No. 24 at pp. 24-25)
    DOE appreciates these comments and in this final rule maintains its 
position regarding the inclusion of non-standard IEC metric and 
English-rated motors. Though NEMA MG1 does not provide ratings for 
these non-standard motors, DOE recognizes that they can perform 
identical functions as those NEMA motors with standard horsepower 
ratings. Therefore, as DOE did within the context of its codified 
definition of the term ``small electric motor'' found in 10 CFR 431.442 
to include IEC metric-equivalent motors, DOE believes that non-standard 
horsepower and kilowatt rated motors should be considered NEMA general 
purpose and included in the scope of coverage of this rulemaking.
i. Summary
    During the public meeting, Baldor and NEMA commented that DOE did 
not include the definition of NEMA general purpose motor in 10 CFR 
431.442, and suggested that DOE include the definition for clarity and 
completeness. (Baldor, Public Meeting Transcript, No. 20.4 at p. 46; 
NEMA, No. 24 at p. 5) A.O. Smith also requested clarification of the 
term ``small electric motor,'' and suggested that the definition align 
with NEMA established guidelines. (A.O. Smith, No. 26 at p. 2)
    DOE has discussed the covered motor categories, horsepower ratings, 
motor enclosures, frame sizes, insulation class systems, service 
factors, and metric equivalents. As discussed in section IV.A.1.b, 
because DOE has found several horsepower/pole configurations for which 
small electric motors are not commercially available, DOE has made 
slight modifications in the range of horsepower ratings for which it is 
adopting standards in this final rule. The motors covered by today's 
rule include polyphase motors from \1/4\- to 3-horsepower for motors 
equipped with two poles, \1/4\- to 3-horsepower for motors with four 
poles, and \1/4\- to \1/2\-horsepower for motors with six pole motors 
as long as they are built in a two-digit frame number series and with 
an open construction; the CSIR and CSCR motors covered by today's rule 
include motors from \1/4\- to 3-horsepower motors equipped with two 
poles, \1/4\- to 2-horsepower for motors with four poles, and \1/4\- to 
1-horesepower for motors with six poles as long as they are built in a 
two-digit frame number series and with an open construction. A motor 
will not be excluded because of its insulation class system or its 
temperature rise. However, it will be excluded if it fails to meet NEMA 
general purpose service factor requirements. Any metric-equivalent 
motor or motor with a non-standard horsepower or kilowatt rating that 
has performance characteristics and construction equivalent to those 
listed

[[Page 10886]]

above is also a covered product and must meet the energy efficiency 
standards of this rulemaking. Although today's final rule DOE does not 
codify a definition for ``NEMA general purpose motor'', DOE will 
consider proposing a definition for this term in the electric motor 
test procedure supplemental NOPR.
2. Product Classes
    When evaluating and establishing energy conservation standards, DOE 
generally divides covered equipment into classes by the type of energy 
used, capacity, or other performance-related features that affect 
efficiency. (42 U.S.C. 6295(q)) DOE routinely establishes different 
energy conservation standards for different product classes based on 
these criteria.
    At the NOPR public meeting, DOE presented its rationale for 
creating 72 product classes. The 72 product classes were based on 
combinations of three different characteristics: motor category, number 
of poles, and horsepower. As these motor characteristics change, so 
does the utility and efficiency of the small electric motor.
    The motor category divides the small electric motors market into 
three major groups: CSIR, CSCR, and polyphase. For each motor category, 
DOE divided the product classes by all combinations of eight different 
horsepower ratings (i.e., \1/4\ to >= 3) and three different pole 
configurations (i.e., 2, 4, and 6). A change in motor category can 
constitute a change in the type of power used, three-phase power for 
polyphase motors versus single-phase power for capacitor-start motors. 
Alternatively, it might be a change in consumer utility that affects 
efficiency. The addition of a run-capacitor on a CSCR motors can make 
the motor more efficient as well as constitute dimensional changes as 
the run-capacitor is usually mounted externally on the housing. 
Horsepower rating is directly related to a motor's capacity, and its 
pole configuration is directly related to the theoretical maximum speed 
at which a motor can operate. For the NOPR, DOE received no comments 
contrary to disaggregating product classes with these characteristics, 
but did receive other comments regarding product classes.
    Consistent with their comments on scope (discussed in section 
IV.A.1), NEMA and Baldor stated that certain combinations of horsepower 
and speed (or pole-configuration) ratings should be excluded from DOE's 
product classes because, in their view, they are not small electric 
motors within the context of MG1-1987. Specifically, they stated that 
motors with horsepower ratings greater than 1-horsepower for two-pole 
motors, greater than \3/4\-horsepower for four-pole motors, and greater 
than \1/2\-horsepower for six-pole motors do not meet the statutory 
definition. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 39-41; 
NEMA, No. 24 at pp. 3-4) As discussed in section IV.A.1, DOE examined 
the statutory definition of small electric motor and disagrees that the 
aforementioned horsepower and speed ratings are not covered under this 
rulemaking. Therefore, in this final rule DOE is maintaining coverage 
of combinations of horsepower and pole configurations higher than those 
recommended by NEMA and Baldor. However, as discussed in section 
IV.A.1.b, DOE is not adopting standards for motors which are not 
currently commercially available. Accordingly, DOE has removed these 
proposed product classes in the final rule, resulting in 62 total 
product classes.
    NEMA and Baldor also commented that DOE should include frame size 
among the characteristics that define a product class. They stated that 
smaller frame size motors will not be able to achieve as high an energy 
efficiency rating as the larger frame sized motors, thus warranting 
separate product classes. (Baldor, Public Meeting Transcript, No. 20.4 
at pp. 43-44, NEMA, No. 24 at pp. 4-5, 23)
    DOE acknowledges that motors built with smaller dimensions, namely 
core diameters, may not be able to achieve the same efficiency as a 
motor with larger dimensions. The smaller diameter limits the amount of 
active material that is used to reduce motor losses and therefore 
limits the maximum efficiency rating possible as well. However, frame 
size, which relates to the frame housing and not the core diameter, is 
a measurement of height from the bottom of the mounting feet to the 
center of the shaft of the motor. Frame size does not always correlate 
to the core diameter of the motor and amount active material. For 
example, DOE found that some motors with larger frame sizes have core 
diameters equivalent to those motors built in smaller frame sizes, 
which means that these motors have an efficiency potential equivalent 
to that of a motor in a smaller frame size. Consequently, frame size 
alone does not necessarily change the efficiency of a small electric 
motor.
    Additionally, NEMA MG1 does not differentiate breakdown torque, 
locked-rotor torque, and locked-rotor current requirements for small 
general-purpose motors by frame size. DOE believes that if performance 
requirements other than efficiency for small motors are not different 
for different frame sizes, there is no need or precedent for DOE to 
differentiate efficiency standards for small electric motors based on 
frame size.
    However, as stated earlier, DOE recognizes that core diameter 
affects efficiency. If DOE were to set a standard based on an analysis 
of a motor of larger core diameter, it could potentially be eliminating 
from market smaller core diameter motors. However, because core 
diameter is not a standardized dimension across all small electric 
motors, DOE has chosen to address this issue in the engineering 
analysis. As discussed in section IV.C DOE based its representative 
unit and scaling analyses on what it perceived as the greatest 
dimensionally constrained motors on the market for each product class. 
By doing this, DOE ensures that all existing consumer utility in the 
marketplace of smaller core diameter motors is maintained with energy 
conservation standards.
    Chapter 3 of the TSD accompanying today's notice provides 
additional detail on the product classes defined for the standards 
proposed in this final rule, and Table IV.2 through Table IV.4 below 
enumerate these product classes. For the final rule, DOE considers 62 
product classes.

                   Table IV.2--Product Classes for Polyphase Motors With an Open Construction
----------------------------------------------------------------------------------------------------------------
    Motor horsepower/standard
       kilowatt equivalent                 Six poles                 Four poles                 Two poles
----------------------------------------------------------------------------------------------------------------
\1/4\ hp/0.18 kW.................  PC <greek-i>1............  PC <greek-i>2...........  PC <greek-i>3.
\1/3\ hp/0.25 kW.................  PC <greek-i>4............  PC <greek-i>5...........  PC <greek-i>6.
\1/2\ hp/0.37 kW.................  PC <greek-i>7............  PC <greek-i>8...........  PC <greek-i>9.
\3/4\ hp/0.55 kW.................  PC <greek-i>10...........  PC <greek-i>11..........  PC <greek-i>12.
1 hp/0.75 kW.....................  PC <greek-i>13...........  PC <greek-i>14..........  PC <greek-i>15.
1\1/2\ hp/1.1 kW.................  PC <greek-i>16...........  PC <greek-i>17..........  PC <greek-i>18.
2 hp/1.5 kW......................  .........................  PC <greek-i>19..........  PC <greek-i>20.

[[Page 10887]]

 
3 hp/2.2 kW......................  .........................  PC <greek-i>21..........  PC <greek-i>22.
----------------------------------------------------------------------------------------------------------------


         Table IV.3--Product Classes for Capacitor-Start Induction-Run Motors With an Open Construction
----------------------------------------------------------------------------------------------------------------
    Motor horsepower/standard
       kilowatt equivalent                 Six poles                 Four poles                 Two poles
----------------------------------------------------------------------------------------------------------------
\1/4\ hp/0.18 kW.................  PC <greek-i>23...........  PC <greek-i>24..........  PC <greek-i>25.
\1/3\ hp/0.25 kW.................  PC <greek-i>26...........  PC <greek-i>27..........  PC <greek-i>28.
\1/2\ hp/0.37 kW.................  PC <greek-i>29...........  PC <greek-i>30..........  PC <greek-i>31.
\3/4\ hp/0.55 kW.................  PC <greek-i>32...........  PC <greek-i>33..........  PC <greek-i>34.
1 hp/0.75 kW.....................  PC <greek-i>35...........  PC <greek-i>36..........  PC <greek-i>37.
1\1/2\ hp/1.1 kW.................  .........................  PC <greek-i>38..........  PC <greek-i>39.
2 hp/1.5 kW......................  .........................  PC <greek-i>40..........  PC <greek-i>41.
3 hp/2.2 kW......................  .........................  ........................  PC <greek-i>42.
----------------------------------------------------------------------------------------------------------------


         Table IV.4--Product Classes for Capacitor-Start Capacitor-Run Motors With an Open Construction
----------------------------------------------------------------------------------------------------------------
    Motor horsepower/standard
       kilowatt equivalent                 Six poles                 Four poles                 Two poles
----------------------------------------------------------------------------------------------------------------
\1/4\ hp/0.18 kW.................  PC <greek-i>43...........  PC <greek-i>44..........  PC <greek-i>45.
\1/3\ hp/0.25 kW.................  PC <greek-i>46...........  PC <greek-i>47..........  PC <greek-i>48.
\1/2\ hp/0.37 kW.................  PC <greek-i>49...........  PC <greek-i>50..........  PC <greek-i>51.
\3/4\ hp/0.55 kW.................  PC <greek-i>52...........  PC <greek-i>53..........  PC <greek-i>54.
1 hp/0.75 kW.....................  PC <greek-i>55...........  PC <greek-i>56..........  PC <greek-i>57.
1\1/2\ hp/1.1 kW.................  .........................  PC <greek-i>58..........  PC <greek-i>59.
2 hp/1.5 kW......................  .........................  PC <greek-i>60..........  PC <greek-i>61.
3 hp/2.2 kW......................  .........................  ........................  PC <greek-i>62.
----------------------------------------------------------------------------------------------------------------

B. Screening Analysis

    The purpose of the screening analysis is to evaluate the technology 
options identified as having the potential to improve the efficiency of 
equipment, to determine which technologies to consider further and 
which to screen out. DOE consulted with industry, technical experts, 
and other interested parties to develop a list of technologies for 
consideration. DOE then applied the following four screening criteria 
to determine which design options are suitable for further 
consideration in a standards rulemaking:
    1. Technological feasibility. DOE considers technologies 
incorporated in commercial products or in working prototypes to be 
technologically feasible.
    2. Practicability to manufacture, install, and service. If mass 
production and reliable installation and servicing of a technology in 
commercial products could be achieved on the scale necessary to serve 
the relevant market at the time the standard comes into effect, then 
DOE considers that technology practicable to manufacture, install, and 
service.
    3. Adverse impacts on product utility or product availability. If 
DOE determines a technology would have a significant adverse impact on 
the utility of the product to significant subgroups of consumers, or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not 
consider this technology further.
    4. Adverse impacts on health or safety. If DOE determines that a 
technology will have significant adverse impacts on health or safety, 
it will not consider this technology further.
    See 10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b).
    DOE identified the following technology options that could improve 
the efficiency of small electric motors: Utilizing a copper die-cast 
rotor, reducing skew on the rotor stack (i.e. straightening the rotor 
conductor bars), increasing the cross-sectional area of rotor conductor 
bars, increasing the end ring size, changing the copper wire gauge used 
in the stator, manipulating the stator slot size, changing capacitor 
ratings, decreasing the air gap between the rotor and stator, improving 
the grades of electrical steel, using thinner steel laminations, 
annealing steel laminations, adding stack length, using high efficiency 
steel lamination materials, using plastic bonded iron powder (PBIP), 
installing better ball bearings and lubricant, and installing a more 
efficient cooling system. For a description of how each of these 
technology options improves small electric motor efficiency see TSD 
chapter 3. For the NOPR, DOE screened out two of these technology 
options: PBIP and decreasing the air gap below .0125 inch. DOE received 
no comments regarding these two technology options and therefore 
maintains its exclusion of these technology options in today's final 
rule. However, DOE did receive comments concerning the availability of 
premium electrical steels (such as Hiperco) and copper rotors, two 
design options that it did not screen out in the NOPR. Please see 
section IV.I for a discussion of those issues.
    DOE believes that all of the efficiency levels discussed in today's 
notice are technologically feasible. The technologies that DOE examined 
have been used (or are being used) in commercially available equipment 
or working prototypes. These technologies all incorporate materials and 
components that are commercially available in today's supply markets 
for the motors that are the subject of this final rule.

C. Engineering Analysis

    The engineering analysis develops cost-efficiency relationships to 
show the manufacturing costs of achieving increased energy efficiency. 
As discussed in the NOPR, to conduct the

[[Page 10888]]

engineering analysis, DOE used a combined design-option and efficiency 
level approach in which it employed a motor design software technical 
expert to develop motor designs at several efficiency levels for each 
analyzed product class. Based on these simulated designs and 
manufacturer and component supplier data, DOE calculated manufacturing 
costs and selling prices associated with each efficiency level. DOE 
decided on this approach after receiving insufficient response to its 
request for the manufacturer data needed to execute an efficiency-level 
approach for the preliminary analyses. The design-option approach 
allowed DOE to make its engineering analysis methodologies, 
assumptions, and results publicly available in the NOPR, thereby 
permitting all interested parties the opportunity to review and comment 
on this information. The design options considered in the engineering 
analysis include: Copper die-cast rotor, reduced skew on the rotor 
stack, increased cross-sectional area of rotor conductor bars, increase 
end-ring size, changing the gauge of copper wire in the stator, 
manipulating stator slot size, decreased air gap between rotor and 
stator to .0125 inch, improved grades of electrical steel, use thinner 
steel laminations, annealed steel laminations, increased stack height, 
modified capacitors ratings, improved ball bearings and lubricant, and 
more efficient cooling systems. Chapter 5 of the TSD contains a 
detailed description of the engineering analysis methodology and 
chapter 3 of the TSD contains a detailed description of how the design 
options listed above increase motor efficiency.
1. Product Classes Analyzed
    As discussed in section IV.A.2 of this notice, DOE is establishing 
a total of 62 product classes for small electric motors, based on the 
motor category (polyphase, CSIR, or CSCR), horsepower rating, and pole 
configuration. DOE carefully selected certain product classes to 
analyze, and then scaled its analytical findings for those 
representative product classes to other product classes that were not 
directly analyzed. Further discussion of DOE's scaling methodology is 
presented in section IV.C.5
    For the NOPR, DOE analyzed three representative product classes: 
(1) 1-horsepower, four-pole, polyphase motor, (2) \1/2\-horsepower, 
four-pole, CSIR motors, and (3) \3/4\-horsepower, four-pole, CSCR 
motor. By choosing these three product classes, DOE ensured that each 
motor category (polyphase, CSIR, and CSCR) was represented. DOE 
achieved this by selecting horsepower ratings for each motor category 
that are commonly available from most manufacturers, thus increasing 
the quantity of available data on which to base the analysis. Finally, 
DOE chose four-pole motors for each motor category, consistent with 
NEMA-provided shipments data (see TSD chapter 9), which indicated that 
these motors had the highest shipment volume in 2007. See TSD chapter 5 
for additional detail on the product classes analyzed.
    In response to the NOPR, Baldor and NEMA commented that the product 
class selected for polyphase motors was inappropriate. They asserted 
that according to NEMA's standard ratings in MG1-1987, a 1-horsepower, 
four-pole, polyphase motor would not be considered a small motor or 
NEMA general purpose small motor, and therefore falls out of the scope 
of this rulemaking. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 
62-63; NEMA, No. 24 at p. 7) However, as discussed in section IV.A.1, 
DOE disagrees with Baldor and NEMA's interpretation of scope, and in 
this final rule, DOE is including small electric motors with horsepower 
ratings ranging from \1/4\- to 3-horsepower and pole configurations of 
two, four, and six poles. In consideration of this scope, DOE believes 
that the representative product classes selected in the NOPR 
engineering analysis are appropriate and is continuing to use these 
same representative product classes in today's final rule.
2. Baseline Models
    The engineering analysis DOE conducted calculates the incremental 
costs for equipment with efficiency levels above the baseline in each 
product class analyzed. For the NOPR analysis, DOE established the 
baseline motor efficiency and design for the three representative 
product classes by purchasing what it believed to be the lowest 
efficiency motors on the market for each of these classes. To select 
these baseline motors, DOE interviewed manufacturers and used catalog 
data on motor efficiency and physical dimensions. DOE recognizes that 
motors with smaller core diameters, may be unable to achieve 
efficiencies as high as those with larger core diameters. In order to 
preserve the availability of these smaller core diameter motors, DOE 
selected baselines which it believed represented the most dimensionally 
constrained, in terms of core diameter, and least efficient motors 
currently available on the market.
    After purchasing the three baseline small electric motors, DOE 
tested the motors according to the appropriate IEEE test procedures (as 
dictated by DOE's small electric motor test procedure discussed in 
section III.A). After performing the appropriate test procedures, DOE 
then tore down each baseline motor to obtain internal dimensions, 
copper wire gauges, steel grade, and any other pertinent design 
information. Those parameters and tests were then used as inputs into 
the design software, allowing DOE to model the motor and calibrate its 
software to the tested efficiencies. All subsequent higher-efficiency 
motor designs employed the design options discussed earlier to model 
incremental improvements in efficiency and increases in cost over the 
baseline.
a. Baseline Efficiencies
    At the NOPR public meeting, DOE received several comments regarding 
the validity of the baseline motor efficiencies used in the engineering 
analysis. Emerson Motor Company pointed out that it is common to see a 
spread in efficiencies within a population of motors of a particular 
design. Emerson questioned if an analysis was conducted to determine if 
the baseline polyphase motor chosen and tested had an efficiency value 
that was at the high-end, low-end, or near the average compared to the 
population of motors of that model type. (Emerson, Public Meeting 
Transcript, No. 20.4 at pp. 73-75) Similarly, Baldor and NEMA noted 
that the baseline polyphase motor's tested efficiency (77 percent) 
varied significantly from the catalog efficiency (74 percent). They 
commented that using 77 percent as the efficiency of the baseline motor 
in the engineering analysis assumed that a single tested value of 
efficiency is equal to the true arithmetic mean of the full-load 
efficiencies of the population of motors. They argued that given the 
distribution of efficiencies commonly seen across a population of 
motors, due in part to factors such as manufacturing variability, this 
would be an inappropriate assumption. In addition, they also cited the 
electric motor compliance provisions (in 10 CFR 431.17) for support. 
These provisions state that the lowest full-load efficiency in a sample 
can differ from the nominal full load efficiency by as much as 15 
percent due to variations in losses attributable to variability in 
manufacturing and testing facilities. Baldor and NEMA asserted that 
similar conditions should be expected for small motors. Baldor and NEMA 
recommended that absent any other

[[Page 10889]]

data, DOE should use the manufacturer-rated catalog efficiency of the 
polyphase motor (74 percent) as the baseline efficiency. (Baldor, 
Public Meeting Transcript, No. 20.4 at pp. 120-121, 125; NEMA, No. 24 
at p. 11, 13)
    DOE agrees that it is possible that one tested efficiency value 
does not represent the average efficiency over a population of motors. 
Inconsistencies in motor laminations and processing during 
manufacturing can result in motors of a single design having a 
distribution of efficiencies, most commonly seen as variability in core 
and stray load losses. However, as manufacturers were not required to 
report its catalog efficiencies for these motors based on the results 
of the DOE test procedures, DOE does not agree with NEMA's assertion 
that catalog efficiencies should be used as the baseline efficiencies.
    In consideration of the comments received, DOE conducted additional 
testing to validate the polyphase baseline efficiency. DOE tested five 
additional polyphase motors (for a total of six tests, exceeding the 
minimum five required by the DOE sampling requirements for electric 
motors in 10 CFR 431.17) of the same baseline model, purchased from 
five separate warehouses in order to ensure the maximum variability in 
production. DOE then used the average of the six tests as the baseline 
efficiency for the polyphase motor. For the single-phase baseline 
motors, because the tested values did not deviate significantly from 
the catalog efficiency values and as DOE did not receive specific 
comments opposing these values, DOE used the single-tested efficiency 
values as the baseline efficiencies.
    Because DOE modified the efficiencies of the baseline designs 
relative to that which was calculated in the motor design software, DOE 
felt it necessary to evaluate whether the efficiencies of the higher 
efficiency designs modeled in the software would also change. As stated 
earlier, DOE calibrated its software model to the NOPR tested 
efficiencies of the baseline models, and all subsequent higher 
efficiency motor designs were generated as incremental efficiency gains 
and cost increases over this baseline design. Thus, a change in the 
baseline efficiency would likely affect the efficiencies of the other 
motor designs. Therefore, for this final rule, DOE shifted the baseline 
modeled efficiencies to match the tested values described above. 
Similarly, subsequent, more efficient designs were shifted by the same 
percentage change in losses as the baseline shifts. For example, the 
baseline polyphase model in the design software predicted an efficiency 
of 77.7 percent. This value was decreased to the average tested 
efficiency value of 75.3 percent, constituting an increase in motor 
losses of roughly 14 percent. The modeled efficiencies of the more 
efficient designs were then shifted down in efficiency by a 14 percent 
increase in motor losses as well.

                                Table IV.5--Efficiency Values of Baseline Models
----------------------------------------------------------------------------------------------------------------
                                                         Polyphase 1 hp, 4   CSIR \1/2\ hp, 4   CSCR \3/4\ hp, 4
                                                                pole               pole               pole
----------------------------------------------------------------------------------------------------------------
Catalog Rated Efficiency (%)...........................               74.0               59.0               72.0
Software Modeled Efficiency (%)........................               77.7               57.9               70.7
Baseline/Tested Efficiency (%).........................           \6\ 75.3           \7\ 57.9           \7\ 71.4
Shift in Losses from Modeled Values (%)................                 14                  0                 -3
----------------------------------------------------------------------------------------------------------------

    In the NOPR, DOE stated that an accredited laboratory performed 
IEEE Standard 112 Test Methods A and B and IEEE Standard 114 to find 
efficiency data for its baseline models. However, at the public meeting 
on December 17, 2009, Baldor commented that according to NEMA and the 
National Voluntary Laboratory Accreditation Program Handbook 150-10, 
accreditation is based on motor testing in accordance with IEEE 
Standard 112 Test Method B only, and that it does not currently cover 
testing in accordance with IEEE Standard 112 Method A or IEEE Standard 
114. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 114-115) 
Therefore, Baldor suggested that DOE's statement about motor tests was 
misleading because no accreditation exists for two of the three listed 
methods. DOE clarifies its previous statement to say that a laboratory 
accredited to perform IEEE Standard 112 Test Method B performed the 
tests.
---------------------------------------------------------------------------

    \6\ This efficiency represents the average of tests conducted on 
six separate units of the same model number.
    \7\ These values were incorrectly presented in the NOPR as 57.7 
and 71.0 for CSIR and CSCR, respectively. These values presented in 
the NOPR represent the NOPR modeled efficiencies. 74 FR 61427.
---------------------------------------------------------------------------

b. Baseline Temperature Rise
    NEMA MG1 defines several temperature rise requirements for general 
purpose alternating current single-speed induction motors. In the NOPR 
TSD, DOE reported the modeled temperature rise characteristics of the 
baseline motors selected in the engineering analysis. In response to 
those values, Baldor reasoned that because the reported temperature 
rises (78 [deg]C for the polyphase motor and 86 [deg]C for the CSIR 
motor at full load) would far exceed the NEMA temperature rise limit of 
70 [deg]C at service factor load, for a Class A motor, the selected 
baseline motors were inappropriate selections. (Baldor, Public Meeting 
Transcript, No. 20.4 at pp. 27-30) After receiving Baldor's comments, 
DOE reviewed the data from thermal tests conducted on the purchased 
baseline motors and found that the winding temperature tests indicated 
that all three baseline motors in fact meet NEMA temperature rise 
requirements for Class A insulation systems. See chapter 5 of the TSD 
for the tested temperature rise data for each baseline motor. However, 
because the modeled temperature rises in the design software were 
inconsistent with these tests, DOE revised the operating temperature 
inputs to the design software to agree with the tested temperature rise 
data. This change in operating temperature results in slight changes in 
the baseline modeled efficiencies. Namely as operating temperature 
decreases, motor efficiency generally increases. Though these motors 
meet temperature rise requirements for Class A insulation systems, DOE 
emphasizes again, that its scope of coverage is not bound to those 
motors with temperature rises of less than Class A requirements, but 
rather motors that contain insulation class systems rated A or higher.
c. Baseline Motor Performance
    In the NOPR TSD, DOE presented the modeled performance 
characteristics for the baseline motors selected. Baldor and NEMA both 
commented that none of the baseline motors meet all of the general 
purpose performance characteristics for locked-rotor torque, locked-
rotor

[[Page 10890]]

current, and breakdown torque as defined in NEMA MG1-1987. They argued 
that these motors cannot be considered small electric motors (under the 
statutory definition) and therefore, should have never been chosen as 
baseline motors. For polyphase motors, they cited comparisons to 
performance characteristics in NEMA MG1-1987 intended for ``medium'' 
motors. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 64-67; 
NEMA, No. 24 at pp. 7-8) The NEEA/NPCC disagreed and stated that 
because the performance of the motors selected by DOE were 
representative of products on the market, they were appropriate 
baseline models. (NEEA/NPCC, No. 27 at pp. 8-9)
    DOE examined the performance characteristics of the three baseline 
motors, and determined that they meet all small electric motor 
performance requirements of NEMA MG1. Thus, DOE believes that they are 
appropriate baseline motors and are representative of covered small 
electric motors on the market. Table IV.6 below presents references to 
NEMA MG1-1987 sections containing performance characteristics that DOE 
believes are relevant to single-phase and polyphase small electric 
motors.

 Table IV.6--NEMA MG1-1987 Performance Requirements Relevant to General
                          Purpose Small Motors
------------------------------------------------------------------------
                                   Single phase          Polyphase
------------------------------------------------------------------------
Breakdown Torque..............  12.32.1..........  12.37.
Locked Rotor Current..........  12.33.2..........  None.*
Locked Rotor Torque...........  12.32.2..........  None.
------------------------------------------------------------------------
* Because NEMA MG1-1987 section 12.35 is labeled as applying to only
  medium motors, DOE does not believe there are polyphase locked rotor
  current requirements for small motors. However, NEMA commented at the
  preliminary analysis stage that it is common industry practice to use
  the limits for Design B medium motors for small motors. (NEMA. No. 13,
  p. 6).

    DOE notes that in the NOPR TSD, DOE presented these performance 
characteristics at full load, steady state operating temperature. When 
extrapolated down to an ambient temperature of 25[deg] C, the 
temperature at which NEMA specifies that breakdown torque requirements 
must be met, all baseline motors meet the necessary small motor 
performance requirements in MG1. A direct comparison of those values, 
as requested by Baldor (Baldor, No. 25 at p. 2; Baldor, Public Meeting 
Transcript, No. 20.4 at p. 66) is available in TSD chapter 5.
3. Higher Efficiency Motor Designs
    After establishing baseline models, DOE next used the motor design 
software to incorporate design options (generated in the market and 
technology assessment and screening analysis) to increase motor 
efficiency. In response to the NOPR engineering analysis, DOE received 
several comments that addressed issues regarding the application of the 
design options in the engineering analysis and the validity of the 
results outputted from the design software.
    In general, manufacturers questioned whether DOE adequately 
verified that its design software accurately predicts motor efficiency. 
NEMA and Baldor stated that DOE seemingly used an AEDM to generate 
motor designs and scaled efficiencies for other product classes without 
meeting DOE's own substantiation requirements of an AEDM. Emerson 
stated that in order for manufacturers to use an AEDM for compliance 
and certification with energy conservation standards, DOE requires that 
the AEDM must be applied to 5 basic models of small electric motors, 
and it be shown to accurately predict motor efficiency under real-world 
testing. Collectively, this constitutes a total of 25 tests 
manufacturers must complete in order to verify their design software. 
(Emerson, Public Meeting Transcript, No. 20.4 at p. 105) Baldor and 
NEMA contended that DOE must be held to these same verification 
standards if it uses an AEDM in establishing energy conservation 
standards. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 118-24, 
145-146; NEMA, No. 24 at p. 11-12)
    NEEA/NPCC disagreed with these comments, stating that requirements 
of certification and compliance with Federal efficiency regulations are 
wholly unrelated and inapplicable to DOE's analysis methodology. The 
motor design software used in the engineering analysis was simply being 
used to create motor models for analysis, not as an alternative 
compliance tool. Thus, DOE is under no obligation to meet the 
verification standards of an AEDM. NEEA/NPCC stated that based on the 
description of the design software, the technical qualifications of the 
consultants, and the motor testing and teardowns conducted to verify 
the accuracy of software tools, it has satisfied with DOE's engineering 
analysis methodology. (NEEA/NPCC, No. 27 at pp 6-7).
    DOE agrees with NEEA/NPCC that substantiation of an AEDM is a 
concept intended for certifying compliance with energy efficiency 
standards. It is a tool for manufacturers to use to help ensure that 
equipment they manufacture comply with the standards that DOE sets. It 
is not a tool for assessing whether a particular energy efficiency 
level under consideration by DOE satisfies the EPCA criteria. 
Accordingly, the use of the AEDM in the manner suggested by industry 
would not be relevant for the purposes of this engineering analysis, 
which is geared toward DOE's standards rulemaking.
    Moreover, on the bases of the baseline motor efficiency 
verification process which included physical teardowns for numerous 
small motors, DOE has confidence in the software program it has 
selected and believes it to be appropriate to analyze efficiency levels 
for small electric motors.\8\ Though the supporting data for these 
tests are based on confidential manufacturer data, the performances of 
these motors verify the software predictions.
---------------------------------------------------------------------------

    \8\ DOE notes that the software used for its analysis has been 
employed by numerous motor manufacturers to develop designs that 
have then been used to produce lines of motors, including capacitor-
start and polyphase motors.
---------------------------------------------------------------------------

    In addition, as discussed in the NOPR, to the extent that it was 
feasible, DOE substantiated the resulting cost-efficiency curves by 
testing and tearing down higher efficiency motors. In response to that 
NOPR discussion, NEMA asserted that as seen in Table 12.1 and Table 
12.2 in appendix 5A of the NOPR, DOE did not compare the test results 
to the calculated results for the representative product classes. 
(NEMA, No. 24 at p. 24) DOE wishes to clarify that Table 12.1 and Table 
12.2 in appendix 5A of the NOPR TSD contained test results for motors 
that were used as part of DOE's scaling methodology. The results of the 
cost-efficiency curve validation testing for representative product 
classes are shown in Figure 4.1 through Figure 4.3 of appendix 5A of 
the NOPR and final rule TSDs.

[[Page 10891]]

a. Electrical Steel
    In the NOPR engineering analysis, DOE modeled the use improved 
grades of electrical steel and thinner laminations to achieve higher 
motor efficiency. In response to that analysis Baldor and NEMA 
commented that because DOE's design software bases loss calculations on 
Epstein core loss values, they believe DOE's modeled efficiencies using 
improved steel types may overestimate the actual achievable efficiency 
for a particular motor design. Baldor cited its experience with 
building and testing multiple motors using various steel types, stating 
that it has never been shown that the core loss in a motor with round 
laminations and rotating flux field is directly related to the results 
of Epstein testing. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 
276-80, Baldor, No. 25 at pp. 5-7; NEMA, No. 24 at pp. 23-24) As a 
result, Baldor asserted that DOE should not rely on steel manufacturer 
core loss data unless it is able to produce an actual motor to verify 
its design assumptions. (Baldor, Public Meeting Transcript, No. 20.4 at 
p. 277) NEEA/NPCC encouraged DOE to investigate the claims made by 
Baldor at the public meeting and revise the engineering analysis if 
necessary. (NEEA/NPCC, No. 27 at pp. 9-10)
    DOE recognizes that in analyzing motor performance, calculated core 
losses based on Epstein tests may deviate from actual core losses in 
the motor.\9\ This is primarily due to the harmonic effects created by 
the distortion of the flux density waveform. When motor core losses are 
modeled or measured at solely the fundamental frequency, it is possible 
that additional losses due to these harmonics may not be accounted for, 
which may yield an overall underestimation of losses. While DOE 
acknowledges that this phenomenon exists, DOE also believes it has 
accounted for this effect in its analysis.
---------------------------------------------------------------------------

    \9\ Epstein tests are performed by steel manufacturers to 
determine expected core loss values in electrical steel. The results 
of these tests are usually provided by steel manufacturers and are 
used by motor design engineers to predict motor performance.
---------------------------------------------------------------------------

    As Baldor suggests, one way to ensure that a software model is 
calibrated correctly to account for effects such as these is to build 
prototype motors and examine their performance characteristics. Though 
DOE did not perform such an exercise specifically for this rulemaking, 
the design software DOE employed for this analysis has been used in the 
past to design many small motors, whose performance characteristics 
compare favorably with the model predictions. Baldor did not provide 
any additional data from which DOE could refine its analysis or perform 
sensitivity analyses, even though it stated the values of core loss 
used in DOE's software model were inaccurate.
    DOE believes that the variances between Epstein losses and actual 
motor losses are not an issue for its engineering analysis. It is DOE's 
understanding that the Epstein core loss data begin to vary 
significantly from actual motor core losses when various components of 
the core steel are driven into magnetic saturation. Magnetic saturation 
is when the amplitude of the magnetic field excitation is large enough 
to force the flux density (of the magnetic field) into the nonlinear 
region of the B-H curve. At this point the harmonic components of the 
electromagnetic field increase.\10\ As these harmonic components 
increase, motor efficiency may be adversely affected and predicted core 
losses from the Epstein tests will deviate from actual core losses seen 
in the motor. In order to assess the degree to which these harmonic 
effects may impact the efficiency of motors analyzed in the engineering 
analysis, DOE examined the magnetic flux densities at full-load for 
each motor design. By using steel manufacturer-provided magnetization 
curves, DOE first determined the saturation point for each of the 
lamination types. DOE then evaluated each of its motor designs to 
determine whether it operates near magnetic saturation. The results of 
this analysis indicated that only two motor designs, the CSIR baseline 
design and the polyphase efficiency level (EL) 1 design, operate close 
to the point of magnetic saturation at full load. Based on these 
results, DOE believes that for all other motor designs, reliance on the 
Epstein core loss data is appropriate to model motor efficiency.
---------------------------------------------------------------------------

    \10\ Yamazaki, Katsumi; Watanabe, Yuta. ``Stray Load Loss 
Calculation of Induction Motors Using Electromagnetic Field 
Analysis.'' IEEJ Transactions on Industry Applications, Volume 128, 
Issue 1, pp. 56-63.
---------------------------------------------------------------------------

    DOE recognizes that for motors designs operating near the point of 
magnetic saturation (i.e., CSIR baseline and polyphase EL 1 designs), 
the modeled efficiency might deviate from a tested efficiency if a 
prototype were built. With regards to the CSIR baseline design, DOE 
notes that, as discussed in section IV.C.2.a, the efficiency associated 
with that design was based on a tested efficiency, rather than a 
modeled efficiency. Therefore, the baseline efficiency for the CSIR 
motor should adequately account for any harmonic core loss effects. For 
the polyphase EL 1 design, DOE recognizes that there may be significant 
uncertainty in its modeled efficiency. However, as discussed in section 
VI DOE has found that an efficiency level higher than EL 1 is 
technologically feasible and economically justified based on the net 
benefits to the nation and individual consumers. Therefore, DOE's 
standards-setting decisions in this final rule are not dependent on any 
uncertainties associated with the polyphase EL1 motor design. Please 
refer to TSD chapter 5 for additional information regarding the steels 
used in DOE engineering analysis, their respective saturation levels, 
and the flux densities of the designs using those steels.
    Baldor also questioned the validity of using several higher 
efficiency steel types in small motors, citing an AK steel publication. 
Baldor commented that several of the lamination types modeled, namely 
24M19 and 29M15, are not recommended for use in motors with less than a 
100 horsepower rating. (Baldor, No. 25 at p. 7) DOE has reviewed the 
referenced AK Steel publication \11\ and disagrees with Baldor's 
assertion. The AK Steel publication does not suggest that 24M19 and 
29M15 steels should not be used in motors with less than a 100 
horsepower rating; rather it only indicates that small electric motors 
currently on the market do not typically use these steel grades. In 
addition, DOE has not received any comments explaining why these 
lamination types, commonly used in medium motors, would not be 
applicable to small electric motors. Therefore, in this final rule, DOE 
continues to use higher efficiency steel grades and thinner laminations 
in the engineering analysis.
---------------------------------------------------------------------------

    \11\ AK Steel Product Data Bulletin. Nonoriented Electrical 
Steels. http://www.aksteel.com/pdf/markets_products/electrical/Non_Oriented_Bulletin.pdf.
---------------------------------------------------------------------------

b. Thermal Analysis
    NEMA and Baldor also questioned whether a thermal analysis was 
conducted for the higher efficiency motors modeled, stating the 
importance of verifying the thermal viability of motor designs. (NEMA, 
No. 24 at pp. 6-7, Baldor, Public Meeting Transcript, No. 20.4 at pp. 
28-29) Emerson commented that the NOPR analysis disregarded MG1 
performance requirements, including operating temperatures, potentially 
cause conflicts with the National Electrical Code. (Emerson, No. 28, p. 
2) In response to these comments, DOE has refined its thermal analysis 
methodology to ensure that it is accurately modeling motor efficiency 
and that all motor designs

[[Page 10892]]

evaluated are thermally viable. As mentioned in section IV.C.2.b, to 
establish the baseline motors' operating temperatures, DOE conducted 
tests in accordance with the relevant IEEE test procedures and 
monitored the temperature rises of the motors. DOE was then able to 
calculate a thermal resistance for each of the baseline motors. The 
thermal resistance of each subsequent design was modified to reflect 
the improved thermal transfer of the more efficient design. As each 
higher efficiency design was modeled, DOE calculated a new temperature 
rise. These calculations indicate that as motor efficiency increases 
(through an increase in the amount of active material and decrease in 
I\2\R losses \12\), the temperature rise of the motor continually 
decreases. For this reason, DOE believes that all higher efficiency 
motor designs analyzed in the engineering analysis have lower 
temperature rises than their respective baseline motors and are 
thermally viable. See TSD chapter 5 for additional information 
regarding the actual temperature rises calculated for each of DOE's 
designs.
---------------------------------------------------------------------------

    \12\ I\2\R losses refer to resistive losses, stemming from 
current flow through the copper windings in the stator and conductor 
bars in the rotor and manifest as waste heat which adversely affects 
the efficiency of a motor.
---------------------------------------------------------------------------

c. Performance Requirements
    As discussed in section IV.C.2.c, NEMA, through its MG1 
publication, lays out a number of performance requirements (breakdown 
torque, locked rotor torque, and locked rotor current) that motors must 
meet in order to be considered ``general purpose.'' In response to the 
small electric motor designs presented in the NOPR, manufacturers 
commented that some of DOE's more efficient designs do not meet certain 
performance requirements. Emerson added that many of the design changes 
that would be necessary to meet these requirements, such as increasing 
resistance at locked rotor or increasing the number of turns of the 
stator coils, could actually decrease efficiency. (Baldor, No. 25 at p. 
4; Baldor, Public Meeting Transcript, No. 20.4 at pp. 67, 86-87; 
Baldor, No. 25 at pp. 1-3; Emerson, Public Meeting Transcript, No. 20. 
4 at pp. 192-93; Emerson, No. 28, p. 1) Emerson also noted that the 
costs for the designs might increase when the motors are adjusted to 
meet these performance characteristics. (Emerson, Public Meeting 
Transcript, No. 73) In light of these comments, DOE revisited its 
engineering designs and found that when new performance values were 
calculated at operating temperatures of 25 [deg]C (as was done for the 
baseline designs), the vast majority of motors met applicable NEMA 
standards. For the motors that did not meet breakdown torque, locked 
rotor torque, or locked rotor current requirements (as presented in TSD 
Chapter 5), DOE revised these designs such that they adhered to all 
performance requirements. DOE notes that in some cases, as predicted by 
manufacturers, the design revisions led to increases in costs to 
maintain the same level of efficiency. See Chapter 5 of the TSD for 
further details on the performance characteristics of motor designs 
analyzed in the engineering analysis and comparisons to NEMA 
performance requirements.
    Baldor also noted that many small electric motors are rated in a 
broad voltage range (208V to 230V) and asserted (without clarifying) 
that the NEMA standard specifies these motors must be able to meet NEMA 
performance requirements over the entire voltage range. Baldor 
questioned whether DOE's proposed efficiency levels are achievable when 
motors are operated across this entire voltage range (specifically at 
208V). (Baldor, Public Meeting Transcript, No. 20.4 at pp. 271-72) As 
indicated by Emerson (Emerson, Public Meeting Transcript, No. 20.4 at 
pp. 273-74), it is DOE's understanding the 208V rating constitutes an 
unusual service condition. Thus, DOE's engineering analysis was based 
on motor operation at 230V.
    DOE notes that although the NEMA standard may require that certain 
performance characteristics (such as breakdown torque) be met through 
the entire rated voltage range, there is no such requirement for 
Federal efficiency standards. In fact, DOE's test procedures for small 
electric motors, IEEE 112 (Section 6.1) and IEEE 114 (Section 8.2.1) 
state that efficiency shall be determined at the rated voltage, without 
specifying which voltage shall be used in cases where motors are rated 
with broad voltages or dual voltages. DOE understands that it is at the 
manufacturer's discretion under which single voltage condition to test 
its motor. Because the test procedure outputs an efficiency value at a 
single input voltage, DOE did not conduct an additional analysis at 
208V.
    Baldor and NEMA stated that MG1 has additional requirements for 
small electric motors such as voltage unbalance, variation from rated 
speed, occasional excess current, stall time, overspeed, and sound 
quality. (Baldor, No. 25 at p. 3; NEMA, No. 24 at p. 9) In examining 
the variation from rated speed requirements, DOE notes that these are 
only applicable to medium motors, and thus not relevant to DOE's small 
electric motor designs. With regard to the other specifications, DOE 
believes that because it purchased the baseline motors from NEMA 
manufacturers, it is reasonable to assume that the motors meet NEMA MG1 
requirements.
    In addition DOE has evaluated each of its motor designs and 
believes for the following reasons that because the baseline motors 
likely meet all specifications, then the higher efficiency motors are 
expected to meet them as well. Specifically, whether a motor is able to 
meet voltage unbalance, excess current, and stall time requirements is 
often related to whether a motor overheats at those specified 
conditions. As the I\2\R losses in higher efficiency motors modeled are 
generally lower than that of the baseline motors (thus, resulting in a 
lower temperature rise), DOE believes that overheating effects will not 
be exacerbated with higher efficiency.
    For the overspeed requirement, DOE understands that there are 
several mechanical failure modes that may cause the motor to be unable 
to withstand speeds above the rated speed. Two primary reasons are the 
failure of the motor bearings and the potential for the motor shaft to 
bend, causing the rotor and stator to contact. In addition, DOE 
understands this issue to be more problematic for medium motors (with 
larger inertia) than small motors. Finally, for sound quality, 
decreased current and magnetic flux densities in higher efficiency 
motors will likely cause the magnitude of the torque pulsations of the 
motor to decrease during running conditions, reducing noise. The added 
mass of higher efficiency motors also serves as a dampener to reduce 
motor vibrations and noise. Given all of these reasons, DOE believes 
that all motor designs analyzed in the engineering analysis meet the 
additional performance requirements identified by the commenters.
    DOE also received comments at the public meeting regarding the 
power factor associated with its designs. Baldor commented that during 
the preliminary analysis stage of the rulemaking some parties preferred 
that the power factor levels be above 85 percent, but that DOE's 
analyses utilized a power factor around 71 to 73 percent for polyphase 
motors. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 275-76) As 
discussed in the NOPR, DOE understands that sacrificing power factor to 
obtain gains in efficiency is counterproductive because of the

[[Page 10893]]

negative effects on line efficiency. 74 FR 61429 For this reason, DOE 
maintained or increased the power factor of the baseline motor for each 
more efficient design. While power factor is generally considered when 
evaluating the potential benefits related to a particular efficiency 
level, it is not a design option that necessarily improves the energy 
efficiency of small electric motors. Increasing power factor could 
yield results that reduce the energy efficiency of individual units or 
impose higher costs without an increase in energy efficiency. For this 
reason, DOE opted not to require its designs to have an 85 percent 
power factor in its design analysis.
d. Stray Load Loss
    In the NOPR, DOE presented values of stray load loss that were 
modeled in the design software for the baseline and higher efficiency 
motor designs. The polyphase designs had a value of 2.4 percent for 
stray load loss, while the CSIR and CSCR designs had a value of 1.8 
percent. In response to the NOPR, DOE received several comments 
regarding the stray load loss values used in its designs. Baldor 
commented that in the absence of a tested stray load loss value, the 
IEEE Standard 112 Test Method A (which is referenced as the DOE test 
procedure for polyphase motors of 1-horsepower or lower) indicates that 
a value of 1.8 percent should be used. As a result, Baldor questioned 
the source of DOE's polyphase motor stray load loss value. Baldor was 
concerned that DOE actually performed IEEE Standard 112 Test Method B, 
which calculates stray load loss but may yield a different tested 
efficiency value than Test Method A. In Baldor's view, using Test 
Method B could potentially skew the analysis. (Baldor, Public Meeting 
Transcript, No. 20.4 at pp. 280-82; NEMA, No. at pp. 23-24)
    Baldor and NEMA also questioned why the stray load loss value of 
1.8 percent was used for the single-phase motors when the IEEE Standard 
114 test procedure calls for a measurement of stray load losses. 
(Baldor, Public Meeting Transcript, No. 20.4 at p. 282; NEMA, No. 24 at 
p. 24) They were concerned that DOE did not follow the IEEE Standard 
114 test procedure for the single-phase motors since the stray load 
loss value used did not appear to be a measured value. (Baldor, Public 
Meeting Transcript, No. 20.4 at p. 286) Advanced Energy supported DOE's 
assumptions, commenting that even though IEEE Standard 114 calls for a 
separation of losses, it also allows an assumed stray load loss value 
of 1.8 percent when a measured value cannot be determined. (Advanced 
Energy, Public Meeting Transcript, No. 20.4 at pp. 285-87) NEEA/NPCC 
also commented that DOE's stray load loss assumptions were appropriate. 
(NEEA/NPCC, No. 27 at p. 10)
    To clarify, DOE tested the polyphase baseline motor according to 
both the IEEE Standard 112 Method A and Method B test procedures. While 
Method A is the appropriate DOE test procedure for a 1-horsepower, 
four-pole small electric motor, Method B determines efficiency by 
segregating motor losses. When DOE compared the results of Method A and 
Method B, it found that there was no material difference between the 
resulting tested efficiencies for this particular motor. Therefore, DOE 
assumed that it would be most accurate to model the stray load losses 
determined by IEEE Standard 112 Method B (i.e. 2.4 percent) rather than 
an assumed value (i.e. 1.8 percent).
    The two baseline single-phase motors were tested according to IEEE 
Standard 114. As stated by Advanced Energy, the IEEE Standard 114 test 
procedure provides that if stray load loss is not measured, then the 
value of stray load loss at rated load may be assumed to be 1.8 percent 
of the rated load, consistent with DOE's assumption for CSCR and CSIR 
motors. DOE recognizes that losses can be segregated using the IEEE 
Standard 114 test procedure and therefore also calculated the stray 
load losses for the baseline motors. The results of these tests showed 
that the stray load losses for the CSIR and CSCR baseline motors were 
1.8 percent and 1.7 percent. Given the similarity to IEEE Standard 114 
assumed value and NEMA's previous recommendation to use this value, DOE 
believes that the use of 1.8 percent stray load loss for the single-
phase motors was appropriate and has used it again for today's final 
rule.
    Additionally, NEMA and Baldor questioned DOE's decision to maintain 
a constant stray load loss across its designs within a representative 
product class, stating that it would be unlikely that the use of 
thinner electrical steels in a longer core length would have resulted 
in the same level of stray load loss as in the baseline design. (NEMA, 
No. 24 at p. 24; Baldor, Public Meeting Transcript, No. 20.4 at pp. 
281-83) In response, DOE affirms that its assumptions of stray load 
loss for higher efficiency motor designs are appropriate. DOE 
recognizes that several factors, such as manufacturing process and 
harmonic effects, may affect the quantity of stray load loss for a 
particular motor. However, as discussed earlier, DOE has determined 
that the majority of motor designs evaluated operate below the point of 
magnetic saturation, thus reducing the impact of harmonic effects. 
Additionally, DOE understands that it is common practice for motor 
design engineers to assume a value of stray load loss either based on 
experience or as recommended by IEEE test procedures when creating new, 
potentially more efficient, motor designs. Finally, DOE also notes that 
both the polyphase and single-phase IEEE test procedures provide 
precedent for the assumption of constant stray load losses across 
several motor designs.
e. Stack Length and Core Diameter
    In the NOPR, DOE considered an increase in stack length as a viable 
option for increasing motor efficiency. DOE recognized, however, that 
limitations for certain motor applications exist because an increase in 
stack length may cause the motor to exceed the space constraints of the 
application into which it would reside. Thus, DOE followed a suggestion 
made by NEMA during the preliminary analysis stage and limited the 
stack length increases for space-constrained applications to no more 
than a 20 percent increase over the baseline motor. (NEMA, No. 13, at 
p. 4) For applications that DOE considered non-space constrained, the 
stack length of the motor was allowed to increase by up to 100 percent 
of the stack length of the baseline motor (i.e. it could double).
    In response to the NOPR analysis, several interested parties 
commented on DOE's assumptions of space constraints and stack length 
increases. WEG questioned if the 20 percent increase in stack length 
for space constrained applications is an appropriate tolerance. (WEG, 
Public Meeting Transcript, No. 20.4 at p. 83) A.O. Smith commented that 
doubling the stack length in non-space constrained applications will be 
somewhat impractical for customers' applications. (A.O. Smith, Public 
Meeting Transcript, No. 20.4 at p. 81).
    In response to the manufacturers' comments, DOE maintains that the 
20 percent increase in stack length for space-constrained applications 
that was used in the NOPR is still an acceptable tolerance. DOE notes 
that NEMA reiterated its support for this design constraint in its 
comments responding to the NOPR, by citing its recommendation from the 
preliminary analysis. (NEMA, No. 24 at p. 9) Regarding doubling the 
stack length of the motor, DOE also believes this is an appropriate 
tolerance for non-space constrained applications. When DOE solicited 
engineering cost-efficiency

[[Page 10894]]

curves from manufacturers for the preliminary analysis, all 
participating manufacturers suggested that increasing stack height 
would be one of the first design options used to achieve greater 
efficiencies because of the relative cost of this design option versus 
a change in steel type lamination. In designs provided by all of these 
manufacturers, stack increases of well over 100 percent relative to the 
baseline were used to achieve target efficiency levels that DOE 
provided to manufacturers. Accordingly, DOE believes that for those 
applications that are non-space constrained, a stack increase of 100 
percent is an appropriate and even a likely design option that 
manufacturers could employ. DOE accounts for the costs associated with 
increasing a motor's stack length in markups analysis (see section 
IV.D).
    Emerson also commented that the NOPR efficiency levels would 
require several motors to increase in frame size. (Emerson, No. 28 at 
p.1) However, DOE disagrees with Emerson's comments and notes that for 
all higher efficiency designs developed in the engineering analysis, 
core diameter was held constant to the baseline value. As only an 
increase in core diameter would force a frame size increase, DOE 
believes that all efficiency levels analyzed can be achieved without 
increasing frame size.
4. Cost Model
    For the NOPR engineering analysis, DOE estimated the manufacturing 
production cost (MPC) of small electric motors by using outputs of the 
design software to generate a complete bill of materials. The bill of 
materials was marked up to account for scrap, overhead (which includes 
depreciation) and associated non-production costs such as interest 
payments, research and development, and sales and general 
administration. To account for the increased depreciation of equipment 
associated with manufacturing a copper rotor, DOE used separate 
overhead markups for motor designs using copper and aluminum rotors. 
The software output also included an estimate of labor time associated 
with each step of motor construction. DOE multiplied these estimates by 
a fully burdened labor rate to obtain an estimate of labor costs.
    DOE estimated input costs by using an inflation-adjusted 5-year 
average of prices for each of the input commodities: Steel laminations, 
copper wiring, and aluminum and copper for rotor die-casting. This 
method for calculating costs is consistent with past rulemakings where 
material costs were a significant part of manufacturers' costs. In 
calculating the 5-year average prices for these commodities, DOE 
adjusted historical prices to 2008 terms using the historical Producer 
Price Index (PPI) for that commodity's industry. For this final rule, 
DOE updated material prices using the PPI to reflect 2009$. After 
calculating the MPC, DOE applied a 1.45 manufacturer markup to arrive 
at the MSP.
    Emerson commented that it was concerned that DOE had not 
appropriately accounted for the significant costs associated with 
implementing the technology to manufacture motors with copper die-cast 
rotors in the engineering analysis. (Emerson, Public Meeting 
Transcript, No. 20.4 at p. 94) DOE recognizes that there are additional 
costs associated with implementing copper die-cast rotors and has 
incorporated higher depreciation costs in the Engineering Analysis for 
designs requiring this technology.
    With regard to the accounting of higher depreciation for equipment 
used to manufacture copper die-cast rotors, NEEA/NPCC supported DOE's 
approach to using different overhead markups for designs with copper 
rotors and those with aluminum rotors. (NEEA/NPCC, No. 27 at p. 9) NEMA 
commented that since motor manufacturers typically standardize its 
production process for a product line, the higher overhead attributable 
to the application of advanced technologies will be applied over all 
production unless the manufacturer exits that portion of the market. 
(NEMA, No. 24 at p. 9) As all comments supported the use of higher 
markups when manufacturing copper rotors, DOE maintained this approach 
in the engineering analysis for the final rule. See section IV.C.4 for 
further details.
5. Efficiency Scaling
    For the NOPR, in order to scale efficiency levels from the 
representative product classes to the other product classes, DOE used 
data on commercially-available motors to investigate how changing 
horsepower or pole configuration affects efficiency, DOE evaluated 
product lines of different manufacturers separately. In developing 
these efficiency relationships, DOE considered only motors of the most 
restrictive frame size for a given product class to ensure that the 
most dimensionally-constrained motors on the market would be able to 
meet all efficiency levels derived. DOE then converted these efficiency 
relationships across product class into motor loss relationships. DOE 
applied these relationships (as a percentage change in motor losses) to 
each efficiency level analyzed for the representative product classes, 
ultimately deriving corresponding efficiency levels for product classes 
not directly analyzed in the engineering analysis. DOE repeated this 
analysis for each manufacturer's product line for which sufficient data 
were available. Finally, DOE averaged the results based on each of the 
manufacturer's product lines to obtain aggregated scaled efficiency 
levels for all product classes.
    DOE received several comments on the results and methodology of the 
proposed scaling analysis. While NEAA/NPCC supported DOE's scaling 
methodology (NEEA/NPCC, No. 27 at p. 9), Baldor stated that the scaling 
presented is likely not accurate because of the difficulty in 
predicting efficiencies when changing frame sizes, horsepower, and pole 
configurations. Instead, Baldor commented that DOE should create a 
motor design for each non-representative product class to verify the 
scaled efficiencies. (Baldor, Public Meeting Transcript, No. 20.4 at p. 
97; Baldor, No. 25 at p. 8) WEG also commented that the scaling should 
take into account not only the change in efficiency associated with 
altering horsepower or pole configuration, but also the drop in 
efficiency associated with moving from a 56-frame to a 48-frame, and 
potentially a smaller core diameter. (WEG, Public Meeting Transcript, 
No. 20.4 at p. 220)
    In addition, with regard to the polyphase motor scaling, several 
manufacturers pointed to the efficiencies at high horsepower ratings as 
evidence that DOE scaling was flawed. Specifically, they remarked that 
although the proposed level for the representative polyphase product 
class harmonized with medium motor NEMA Premium efficiency standards, 
the 3-horsepower, six-pole polyphase motor had a scaled efficiency 
greater than the NEMA Premium level.\13\ They also noted that because 
the comparable medium motor for that product class is built in a 213 T-
frame (larger than a 56-frame), it may be unreasonable to require a 56-
frame motor to have a higher efficiency. (A.O. Smith, No. 26 at p. 2; 
Baldor, No. 25 at p. 8; Baldor, Public Meeting Transcript, No. 20.4 at 
pp. 100-101, 212-213; Regal-Beloit,

[[Page 10895]]

Public Meeting Transcript, No. 20.4 at pp.105)
---------------------------------------------------------------------------

    \13\ NEMA Premium refers to efficiency levels for three-digit 
frame series medium electric motors developed by NEMA to identify 
high efficiency motors. Congress subsequently adopted those levels 
for medium electric motors. See EISA 2007, Sec. 313(b).
---------------------------------------------------------------------------

    DOE agrees that the efficiency behavior at high horsepower ratings 
for polyphase motors indicated a lack of accuracy in the NOPR scaling, 
and has revised its analysis for the final rule. Baldor's 
recommendation to generate motor designs to validate scaling 
essentially constitutes developing an additional engineering analysis 
for every product class, which is atypical for DOE rulemakings and 
unnecessary because it defeats the purpose of using a scaling 
methodology. In addition, DOE notes that in its comments on the 
preliminary analysis, NEMA recommended that DOE utilize product 
literature to derive efficiency levels for product classes not directly 
analyzed in the engineering analysis, which was a significant reason 
why DOE maintained a scaling approach based partially on publicly 
available data. (NEMA, No. 13, at p. 10) Thus, DOE believes scaling is 
an appropriate approach to developing efficiency levels. As interested 
parties did not recommend a new methodology for scaling, DOE based it 
revised scaling on the same general methodology (establishing 
relationships in efficiency across horsepower ratings and pole 
configurations), but utilized additional sources of data to refine its 
inputs.
    One new source of data DOE utilized was the NEMA recommended 
standard levels for polyphase, CSIR, and CSCR motors built in small 
frames (42- and 48-frames) and in 56-frames. These recommended standard 
levels included efficiencies for motors with horsepower ratings less 
than and equal to 1-horsepower and with two-, four-, or six-pole 
configurations. (NEMA, No. 24 at p. 1) DOE first examined this data to 
see how it compared to the efficiency data of motors currently on the 
market. DOE noted that the efficiency relationships that NEMA presented 
between product classes were comparable to the market data that DOE had 
collected for the NOPR. For this reason, DOE concludes that NEMA's 
recommended standard levels can be used to establish appropriate 
efficiency (or loss) relationships for lower horsepower polyphase, 
CSIR, and CSCR motors.
    For the high horsepower (greater than or equal to 1-horsepower) 
polyphase motors, DOE utilized the relationships found in the NEMA 
Premium standards for electric motors. As seen in Table IV.7, the 
majority of the NEMA Premium standards between 1- and 3-horsepower are 
based on motors with a frame size in the 140T series, which has the 
same foot to shaft dimension as the 56-frame motor. Therefore, for 
these 140T series product classes, DOE used NEMA Premium efficiencies 
to develop relationships across horsepower ratings and poles. DOE did 
not use the efficiency relationships found from NEMA Premium classes 
associated with larger frame sizes (182T). For these horsepower/pole 
configurations, DOE did not have sufficient efficiency data to 
determine appropriate scaling relationships. Thus, though efficiency 
generally increases with horsepower, in order to ensure that all 
efficiency levels are technologically feasible, DOE decided that the 3-
horsepower, four-pole motor and 1\1/2\-horsepower, two pole motor would 
have the same minimum efficiency standards as the 2-horsepower, four-
pole motor and 1-horsepower, two-pole motor, respectively.

                         Table IV.7--Frame Sizes Associated With NEMA Premium Standards
----------------------------------------------------------------------------------------------------------------
          Motor horsepower/standard kilowatt equivalent              Six poles      Four poles       Two poles
----------------------------------------------------------------------------------------------------------------
1 hp/0.75 kW....................................................              56            143T            145T
1\1/2\ hp/1.1 kW................................................            143T            145T            182T
2 hp/1.5 kW.....................................................            145T            145T  ..............
3 hp/2.2 kW.....................................................            145T            182T  ..............
----------------------------------------------------------------------------------------------------------------

    In the absence of any standardized efficiency levels above 1-
horsepower for CSIR motors (such as those provided in the NEMA Premium 
table for polyphase motors), DOE continued to use market efficiency 
data. Since this approach, when used in the NOPR, resulted in some 
aberrations (abnormally high efficiencies) for high horsepower 
polyphase motors, DOE modified its methodology slightly for the final 
rule to result in more appropriate scaling relationships. As stated 
earlier, for the NOPR, because some manufacturers showed larger 
increases in efficiency with increasing horsepower than others, DOE 
averaged data from several manufacturer product lines to create 
efficiency relationships. However, for this final rule, to ensure the 
technological feasibility of all scaled efficiency levels, instead of 
averaging data from all manufacturers, DOE selected the product line 
which resulted in the most achievable efficiency levels.
    As mentioned in the NOPR, DOE was unable to locate sufficient 
market data for CSCR motors. However, DOE data indicate that CSCR 
motors exhibit scaling relationships similar to CSIR motors. For these 
reasons, DOE decided to continue utilizing CSIR market data to 
characterize the efficiency (or loss) relationships present in the CSCR 
market at high horsepower ratings.
    Next, DOE addressed changes in physical dimensions of motors across 
horsepower ratings and pole configurations. As discussed earlier, DOE 
recognizes that core diameter affects the amount of active material 
that is used to reduce motor losses, thus impacting efficiency. If DOE 
were to set a standard based on an analysis of a motor of larger core 
diameter, it could potentially eliminate smaller core diameter motors 
from the market. Therefore, after establishing the efficiency 
relationships (by using the NEMA recommended levels, the NEMA Premium 
levels, and market data), DOE accounted for the fact that for some 
horsepower/pole configurations, 48-frame size motors are commercially 
available, while for others, only 56-frame size motors are commercially 
available.
    As stated by WEG at the NOPR public meeting, a reduction in frame 
size (or core diameter) should accompanied by a reduction in 
efficiency. To determine the appropriate efficiency reduction of 
shifting from a motor with a core diameter representative of a 56-frame 
to a core diameter representative of a 48-frame, DOE again utilized the 
NEMA recommended efficiencies. From these efficiency values, DOE noted 
that according to NEMA a shift in frame size constitutes approximately 
a 20 percent change in losses. DOE applied this 20 percent reduction in 
losses to product classes for which 42 frame or 48-frame motors are 
commercially available. DOE intends for its loss scaling analysis to 
reflect motors in the smallest commercially available frame size for 
each product class.
    After deriving efficiency relationships accounting for changes in 
horsepower, pole configuration, and core diameter, DOE then applied 
these relationships (as a percentage change in motor losses)

[[Page 10896]]

to each efficiency level of the representative product classes, 
ultimately deriving corresponding efficiency levels for the non-
representative product classes.
6. Cost-Efficiency Results
    The results of the engineering analysis are reported as cost-
efficiency data (or ``curves'') in the form of MSP (in dollars) versus 
full-load efficiency (in percentage). These data form the basis for 
subsequent analyses in the final rule. As discussed in the NOPR, DOE 
developed two curves for each product class analyzed, one for the 
space-constrained set of designs restricted by a 20-percent increase in 
stack height and one for the non-space constrained set of designs 
restricted by a 100-percent increase in stack height relative to the 
baseline.
    NEMA recommended efficiency levels for small electric motors that 
it believed would be technologically feasible to implement by 2015. 
NEMA presented six separate sets of efficiency levels, one for 56-frame 
size motors in each of the three motor categories and one for 42- and 
48-frame size motors in each of the three motor categories. (NEMA, No. 
24 at p. 1) When DOE revised its engineering analysis, it ensured that 
each of its representative units had an efficiency level that 
corresponded to one of those sets of standards. For CSIR motors, NEMA 
proposed an efficiency value of 72.0 percent for a 48-frame size, four-
pole \1/2\-horsepower motor. This proposal roughly corresponds to DOE's 
efficiency level 4 for CSIR motors. For CSCR motors NEMA proposed an 
efficiency value of 80.0 percent for a 56-frame size, four-pole, \3/4\-
horsepower motor. This proposal corresponds to DOE's efficiency level 2 
for CSCR motors.
    For polyphase motors, NEMA did not present an efficiency value for 
the four-pole, 1-horsepower product class. In light of this, DOE 
utilized its scaling model to identify the projected efficiency for the 
four-pole, 1-horsepower product class according to NEMA's 
recommendations for the 42- and 48-frame size motors. DOE used the 42/
48-frame size proposed levels to apply to its representative product 
class because the core diameter of its baseline model is representative 
of 48-frame size motors. DOE projects this efficiency value to be 
approximately 82.6 percent for the representative polyphase motor. As 
this efficiency lies between the designs analyzed for EL 4 and EL5, DOE 
created an additional efficiency level at 82.6 percent, denoted EL 4b. 
DOE developed a new space constrained and non-space constrained design 
at this efficiency level that adhered to all of DOE's design 
limitations.
    Table IV.8 through Table IV.10 show the efficiency value and 
manufacturer selling price data for each EL examined in the final rule.

Table IV.8--Efficiency and Manufacturer Selling Price Data for Polyphase
                                  Motor
------------------------------------------------------------------------
                                 Efficiency (%)     Manufacturer selling
      Efficiency level         (Design 1/Design 2)  price ($) (Design 1/
                                        *                Design 2) *
------------------------------------------------------------------------
Baseline....................                  75.3                 98.54
EL 1........................                  77.3                104.83
EL 2........................                  78.8                108.17
EL 3........................                  80.5                114.24
EL 4........................                  81.1                118.54
EL 4b.......................             83.5/83.5         135.62/134.04
EL 5........................             85.3/85.2         230.92/153.92
EL 6........................             86.2/86.3         237.70/186.37
EL 7 (Max-tech).............             87.7/87.8       1,766.06/326.18
------------------------------------------------------------------------
* Design 1 denotes the space-constrained design, and Design 2 denotes
  the non-space-constrained design. If only one value is listed, then
  the space-constrained design is the same as the non-space-constrained
  design.


Table IV.9--Efficiency and Manufacturer Selling Price Data for Capacitor-
                       Start, Induction-Run Motor
------------------------------------------------------------------------
                                 Efficiency (%)     Manufacturer selling
      Efficiency level         (Design 1/Design 2)  price ($) (Design 1/
                                        *                Design 2) *
------------------------------------------------------------------------
Baseline....................                  57.9                 91.24
EL 1........................                  61.1                 95.43
EL 2........................                  63.5                 98.45
EL 3........................                  65.7                 99.58
EL 4........................             70.6/70.5         114.31/106.99
EL 5........................             71.8/71.8         117.07/118.00
EL 6........................             73.1/73.3         182.09/132.22
EL 7 (Max-tech).............             77.6/77.7       1,200.98/151.25
------------------------------------------------------------------------
* Design 1 denotes the space-constrained design, and Design 2 denotes
  the non-space-constrained design. If only one value is listed, then
  the space-constrained design is the same as the non-space-constrained
  design.


     Table IV.10--Efficiency and Manufacturer Selling Price Data for
                  Capacitor-Start, Capacitor-Run Motor
------------------------------------------------------------------------
                                 Efficiency (%)     Manufacturer selling
      Efficiency level         (Design 1/Design 2)  price ($) (Design 1/
                                        *                Design 2) *
------------------------------------------------------------------------
Baseline....................                  71.4                111.72
EL 1........................                  75.1                117.13
EL 2........................             79.5/79.5         137.20/129.88

[[Page 10897]]

 
EL 3........................             81.7/81.8         142.63/135.56
EL 4........................             82.8/82.8         146.44/142.76
EL 5........................             84.1/84.0         154.55/151.91
EL 6........................             84.8/84.6         236.98/158.25
EL 7........................             86.8/86.7         244.03/175.75
EL 8 (Max-tech).............             88.1/87.9       1,771.47/327.69
------------------------------------------------------------------------
* Design 1 denotes the space-constrained design, and design 2 denotes
  the non-space-constrained design. If only one value is listed, then
  the space-constrained design is the same as the non-space-constrained
  design.

D. Markups To Determine Equipment Price

    To calculate the equipment prices faced by small electric motor 
purchasers, DOE multiplied the manufacturing costs developed from the 
engineering analysis by the supply chain markups it developed (along 
with sales taxes). In the NOPR, DOE explained how it developed the 
distribution channel markups used. 74 FR 61434.
    DOE did not receive comments on these markups; however, in written 
comments, NEMA and DOJ commented that some original equipment 
manufacturers (OEMs) could incur additional design costs to redesign 
their products to accommodate the increased size of more efficient 
motor designs. (NEMA, No. 24 at p.19 and DOJ No. 29 at p. 2) DOE 
recognizes that motors produced following the introduction of the 
standards described in this rule will likely be different in size and 
shape from motors produced today. In particular, the designs produced 
in DOE's engineering analysis exhibit longer stack length to increase 
efficiency. DOE also projects that the standards may result in 
significant increases in market share for CSCR motors (which have an 
extra external capacitor). DOE understands that these changes may 
result in the need for some OEMs who incorporate these motors to 
redesign their products. Nationally, about 2.5% of U.S. gross domestic 
product is spent on research and development (R&D; National Science 
Board. 2010. Science and Engineering Indicators 2010. Arlington, VA: 
National Science Foundation (NSB 10-01)). DOE estimates that R&D by 
equipment OEMs, including the design of new products, generally 
represents approximately 2 percent of company revenue. This percentage 
is slightly less than the national average to account for high 
technology companies that generally spend a much larger fraction of 
revenue on R&D than OEMs of equipment that incorporate small motors. 
DOE accounted for the additional costs to redesign products and 
incorporate differently-shaped motors by adding 2% to the OEM markup, 
increasing the baseline OEM markup from 1.37 to 1.39 and the 
incremental OEM markup from 1.27 to 1.29 for OEMs without a 
distributor, and 1.33 to 1.35 for OEMs that purchase motors through 
distributors.
    DOE used these markups, along with sales taxes, installation costs, 
and manufacturer selling prices (MSPs) developed in the engineering 
analysis, to arrive at the final installed equipment prices for 
baseline and higher efficiency small electric motors. As explained in 
the NOPR (74 FR 61434), DOE defined three distribution channels for 
small electric motors to describe how the equipment passes from the 
manufacturer to the customer. DOE retained the same distribution 
channel market shares described in the NOPR.
    Table IV.11 summarizes for each of the three identified 
distribution channels the baseline and incremental markups at each 
stage and the overall markups, including sales taxes. Weighting the 
markups in each channel by its share of shipments yields an average 
overall baseline markup of 2.52 and an average overall incremental 
markup of 1.86. DOE used these markups for all three types of motors.

                                        Table IV.11--Summary of Small Electric Motor Distribution Channel Markups
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Direct to OEMs 65%         Via distributors to OEMs 30%    Via distributors to end-users
                                                         ----------------------------------------------------------------               5%
                                                                                                                         -------------------------------
                                                             Baseline       Incremental      Baseline       Incremental      Baseline       Incremental
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wholesale Distributor...................................  ..............  ..............            1.28            1.10            1.28            1.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
OEM.....................................................            1.39            1.29            1.39            1.35  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Retail and Post-OEM Distributor.........................            1.43            1.18            1.43            1.18            1.44            1.18
--------------------------------------------------------------------------------------------------------------------------------------------------------
Contractor or Installer.................................            1.10            1.10            1.10            1.10            1.10            1.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sales Tax...............................................              1.0684
                                                                      1.0684
                                                                      1.0684
--------------------------------------------------------------------------------------------------------------------------------------------------------
Overall.................................................            2.34            1.79            2.99            2.06            2.17            1.53
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Using these markups, DOE generated motor end-user prices for each 
efficiency level it considered, assuming that each level represents a 
new minimum efficiency standard. Because it generated a range of price 
estimates,

[[Page 10898]]

DOE describes prices within a range of uncertainty.
    Chapter 7 of the TSD provides additional detail on the markups 
analysis.

E. Energy Use Characterization

    The energy use characterization estimates the annual energy 
consumption of small electric motors. This estimate is used in the 
subsequent LCC and PBP analyses (chapter 8 of the TSD) and National 
Impacts Analysis (NIA) (chapter 11 of the TSD). DOE determined the 
annual energy consumption of small electric motors by multiplying the 
energy use while in operation by the annual hours of operation. The 
energy use in operation is a function of the motor loading and the 
losses resulting from motor operation, based on the motor designs 
characterized in the engineering analysis. DOE's motor designs are also 
characterized by their power factor, which allows DOE to estimate the 
reactive power requirements of each analyzed motor.
1. Applications
    DOE's shipments analysis indicates that small electric motors are 
used in five application categories: Pumps; fans and blowers; air 
compressors; conveyors and material handling; and general industrial or 
miscellaneous applications. Motor energy use depends on application 
because different applications have different annual hours of operation 
and different average motor loading.
    In the NOPR, DOE presented the results of an analysis of motor 
shipments into the five application categories. Table IV.12 shows the 
distribution of motor shipments by application presented in the NOPR.

                        Table IV.12--Distribution of Motors by Application and Motor Type
----------------------------------------------------------------------------------------------------------------
                        Motor application                          Polyphase (%)     CSIR (%)        CSCR (%)
----------------------------------------------------------------------------------------------------------------
Reference Case:
    Air and gas compressors.....................................            17.3            14.9            14.9
    Conveyors & packaging equipment.............................            13.3            11.9            11.9
    General industrial machinery................................            11.3            12.5            12.5
    Indus. and comm. fans and blowers...........................             7.3             6.9             6.9
    Pumps and pumping equipment.................................            50.7            53.7            53.7
    Service industry............................................             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------
        Total...................................................           100.0           100.0           100.0
----------------------------------------------------------------------------------------------------------------
Sensitivity (NEMA Survey):
    Air and gas compressors.....................................              45              22              45
    Conveyors & packaging equipment.............................               5               2               2
    General industrial machinery................................               7               1               1
    Indus. and comm. fans and blowers...........................              23              51              29
    Pumps and pumping equipment.................................              15              13              12
    Service industry............................................               5              11              11
----------------------------------------------------------------------------------------------------------------
        Total...................................................           100.0           100.0           100.0
----------------------------------------------------------------------------------------------------------------

    In written comments, NEMA submitted the results of a survey of 
their OEM customers for motors which NEMA considers to be covered 
products. (NEMA, No. 24 at pp. 19 to 21) The survey reports 
distributions by application and owner type, estimates of annual hours 
of operation, and the fraction of motors that are space-constrained. 
NEMA also provided information on a sixth application not included in 
DOE's NOPR, service industry motors. The distribution by application 
and motor type provided by NEMA is also shown in Table IV.13.
    DOE has concerns about the accuracy of the results of this survey. 
It is not clear which OEMs were contacted for the survey, how many 
responded, how representative the respondents are of the small motor 
market, and what specific questions were asked. It is also not clear 
that the survey results represent an accurate picture of the entire 
U.S. market for small motors, or how all OEMs will respond to today's 
rule. In contrast, the distributions by motor application that DOE used 
in the NOPR were based on analysis conducted in the early stages of the 
rulemaking, supplemented by a review of U.S. Census and U.S. Customs 
data regarding production and imports of motors and equipment 
containing motors. For these reasons, DOE retained its assumptions 
regarding the distribution of motors by application and sector; 
however, DOE did run a sensitivity case that reflects the results of 
the NEMA survey. This sensitivity is discussed in Section VI, and the 
detailed results are presented in the TSD.
    Table IV.13 shows the distributions of motors by sector within each 
application used in the NOPR, as well as the results provided by the 
NEMA survey.

                          Table IV.13--Distribution of Motors by Application and Sector
----------------------------------------------------------------------------------------------------------------
                                                              Sector
                                 ----------------------------------------------------------------
           Application                                             Agricultural     Residential      Total (%)
                                  Industrial (%)  Commercial (%)        (%)             (%)
----------------------------------------------------------------------------------------------------------------
Reference Case:
    Air and gas compressors.....              40              40              10              10             100
    Conveyors & Packaging                     40              50              10               0             100
     Equipment..................
    General industrial machinery              50              40              10               0             100
    Indus. and comm. fans and                 50              50               0               0             100
     blowers....................

[[Page 10899]]

 
    Pumps and pumping equipment.              40              35              20               5             100
    Service industry............               0               0               0               0             N/A
----------------------------------------------------------------------------------------------------------------
Sensitivity (NEMA Survey):
    Air and gas compressors.....               0              15              15              70             100
    Conveyors & Packaging                     65              35               0               0             100
     Equipment..................
    General industrial machinery              80              20               0               0             100
    Indus. and comm. fans and                 20              80               0               0             100
     blowers....................
    Pumps and pumping equipment.              10              40              20              30             100
    Service industry............              10              80               0              10             100
----------------------------------------------------------------------------------------------------------------

2. Annual Hours of Operation and Motor Loading
    In the NOPR, and in today's final rule, DOE characterized the motor 
loading and annual hours of operation with distributions for each 
analyzed motor application. DOE's estimates of the average motor 
loading in each application are unchanged from the NOPR to today's 
final rule. Table IV.14 shows the average loading in each application. 
DOE assumed that the motor loading distribution took the form of a 
normal distribution, centered on the average value, with a standard 
deviation equal to one fifth of the average loading. Details on these 
calculations are provided in chapter 6 of the TSD.

            Table IV.14--Average Motor Loading By Application
------------------------------------------------------------------------
                                                               Average
                        Application                          loading (%)
------------------------------------------------------------------------
Air and gas compressors....................................           85
Conveyors & Packaging Equipment............................           50
General industrial machinery...............................           70
Indus. and comm. fans and blowers..........................           80
Pumps and pumping equipment................................           65
Service industry...........................................           70
------------------------------------------------------------------------

    In the NOPR, DOE assumed distributions of the annual hours of 
operation in each application with means and medians as shown in Table 
IV.15. At the December 17, 2009 public meeting, Emerson commented that 
the average hours of operation within each application assumed by DOE 
are too high (Emerson, Public Meeting Transcript No. 20.4 at pp. 197-
99). According to Emerson, the distribution of hours of operation that 
DOE assumed for each application, detailed in the TSD, is a highly 
skewed distribution in which the mean and median can be significantly 
different. As a result of its survey of OEMs, NEMA reported lower hours 
of operation only for compressors, and reported that service industry 
motors run 1000 hours per year on average, with a median of 400 hours. 
However, by including in the table in their written comments the 
operating hour assumptions DOE used in the NOPR for the other 
applications, NEMA appears to accept DOE's assumptions of hours of 
operation for conveyors, general industrial machinery, fans and 
blowers, and pumps. The mean and median hours of operation in each 
application in the reference and sensitivity case are shown in Table 
IV.15.

 Table IV.15--Median and Mean Annual Hours of Operation and Fraction That Run All the Time, by Motor Application
----------------------------------------------------------------------------------------------------------------
                                                                     Annual Hours of Operation      Fraction of
                                                                 --------------------------------   motors that
                           Application                                                              run all the
                                                                      Median           Mean          time (%)
----------------------------------------------------------------------------------------------------------------
Reference Case:
    Air and gas compressors.....................................             375             600               0
    Conveyors & Packaging Equipment.............................            2000            3000               8
    General industrial machinery................................            1200            2000               4
    Indus. and comm. fans and blowers...........................            2825            4500              40
    Pumps and pumping equipment.................................            1850            3000              12
    Service industry............................................              NA              NA              NA
----------------------------------------------------------------------------------------------------------------
Sensitivity (NEMA Survey):
    Air and gas compressors.....................................             100             200               0
    Conveyors & Packaging Equipment.............................            2000            3000               0
    General industrial machinery................................            1200            2000               4
    Indus. and comm. fans and blowers...........................            2825            4500              10
    Pumps and pumping equipment.................................            1850            3000              12
    Service industry............................................             400            1000               2
----------------------------------------------------------------------------------------------------------------


[[Page 10900]]

F. Life-Cycle Cost and Payback Period Analysis

    In response to the requirements of section 325(o)(2)(B)(i) of the 
Act, DOE conducted LCC and PBP analyses to evaluate the economic 
impacts of possible amended energy conservation standards on small 
electric motor customers. This section of the notice describes these 
analyses. DOE conducted the analysis using a spreadsheet model 
developed in Microsoft (MS) Excel for Windows 2003.
    The LCC is the total consumer expense over the life of the 
equipment, including purchase and installation expense and operating 
costs (energy expenditures, repair costs, and maintenance costs). The 
PBP is the number of years it would take for the consumer to recover 
the increased costs of a higher-efficiency equipment through energy 
savings. To calculate the LCC, DOE discounted future operating costs to 
the time of purchase and summed them over the lifetime of the 
equipment. DOE measured the change in LCC and the change in PBP 
associated with a given efficiency level relative to a base case 
forecast of equipment efficiency. The base case forecast reflects the 
market in the absence of amended mandatory energy conservation 
standards. As part of the LCC and PBP analyses, DOE developed data that 
it used to establish equipment prices, installation costs, annual 
energy consumption, energy and water prices, maintenance and repair 
costs, equipment lifetime, and discount rates.
    Table IV.16 summarizes the approaches and data DOE used to derive 
the inputs to the LCC and PBP calculations for the NOPR. For today's 
final rule, DOE did not introduce changes to the LCC and PBP analyses 
methodology described in the NOPR, but incorporated changes to the 
inputs to the analysis to account for updates to the engineering 
analysis and energy price trends and to analyze the sensitivity of the 
results using the survey data NEMA provided. Chapter 8 of the TSD 
contains detailed discussion of the methodology utilized for the LCC 
and PBP analyses as well as the inputs developed for the analyses.

  Table IV.16--Summary of Inputs and Key Assumptions in the Life-Cycle
                    Cost and Payback Period Analyses
------------------------------------------------------------------------
                                                       Changes for the
           Inputs                     NOPR               Final Rule
------------------------------------------------------------------------
                        Affecting Installed Costs
------------------------------------------------------------------------
Equipment Price.............  Derived by            No change.
                               multiplying
                               manufacturer cost
                               by manufacturer,
                               distributor and OEM
                               markups, and sales
                               tax.
Installation Cost...........  Based on data from    No change.
                               RSMeans.
------------------------------------------------------------------------
                        Affecting Operating Costs
------------------------------------------------------------------------
Annual Energy Use...........  Derived by            No change in
                               multiplying hours     operating hours in
                               of operation by       the reference case;
                               losses, accounting    changes to
                               for motor loading.    operating hours of
                               Reactive power        compressors in the
                               demand calculated     sensitivity cases.
                               from power factor.    Losses, loading and
                                                     reactive power
                                                     changed slightly,
                                                     as a result of the
                                                     updated engineering
                                                     analysis.
Energy Prices...............  Electricity:          No change.
                               Distribution of
                               values for each
                               sector, updated
                               using EIA's 2007
                               Form 861 data.
Energy Price Trends.........  Energy: Reference     AEO 2010 for the
                               Case forecast         reference; ratios
                               updated with EIA's    from AEO 2009 March
                               AEO 2009 April        release used for
                               Release. High-Price   high and low.
                               and Low-Price
                               forecasts updated
                               with EIA's AEO 2009
                               March Release.
                               Carbon Cap and
                               Trade case from
                               Lieberman-Warner.
Repair and Maintenance Costs  Unchanging with       No change.
                               efficiency.
------------------------------------------------------------------------
        Affecting Present Value of Annual Operating Cost Savings
------------------------------------------------------------------------
Equipment Lifetime..........  Mean of 7 and 9       No change.
                               years. Lifetime is
                               correlated with
                               annual hours of
                               operation.
Discount Rates..............  Approach based on     No change.
                               cost of capital of
                               publicly traded
                               firms in the
                               sectors that
                               purchase small
                               electric motors.
                               Primary data source
                               is Damodaran
                               Online.\14\
------------------------------------------------------------------------
                 Affecting Installed and Operating Costs
------------------------------------------------------------------------
Space Constraints...........  Assumed 20% of        No change in
                               motors in OEM         reference case;
                               applications face     analyzed 62% and
                               space constraints.    95% sensitivity
                                                     cases.
Effective Date of New         2015................  No change.
 Standard.
------------------------------------------------------------------------

1. Installation Cost
    Installation costs include labor, overhead, and any miscellaneous 
materials and parts. For the NOPR and today's final rule, DOE used data 
from the RS Means Mechanical Cost Data, 2008 on labor requirements to 
estimate installation costs for small electric motors. DOE estimates 
that installation costs do not increase with equipment efficiency.
---------------------------------------------------------------------------

    \14\ Please see the following Web site for further information: 
http://pages.stern.nyu.edu/adamodar/.
---------------------------------------------------------------------------

2. Energy Prices
    For both the NOPR and today's final rule, DOE developed nationally 
representative distributions of electricity prices for different 
customer categories (industrial, commercial, and residential) from 2007 
Energy Information Administration (EIA) Form 861 data, the most recent 
data available.

[[Page 10901]]

DOE estimates that marginal energy prices for electric motors are close 
to average prices, which vary by customer type and utility. The average 
prices (in 2009$) for each sector are 7.5 cents for the industrial and 
agricultural sectors, 10.4 cents for the commercial sector, and 11.7 
cents for the residential sector. DOE also estimated an average 
reactive power charge of $0.51 per kilovolt-amps reactive (kVAr) per 
month using survey data provided in written comments submitted during 
the preliminary analysis stage of the rulemaking by Edison Electric 
Institute. The data identified those customers who are subject to a 
reactive power charge. (EEI, No. 14 at p. 6)
3. Energy Price Trend
    To estimate the trends in electricity prices for the NOPR, DOE used 
the price forecasts in the 2009 Annual Energy Outlook (AEO 2009) April 
Release.\15\ To arrive at prices in future years, DOE multiplied the 
average prices described above by the forecast of annual average price 
changes. Because the AEO 2009 forecasts prices only to 2030, DOE 
followed past guidelines provided to the Federal Energy Management 
Program by EIA and used the average rate of change during 2020-2030 to 
estimate the price trends beyond 2030. For today's final rule, DOE had 
updated its analysis to use the price forecasts in the AEO 2010 Early 
Release, which includes price forecasts until 2035. DOE used the 
average rate of change from 2025 to 2035 to estimate price trends 
beyond 2035.
---------------------------------------------------------------------------

    \15\ All AEO publications are available online at: http://www.eia.doe.gov/oiaf/aeo/.
---------------------------------------------------------------------------

    The spreadsheet tools used to conduct the LCC and PBP analysis 
allow users to select either the AEO's high-price case or low-price 
case price forecasts to estimate the sensitivity of the LCC and PBP to 
different energy price forecasts. The AEO 2009 April Release and AEO 
2010 Early Release only provide forecasts for the Reference Case. 
Therefore, for the NOPR, DOE used the AEO 2009 March Release high-price 
or low-price forecasts directly to estimate high-price and low-price 
trends. For today's final rule, DOE updated the low-price ad high-price 
forecasts to be based on the ratio between the AEO 2009 March Release 
low- or high-price forecasts and the AEO 2009 March Release reference 
case. DOE then applied these ratios to the AEO 2010 Early Release 
reference case to construct its high-price and low-price forecasts.
4. Maintenance and Repair Costs
    Small electric motors are not usually repaired, because they often 
outlast the equipment in which they are installed. DOE found no 
evidence that repair or maintenance costs would increase with higher 
motor energy efficiency. In response to the preliminary analysis, no 
interested parties provided any comments or data indicating that 
maintenance or repair costs are likely to change with motor efficiency. 
Thus, in today's final rule DOE did not change the repair and 
maintenance costs for motors that are more efficient than baseline 
products that were presented in the NOPR.
5. Equipment Lifetime
    For the NOPR and today's final rule, DOE developed motor lifetime 
distributions for each motor application, with a mean of seven years 
for capacitor-start motors and a mean of nine years for polyphase 
motors. Each distribution incorporates a correlation between the motor 
annual hours of operation and the motor lifetime. Motor lifetime is 
governed by two Weibull distributions. One characterizes the motor 
lifetime in total operating hours while the other characterizes the 
lifetime in years of use in the application. Motors are retired from 
service at the age when they reach either of these limits.
6. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. DOE used the classic 
economic definition that discount rates are equal to the cost of 
capital. The cost of capital is a combination of debt interest rates 
and the cost of equity capital to the affected firms and industries. 
For each end-use sector, DOE developed a distribution of discount 
rates. DOE's methodology and inputs for calculating discount rates are 
unchanged from the NOPR (74 FR 61440), and details are available in 
chapter 8 of the TSD. In response to the NOPR, DOE did not receive any 
comments regarding customer discount rates.
7. Space-Constrained Applications and the After-Market
    Comments at the NOPR public meeting (WEG, Emerson, and Regal-
Beloit, Public Meeting Transcript, No. 20.4 at pp. 184-85, 191-92), and 
in written comments (NEMA, No. 24 at p. 19; DOJ, No. 29 at p. 2), 
expressed concerns regarding the challenges faced by users who purchase 
motors to replace existing motors within their applications. (This 
market is referred to as the ``after-market.'') In particular, these 
customers might face difficulty replacing motors in space-constrained 
applications with new motors of different size. Motors are sold to 
these customers through distributors or OEMs. DOE was unable to obtain 
data on the size and structure of the space-constrained portion of this 
market. However, DOE's motor lifetime function, which differentiates 
between motors retired due to mechanical failure and motors retired 
when the application in which they reside is retired, indicates that 
approximately 25-percent of small electric motors retire because of 
mechanical failure. Only users of these motors would be participants in 
the after-market, as other users replace their complete application 
rather than the motor alone. DOE has assumed that 20-percent of motor 
application are space-constrained, indicating that approximately 5-
percent of motors are both space-constrained and retire due to 
mechanical failure--these users would participate in the after-market.
    As discussed above in section IV.E, the NEMA survey reported on the 
fraction of motors purchased by OEMs that face space constraints inside 
their application. NEMA reported that 62 percent of the OEMs responding 
to the survey stated that any increase in size would negatively impact 
their ability to use the motor in their current applications, and that 
33-percent stated that their applications could accept ``only a slight 
increase'' in size; only 5 percent stated that their application had 
few space constraints.
    While DOE appreciates the information provided by NEMA, the agency 
has concerns regarding how well the sample represents total U.S. small 
motor shipments and possible survey response bias. In addition, as part 
of its written comments, NEMA has proposed alternative standards. These 
alternative standards appear to indicate that if nearly all OEMs face 
space constraints for motors in their products, it would be difficult 
for motor manufacturers to achieve the efficiency level called for in 
the NEMA standard levels without large cost increases. For these 
reasons, DOE has retained its assumption that 20-percent of the small 
motors are installed in applications that cannot accommodate any size 
increases.
    OEMs that manufacture applications with space constraints on their 
motors have several options: (1) Redesign their application to 
accommodate a motor with a longer stack and/or a run capacitor; (2) 
purchase a stockpile of motors not covered by today's rule to install 
in future production of their application; (3) replace a less efficient

[[Page 10902]]

CSIR motor with a more efficient CSCR motor without increasing stack 
length; or (4) replace their motor with a motor not covered by today's 
rule. DOE estimates the likelihood and effect of each of these outcomes 
in its analysis of national impacts, by: Increasing the OEM baseline 
and incremental markups by 2 percent to either pay for redesign of 
their products to accommodate larger motors or purchase a stockpile of 
existing motors of the correct size; applying a model that estimates 
the migration from CSIR to CSCR motors, based on the relative 
difference in equipment and operating costs of the two types of motors 
and the assumed fraction that are space-constrained; and changing the 
assumption in the reference case regarding the elasticity of demand for 
small electric motors to a change in purchase price (from zero, or 
inelastic, to -0.25), thereby increasing the number of motors expected 
to migrate to totally enclosed motors not covered by today's rule. 
These assumptions result in nearly the entire CSIR market migrating to 
CSCR motors under the proposed standards, with net benefits to the 
average motor customer.
    In response to this comment, DOE analyzed the impact of increasing 
the space-constrained fraction to 62 percent and to 95 percent of all 
motors in its sensitivity case (the additional 2-percent markup is not 
included in these two scenarios). These results are summarized in 
section VI below.
    Emerson also pointed out that the OEMs whose products have space 
constraints are typically smaller companies that have a hard time re-
engineering their product when changes in size occur. (Emerson, Public 
Meeting Transcript, No. 20.4 at pp. 83-85) DOE recognizes that smaller 
OEMs that manufacture products which cannot readily be altered to 
accommodate a larger motor may be adversely affected by today's rule. 
In analyzing the potential impact of today's standards on customers, 
DOE evaluated the impact on identifiable groups of end-use motor 
customers (i.e., subgroups), such as small businesses, that may not be 
equally affected by a national standard level. The results of the 
subgroup analysis for small businesses can be found in section VI.C.1.b 
of this notice.
8. Standard Compliance Date
    The date by which all small electric motor manufacturers must 
manufacture motors that satisfy the new standards announced in today's 
rule is statutorily-prescribed under EPCA. See 42 U.S.C. 6317(b). 
Therefore, the effective date of any new energy conservation standards 
for these products will be February 2015. DOE calculated the LCC for 
all end users assuming that each one would purchase a new piece of 
equipment in the year the standard takes effect.

G. National Impact Analysis--National Energy Savings and Net Present 
Value Analysis

1. General
    DOE's National Impact Analysis (NIA) assesses the national energy 
savings, as well as the national Net Present Value (NPV) of total 
consumer costs and savings, expected to result from new standards at 
specific efficiency levels. DOE applied the NIA spreadsheet to perform 
calculations of energy savings and NPV, using the annual energy 
consumption and total installed cost data from the LCC analysis. DOE 
forecasted the energy savings, energy cost savings, equipment costs, 
and NPV for each equipment class from 2015 to 2045. The forecasts 
provide annual and cumulative values for all four parameters. In 
addition, DOE incorporated into its NIA spreadsheet the capability to 
analyze the sensitivity of the results to forecasted energy prices and 
equipment efficiency trends. Table IV.17 summarizes the approach and 
data DOE used to derive the inputs to the NES and NPV analyses for the 
NOPR. It also summarizes the changes DOE made in this analysis for 
today's final rule. These changes are described in the following 
sections, and more details are available in chapter 11 of the final 
rule TSD.

Table IV.17--Approach and Data Used To Derive the Inputs to the National
                     Energy Savings and NPV Analyses
------------------------------------------------------------------------
                                    2009 NOPR          Changes for the
           Inputs                  description           final rule
------------------------------------------------------------------------
Shipments...................  Annual shipments      Updated shipments
                               from Shipments        drivers to AEO 2010
                               Model. Shipments      for reference case.
                               inelastic to          Total shipments
                               changes in motor      elasticity changed
                               price. Two CSIR-      from 0 to -0.25.
                               CSCR cross-           Single cross-
                               elasticity cases.     elasticity case in
                                                     which market shares
                                                     are fixed beginning
                                                     in 2015.
Space Constraints...........  Assumed 20% of        No change in
                               motors in OEM         reference case;
                               applications face     analyzed 62% and
                               space constraints.    95% sensitivity
                                                     cases.
Effective Date of Standard..  2015................  No change.
Base-Case Forecasted          Efficiency            Efficiency
 Efficiencies.                 distribution          distribution
                               determined by the     updated to reflect
                               number of currently   changes in
                               available models      engineering
                               meeting the           analysis, including
                               efficiency            the additional
                               requirements of       polyphase motor
                               each TSL.             design
Standards-Case Forecasted     Roll-up scenario.     No change.
 Efficiencies.                 Efficiency
                               distribution held
                               constant over
                               forecast period.
Annual Energy Consumption     Annual weighted-      Updated to account
 per Unit.                     average values as a   for correlation
                               function of           between average
                               efficiency            energy use and
                               distribution.         motor age.
Total Installed Cost per      Annual weighted-      No change.
 Unit.                         average values as a
                               function of
                               efficiency
                               distribution.
Energy Cost per Unit........  Annual weighted-      No change.
                               average values a
                               function of the
                               annual energy
                               consumption per
                               unit and energy
                               prices.
Repair Cost and Maintenance   None................  No change.
 Cost per Unit.
Escalation of Energy Prices.  Energy Prices: AEO    Updated to AEO 2010
                               2009 April Release    Early Release
                               forecasts for the     forecasts for the
                               Reference Case. AEO   Reference Case.
                               2009 April Release    High-Price and Low-
                               does not provide      Price forecasts
                               High-Price and Low-   created using
                               Price forecasts;      ratios of AEO 2009
                               used AEO 2009 March   March release High-
                               Release High-Price    and Low-Price
                               and Low-Price         forecasts to the
                               forecasts to          AEO 2009 March
                               estimate high- and    Reference Case.
                               low-growth price
                               trends.

[[Page 10903]]

 
Energy Site-to-Source         Conversion varies     No change.
 Conversion.                   yearly and is
                               generated by DOE/
                               EIA's NEMS program
                               (a time-series
                               conversion factor;
                               includes electric
                               generation,
                               transmission, and
                               distribution
                               losses).
Effect of Standards on        Determined but found  No change.
 Energy Prices.                not to be
                               significant.
Discount Rate...............  3% and 7% real......  No change.
Present Year................  Future expenses       Future expenses
                               discounted to year    discounted to year
                               2009.                 2010.
------------------------------------------------------------------------

2. Shipments
    The shipments portion of the NIA spreadsheet is a shipments model 
based on macroeconomic drivers for small electric motor shipments. In 
the NOPR, DOE estimated that shipments to the industrial sector are 
proportional to the manufacturing output, shipments to the commercial 
sector are proportional to commercial floor-space, and shipments to the 
residential sector are proportional to the number of households. DOE 
used the AEO 2009 April Release to forecast these three drivers. For 
today's final rule, DOE has updated the drivers in the reference case 
to the AEO 2010 Early Release.
    In the NOPR, DOE examined three alternate shipments scenarios. Two 
of these scenarios were based on the AEO 2009 March Release High-Growth 
and Low-Growth cases, while the third was a ``falling market share'' 
case, in which forecast shipments remain constant at their 2008 levels 
independent of economic growth. The NEEA/NPCC commented that DOE should 
retain the falling market share case because of uncertainties regarding 
the size of the future demand for small motors covered by this rule, as 
well as the current economic climate. NEEA/NPCC added that DOE should 
give additional weight to this scenario when making its policy decision 
(NEEA, No. 27 at p. 10). These shipments scenarios are presented in 
Chapter 9 of the TSD.
    In its analysis for the NOPR, DOE assumed that customers would not 
respond to standards by changing to enclosed motors, due to different 
ventilation requirements, and analyzed two different elasticities to 
enclosed motors, -0.25 and -0.5, as sensitivities. Several comments 
(Emerson, Public Meeting Transcript, No. 20.4 at pp. 176-77; NEEA/NPCC, 
No. 27 at pp. 5-6; NEMA, No. 24 at p. 19), pointed out that if, as a 
result of standards, open-construction motors become more expensive 
than enclosed motors, customers may choose to purchase enclosed motors. 
DOE's analysis indicates that enclosed small electric motors are, on 
average, 18-percent more expensive than open motors. For today's final 
rule, DOE has changed its reference scenario to the -0.25 elasticity 
scenario for both polyphase and capacitor-start motors. As a result, 
DOE estimates that, depending on the TSL selected, up to 12 percent of 
the capacitor-start motor market might migrate to enclosed motors; 
however, today's rule would result in a reduction of less than 1 
percent for the capacitor-start motor market. DOE has retained the 
inelastic and -0.5 elasticity scenarios as sensitivities.
    For the NOPR, DOE developed a cross-elasticity model to forecast 
the impact of standards on the relative market shares of CSIR and CSCR 
motors within each combination on motor horsepower and number of poles. 
DOE used this model to develop two reference cases for the NIA 
analysis. One case assumed that the market share shift described by the 
model would be complete by 2015, the date by which manufacturers must 
comply with the standard, while the other case arbitrarily assumed that 
the transition would begin in 2015 and be complete by 2025. At the 
December 17, 2009, Public Meeting, WEG Electric commented that their 
engineers had examined motor designs necessary to meet the CSIR and 
CSCR standard levels proposed in the NOPR. Their engineers concluded 
that motors meeting these efficiencies were manufacturable, but that 
the designs would include a run capacitor (making them all CSCR motors) 
that might present another issue for space constrained applications. 
(WEG, Public Meeting Transcript No. 20.4 at pp. 185-86)
    When examining the cross-elasticity between CSIR and CSCR motors, 
DOE built a demand-based model that assumed that manufacturers would 
produce the products demanded by the modeled motor customer behavior. 
This model has significant uncertainty because of the difficulty in 
predicting the extent and timeframe of the market response to standards 
and an absence of data on changes in the small electric motor market. 
However, in view of WEG's comment, DOE has placed greater emphasis on 
the influence of decisions made by manufacturers on market share. In 
particular, in cases where DOE's model predicts that the market will 
result in a complete or nearly complete shift from CSIR to CSCR motors, 
DOE expects that the market share shift will take place prior to the 
introduction of standards in 2015 because manufacturers will change 
their production by that date. Therefore, for today's final rule, DOE 
has decided to use the scenario in which the market share shift is 
complete by 2015 as its single reference case for the shipments model.
    NEMA disagreed with DOE's statement that the standard levels 
proposed in the NOPR would ``maintain a supply of both categories of 
motors (CSIR and CSCR) in the single-phase motor market,'' especially 
since DOE was estimating that the purchase price of a CSIR motor would 
increase dramatically over that of the baseline motor. DOE wishes to 
clarify that the NOPR analysis predicted that nearly all, but not the 
entire, CSIR market would migrate to CSCR motors under the proposed 
standard level, TSL 7. DOE's elasticity model for capacitor-start 
motors incorporates both elasticity to products not covered by today's 
final rule (enclosed motors) and cross-elasticity between CSIR and CSCR 
motors. DOE expects that the open-construction CSIR motor market will 
migrate to open CSCR motors, rather than enclosed CSIR motors, because 
enclosed CSIR motors are only less expensive than open CSCR motors in 
the case of relatively inefficient enclosed CSIR motors.
    Chapter 9 of the TSD describes the shipments and elasticity models 
and their results in detail.
3. Space Constraints
    As discussed above in Section F, DOE retained its assumption that 
20-percent

[[Page 10904]]

of the small motors are installed in applications that cannot 
accommodate any size increases. DOE has added 2-percent to the OEM 
markups in its reference case to account for estimated increases in OEM 
costs to redesign their products to accommodate larger, more efficient 
motors, or to purchase a stockpile of replacement motors of the correct 
size. In addition, in response to the survey results presented by NEMA, 
DOE has analyzed the impact of increasing the space-constrained 
fraction from 20 percent to 62 percent and to 95 percent of all motors 
in a pair of sensitivity case (the additional 2 percent markup is not 
included in these two scenarios). These sensitivity cases have little 
impact on the national impacts for capacitor-start motors because at 
the capacitor-start efficiency levels in today's rule, DOE estimates 
that 97 percent of the CSIR market will migrate to CSCR motors assuming 
only 20 percent of the market is space-constrained. Therefore, 
increasing the assumption of the fraction of space-constrained CSIR 
motors to 95-percent only affects the 3-percent of the CSIR market that 
had not already migrated to CSCR motors under DOE's reference case, and 
has little effect on the estimates of national energy savings. 
Appendices 9A and 10A of the TSD present the results of this and other 
sensitivity cases in more detail.
4. Base-Case and Standards-Case Efficiency Distributions
    In its analysis for the NOPR, DOE developed base-case and 
standards-case efficiency distributions based on the distribution of 
currently available models for which motor catalogs list efficiency. In 
preparing today's final rule, DOE developed new scaling relationships 
governing the relationship between the efficiency of each product class 
to the efficiency of the representative product class for its motor 
category. These changes resulted in some motor models that met the 
criteria for one TSL in the NOPR analysis also meeting the criteria for 
a different TSL in the analysis for today's rule. The resulting base-
case efficiency distributions are shown in Table IV.18 DOE's use of a 
roll-up method to determine the efficiency in the standards-cases is 
unchanged from the NOPR to the final rule analysis.

                          Table IV.18--Base Case Efficiency Market Shares by Motor Type
----------------------------------------------------------------------------------------------------------------
                                                   Motor type
-----------------------------------------------------------------------------------------------------------------
    Base Case Market Share (%) by
          Efficiency Level             Baseline    EL 1    EL 2    EL 3    EL 4    EL 4b   EL 5    EL 6    EL 7
----------------------------------------------------------------------------------------------------------------
Polyphase...........................          54       6      13       7      12       5       3       0       0
----------------------------------------------------------------------------------------------------------------
                                        Baseline    EL 1    EL 2    EL 3    EL 4    EL 5    EL 6    EL 7    EL 8
----------------------------------------------------------------------------------------------------------------
CSIR................................          40      30      13      15       2       0       0       0      NA
CSCR................................          37      33       4      11      11       0       4       0       0
----------------------------------------------------------------------------------------------------------------

5. Annual Energy Consumption per Unit
    In the analysis conducted for the NOPR, DOE developed a model for 
motor lifetime that incorporates a correlation between annual hours of 
motor operation and the lifetime of the motor. This correlation was 
incorporated into the life-cycle cost analysis, which provides average 
energy use values for the NIA. In the analysis developed for today's 
final rule, DOE added a correction factor related to this correlation 
to its NIA model. This correction factor accounts for the higher 
removal rate of motors with higher annual energy usage levels when 
compared to motors with lower annual energy usage levels. This 
relationship is reflected in DOE's lifetime model.

H. Customer Sub-Group Analysis

    For the NOPR and today's final rule, DOE analyzed the potential 
effects of small electric motor standards on two subgroups: (1) 
Customers with space-constrained applications, and (2) small 
businesses. For customers with space-constrained applications, DOE used 
the price and energy use estimates developed for space-constrained 
designs from the engineering analysis to conduct its life-cycle cost 
analysis. For small businesses, DOE analyzed the potential impacts of 
standards by conducting the analysis with different discount rates, 
because small businesses do not have the same access to capital as 
larger businesses. DOE estimated that for businesses purchasing small 
electric motors, the average discount rate for small companies is 4.2 
percent higher than the industry average. Due to the higher costs of 
conducting business, as evidenced by their higher discount rates, the 
benefits of small electric motor standards for small businesses are 
estimated to be slightly lower than for the general population of small 
electric motor owners.
    More details on the consumer subgroup analysis can be found in 
chapter 12 of the final rule TSD.

I. Manufacturer Impact Analysis

    DOE conducted a manufacturer impact analysis (MIA) to estimate the 
financial impact of new energy conservation standards on small electric 
motors manufacturers, and to calculate the impact of such standards on 
domestic manufacturing employment and capacity. The MIA has both 
quantitative and qualitative aspects. The quantitative part of the MIA 
primarily relies on the GRIM--an industry-cash-flow model customized 
for this rulemaking. The GRIM inputs are data characterizing the 
industry cost structure, investments, shipments, and revenues. The key 
output is the industry net present value (INPV). Different sets of 
assumptions (scenarios) produce different results. The qualitative part 
of the MIA addresses factors such as equipment characteristics, market 
and equipment trends, as well as an assessment of the impacts of 
standards on subgroups of manufacturers. DOE outlined its methodology 
for the MIA in the NOPR. 74 FR 61442-46. The complete MIA for the NOPR 
is presented in chapter 12 of the NOPR TSD.
    For today's final rule, DOE updated the MIA to reflect changes in 
the outputs of two other key DOE analyses, which feed into the GRIM. In 
the Engineering Analysis, DOE updated manufacturer production costs 
(MPCs) and inflated them to 2009$ from 2008$ using the producer price 
index (PPI). In the NIA, DOE updated its shipment forecasts and 
efficiency distributions. In turn, DOE updated the GRIM for these new 
estimates. DOE also inflated its capital and equipment conversion costs 
to 2009$ from 2008$ using the PPI for Motor and Generator Manufacturing 
(North American Industry Classification System (NAICS) 335312). Based 
on these changes, DOE used the GRIM to revise the MIA results from the 
NOPR.

[[Page 10905]]

For direct employment calculations, DOE revised the GRIM to include the 
U.S. Census information that was revised for 2007.
    The following sections discuss interested parties comments on the 
NOPR MIA. In general, the format is as follows: DOE provides background 
on an issue that was raised by interested parties, summarizes the 
interested parties' comment, and discusses whether and how DOE modified 
its analysis in light of the comments.
1. Capital Conversion and Equipment Conversion Costs
    For the NOPR, DOE estimated capital conversion costs for a typical 
manufacturer using estimates provided by manufacturers and information 
provided by industry experts. DOE estimated the tooling cost for each 
separate design at each incremental efficiency level. In addition to 
these capital expenditures, DOE also estimated equipment conversion 
expenses such as research and development, testing, and product 
literature development associated with new energy conservation 
standards. Because DOE did not receive specific feedback from all 
manufacturers in the industry, DOE then scaled these costs from a 
typical manufacturer to account for the entire industry where 
appropriate.
    More specifically, DOE estimated the tooling costs for: (1) Total 
number of laminations over baseline designs; (2) grade of steel 
including the use of premium electrical steels; (3) increases in stack 
length; (4) necessary rewiring; (5) replacement of end rings; and (6) 
rotor redesigns to use copper (if applicable). For rotor redesigns to 
use copper, DOE estimated the costs to purchase new presses, new end 
rings, and additional tooling. For changes to the grade of steel, DOE 
estimated the costs for punch press dyes. For increases in stack 
length, DOE estimated the costs of switching more production equipment 
to accommodate a higher volume of larger sized small electric motors. 
For necessary rewiring, DOE estimates the cost of crimp tools. For 
replacement of end rings, DOE estimated the tooling changes for 
different dimensional changes to the end rings. For increases in 
laminations, DOE estimated the purchase of presses and tooling for 
winding machinery.
    In written comments, NEMA stated that the capital conversion costs 
DOE assumed in the NOPR represent only 25- to 30-percent of the capital 
investments required by manufacturers at the proposed level for CSCR 
and CSIR. Specifically, NEMA argued that DOE did not account for 
progressive lam dies, new winding retooling, and other equipment 
conversion costs (e.g., engineering time, and manufacture and customer 
agency approvals). (NEMA, No. 24 at p.18) Emerson and A.O. Smith added 
that such investments needed to reach the proposed standards could 
cause manufacturers to exit the small electric motors market. (Emerson, 
No. 28 at p. 1; A.O. Smith, No. 27 at p. 2)
    As discussed above, in the NOPR and in today's final rule, DOE 
accounts for lam dies, new winding retooling and other capital 
investments at the TSLs that require such tooling. DOE also notes that 
equipment conversion costs associated with R&D, testing, and other non-
capital expenses are included in its equipment conversion costs 
assumptions. However, in part because the proposed TSL did not require 
copper rotors or premium electric steel for the CSCR or polyphase 
markets, DOE cannot reconcile its investment totals at TSL 7 for CSCR 
and CSIR with the $150 million to $180 million range implied by NEMA's 
comment. However, in response to other comments, discussed immediately 
below, DOE has modified its approach to calculating the investments 
required of a typical manufacturer producing space constrained and non-
space constrained motors.
    In the NOPR, DOE examined the complete tooling requirements 
necessary for both space-constrained and non-space constrained designs. 
That is, DOE first calculated tooling costs assuming shipments were 
100-percent space constrained, then calculated tooling costs assuming 
shipments were 100-percent non-space constrained. Next, DOE calculated 
the overall tooling costs by weighting these values by the fraction of 
shipments dedicated to space-constrained and non-space-constrained 
applications as forecast in the shipments model (20-percent and 80-
percent, respectively).
    Emerson and NEMA commented that the proposed TSLs require the use 
of different materials for electrical steel and rotors for different 
types of motors, which will lead to high capital costs. (Emerson, No. 
28 at p. 1; NEMA, No. 24 at p. 18). Baldor Electric commented that 
manufacturers would lose economies of scope at the proposed TSLs 
because they would not be able to standardize along one type of steel 
for different classes of motors. Combined with the high capital costs, 
particularly for CSIR, this lack of standardization may lead 
manufacturers to choose to exit portions of the market. (Baldor 
Electric, Public Meeting Transcript, No. 20.4 at pp. 246-47; Emerson, 
Public Meeting Transcript, No. 20.4 at pp. 248)
    For today's final rule, DOE modified its calculation of investments 
based on changes to the shipments forecasts related to the split 
between space-constrained and non-space constrained motors. For many 
manufacturers, it will not be possible to invest in tooling equipment 
for space constrained and non-space-constrained motors in a manner that 
is proportional to the relative market share of the two types of 
motors. Particularly given the uncertainty with regard to the future 
market demand and the resulting product mix, DOE believes it is more 
appropriate to look at the specific investment needs of a typical 
manufacturer at each TSL for both space constrained and non-space 
constrained investments for each motor design. For many design options, 
this leads to investments that are additive--not weighted by shipment 
share--across space-constrained and non-space constrained motors. 
Furthermore, DOE does not assume economies of scope in its assumptions 
regarding capital investments among the three classes of motors. That 
is, DOE assumed investment in each class independently and assumed they 
were additive when appropriate across the classes. To be clear, DOE is 
not modifying the shipments scenarios from the NIA in this scenario. It 
is modifying the capital investment assumptions to more completely 
capture the business decisions firms will likely have to make.
    As mentioned in the comments referenced above, the business case 
for making the large capital investments required for certain types of 
motors becomes less compelling as shipment volumes decrease at higher 
TSLs (including the TSL established in today's final rule). DOE agrees 
with Emerson and A.O. Smith that some manufacturers are likely to exit 
this portion of their market, as is reflected by the shipments 
analysis, which shows a dramatic migration away from CSIR motors. For 
space-constrained motors within the CSIR class DOE projects no 
shipments after standards take effect. To capture this dynamic, at 
certain TSLs DOE calculated investments to include those associated 
with the CSCR line and the CSIR non-space constrained line. Without 
forecasting a significant volume of space-constrained CSIR shipments, 
it would be inappropriate to assume all manufacturers would invest in 
the premium electrical steel and copper technologies required to meet 
the standard level. For further details of the investments, see chapter 
12 of the TSD and or section IV.I of today's notice.

[[Page 10906]]

    In written comment, Emerson further argues that the exit of the 
market by certain manufacturers in response to amended standards would 
reduce competition and domestic employment. (Emerson, No. 28 at p. 1)
    As previously discussed, DOE believes that some manufacturers could 
exit the small electric motors market segment covered by this rule in 
response to amended standards. However, it should be noted that covered 
small electric motors comprise only a small portion of overall motor 
sales for these companies. At the efficiency levels established by this 
final rule, DOE's analysis and manufacturer interviews indicated that 
the majority of manufacturers would likely remain in the small electric 
motors market following the implementation of amended standards. 
Additionally, DOE learned that a number of covered motors are already 
manufactured overseas and that foreign competition continues to make 
inroads into the covered motors segment. As for a potential reduction 
in domestic employment, DOE's analysis indicates that even with the 
potential departure by some manufacturers from segments of the small 
electric motors market, overall direct employment will remain 
relatively constant due to the increased labor content of more 
efficient motors.
2. Manufacturer Selling Prices
    In the NOPR, DOE calculated weighted manufacturer selling prices 
(MSPs) based on a shipments split of 20-percent space-constrained and 
80-percent non-space constrained motors. However, the shipments 
analysis in today's final rule models a mix of space-constrained and 
non-space constrained motors that varies by TSL. As such, DOE has 
updated its MSPs in the GRIM using the same shipment weights used in 
the shipments analysis at each TSL. For further information on the 
shipment analysis, see chapter 9 of the TSD.
3. Markup Scenarios
    In the NOPR, DOE analyzed two markup scenarios in the MIA: the 
preservation-of-return-on-invested-capital scenario and the 
preservation-of-operating-profits scenario. These scenarios reflected 
the upper and lower bounds of industry profitability, respectively. In 
written comments, NEMA contended that DOE had inappropriately 
discounted the likelihood of the lower-bound scenario occurring when it 
stated its belief that design changes necessary for TSL 5 would not 
force all manufacturers to significantly redesign all of their 
polyphase small electric motors and production processes. (NEMA, No. 24 
at p. 16)
    In response, DOE first clarifies that it did not and is not 
assigning probabilities to the preservation of operating profit 
scenario or the preservation of return on invested capital scenario. 
The two markup scenarios are meant to estimate the range of potential 
impacts. Second, in the NOPR, and for this final rule, DOE accounted 
for equal investments in the GRIM under both the lower and upper bound 
profitability scenarios. Therefore, changes in markup assumptions--not 
changes in investments--drive the profitability difference between the 
scenarios. For example, in this final rule DOE assumes industry wide 
capital conversion investments for TSL 5 of approximately $7.1 million 
for polyphase small motors in each markup scenario. Thus, the 
likelihood of either scenario occurring with respect to the other is 
independent of the investment level assumed in the GRIM.
    NEMA further argued that in discounting the likelihood of the 
lower-bound profitability scenario, DOE ignored cost increases and 
equipment investments associated with specialty steels and copper 
rotors necessary for polyphase motors to meet TSL 5. (NEMA, No. 24 at 
p. 16).
    DOE disagrees with NEMA's suggestion that TSL 5 requires copper 
rotors and premium electrical steels (such as Hiperco) for polyphase 
motor designs. DOE continues to believe, as discussed in the 
Engineering Analysis, that both space-constrained and non-space 
constrained motors can achieve TSL 5 through the use of additional 
laminations. As discussed above, DOE included the attendant costs of 
the additional lams, steel-grade lam dies, end ring investment for both 
space constrained and non-space constrained motors, and a crimping 
tool. No investments for copper rotors design were assumed at TSL 5 for 
polyphase motors. NEMA ostensibly agreed that the proposed TSL did not 
require copper rotors when it commented that the ``proposed standards 
for polyphase and CSCR small electric motors are based on the use of 
cast aluminum rotors.'' (NEMA, No. 24 at p. 18)
    Baldor and NEMA stated that the proposed levels of efficiency in 
the NOPR are based on the assumption that manufacturers must use three 
different types of electrical steel including 24M19, 29M15, and Hiperco 
50. According to NEMA, each type of electrical steel requires different 
methods for processing the rolled steel into laminations acceptable for 
use in electric motors. NEMA further adds that to remain competitive, 
manufacturers must minimize the number of different types of materials 
and processes used in a manufacturing facility and suggested that DOE 
adopt a standard level that is achievable with the same electrical 
steel for all motor categories. (Baldor, Public Meeting Transcript, No. 
20.4 at pp. 246-47; NEMA, No. 24 at p. 17.
    In the NOPR, DOE predicted that manufacturers would achieve the 
proposed efficiency levels with three types of steels including 24M19, 
29M15, and Hiperco 50. During manufacturer interviews, DOE requested 
information on the type of processes needed to achieve each efficiency 
level, as well as the costs associated with each process. In regard to 
types of steel used and the cost of switching from one steel process to 
another, all interviewed manufacturers reported the use of additional 
lamination dies to accommodate the different thickness of steel. 
Accordingly, DOE included additional lamination dies per manufacturer 
in its estimates whenever a change of steel grade was applicable, as 
described in chapter 12 of the TSD. The cost per die was derived based 
on manufacturer's estimates and information provide by industry 
experts. See chapter 12 of the TSD for additional details on each type 
of investment at each efficiency level including all design options 
analyzed. DOE acknowledges that manufacturers in general, regardless of 
industry, reduce the number of manufacturing processes to lower costs 
and thus increase margins. For today's amended standards, DOE does not 
prescribe designs nor how manufacturers achieve each efficiency level. 
Because DOE accounts for all the relevant costs associated with using 
the various steel types in both the engineering analysis and MIA, it 
believes it accurately captures the potential costs to manufacturers in 
using different steel grades. Therefore, DOE believes that potential 
burden on manufacturers has been accounted for in today's final rule.
    In response to the NOPR, NEMA commented that manufacturers are not 
aware of any other pathways to achieving the proposed efficiencies for 
space constrained CSIR motors but the ones analyzed in this rulemaking. 
NEMA argued that because there are no other pathways to achieving the 
proposed efficiencies, DOE is dictating that manufacturers use 
different electrical steels and different materials for the rotor 
construction in order to meet the proposed efficiencies for the three 
motor types. (NEMA, No. 24 at p. 16).

[[Page 10907]]

    DOE acknowledges that TSL 7 reflects the max-tech efficiency levels 
for CSIR; as such, DOE estimates manufacturers may have to employ both 
copper rotors and premium electrical steels to achieve that level. In 
the engineering analysis, which subsequently carries over to the MIA, 
DOE models a pathway for space-constrained and non-space constrained 
application motors with the use of these technologies. However, in 
setting new standards for small electric motors, as described in 
today's notice, DOE selects efficiency levels for each motor category 
and does not prescribe designs.
4. Premium Electrical Steels
    In response to the NOPR, Regal-Beloit and NEMA argue that DOE 
proposed an efficiency level for motors that would force manufacturers 
to utilize specific electrical steels that are in scarce supply. NEMA 
further argues that DOE should not establish standards that require 
manufacturers to use materials that are supply constrained. NEMA stated 
that a market analysis for the scarce materials is needed to prove 
otherwise. (Regal-Beloit, Public Meeting Transcript, No. 20.4 at pp. 
245-46; NEMA, No. 24 at pp. 17-18). Similarly, NEMA asked DOE to 
consider any spillover effects on the supply of steel for medium 
electric motors. (NEMA, No. 24 at p.18)
    DOE acknowledges the concern that Hiperco may be supply constrained 
in the short run should manufacturers pursue that design option. As 
such, to investigate these steel concerns, DOE contacted Hiperco 50 
steel and other premium electrical steel suppliers and used steel 
manufacturer's annual reports to examine past shipment volumes of 
premium steels. DOE then compared estimated shipments of these steel to 
volumes that would be necessary for motors if should the base case mix 
of space constrained and non space constrained persist at all TSLs. 
Based on that analysis, DOE estimates that the entire small electric 
motor industry would need approximately 1.3 million pounds of premium 
steels (such as Hiperco) in 2015 for the level established by this 
rule. For the steel manufacturer that had available annual reports, the 
estimated pounds of premium steels needed by the motor manufacturers 
constitutes less than one percent of total steel shipments for 2008. 
How much of that volume reflects premium steels is not publically 
available. However, annual reports for the publicly traded manufacturer 
of premium steels suggest that shipments of these steels have decreased 
by close to 20 percent from the previous year, suggesting this 
manufacturer has over capacity and the ability to meet the possible 
increase in demand of premium steels. Given the time lag for the market 
to prepare for the compliance date of the standard and the low volumes 
of motors that may require premium steel, DOE believes that the 
proposed standard level will not threaten the supply of the steel, even 
if manufacturers decide to pursue this option. DOE's analysis does not 
forecast shipments of motors that require premium steel and, as a 
result, DOE does not believe that, based on the available data, there 
will be a significant impact (``spillover'') on the medium motor market 
due to higher demand of the material in the small motor market.
    NEMA stated that the proposed efficiency level mandates the use of 
copper rotor casting technology along with aluminum rotor casting 
technology in the same manufacturing facilities. NEMA argued that 
copper rotor casting technology is in its infancy and is not a fully 
developed process that can be adapted in all present facilities where 
small electric motors are built. Additionally, NEMA and A.O. Smith are 
concerned that copper rotor casting technology has significant safety 
issues related to the high temperatures needed for the process. 
According to NEMA, manufacturers may be required to use a few outside 
companies that may not have sufficient capacity to meet all of the 
copper rotor volume required to meet the needs for all of the CSIR 
small electric motors. Additionally, NEMA argues that standards must be 
based on the use of aluminum rotors only. (A.O. Smith, No. 26 at p. 2; 
NEMA, No. 24 at p. 18)
    DOE acknowledges manufacturers' concerns related to the processes 
for die-casting copper rotors. In its analysis, DOE accounted for the 
increased capital requirements as they would likely occur depending on 
the efficiency level and motor type at issue. As stated in the NOPR, 
the use of copper rotors could lead manufacturers to outsource their 
die-casting processes, as indicated by NEMA in its comments. (74 FR 
61467-68). Ultimately, this is a business decision. In its engineering 
analysis for this rulemaking, DOE included a copper rotor design at 
efficiency level 6 or above for polyphase motors, efficiency level 5 or 
above for CSIR motors, and efficiency level 4 or above for CSCR motors. 
The inclusion of copper rotor designs at each efficiency level varies 
depending on the necessary efficiency and space constraints. However, 
DOE reiterates that different manufacturers will not necessarily employ 
the same design options to make their motors achieve higher efficiency 
levels where DOE estimates copper rotors may be used, with the 
exception of the max-tech efficiency levels. In fact, for the NOPR and 
today's final rule, DOE has analyzed motors up to efficiency level 5 
for CSIR motors and efficiency level 6 for CSCR motors that use an 
aluminum die-cast rotor.

J. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
direct and indirect impacts. Direct employment impacts are changes in 
the number of employees for manufacturers of equipment subject to 
standards, their suppliers, and related service firms. The MIA 
addresses these impacts.
    Indirect employment impacts from standards consist of the net jobs 
created or eliminated in the national economy, other than in the 
manufacturing sector being regulated, due to: (1) Reduced spending by 
end users on energy (electricity, gas (including liquefied petroleum 
gas), and oil); (2) reduced spending on new energy supply by the 
utility industry; (3) increased spending on the purchase price of new 
equipment; and (4) the effects of those three factors throughout the 
economy. DOE expects the net monetary savings from standards to be 
redirected to other forms of economic activity. DOE also expects these 
shifts in spending and economic activity to affect the demand for labor 
in the short term, as explained below.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare employment 
statistics in different economic sectors, which are compiled and 
published by the Bureau of Labor Statistics (BLS). The BLS regularly 
publishes its estimates of the number of jobs per million dollars of 
economic activity in different sectors of the economy, as well as the 
jobs created elsewhere in the economy by this same economic activity. 
Data from BLS indicate that expenditures in the utility sector 
generally create fewer jobs (both directly and indirectly) than 
expenditures in other sectors of the economy. There are many reasons 
for these differences, including wage differences and the fact that the 
utility sector is more capital intensive and less labor intensive than 
other sectors. (See Bureau of Economic Analysis, Regional Multipliers: 
A User Handbook for the Regional Input-Output Modeling System (RIMS 
II), Washington, DC, U.S. Department of Commerce, 1992.) Efficiency 
standards have the effect of reducing consumer utility bills. Because

[[Page 10908]]

reduced consumer expenditures for energy likely lead to increased 
expenditures in other sectors of the economy, the general effect of 
efficiency standards is to shift economic activity from a less labor-
intensive sector (i.e., the utility sector) to more labor-intensive 
sectors (e.g., the retail and manufacturing sectors). Thus, based on 
the BLS data alone, DOE believes net national employment will increase 
due to shifts in economic activity resulting from standards for small 
electric motors.
    In developing the NOPR, DOE estimated indirect national employment 
impacts using an input/output model of the U.S. economy called Impact 
of Sector Energy Technologies (ImSET).\16\ ImSET is a special-purpose 
version of the ``U.S. Benchmark National Input-Output'' (I-O) model 
designed to estimate the national employment and income effects of 
energy-saving technologies. The ImSET software includes a computer-
based I-O model with structural coefficients to characterize economic 
flows among 188 sectors most relevant to industrial, commercial, and 
residential building energy use. For today's final rule, DOE has made 
no change to its method for estimating employment impacts. For further 
details, see chapter 15 of the final rule TSD.
---------------------------------------------------------------------------

    \16\ More information regarding ImSET is available online at: 
http://www.pnl.gov/main/publications/external/technical_reports/PNNL-15273.pdf.
---------------------------------------------------------------------------

K. Utility Impact Analysis

    The utility impact analysis estimates the change in the forecasted 
power generation capacity for the Nation that would be expected to 
result from adoption of new standards. For the NOPR and today's final 
rule, DOE calculated this change using the NEMS-BT computer model. 
NEMS-BT models certain policy scenarios such as the effect of reduced 
energy consumption by fuel type. The analysis output provides a 
forecast for the needed generation capacities at each TSL. While DOE 
was able to use the forecasts from the AEO 2010 Early Release for 
energy prices and macroeconomic indicators, the NEMS-BT model 
corresponding to this case is not yet available. The estimated net 
benefit of the standard in today's final rule is the difference between 
the forecasted generation capacities by NEMS-BT and the AEO 2009 April 
Release Reference Case. DOE obtained the energy savings inputs 
associated with efficiency improvements to small electric motors from 
the NIA. These inputs reflect the effects of both fuel (natural gas) 
and electricity consumption savings. Chapter 14 of the final rule TSD 
presents results of the utility impact analysis.
    NEEA/NPCC claimed that only a small fraction of the total costs of 
avoided generation are currently counted in any rulemaking. They note 
that DOE uses the NEMS-BT model to calculate the avoided generation 
facilities produced by a standard and that the cost of construction and 
operation of these plants are rolled into average rates that all 
electricity consumers must pay, not just those purchasing the product 
in question. As a result, they believe that the NPV difference in the 
value of total electricity sales between the NEMS-BT forecasts with and 
without the standards may serve as a reasonable proxy for the economic 
value to all electricity consumers of the proposed standards. The 
difference value of total retail electricity sales is necessary to 
capture all of the cost of the avoided generation, since as noted 
above, users of small general purpose motors impacted by the standard 
will pay only a portion of those cost at embedded rates. (NEEA/NPPC, 
No. 27, p. 7-8)
    DOE investigated the possibility of estimating the impact of 
specific standard levels on electricity prices in its rulemaking for 
general service fluorescent lamps and incandescent reflector lamps. 
(See U.S. Department of Energy--Office of Energy Efficiency and 
Renewable Energy: Energy Conservation Standards for General Service 
Fluorescent Lamps and Incandescent Reflector Lamps; Proposed Rule, 74 
FR 16920, 16978-979 (April 13, 2009).) It concluded that caution is 
warranted in reporting impacts of appliance standards on electricity 
prices due to the complexity of the power industry (including the 
variety of utility regulation in the U.S.) and the relatively small 
impact of equipment efficiency standards on demand. In addition, 
electricity price reductions cannot be viewed as equivalent to societal 
benefits because part of the price reductions result from transfers 
from producers to consumers. The electric power industry is a complex 
mix of fuel suppliers, producers, and distributors. While the 
distribution of electricity is regulated everywhere, its institutional 
structure varies, and upstream components are complex. Because of the 
difficulty in accurately estimating electricity price impacts, and the 
uncertainty with respect to transfers from producers to consumers, DOE 
did not estimate the value of potentially reduced electricity costs for 
all consumers associated with standards for small electric motors.

L. Environmental Assessment

    Pursuant to the National Environmental Policy Act of 1969 (NEPA) 
(42 U.S.C. 4321 et seq.) 42 U.S.C. 6295(o)(2)(B)(i)(VI), DOE prepared a 
draft environmental assessment (EA) of the potential impacts of the 
standards for small electric motors in today's final rule, which it has 
included as chapter 15 of the TSD. DOE found that the environmental 
effects associated with the standards for small electric motors were 
not significant. Therefore, DOE is issuing a Finding of No Significant 
Impact (FONSI), pursuant to NEPA, the regulations of the Council on 
Environmental Quality (40 CFR parts 1500-1508), and DOE's regulations 
for compliance with NEPA (10 CFR part 1021). The FONSI is available in 
the docket for this rulemaking.
    In the EA, DOE estimated the reduction in power sector emissions of 
CO<INF>2</INF>, NO<INF>X</INF>, and Hg using the NEMS-BT computer 
model. In the EA, NEMS-BT is run similarly to the AEO NEMS, except that 
small electric motor energy use is reduced by the amount of energy 
saved (by fuel type) due to the TSLs. The inputs of national energy 
savings come from the NIA analysis; the output is the forecasted 
physical emissions. The estimated net benefit of the standard in 
today's final rule is the difference between the forecasted emissions 
by NEMS-BT at each TSL and the AEO 2009 April Early Release Reference 
Case. NEMS-BT tracks CO<INF>2</INF> emissions using a detailed module 
that provides results with broad coverage of all sectors and inclusion 
of interactive effects.
    DOE has determined that sulfur dioxide (SO<INF>2</INF>) emissions 
from affected Electric Generating Units (EGUs) are subject to 
nationwide and regional emissions cap and trading programs that create 
uncertainty about the impact of energy conservation standards on 
SO<INF>2</INF> emissions. Title IV of the Clean Air Act sets an annual 
emissions cap on SO<INF>2</INF> for all affected EGUs. SO<INF>2</INF> 
emissions from 28 eastern States and the District of Columbia (D.C.) 
are also limited under the Clean Air Interstate Rule (CAIR, published 
in the Federal Register on May 12, 2005; 70 FR 25162 (May 12, 2005), 
which creates an allowance-based trading program that will gradually 
replace the Title IV program in those States and D.C. (The recent legal 
history surrounding CAIR is discussed below.) The attainment of the 
emissions caps is flexible among EGUs and is enforced through the use 
of emissions allowances and tradable permits. Energy conservation 
standards

[[Page 10909]]

could lead EGUs to trade allowances and increase SO<INF>2</INF> 
emissions that offset some or all SO<INF>2</INF> emissions reductions 
attributable to the standard. DOE is not certain that there will be 
reduced overall SO<INF>2</INF> emissions from the standards. The NEMS-
BT modeling system that DOE uses to forecast emissions reductions 
currently indicates that no physical reductions in power sector 
emissions would occur for SO<INF>2</INF>. The above considerations 
prevent DOE from estimating SO<INF>2</INF> reductions from standards at 
this time.
    Even though DOE is not certain that there will be reduced overall 
emissions from the standard, there may be an economic benefit from 
reduced demand for SO<INF>2</INF> emission allowances. Electricity 
savings from standards decrease the generation of SO<INF>2</INF> 
emissions from power production, which can lessen the need to purchase 
emissions allowance credits, and thereby decrease the costs of 
complying with regulatory caps on emissions.
    Much like SO<INF>2</INF> emissions, NO<INF>X</INF> emissions from 
28 eastern States and the District of Columbia (D.C.) are limited under 
the CAIR. Although CAIR has been remanded to EPA by the U.S. Court of 
Appeals for the District of Columbia Circuit (D.C. Circuit), it will 
remain in effect until it is replaced by a rule consistent with the 
Court's July 11, 2008, opinion in North Carolina v. EPA. 531 F.3d 896 
(D.C. Cir. 2008); see also North Carolina v. EPA, 550 F.3d 1176 (D.C. 
Cir. 2008). These court positions were taken into account in the 
analysis conducted for the NOPR and in today's final rule. Because all 
States covered by CAIR opted to reduce NO<INF>X</INF> emissions through 
participation in cap and trade programs for electric generating units, 
emissions from these sources are capped across the CAIR region.
    In the 28 eastern States and D.C. where CAIR is in effect, DOE's 
forecasts indicate that no NO<INF>X</INF> emissions reductions will 
occur due to energy conservation standards because of the permanent 
cap. Energy conservation standards have the potential to produce an 
economic impact in the form of lower prices for NO<INF>X</INF> 
emissions allowances, if their impact on electricity demand is large 
enough. However, DOE has concluded that the standards in today's final 
rule will not have such an effect because the estimated reduction in 
electricity demand in States covered by the CAIR cap would be too small 
to affect allowance prices for NO<INF>X</INF> under the CAIR.
    New or amended energy conservation standards would reduce 
NO<INF>X</INF> emissions in those 22 States that are not affected by 
the CAIR. DOE used the NEMS-BT to forecast emission reductions from the 
small electric motor standards in today's final rule.
    Similar to emissions of SO<INF>2</INF> and NO<INF>X</INF>, future 
emissions of Hg would have been subject to emissions caps. The Clean 
Air Mercury Rule (CAMR) would have permanently capped emissions of 
mercury from new and existing coal-fired plants in all States beginning 
in 2010 (70 FR 28606). However, the CAMR was vacated by the D.C. 
Circuit in its decision in New Jersey v. Environmental Protection 
Agency, 517 F 3d 574 (D.C. Cir. 2008) Thus, DOE was able to use the 
NEMS-BT model to estimate the changes in Hg emissions resulting from 
the proposed rule.
    NEMA noted that the TSD for the NOPR provides a qualitative 
assessment of upstream emissions (i.e., emissions from energy losses 
during coal and natural gas production) in addition to quantifying the 
emissions at power plants. NEMA states that if DOE is making an 
assessment of upstream emissions, it should also account for the 
emissions related to the construction of more efficient small electric 
motors, such as those related to the mining of additional raw 
materials, processing of the additional materials, transportation of 
the additional materials, and the manufacture of the motor itself. 
(NEMA, No. 24 at p. 22)
    As noted in the TSD for the NOPR, DOE developed qualitative 
estimates of affects on upstream fuel-cycle emissions because NEMS-BT 
does a thorough accounting only of emissions at the power plant due to 
downstream energy consumption. In other words, NEMS-BT does not account 
for upstream emissions. Therefore, the Environmental Assessment for 
today's final rule reports only power plant emissions.
    When setting performance standards for industrial equipment, EPCA 
prescribes that an energy efficiency standard be a minimum level of 
energy efficiency or maximum allowable energy use. EPCA defines the 
term ``energy use'' within this limited context for commercial and 
industrial equipment as being the quantity of energy directly consumed 
by an article of industrial equipment at the point of use. See 42 
U.S.C. 6311(4). In ascertaining the appropriate level of efficiency, 
DOE must balance seven criteria to develop a standard that is 
economically justified and technically feasible. While DOE believes 
that the majority of the energy and other costs associated with the 
manufacturing of more efficient motors are reflected in its analysis, 
some of the costs associated with certain environmental impacts and 
other externalities are not incorporated. Even though DOE estimates and 
considers the impacts of standards on the energy and emissions 
associated with electricity generation, it does not specifically assess 
the energy and emissions associated with the manufacturing of more 
efficient motors or the manufacturing of the equipment required to 
produce and supply energy. The main reason for not assessing such 
indirect costs and benefits is the absence of a reliable and 
comprehensive method of doing so. Such an assessment would require 
accounting for a variety of variables, including the energy required to 
build and service the energy production, generation, and transmission 
infrastructure needed to deliver the energy, as well as accounting for 
the energy expended to manufacture energy-using equipment.

M. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this final rule, DOE considered the 
estimated monetary benefits likely to result from the reduced emissions 
of CO<INF>2</INF> and other pollutants that are expected to result from 
each of the Trial Standard Levels considered. This section summarizes 
the basis for the estimated monetary values used for each of these 
emissions and presents the benefits estimates considered.
    For today's final rule, DOE is relying on a new set of values for 
the social cost of carbon SCC that were recently developed by an 
interagency process. A summary of the basis for these new values is 
provided below, and a more detailed description of the methodologies 
used is provided as an Annex to Chapter 15 of the Technical Support 
Document.
1. Social Cost of Carbon
    Under Executive Order 12866, agencies are required, to the extent 
permitted by law, ``to assess both the costs and the benefits of the 
intended regulation and, recognizing that some costs and benefits are 
difficult to quantify, propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs.'' The purpose of the SCC estimates presented here is 
to allow agencies to incorporate the social benefits of reducing 
CO<INF>2</INF> emissions into cost-benefit analyses of regulatory 
actions that have small, or ``marginal,'' impacts on cumulative global 
emissions. The estimates are presented with an acknowledgement of the 
many uncertainties involved and with a clear understanding that they 
should be updated over time to reflect

[[Page 10910]]

increasing knowledge of the science and economics of climate impacts.
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services due to climate change.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
    The interagency group selected four SCC values for use in 
regulatory analyses. Three values are based on the average SCC from 
three integrated assessment models, at discount rates of 2.5, 3, and 5 
percent. The fourth value, which represents the 95th percentile SCC 
estimate across all three models at a 3 percent discount rate, is 
included to represent higher-than-expected impacts from temperature 
change further out in the tails of the SCC distribution.

                                   Table IV.19--Social Cost of CO2, 2010-2050
                                                [In 2007 dollars]
----------------------------------------------------------------------------------------------------------------
                  Discount year                       5% Avg          3% Avg         2.5% Avg         3% 95th
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------

a. Monetizing Carbon Dioxide Emissions
    The ``social cost of carbon'' (SCC) is an estimate of the monetized 
damages associated with an incremental increase in carbon emissions in 
a given year. It is intended to include (but is not limited to) changes 
in net agricultural productivity, human health, property damages from 
increased flood risk, and the value of ecosystem services. Estimates of 
the social cost of carbon are provided in dollars per metric ton of 
carbon dioxide.\17\
---------------------------------------------------------------------------

    \17\ In this document, DOE presents all values of the SCC as the 
cost per metric ton of CO<INF>2</INF> emissions. Alternatively, one 
could report the SCC as the cost per metric ton of carbon emissions. 
The multiplier for translating between mass of CO<INF>2</INF> and 
the mass of carbon is 3.67 (the molecular weight of CO<INF>2</INF> 
divided by the molecular weight of carbon = 44/12 = 3.67).
---------------------------------------------------------------------------

    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of serious 
challenges. A recent report from the National Academies of Science 
(Hidden Costs of Energy: Unpriced Consequences of Energy Production and 
Use. National Academies Press. 2009) points out that any assessment 
will suffer from uncertainty, speculation, and lack of information 
about (1) future emissions of greenhouse gases, (2) the effects of past 
and future emissions on the climate system, (3) the impact of changes 
in climate on the physical and biological environment, and (4) the 
translation of these environmental impacts into economic damages. As a 
result, any effort to quantify and monetize the harms associated with 
climate change will raise serious questions of science, economics, and 
ethics and should be viewed as provisional.
    Despite the serious limits of both quantification and monetization, 
SCC estimates can be useful in estimating the social benefits of 
reducing carbon dioxide emissions. Under Executive Order 12866, 
agencies are required, to the extent permitted by law, ``to assess both 
the costs and the benefits of the intended regulation and, recognizing 
that some costs and benefits are difficult to quantify, propose or 
adopt a regulation only upon a reasoned determination that the benefits 
of the intended regulation justify its costs.'' The purpose of the SCC 
estimates presented here is to make it possible for agencies to 
incorporate the social benefits from reducing carbon dioxide emissions 
into cost-benefit analyses of regulatory actions that have small, or 
``marginal,'' impacts on cumulative global emissions. Most Federal 
regulatory actions can be expected to have marginal impacts on global 
emissions.
    For such policies, the benefits from reduced (or costs from 
increased) emissions in any future year can be estimated by multiplying 
the change in emissions in that year by the SCC value appropriate for 
that year. The net present value of the benefits can then be calculated 
by multiplying each of these future benefits by an appropriate discount 
factor and summing across all affected years. This approach assumes 
that the marginal damages from increased emissions are constant for 
small departures from the baseline emissions path, an approximation 
that is reasonable for policies that have effects on emissions that are 
small relative to cumulative global carbon dioxide emissions. For 
policies that have a large (non-marginal) impact on global cumulative 
emissions, there is a separate question of whether the SCC is an 
appropriate tool for calculating the benefits of reduced emissions; we 
do not attempt to answer that question here.
    An interagency group convened on a regular basis to consider public 
comments, explore the technical literature in relevant fields, and 
discuss key inputs and assumptions in order to generate SCC estimates. 
Agencies that actively participated in the interagency process include 
the Environmental Protection Agency, and the Departments of 
Agriculture, Commerce, Energy, Transportation, and Treasury. This 
process was convened by the Council of Economic Advisers and the Office 
of Management and Budget, with active participation and regular input 
from the Council on Environmental Quality,

[[Page 10911]]

National Economic Council, Office of Energy and Climate Change, and 
Office of Science and Technology Policy. The main objective of this 
process was to develop a range of SCC values using a defensible set of 
input assumptions that are grounded in the existing literature. In this 
way, key uncertainties and model differences can more transparently and 
consistently inform the range of SCC estimates used in the rulemaking 
process.
    The interagency group selected four SCC estimates for use in 
regulatory analyses. For 2010, these estimates are $5, $21, $35, and 
$65 (in 2007 dollars). The first three estimates are based on the 
average SCC across models and socio-economic and emissions scenarios at 
the 5, 3, and 2.5 percent discount rates, respectively. The fourth 
value is included to represent the higher-than-expected impacts from 
temperature change further out in the tails of the SCC distribution. 
For this purpose, we use the SCC value for the 95th percentile at a 3 
percent discount rate. The central value is the average SCC across 
models at the 3 percent discount rate. For purposes of capturing the 
uncertainties involved in regulatory impact analysis, we emphasize the 
importance and value of considering the full range. These SCC estimates 
also grow over time. For instance, the central value increases to $24 
per ton of CO<INF>2</INF> in 2015 and $26 per ton of CO<INF>2</INF> in 
2020. See Appendix A of the Annex to Chapter 15 of the Technical 
Support Document for the full range of annual SCC estimates from 2010 
to 2050.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improve over 
time. Specifically, we have set a preliminary goal of revisiting the 
SCC values within two years or at such time as substantially updated 
models become available, and to continue to support research in this 
area. In the meantime, we will continue to explore the issues raised by 
this analysis and consider public comments as part of the ongoing 
interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    To date, economic analyses for Federal regulations have used a wide 
range of values to estimate the benefits associated with reducing 
carbon dioxide emissions. In the final model year 2011 CAFE rule, the 
Department of Transportation (DOT) used both a ``domestic'' SCC value 
of $2 per ton of CO<INF>2</INF> and a ``global'' SCC value of $33 per 
ton of CO<INF>2</INF> for 2007 emission reductions (in 2007 dollars), 
increasing both values at 2.4 percent per year. It also included a 
sensitivity analysis at $80 per ton of CO<INF>2</INF>. A domestic SCC 
value is meant to reflect the value of damages in the United States 
resulting from a unit change in carbon dioxide emissions, while a 
global SCC value is meant to reflect the value of damages worldwide.
    A 2008 regulation proposed by DOT assumed a domestic SCC value of 
$7 per ton CO<INF>2</INF> (in 2006 dollars) for 2011 emission 
reductions (with a range of $0-$14 for sensitivity analysis), also 
increasing at 2.4 percent per year. A regulation finalized by DOE in 
October of 2008 used a domestic SCC range of $0 to $20 per ton 
CO<INF>2</INF> for 2007 emission reductions (in 2007 dollars). In 
addition, EPA's 2008 Advance Notice of Proposed Rulemaking for 
Greenhouse Gases identified what it described as ``very preliminary'' 
SCC estimates subject to revision. EPA's global mean values were $68 
and $40 per ton CO<INF>2</INF> for discount rates of approximately 2 
percent and 3 percent, respectively (in 2006 dollars for 2007 
emissions).
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across agencies, the Administration sought to 
develop a transparent and defensible method, specifically designed for 
the rulemaking process, to quantify avoided climate change damages from 
reduced CO<INF>2</INF> emissions. The interagency group did not 
undertake any original analysis. Instead, it combined SCC estimates 
from the existing literature to use as interim values until a more 
comprehensive analysis could be conducted.
    The outcome of the preliminary assessment by the interagency group 
was a set of five interim values: global SCC estimates for 2007 (in 
2006 dollars) of $55, $33, $19, $10, and $5 per ton of CO<INF>2</INF>. 
The $33 and $5 values represented model-weighted means of the published 
estimates produced from the most recently available versions of three 
integrated assessment models--DICE, PAGE, and FUND--at approximately 3 
and 5 percent discount rates. The $55 and $10 values were derived by 
adjusting the published estimates for uncertainty in the discount rate 
(using factors developed by Newell and Pizer (2003)) at 3 and 5 percent 
discount rates, respectively. The $19 value was chosen as a central 
value between the $5 and $33 per ton estimates. All of these values 
were assumed to increase at 3 percent annually to represent growth in 
incremental damages over time as the magnitude of climate change 
increases.
    These interim values represent the first sustained interagency 
effort within the U.S. government to develop an SCC for use in 
regulatory analysis. The results of this preliminary effort were 
presented in several proposed and final rules and were offered for 
public comment in connection with proposed rules, including the joint 
EPA-DOT fuel economy and CO<INF>2</INF> tailpipe emission proposed 
rules.
c. Approach and Key Assumptions
    Since the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates 
considered for this final rule. Specifically, the group considered 
public comments and further explored the technical literature in 
relevant fields.
    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable since they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Academy of 
Science (2009) points out that there is tension between the goal of 
producing quantified estimates of the economic damages from an 
incremental ton of carbon and the limits of existing efforts to model 
these effects. There are a number of concerns and problems that should 
be addressed by the research community, including research programs 
housed in many of the agencies participating in the interagency process 
to estimate the SCC.
    The U.S. Government will periodically review and reconsider 
estimates of the SCC used for cost-benefit analyses to reflect 
increasing knowledge of the science and economics of climate impacts, 
as well as improvements in modeling. In this context, statements 
recognizing the limitations of the analysis and calling for further 
research take on exceptional significance. The interagency group offers 
the new SCC values with all due humility about the uncertainties 
embedded in them and with a sincere promise to continue work to improve 
them.
    In summary, in considering the potential global benefits resulting 
from reduced CO<INF>2</INF> emissions, DOE used the most recent values 
identified by the interagency process, adjusted to 2009$ using the 
standard GDP deflator values for 2008 and 2009. For each of the four 
cases specified, the values for emissions

[[Page 10912]]

in 2010 used were approximately $5, $22, $36, and $67 per metric ton 
avoided (values expressed in 2009$). To monetize the CO<INF>2</INF> 
emissions reductions expected to result from amended standards for 
small electric motors in 2015-2045, DOE used the values identified in 
Table A1 of the ``Social Cost of Carbon for Regulatory Impact Analysis 
Under Executive Order 12866,'' which is reprinted as an Annex to 
Chapter 15 of the Technical Support Document, appropriately escalated 
to 2009$.
2. Monetary Values of Non-Carbon Emissions
    As previously stated, DOE's analysis assumed the presence of 
nationwide emission caps on SO<INF>2</INF> and caps on NO<INF>X</INF> 
emissions in the 28 States covered by CAIR. In the presence of these 
caps, the NEMS-BT modeling system that DOE used to forecast emissions 
reduction indicated that no physical reductions in power sector 
emissions would occur (although there remains uncertainty about whether 
physical reduction of SO<INF>2</INF> will occur), but that the 
standards could put slight downward pressure on the prices of emissions 
allowances in cap-and-trade markets. Estimating this effect is very 
difficult because factors such as credit banking can change the 
trajectory of prices. From its modeling to date, DOE is unable to 
estimate a benefit from energy conservation standards on the prices of 
emissions allowances at this time. See the environmental assessment in 
the final rule TSD for further details.
    DOE also investigated the potential monetary benefit of reduced 
NO<INF>X</INF> and Hg emissions from the TSLs it considered. As noted 
above, new or amended energy conservation standards would reduce 
NO<INF>X</INF> emissions in those 22 States that are not affected by 
CAIR, in addition to the reduction in site NO<INF>X</INF> emissions 
nationwide. DOE estimated the monetized value of NO<INF>X</INF> 
emissions reductions resulting from each of the TSLs considered for 
today's final rule based on environmental damage estimates from the 
literature. Available estimates suggest a very wide range of monetary 
values for NO<INF>X</INF> emissions, ranging from $370 per ton to 
$3,800 per ton of NO<INF>X</INF> from stationary sources, measured in 
2001$ (equivalent to a range of $447 to $4,591 per ton in 2009$). Refer 
to the OMB, Office of Information and Regulatory Affairs, ``2006 Report 
to Congress on the Costs and Benefits of Federal Regulations and 
Unfunded Mandates on State, Local, and Tribal Entities,'' Washington, 
DC, for additional information.
    For Hg emissions reductions, DOE estimated the national monetized 
values resulting from the TSLs considered for today's rule based on 
environmental damage estimates from the literature. The impact of 
mercury emissions from power plants on humans is considered highly 
uncertain. However, DOE identified two estimates of the environmental 
damage of Hg based on estimates of the adverse impact of childhood 
exposure to methyl mercury on IQ for American children, and subsequent 
loss of lifetime economic productivity resulting from these IQ losses. 
The high-end estimate of $1.3 billion per year in 2000$ (which works 
out to $33.7 million per ton emitted per year in 2009$) is based on an 
estimate of the current aggregate cost of the loss of IQ in American 
children that results from exposure to Hg of U.S. power plant 
origin.\18\ DOE's low-end estimate of $0.66 million per ton emitted in 
2004$ ($0.764 million per ton in 2008$) was derived from an evaluation 
of mercury control that used different methods and assumptions from the 
first study, but was also based on the present value of the lifetime 
earnings of children exposed to Hg.\19\
---------------------------------------------------------------------------

    \18\ Trasande, L., et al., ``Applying Cost Analyses to Drive 
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911 
(2006).
    \19\ Ted Gayer and Robert Hahn, ``Designing Environmental 
Policy: Lessons from the Regulation of Mercury Emissions,'' 
Regulatory Analysis 05-01, AEI-Brookings Joint Center for Regulatory 
Studies, Washington, DC (2004). A version of this paper was 
published in the Journal of Regulatory Economics in 2006. The 
estimate was derived by back-calculating the annual benefits per ton 
from the net present value of benefits reported in the study.
---------------------------------------------------------------------------

V. Discussion of Other Comments

    Since DOE opened the docket for this rulemaking, it has received 
more than 20 comments from a diverse set of parties, including 
manufacturers and their representatives, States, energy conservation 
advocates, and electric utilities. Section IV of this preamble 
discusses comments DOE received on the analytical methodologies it has 
used in this rulemaking. Additional comments DOE received in response 
to the NOPR addressed the information DOE used in its analyses, results 
of and inferences drawn from the analyses, impacts of standards, the 
merits of the different TSLs and standards options DOE considered, 
other issues affecting adoption of standards for small electric motors, 
and the DOE rulemaking process. DOE addresses these comments below.
A. Trial Standard Levels
    In selecting the proposed energy conservation standards for both 
classes of small electric motors for consideration in today's final 
rule, DOE started by examining the standard levels with the highest 
energy savings, and determined whether those levels were economically 
justified. If DOE found those levels not to be justified, DOE 
considered TSLs sequentially lower in energy savings until it reached 
the level with the greatest energy savings that was both 
technologically feasible and economically justified. In the NOPR 
document, DOE proposed TSL 5 for polyphase motors and TSL 7 for single-
phase motors.
    Emerson commented that while it is in favor of efficiency standards 
in general, it is not in favor of the proposed standards for small 
electric motors. This is because it diverts a manufacturer's attention 
and funding away from other energy efficient technologies that it is 
developing, which are actually being used to replace these covered 
motors. In its written comments, Emerson asked that DOE not regulate 
small electric motors. (Emerson, Public Meeting Transcript, No. 20.4 at 
pp. 267-69; Emerson, No. 28 at p. 3) Underwriters Laboratories (UL) 
submitted written comments stating that over the past five years the 
majority of fractional horsepower motors it has seen have been 
electronically commutated motors (ECM), which reach efficiency levels 
in the high 90 percent range. However, UL continued on to state that 
DOE should not set efficiency levels for the covered motors that 
reinforce the status quo, but rather encourage greater efficiency, 
which it states the proposed standard levels would not achieve. (UL, 
No. 21 at pp. 1-2) QM Power added that high standards would cause 
alternative technologies to be sold in higher volumes and as a result 
bring their relative prices down. (QM Power, Public Meeting Transcript, 
No. 20.4 at pp. 290-91) Finally, a joint comment submitted by PG&E, 
SCE, SCGC, and SDGE indicated support for the standard levels chosen by 
DOE in the NOPR phase. (Joint Comment, No. 23 at p. 2)
    DOE notes that it is legally required to issue standards for small 
electric motors and reiterates that it selects the standard level with 
the highest energy savings that is both technologically feasible and 
economically justified. The standards set in today's final rule 
represent the efficiency level with the greatest energy savings that is 
both technologically feasible and economically justified. While other 
classes of motors, such as electronically commutated motors (ECMs) may 
offer higher efficiency levels than the levels selected by DOE in 
today's rulemaking,

[[Page 10913]]

DOE must consider and evaluate the covered motors when selecting 
efficiency levels.
    NEMA commented that a statement in the NOPR indicated that the 
proposed polyphase standard was closely aligned with the EPACT 1992 
efficiency levels. NEMA was confused by this statement because the 
levels proposed in the NOPR were greater than the EPACT 1992 levels. 
(NEMA, No. 24 at p. 22) NEMA also stated that the NOPR indicates ``TSL 
7 corresponds to the NEMA Premium equivalent efficiency for CSCR 
motors,'' (74 FR 61469) but that there is no defined level of NEMA 
Premium efficiency for any \3/4\-horsepower, four-pole motor. (NEMA, 
No. 24 at p. 24)
    DOE would like to clarify these statements. In the NOPR, DOE stated 
``DOE proposes a standard for polyphase small motors * * * that is 
closely aligned with the EPACT 1992 standard for medium motors.'' 74 FR 
61419-20. This text should have read that DOE proposed efficiency 
levels (TSL 5) for polyphase small electric motors are closely aligned 
with the NEMA Premium efficiency levels for 1-horsepower, four-pole 
medium electric motors. This statement was restated and asserted at 
other times throughout the NOPR document and DOE regrets any confusion 
it may have caused.
    In this final rule, due to revisions in the baseline efficiencies, 
modeling of higher efficiency motor designs, and scaling analysis, TSL 
4b now most closely aligns with NEMA Premium efficiency levels (and 
medium electric motor standards) for motors greater than 1 horsepower. 
DOE recognizes the value to manufacturers of having a single efficiency 
requirement for similar models of motors. Because some efficiency 
values associated with TSL 4b are slightly higher than the NEMA Premium 
efficiency requirements, DOE is reducing these values to harmonize with 
NEMA Premium efficiency. DOE does not anticipate that this reduction 
will result in a significant loss of energy savings. For this reason, 
DOE is implementing this change after conducting its analyses and in 
the final stage of standard-setting. For further detail on the 
polyphase efficiencies analyzed for TSL 4b, see chapter 5 of the TSD.
    DOE also understands that NEMA Premium levels exist neither for any 
\3/4\-horsepower, four-pole motors nor single-phase. DOE drew this 
comparison to NEMA Premium because manufacturers had recommended, 
during the preliminary analysis, that DOE examine such a standard level 
for its CSCR motor with the aforementioned ratings, and the 
manufacturers used that terminology when providing their 
recommendations to DOE.
    In addition, Regal-Beloit and A.O. Smith commented that a CSCR 
motor should be able to generate a higher efficiency level than a 
comparable CSIR motor, but pointed out that DOE's NOPR proposed 
efficiency levels would require CSIR motors to have higher efficiencies 
than corresponding CSCR motors. (Regal-Beloit, Public Meeting 
Transcript, No. 20.4 at pp. 107-08; A.O. Smith, Public Meeting 
Transcript, No. 20.4 at p. 108) NEMA also questioned the validity of 
DOE's scaling analysis, citing the fact that the proposed CSIR levels 
were in fact slightly higher than the proposed CSCR levels. (NEMA, No. 
24 at pp. 9-10) They added that though DOE indicated that the proposed 
efficiency levels for CSIR and CSCR were the same, they were not 
exactly equivalent. (NEMA, No. 24 at pp. 25-26)
    DOE would like to clarify that it was not alleging that CSCR motors 
cannot be as efficient as CSIR motors. DOE is aware that CSCR motors 
are inherently more efficient than CSIR motors, as indicated by the 
NOPR and final rule's max-tech efficiency levels for these two types of 
motors. DOE had proposed a standard level where the pairing of 
efficiency standards for both motor categories were approximately 
equivalent. DOE analyzed several TSLs for single-phase motors, some of 
which result in higher minimum efficiency requirements for CSCR motors 
than CSIR motors. However, as discussed in section VI.D, TSL 7, which 
adopt levels for CSIR and CSCR that are approximately equivalent, has 
been determined to the level that achieves the maximum energy savings, 
while being technologically feasible and economically justified.
    In consideration of the comments received regarding the exact 
equivalence of the CSIR and CSCR levels, DOE believes it appropriate to 
harmonize the levels of the two categories of motors for the standard 
selected in today's final rule. Because the TSL 7 represents the 
maximum technologically feasible level for CSIR motors, DOE has opted 
to lower these levels to equal the CSCR standard levels for TSL 7. DOE 
does not expect that this shift in CSIR motor efficiency will have a 
significant impact on the comparative economics or energy savings of 
the varying TSLs, and thus will not change the decision of which TSL to 
adopt. For this reason, DOE has decided to apply this efficiency shift 
at the standard-setting phase of the analyses. For further detail on 
the CSIR efficiencies analyzed for TSL 7, see chapter 5 of the TSD.

B. Enforcement

    Thus far in the rulemaking process, DOE has not laid out any plans 
for the enforcement of efficiency standards for small electric motors. 
Typically, efficiency standard rulemakings do not outline a plan for 
enforcement, which occurs independently from the rulemaking process.
    DOE received a number of comments pertaining to the enforcement of 
today's final rule and what steps DOE will take to enforce these 
efficiency standards. Regal-Beloit, A.O. Smith, and WEG all expressed 
the concern that some manufacturers, most notably from overseas, may 
not comply with the standards, and they wished to see a plan for how 
these standards would be enforced. (Regal-Beloit, Public Meeting 
Transcript, No. 20.4 at pp. 182-83; A.O. Smith, No. 26 at p. 3; WEG, 
Public Meeting Transcript, No. 20.4 at pp. 261-66) A joint comment 
submitted by PG&E, SCE, SCGC, and SDGE also stressed the importance of 
developing a plan for enforcement. (Joint Comment, No. 23 at p. 2) 
Emerson agreed with the joint commenters that a lack of enforcement 
would put the domestic manufacturers who comply with today's standard 
at a disadvantage in the marketplace because they would incur the costs 
necessary to increase efficiency. (Joint Comment, No. 23 at p. 2; 
Emerson, No. 28 at p. 2)
    Additionally, DOE received comments offering suggestions for how to 
improve the enforcement of today's rule. Both Regal-Beloit commented 
that DOE should require a marking on the motor to indicate that it 
complies with the efficiency standard, such as is done with NEMA 
Premium motors. (Regal-Beloit, Public Meeting Transcript, No. 20.4 at 
pp. 229-30) Regal-Beloit also suggested that DOE perform some sort of 
audit of the motors on the market to ensure compliance with today's 
rule. (Regal-Beloit, Public Meeting Transcript, No. 20.4 at p. 230) 
Finally, Earthjustice requested that today's final rule outline a 
specific date on which DOE will layout plans for enforcement of the 
small electric motors standards. (Earthjustice, Public Meeting 
Transcript, No. 20.4 at pp. 20-21)
    NEMA's written comment reiterated these concerns about enforcement, 
and outlined several steps DOE should take to ensure proper compliance. 
First, it recommended that DOE expand its present Compliance 
Certification number system that is used for electric motors to include 
small electric motors. Second, it recommended a means to

[[Page 10914]]

notify DOE of potential violations. Third, it suggested maintaining a 
Web site that lists manufacturers and OEMs who have submitted 
compliance certificates. Fourth, it supported penalties for repeat 
violations of the law. Finally, it stressed the importance of securing 
the appropriate funds for implementing and maintaining an enforcement 
program. (NEMA, No. 24 at pp. 26-27) NEEA and NPCC also commented on 
the importance of appropriating funds for enforcement of today's 
standards. (NEEA/NPCC, No. 27 at p. 7)
    Additionally, NEMA's written comment indicated that DOE must 
publish the small electric motors SNOPR soon in order for manufacturers 
to have sufficient time to ensure compliance with today's standards. 
(NEMA, No. 24 at p. 25)
    DOE agrees that the plans for enforcing today's final rule are very 
important, and appreciates the suggestions provided by manufacturers. 
While it is uncommon for a standard rulemaking to address issues of 
enforcement, DOE would like to highlight its intention to outline 
concrete steps for enforcing today's efficiency standards. Given the 
numerous rulemakings that the agency must promulgate pursuant to its 
court consent decree and statutory requirements, DOE plans to issue 
this supplemental notice as expeditiously as possible to invite comment 
from interested parties and to ensure that the motor industry has 
sufficient time to adjust to any new provisions that DOE proposes.

C. Nominal Full-Load Efficiency

    As discussed in section IV.C.2 of today's final rule, it is common 
in the motor industry to observe variation in motor performance for a 
population of motors of identical designs, including tested efficiency. 
This variation can be due to variations in material quality, 
manufacturing processes, and even testing equipment. NEMA has 
established the term ``nominal full-load efficiency'' and uses the term 
for medium electric motors customers with a guaranteed efficiency given 
the variations in motor manufacturing and testing. As the tolerances 
due to manufacturing and testing variations guaranteed by NEMA's 
definition of nominal full load efficiency are based on test procedures 
and data for medium electric motors, DOE elected to alter the 
definition in its NOPR and as it pertains to small electric motors. In 
the NOPR, DOE defined the term nominal full-load efficiency as the 
arithmetic mean of the full load efficiency of a population of motors 
of duplicate design.
    At the NOPR public meeting, Baldor made several comments regarding 
DOE's proposed definition for ``nominal full-load efficiency'' 
pertaining to small electric motors. First, Baldor commented that the 
proposed definition was too similar to the existing definition for 
``average full-load efficiency,'' and that it differed from the 
definition in NEMA MG-1, which would create confusion for users. 
(Baldor, Public Meeting Transcript, No. 20.4 at pp. 112, 126-27) Next, 
Baldor commented that the proposed definition provided no stipulation 
for what constitutes a population of motors, and suggested that the 
term be clarified. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 
112-13) These two comments were reiterated by NEMA in its written 
comments. (NEMA, No. 24 at pp. 10-16) Finally, Baldor commented that 
the proposed definition infers that the arithmetic mean of the full-
load efficiencies of the population of motors is known and that the 
nominal full-load efficiency must be specified to be equal to the 
arithmetic mean, which would provide no limit to the number of 
different values of efficiency that might be marked on nameplates. As 
such, Baldor requested further clarification on the determination of 
any relationship between nominal full-load efficiency and calculated 
efficiency. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 114, 
125)
    Additionally, Baldor recommended improvements to DOE's usage of 
nominal full-load efficiency. Baldor stated that the standard levels 
set by DOE should follow a pattern similar to the one already 
established in Table 12-6(a), which provides a logical sequence of 
numbers, and is familiar to motor users. (Baldor, Public Meeting 
Transcript, No. 20.4 at pp. 129-31) Baldor also pointed out that DOE is 
able to use the nominal values in Table 12-6(a) without using the 
minimum values, which are just provided for user information but not 
for compliance. (Baldor, Public Meeting Transcript, No. 20.4 at pp. 
142-43) Again, NEMA supported these statements in its written comments. 
(NEMA, No. 24 at p. 14) Finally, Baldor and NEMA stated that DOE does 
not need to establish energy conservation standards in terms of nominal 
efficiency, but rather identify the characteristic of the efficiency 
value assigned to a motor to which a value in the table applies. 
(Baldor, Public Meeting Transcript, No. 20.4 at pp. 134-35; NEMA, No. 
24 at pp. 15-16)
    DOE considered all of these comments when it established energy 
conservation standards for small electric motors in today's final rule. 
DOE agrees with NEMA and Baldor that its energy efficiency standards 
are not mandated to be in terms of nominal full-load efficiency. 
Instead, DOE believes that nominal efficiency is an issue more related 
to certifying compliance. Therefore, DOE has elected to establish 
energy conservation standards in terms of average full-load efficiency. 
DOE will address comments related to nominal efficiency and propose 
provisions for certifying compliance with small electric motor energy 
efficiency standards in its supplemental test procedure NOPR for 
electric motors.

VI. Analytical Results and Conclusions

A. Trial Standard Levels

    DOE examined eight TSLs for polyphase small electric motors and 
eight for capacitor-start small motors. Table VI.1 and Table VI.2 
present the TSLs and the corresponding efficiencies for the three 
representative product classes analyzed for today's final rule. TSL 8 
is the max-tech efficiency level for the polyphase motors, and TSL 7 is 
the max-tech level for the capacitor-start motors.

 Table VI.1--Trial Standard Levels for Polyphase Small Electric Motors *
------------------------------------------------------------------------
                                                          Polyphase four-
                                                             pole  1-
                                                           horsepower %
------------------------------------------------------------------------
TSL 1...................................................            77.3
TSL 2...................................................            78.3
TSL 3...................................................            80.5
TSL 4...................................................            81.1
TSL 4b..................................................            83.5
TSL 5...................................................            85.2
TSL 6...................................................            86.2
TSL 7...................................................            87.7
------------------------------------------------------------------------
* Standard levels are expressed in terms of full-load efficiency.

    DOE's polyphase TSLs represent the increasing efficiency of the 
range of motors DOE modeled in its engineering analysis. DOE 
incorporated one additional TSL since the NOPR, which is the new TSL 
4b. This TSL approximately aligns with the efficiency values proposed 
by NEMA in their written comments.
    TSLs 1, 2, and 3 represent incremental improvements in efficiency 
as a result of increasing the stack height and the slot fill 
percentage. TSL 4 represents the efficiency level possible by 
increasing stack height by 20 percent while maintaining the baseline 
steel

[[Page 10915]]

grade and an aluminum rotor. TSL 4b approximately aligns with the 
efficiency levels proposed by NEMA in its written comment, and for the 
representative product class is comparable to the efficiency of a 
three-digit frame series medium electric motor that meets the 
efficiency requirements of EPCA. TSL 5 represents the highest 
efficiency value for a space-constrained design before switching to a 
copper rotor. TSL 6 represents a level at which DOE has reached the 20 
percent limit of increased stack height, increased grades of steel and 
included a copper die-cast rotor. Also, TSL 6 is comparable to the 
efficiency standard of a three-digit frame series medium electric motor 
that meets the NEMA Premium level, which Congress has set as an energy 
conservation standard for medium motors through section 313(b) of EISA 
2007. At TSL 7, the max-tech efficiency level, for the restricted 
designs DOE has reached the design limit using the maximum increase in 
stack height of 20 percent and increased grades of steel. At this 
level, DOE has also implemented a premium steel type (Hiperco 50), a 
copper die-cast rotor, a maximum slot fill percentage of nearly 65 
percent. For the lesser space-constrained design, DOE has decreased the 
stack height from the design used at TSL 6. This design incorporates a 
copper rotor while reaching the design limitation maximum slot fill 
percentage.

  Table VI.2--Trial Standard Levels for Capacitor-Start Small Electric
                                 Motors*
------------------------------------------------------------------------
                                            Capacitor-      Capacitor-
                                              start,          start,
                                           induction-run   capacitor-run
                                            4-pole 0.50     4-pole 0.75
                                            horsepower      horsepower
                                            motors (%)      motors (%)
------------------------------------------------------------------------
TSL 1...................................     70.5 (EL 4)     79.5 (EL 2)
TSL 2...................................     70.5 (EL 4)     81.7 (EL 3)
TSL 3...................................     71.8 (EL 5)     81.7 (EL 3)
TSL 4...................................     73.1 (EL 6)     82.8 (EL 4)
TSL 5...................................     73.1 (EL 6)     81.7 (EL 3)
TSL 6...................................     77.6 (EL 7)     87.9 (EL 8)
TSL 7...................................     77.6 (EL 7)     81.7 (EL 3)
TSL 8...................................     77.6 (EL 7)     86.7 (EL 7)
------------------------------------------------------------------------
* Standard levels are expressed in terms of full-load efficiency.

    Each TSL for capacitor-start small motors consists of a combination 
of efficiency levels for induction-run and capacitor-run motors. CSIR 
and CSCR motors are used in similar applications and generally can be 
used interchangeably provided the applications are not bound by strict 
space constraints and will allow the presence of a second capacitor 
housing of the motor. DOE believes that the standards set by today's 
rule will impact the relative market share of CSIR and CSCR motors for 
general-purpose single-phase applications by changing the upfront cost 
of motors as well as their estimated losses. Section IV.G of this final 
rule and chapter 9 of the TSD describe DOE's model of this market 
dynamic.
    DOE developed seven possible efficiency levels for CSIR motors and 
eight possible efficiency levels for CSCR motors. Rather than present 
all possible combinations of these efficiency levels, DOE chose a 
representative set of 8 TSLs that span the range from low energy 
savings to the maximum national energy savings. Because of the 
interaction between the CSIR and CSCR market share, there is no simple 
relationship between the combination of efficiency levels and the 
resulting energy savings. DOE's capacitor-start cross-elasticity model 
was used to evaluate the impacts of each TSL on motor shipments in each 
product class. The model predicts that TSLs 1 through 5 result in 
relatively minor changes in product class market shares, while TSLs 6, 
7, and 8 result in more significant changes. Uncertainties in the 
cross-elasticity model, and in the timescale of market share response 
to standards, lead to greater uncertainty in the national impacts of 
TSLs 6, 7, and 8, than with TSLs 1 through 5. A summary of results for 
all combinations of CSIR and CSCR efficiency levels is presented in 
chapter 10 of the TSD.
    TSL 1 is a combination consisting of the fourth efficiency level 
analyzed for CSIR motors and the second efficiency level for CSCR 
motors. This TSL uses similar engineering design options for both CSIR 
and CSCR motors and corresponds to an efficiency level roughly 
equivalent to the standards levels recommend for 42/48-frame-size CSIR 
motors and 56-frame size CSCR motors by NEMA. TSL 2 increases the 
efficiency level of the CSCR motor to the third efficiency level, which 
corresponds to the minimum life-cycle cost. The efficiency level for 
the CSIR motor remains the same as in TSL 1. TSL 3 raises the CSIR 
efficiency level, which DOE's model meets by implementing a copper die-
cast rotor, increasing slot fill, and reaching the 20 percent limit on 
increased stack height, or by doubling the original stack height and 
increasing slot fill. However, the CSCR efficiency level remains at the 
minimum LCC.
    TSLs 4 and 5 both show the same efficiency level for CSIR motors, 
but different efficiency levels for CSCR motors. To obtain the 
efficiency level for CSIR motors, DOE had to use either a copper rotor 
in combination with a thinner and higher grade of steel and a stack 
increase of 20 percent, or only a higher grade of steel with a stack 
exceeding a 20-percent increase but no longer than a 100-percent 
increase. The 82.2-percent efficiency level for CSCR motors in TSL 5 
corresponds again to the same design and efficiency level for TSL 2 and 
3. To achieve the 83.2-percent efficiency level for CSCR motors in TSL 
4, DOE created designs with a 20-percent increase in stack height and a 
higher grade of steel or used a copper rotor with a stack height above 
a 20-percent increase. TSL 4 represents the combination of the highest 
CSIR and CSCR levels that have more customers who benefit than 
customers who do not according to DOE's LCC analysis. TSL 5 increases 
energy savings relative to TSL 4 because DOE anticipates there will be 
a greater CSCR market share, and the CSCR efficiency level again 
corresponds with the minimum LCC.
    TSL 6 represents max-tech efficiency levels for CSIR and CSCR 
motors, as determined by DOE's engineering analysis; at this level CSCR 
motors are very expensive relative to CSIR motors, and DOE forecasts a 
nearly complete market shift to CSIR motors. TSLs 7 and 8 represent 
cases in which CSIR motors are, on average, very expensive relative to 
CSCR motors as a result of standards, and DOE forecasts near-to-
complete market shifts to CSCR motors in both of its reference 
scenarios. Because CSCR motors are more efficient at these levels, 
national energy savings are increased beyond that of the max-tech 
efficiency level, TSL 6. TSL 7 pairs the max-tech efficiency 
requirements for CSIR motors with the minimum LCC efficiency level for 
CSCR motors, while TSL 8 pairs max-tech CSIR efficiency requirements 
with the second-highest CSCR motor efficiency level that DOE analyzed. 
The ordering of TSLs 5, 6, 7, and 8, with respect to energy savings is 
robust in the face of uncertainties in the inputs to, and the 
parameters of, DOE's cross-elasticity model.

B. Significance of Energy Savings

    To estimate the energy savings through year 2045 from potential 
standards, DOE compared the energy consumption attributable to small 
electric motors under the base case (no new standards) to energy 
consumption attributable to this equipment under each standards case 
(each TSL that DOE has considered). Table VI.3 and Table VI.4 show 
DOE's national energy savings estimates, which are based on the AEO 
2010 Early Release, for each TSL for polyphase and capacitor-start

[[Page 10916]]

small electric motors, respectively. Chapter 10 of the TSD describes 
these estimates in more detail. DOE reports both undiscounted and 
discounted values of energy savings. Discounted energy savings 
represent a policy perspective where energy savings farther in the 
future are less significant than energy savings closer to the present.
    Estimating the energy savings due to revised and new energy 
efficiency standards required DOE to compare the energy consumption of 
small electric motors under the base case to energy consumption of 
these products under the trial standard levels. As described in section 
IV.G DOE used scaling relations for energy use and equipment price to 
extend its average energy use and price for representative product 
classes (analyzed in the LCC analysis) to all product classes, and then 
developed shipment-weighted sums to estimate the national energy 
savings. As described in section IV.G, DOE conducted separate national 
impact analyses for polyphase and capacitor-start (single-phase) 
motors. Efficiency standards for CSIR and CSCR motors are reflected in 
the capacitor-start energy savings and NPV results, which account for 
the interchangeability of CSIR and CSCR motors in many applications.
    Table VI.3 and Table VI.4 show the forecasted national energy 
savings through year 2045 at each of the TSLs. The tables also show the 
magnitude of the energy savings if the savings are discounted at rates 
of seven and three percent. The energy savings (undiscounted) from 
implementing standards for polyphase small electric motors range from 
0.05 to 0.37 quad and the savings for capacitor-start small electric 
motors range from 1.18 to 2.33 quads.

          Table VI.3--Summary of Cumulative National Energy Savings for Polyphase Small Electric Motors
                                     [Energy savings between 2015 and 2045]
----------------------------------------------------------------------------------------------------------------
                                                                     National energy savings (quads)
                  Trial standard level                  --------------------------------------------------------
                                                           Not discounted    Discounted at 3%   Discounted at 7%
----------------------------------------------------------------------------------------------------------------
1......................................................               0.05               0.03               0.01
2......................................................               0.09               0.05               0.02
3......................................................               0.17               0.09               0.04
4......................................................               0.19               0.10               0.05
4b.....................................................               0.29               0.15               0.07
5......................................................               0.34               0.18               0.09
6......................................................               0.37               0.19               0.09
7......................................................               0.37               0.20               0.09
----------------------------------------------------------------------------------------------------------------


       Table VI.4--Summary of Cumulative National Energy Savings for Capacitor-Start Small Electric Motors
                                     [Energy savings between 2015 and 2045]
----------------------------------------------------------------------------------------------------------------
                                                                     National energy savings (quads)
                  Trial standard level                  --------------------------------------------------------
                                                           Not discounted    Discounted at 3%   Discounted at 7%
----------------------------------------------------------------------------------------------------------------
1......................................................               1.18               0.63               0.31
2......................................................               1.19               0.64               0.31
3......................................................               1.36               0.73               0.36
4......................................................               1.47               0.79               0.39
5......................................................               1.47               0.79               0.39
6......................................................               1.61               0.87               0.43
7......................................................               1.91               1.03               0.51
8......................................................               2.33               1.25               0.62
----------------------------------------------------------------------------------------------------------------

    DOE conducted a wide range of sensitivity analyses, including 
scenarios demonstrating the effects of variation in shipments, response 
of customers to higher motor prices, the cost of electricity due to a 
carbon cap and trade regime, reactive power costs, and (for capacitor-
start motors) the dynamics of CSIR/CSCR consumer choice. These 
scenarios show a range of possible outcomes from projected energy 
conservation standards, and illustrate the sensitivity of these results 
to different input and modeling assumptions. In general, however, they 
do not dramatically change the relationship between results at one TSL 
with those at another TSL and the relative economic savings and energy 
savings of different TSLs remain roughly the same. The estimated 
overall magnitude of savings, however, can change substantially, which 
can be due to a change in the estimated total number of small electric 
motors in use. Details of each scenario are available in chapter 10 of 
the TSD and its appendices, along with the national energy savings 
estimated for each scenario.
    Customers currently appear to favor CSIR motors over CSCR motors, 
even if their initial costs and losses are almost identical. DOE's 
market-share model includes an ``unfamiliarity cost'' parameter that 
attempts to account for this observed behavior. For the shipments 
sensitivity analysis, DOE analyzed the total energy savings from 
capacitor-start motors when this unfamiliarity cost is significantly 
lower (high CSCR model) or higher (low CSCR model) than DOE's reference 
case. These scenarios can have a significant impact on the relative 
energy savings in different TSLs. Table VI.5 shows the results for the 
national energy savings (through year 2045) in these scenarios.

[[Page 10917]]



   Table VI.5--Undiscounted Cumulative National Energy Savings for Capacitor-Start Small Electric Motors Under
                                   Different CSIR/CSCR Market Share Scenarios
                                  [Energy savings between years 2015 and 2045]
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings quads
                                                        --------------------------------------------------------
                  Trial standard level                                          Reference          High CSCR
                                                         Low CSCR scenario       scenario           scenario
----------------------------------------------------------------------------------------------------------------
1......................................................               1.17               1.18               1.30
2......................................................               1.17               1.19               1.38
3......................................................               1.34               1.36               1.52
4......................................................               1.43               1.47               1.67
5......................................................               1.43               1.47               1.65
6......................................................               1.61               1.61               1.62
7......................................................               1.87               1.91               1.92
8......................................................               2.17               2.33               2.37
----------------------------------------------------------------------------------------------------------------

C. Economic Justification

    In examining the potential for energy savings for small electric 
motors, DOE analyzed whether standards would be economically justified. 
As part of this examination, a variety of elements were examined. These 
elements are based on the various criteria specified in EPCA. See 
generally, 42 U.S.C. 6295.
1. Economic Impact on Motor Customers
    DOE analyzed the economic impacts on small electric motor customers 
by looking at the effects standards would have on the LCC, PBP, and on 
various subgroups. DOE also examined the effects of the rebuttable 
presumption payback period set out in 42 U.S.C. 6295. All of these 
analyses are discussed below.
a. Life-Cycle Costs and Payback Period
    Customers of equipment affected by new or amended standards usually 
experience higher purchase prices and lower operating costs. Generally, 
these impacts are best captured by changes in life-cycle costs. 
Therefore, DOE calculated the LCC and PBP for the standards levels 
considered in this proceeding. DOE's LCC and PBP analyses provided five 
key outputs for each TSL, which are reported in Table VI.6 through 
Table VI.8 below. The first three outputs are the proportion of small 
motor purchases where the purchase of a design that complies with the 
TSL would create a net life-cycle cost, no impact, or a net life-cycle 
savings for the consumer. The fourth output is the average net life-
cycle savings from the purchase of a complying design.
    Finally, the fifth output is the average PBP for the consumer 
purchase of a design that complies with the TSL. The PBP is the number 
of years it would take for the customer to recover, as a result of 
energy savings, the increased costs of higher-efficiency equipment, 
based on the operating cost savings from the first year of ownership. 
The payback period is an economic benefit-cost measure that uses 
benefits and costs without discounting. DOE's PBP analysis and its 
analysis under the rebuttable presumption test both address the payback 
period for a standard. DOE based its estimates of the average PBPs for 
small electric motors on energy consumption under conditions of actual 
use of these motors and also analyzed the amount of energy consumption 
for purposes of the rebuttable presumption calculations using the 
conditions prescribed by the DOE test procedure. See 42 U.S.C. 
6295(o)(2)(B)(iii). Moreover, as discussed above, while DOE examined 
the rebuttable-presumption criteria (see TSD section VI.C.1.d), it 
determined today's standard levels to be economically justified through 
a more detailed analysis of the economic impacts of increased 
efficiency pursuant to section 325(o)(2)(B)(i) of EPCA. (42 U.S.C. 
6295(o)(2)(B)(i)) Detailed information on the LCC and PBP analyses can 
be found in TSD Chapter 8.
    DOE analyzed the life-cycle cost for three representative motors, 
as shown in Table VI.6 through Table VI.8. A Monte Carlo simulation was 
performed to incorporate uncertainty and variability into the analysis. 
A random sample of 10,000 motors was drawn from the distributions of 
current national shipments by motor type, application, owner type, 
operating hours, and other inputs, using Crystal Ball, a commercially 
available software program. The model calculated the LCC and PBP for 
equipment at each efficiency level for each of the 10,000 motors 
sampled. For a 1-horsepower polyphase motor, customers experience net 
LCC savings, on average, through efficiency level 4b. Efficiency level 
3 has the minimum average life-cycle cost. For a \1/2\-horsepower CSIR 
motor, customers experience net LCC savings, on average, through 
efficiency level 6. CSIR efficiency level 4 has the minimum average 
life-cycle cost. For a \3/4\-horsepower CSCR motor, customers 
experience net LCC savings, on average, through efficiency level 5. 
CSCR efficiency level 3 has the greatest average life-cycle cost 
savings. The average payback periods in the tables are substantially 
longer than the median payback periods because a fraction of customers 
run their motors very few hours per year. This results in 
extraordinarily long payback periods for this fraction of customers and 
results in average payback periods that far exceed the median payback 
period. DOE believes that the median payback period represents the 
anticipated experience of the typical customer more accurately than the 
average payback period.

[[Page 10918]]



                   Table VI.6--Polyphase Small Electric Motors: Life-Cycle Cost and Payback Period Results for a One Horsepower Motor
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Life-cycle cost                      Life-cycle cost savings      Payback period years
                                                --------------------------------------------------------------------------------------------------------
                                     Efficiency                 Average      Average     Average                 Customers with
      Energy efficiency level            %         Average       annual       annual      life-     Average  ----------------------
                                                  installed    energy use   operating     cycle    savings $   Net cost     Net      Average     Median
                                                   price $        kWh         cost $      cost $                  %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..........................         74.0          517        1,892          130      1,268  .........  .........  .........  .........  .........
1.................................         76.1          530        1,729          127      1,261          8       46.8       53.2       21.8        7.1
2.................................         77.7          537        1,686          123      1,249         19       41.3       58.7       17.8        5.8
3.................................         79.4          549        1,630          119      1,237         31       40.6       59.4       17.7        5.6
4.................................         80.1          558        1,615          118      1,240         29       45.1       54.9       20.4        6.5
4b................................         82.6          589        1,540          113      1,240         28       51.2       48.8       24.8        7.8
5.................................         84.4          655        1,508          110      1,291        -23       65.8       34.3       41.5       12.4
6.................................         85.3          711        1,488          109      1,339        -71       77.4       22.6       54.2       16.9
7.................................         87.0        1,477        1,462          107      2,095       -827       96.8        3.2      243.0       51.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


              Table VI.7--Capacitor-Start Induction-Run Motors: Life-Cycle Cost and Payback Period Results for a One-Half Horsepower Motor
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Life-cycle cost                      Life-cycle cost savings      Payback period years
                                                --------------------------------------------------------------------------------------------------------
                                     Efficiency                 Average      Average     Average                 Customers with
      Energy efficiency level            %         Average       annual       annual      life-     Average  ----------------------
                                                  installed    energy use   operating     cycle    savings $   Net cost     Net      Average     Median
                                                   price $        kWh         cost $      cost $                  %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..........................         59.0          494        1,250           91        915  .........  .........  .........  .........  .........
1.................................         62.2          502        1,170           85        896         19         27         73        8.6        2.7
2.................................         64.5          508        1,116           81        884         31         28         72        8.8        2.8
3.................................         66.7          511        1,064           77        869         46         24         76        7.5        2.3
4.................................         71.5          529          976           71        857         58         32         68       10.5        3.2
5.................................         72.7          549          951           69        868         47         42         58       15.1        4.7
6.................................         74.0          593          920           67        902         13         55         45       24.9        7.2
7.................................         78.4          996          860           63      1,285       -369         66         34      108.2       12.4
--------------------------------------------------------------------------------------------------------------------------------------------------------


            Table VI.8--Capacitor-Start Capacitor-Run Motors: Life-Cycle Cost and Payback Period Results for a Three-Quarter Horsepower Motor
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Life-cycle cost                      Life-cycle cost savings      Payback period years
                                                --------------------------------------------------------------------------------------------------------
                                     Efficiency                 Average      Average     Average                 Customers with
      Energy efficiency level            %         Average       annual       annual      life-     Average  ----------------------
                                                  installed    energy use   operating     cycle    savings $   Net cost     Net      Average     Median
                                                   price $        kWh         cost $      cost $                  %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..........................         72.0          548        1,425          104      1,026  .........  .........  .........  .........  .........
1.................................         75.7          559        1,360           99      1,014         12         36         64       13.4        4.3
2.................................         80.0          587        1,250           91      1,005         21         46         54       18.5        5.8
3.................................         82.2          599        1,205           88      1,002         24         48         52       19.1        5.9
4.................................         83.2          612        1,214           88      1,015         11         55         45       24.4        7.8
5.................................         84.5          630        1,201           88      1,029         -3         62         38       29.5        9.4
6.................................         85.2          670        1,179           86      1,062        -36         70         30       40.3       11.8
7.................................         87.1          697        1,146           84      1,078        -52         75         25       43.5       13.1
8.................................         88.4        1,485        1,115           81      1,856       -830         99          1      250.0       49.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE analyzed the average life-cycle cost for a shipment-weighted 
distribution of product classes, as shown in Table VI.9, Table VI.10 
and Table VI.11. The results in these tables account for motors of 
different horsepower and pole configuration from the three 
representative motors shown in Table VI.6 through Table VI.8.

               Table VI.9--Polyphase Motors: Life-Cycle Cost and Payback Period Results for a Shipment-Weighted Product Class Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Life-cycle cost                      Life-cycle cost savings      Payback period years
                                                --------------------------------------------------------------------------------------------------------
                                     Efficiency                 Average      Average     Average                 Customers with
      Energy efficiency level            %         Average       annual       annual      life-     Average  ----------------------
                                                  installed    energy use   operating     cycle    savings $   Net cost     Net      Average     Median
                                                   price $        kWh         cost $      cost $                  %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..........................         78.8          515         1934       139.52      1,323  .........  .........  .........  .........  .........
1.................................         80.6          528         1883       135.85      1,314          9       44.7       55.3       21.1        6.6
2.................................         82.0          535         1836       132.45      1,302         22       39.2       60.8       17.2        5.3
3.................................         83.4          547         1775       128.07      1,287         36       38.7       61.3       17.1        5.2

[[Page 10919]]

 
4.................................         84.0          556         1759       126.91      1,289         34       42.7       57.3       19.6        6.0
4b................................         86.1          587         1678       121.06      1,288         36       49.2       50.8       23.9        7.3
5.................................         87.6          651         1643       118.52      1,337        -13       63.2       36.8       39.1       11.5
6.................................         88.4          707         1622       116.99      1,383        -60       74.8       25.2       51.8       15.7
7.................................         89.7        1,465         1594       114.96      2,131       -808       96.2        3.8      220.4       47.8
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Table VI.10--Capacitor-Start Induction-Run Motors: Life-Cycle Cost and Payback Period Results for a Shipment-Weighted Product Class Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Life-cycle cost                      Life-cycle cost savings      Payback period years
                                                --------------------------------------------------------------------------------------------------------
                                      Average                   Average      Average     Average                 Customers with
      Energy efficiency level        efficiency    Average       annual       annual      life-     Average  ----------------------
                                         %        installed    energy use   operating     cycle    savings $   Net cost     Net      Average     Median
                                                   price $        kWh         cost $      cost $                  %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..........................         49.9          496         1265        92.12        920  .........  .........  .........  .........  .........
1.................................         53.2          504         1182        86.03        900         20       26.9       73.1        8.5        2.5
2.................................         55.7          510         1125        81.89        888         33       27.7       72.3        8.7        2.6
3.................................         58.1          513         1071        77.96        871         49       24.0       76.0        7.4        2.2
4.................................         63.5          531          979        71.28        859         62       30.7       69.3       10.4        3.1
5.................................         64.8          551          953        69.40        870         51       40.2       59.8       14.9        4.5
6.................................         66.3          595          920        67.00        903         17       54.1       45.9       24.5        7.0
7.................................         71.5        1,000          858        62.48      1,287       -367       65.1       34.9      104.4       11.7
--------------------------------------------------------------------------------------------------------------------------------------------------------


    Table VI.11--Capacitor-Start Capacitor-Run Motors: Life-Cycle Cost and Payback Period Results for a Shipment-Weighted Product Class Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Life-cycle cost                      Life-cycle cost savings      Payback period years
                                                --------------------------------------------------------------------------------------------------------
                                      Average                   Average      Average     Average                 Customers with
      Energy efficiency level        efficiency    Average       annual       annual      life-     Average  ----------------------
                                         %        installed    energy use   operating     cycle    savings $   Net cost     Net      Average     Median
                                                   price $        kWh         cost $      cost $                  %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline..........................         73.2          582         2310       167.38      1,349  .........  .........  .........  .........  .........
1.................................         76.7          594         2208       160.02      1,325         24       29.3       70.7       10.9        3.3
2.................................         80.9          626         2036       147.55      1,299         50       38.4       61.6       14.9        4.4
3.................................         83.0          639         1965       142.43      1,289         60       39.7       60.3       15.4        4.6
4.................................         84.0          653         1979       143.43      1,304         45       46.1       53.9       19.8        5.9
5.................................         85.2          673         1959       141.96      1,318         32       52.6       47.4       23.9        7.2
6.................................         85.9          719         1923       139.37      1,351         -1       60.2       39.9       32.5        8.9
7.................................         87.8          749         1873       135.72      1,364        -15       65.1       35.0       35.1       10.1
8.................................         89.0        1,629         1824       132.17      2,228       -879       94.7        5.3      200.0       36.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Life-Cycle Cost Sensitivity Calculations
    DOE made sensitivity calculations for the case where CSIR motor 
owners switch to CSCR motors. DOE reports the details of the 
sensitivity calculations in chapter 8 of the TSD and the accompanying 
appendices. Section VI.C.1.a above describes the relationship between 
efficiency levels for the two categories of capacitor-start motors and 
the TSLs. For TSLs where there is a large increase in first cost for 
CSIR motors and only a moderate increase in price for CSCR motors, DOE 
forecasts that a large fraction of CSIR motor customers will switch to 
CSCR motors. Table VI.12 shows the shipments-weighted average of the 
LCC for CSIR motors including those users that switch to CSCR. The 
table shows that a negative average LCC is forecast for TSL 6, the 
level at which both CSIR and CSCR motors are at the maximum 
technologically feasible efficiency for space-constrained designs, and 
at TSL 8, the level with the greatest energy savings.

[[Page 10920]]



  Table VI.12--Capacitor-Start Induction-Run Motors: Shipment-Weighted Life-Cycle Cost and Payback Period Results for a One-Half Horsepower Motor with
                                                                    Switching to CSCR
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Life-cycle cost                              Life-cycle cost savings
                                                       -------------------------------------------------------------------------------------------------
                                                                         Average       Average                                      Customers with
                 Trial standard level                      Average       annual        annual     Average life     Average   ---------------------------
                                                          installed    energy use     operating   cycle cost $   savings  $                  Net benefit
                                                          price  $         kWh         cost  $                                 Net cost %         %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline
1.....................................................           528           969          70.8           854            58          32.5          67.5
2.....................................................           528           969          70.8           854            58          32.5          67.5
3.....................................................           547           945          69.0           865            47          41.7          58.3
4.....................................................           590           913          66.7           897            15          55.0          45.0
5.....................................................           589           913          66.7           897            15          55.0          45.0
6.....................................................           994           854          62.4         1,282          -370          66.0          34.0
7.....................................................           601           863          63.1           891            23          53.7          46.3
8.....................................................           633           847          61.9           917            -3          60.6          39.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Additional sensitivity analyses examined the magnitude by which the 
estimates varied when the results of the NEMA survey of OEMs (motor 
distributions by application and sector, operating hours, and the 
fraction of motors that are space-constrained in their applications) 
were used. Other sensitivities were conducted by varying inputs such as 
the cost of electricity, the purchase year of the motor, the motor 
capacity, the number of poles and other inputs and assumptions of the 
analysis. DOE reports the details of all of the sensitivity 
calculations in chapter 8 of the TSD and the accompanying appendices.
    As discussed in section IV.E.1 above, NEMA submitted the results of 
a survey of their OEM customers that install motors covered by today's 
rule in their products. The survey reports distributions by application 
and owner type, estimates of annual hours of operation, and the 
fraction of motors that are space-constrained. NEMA also provided 
information on a sixth application not included in DOE's NOPR, service 
industry motors. DOE ran a sensitivity analysis using the data NEMA 
provided on motor distributions. Under this sensitivity, LCC savings 
are reduced and payback periods are increased for polyphase and CSCR 
motor customers, while LCC savings are increased and payback periods 
reduced for CSIR motor customers. This is the result of average 
operating hours of polyphase and CSCR motors being reduced by about 30 
percent from the DOE reference case, while operating hours of CSIR 
motors are increased by about 10 percent.
    Details on these and other LCC sensitivity cases can be found in 
TSD appendix 8A.
c. Customer Subgroup Analysis
    Using the LCC spreadsheet model, DOE estimated the impacts of the 
TSLs on the following customer subgroups: Small businesses and 
customers with space-constrained applications. DOE analyzed the small 
business subgroup because this group has typically had less access to 
capital than larger businesses, which results in higher financing costs 
and a higher discount rate than the industry average. 74 FR 61442, 
61459. DOE estimated the LCC and PBP for the small business subgroup, 
as shown in Table VI.13 through Table VI.15. The analysis indicates 
that the small business subgroup is expected to have lower LCC savings 
and longer payback periods than the industry average.
    Chapter 12 of the TSD provides more detailed discussion on the LCC 
subgroup analysis and results.

                                             Table VI.13--Polyphase Motors: Small Business Customer Subgroup
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Life-cycle cost                       Life-cycle cost savings      Payback period years
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                    Average      Consumers with
           Energy efficiency level               Average      Average      Average      Average      life-   ----------------------
                                                installed      annual       annual     life-cycle    cycle                           Average     Median
                                                 price $     energy use   operating      cost $       cost     Net cost     Net
                                                                kWh         cost $                 savings $      %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.....................................          516         1888       137.84        1,192  .........  .........  .........  .........  .........
1............................................          529         1838       134.21        1,186          6       51.9       48.1       22.0        6.9
2............................................          536         1792       130.85        1,177         15       46.1       54.0       18.0        5.6
3............................................          548         1733       126.54        1,167         25       45.5       54.5       17.9        5.5
4............................................          556         1718       125.39        1,170         22       49.7       50.3       20.6        6.3
4b...........................................          588         1639       119.63        1,174         18       56.5       43.5       25.1        7.7
5............................................          652         1604       117.13        1,226        -34       69.6       30.4       41.8       12.2
6............................................          708         1584       115.60        1,274        -82       80.2       19.9       54.7       16.7
7............................................        1,460         1557       113.63        2,017       -825       97.4        2.6      243.1       50.2
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 10921]]


                                   Table VI.14--Capacitor-Start Induction Run Motors: Small Business Customer Subgroup
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Life-cycle cost                       Life-cycle cost savings      Payback period years
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                    Average      Consumers with
           Energy efficiency level               Average      Average      Average      Average      life-   ----------------------
                                                installed      annual       annual     life-cycle    cycle                           Average     Median
                                                 price $     energy use   operating      cost $       cost     Net cost     Net
                                                                kWh         cost $                 savings $      %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.....................................          497         1261        91.33          869  .........  .........  .........  .........  .........
1............................................          506         1178        85.28          852         16       31.3       68.7        8.5        2.6
2............................................          512         1121        81.16          842         27       32.4       67.6        8.7        2.7
3............................................          514         1067        77.25          828         41       28.0       72.0        7.4        2.3
4............................................          533          976        70.63          819         50       35.8       64.2       10.4        3.2
5............................................          553          950        68.75          832         37       45.3       54.7       14.9        4.6
6............................................          597          917        66.37          866          3       58.6       41.4       24.7        7.1
7............................................          995          855        61.89        1,246       -377       68.5       31.5      108.4       11.9
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                   Table VI.15 Capacitor-Start Capacitor Run Motors: Small Business Customer Subgroup
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Life-cycle cost                       Life-cycle cost savings      Payback period years
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                    Average      Consumers with
           Energy efficiency level               Average      Average      Average      Average      life-   ----------------------
                                                installed      annual       annual     life-cycle    cycle                           Average     Median
                                                 price $     energy use   operating      cost $       cost     Net cost     Net
                                                                kWh         cost $                 savings $      %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
CSCR Baseline................................          586         2339       169.80        1,273  .........  .........  .........  .........  .........
1............................................          598         2236       162.36        1,253         20       33.6       66.4       10.8        3.3
2............................................          630         2062       149.73        1,234         39       43.4       56.6       15.0        4.4
3............................................          643         1991       144.55        1,226         47       44.7       55.3       15.5        4.6
4............................................          657         2005       145.59        1,241         32       51.1       48.9       19.7        6.0
5............................................          678         1985       144.09        1,256         17       58.0       42.0       23.9        7.3
6............................................          723         1949       141.51        1,290        -17       65.1       34.9       32.8        9.1
7............................................          754         1898       137.82        1,306        -33       69.7       30.4       35.4       10.2
8............................................        1,633         1849       134.23        2,171       -898       96.0        4.0      205.3       37.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE has analyzed customers with space-constrained applications, 
i.e., customers whose motor stack length can increase by no more than 
20 percent, because they cannot realize the full economic benefit of 
efficiency improvements in small electric motors. Increasing the stack 
length of small motors is one way to improve their efficiency. But 
customers with space-constrained applications cannot increase the stack 
length of the motors they use without being subject to burdens to which 
other small motor users are not. Furthermore, although small electric 
motors without increased stack length could meet the TSLs DOE has 
evaluated in this rulemaking, such motors use other, more costly design 
options. Table VI.16 through Table VI.18 show the mean LCC savings and 
the mean PBP (in years) for equipment that meets the energy 
conservation standards in today's final rule for the subgroup of 
customers with space-constrained applications.
    The analysis indicates that the economic benefits of efficiency 
improvements in small electric motors will be lower for customers 
subject to space constraints than for those who do not face such 
constraints, as well as for the industry average, particularly for 
motors at the higher efficiency levels. For the standard levels 
promulgated by today's rule, customers will still realize net benefits 
from space-constrained polyphase and CSCR motors, but not from space-
constrained CSIR motors. OEMs whose applications have space constraints 
can replace a less efficient CSIR motor with a more efficient CSCR 
motor without increasing stack length, and still realize net benefits, 
as shown in Table VI.12 above. If these applications cannot accommodate 
a motor with a run capacitor, OEMs can either redesign their 
application to accommodate a CSCR motor, purchase a stockpile of motors 
not covered by today's rule to install in future production of their 
application, or replace their motor with a fully enclosed motor not 
covered by today's rule.
    Chapter 11 of the TSD explains DOE's method for conducting the 
customer subgroup analysis and presents the detailed results of that 
analysis.

                                         Table VI.16--Polyphase Motors: Space-Constrained Applications Subgroup
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Life-cycle cost                       Life-cycle cost savings      Payback period years
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                    Average      Consumers with
           Energy efficiency level               Average      Average      Average      Average      life-   ----------------------
                                                installed      annual       annual     life-cycle    cycle                           Average     Median
                                                 price $     energy use   operating      cost $       cost     Net cost     Net
                                                                kWh         cost $                 savings $      %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.....................................          512         1903       140.60        1,318  .........  .........  .........  .........  .........
1............................................          524         1853       136.90        1,308          9       45.6       54.4       21.5        6.8
2............................................          531         1807       133.49        1,296         22       40.2       59.8       17.5        5.5
3............................................          543         1748       129.13        1,282         36       39.6       60.4       17.4        5.4
4............................................          552         1732       127.96        1,284         34       43.7       56.3       20.0        6.3
4b...........................................          582         1650       121.98        1,280         37       49.7       50.3       24.2        7.5
5............................................          756         1610       119.00        1,437       -120       84.8       15.2       71.8       22.3
6............................................          769         1590       117.55        1,441       -123       84.3       15.7       70.7       22.1

[[Page 10922]]

 
7............................................        3,548         1543       114.11        4,201     -2,883      100.0        0.0      728.2      226.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                           Table VI.17--Capacitor-Start Induction Run Motors: Space-Constrained Applications Customer Subgroup
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Life-cycle cost                       Life-cycle cost savings      Payback period years
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                    Average      Consumers with
           Energy efficiency level               Average      Average      Average      Average      life-   ----------------------
                                                installed      annual       annual     life-cycle    cycle                           Average     Median
                                                 price $     energy use   operating      cost $       cost     Net cost     Net
                                                                kWh         cost $                 savings $      %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.....................................          494         1274        92.66          923  .........  .........  .........  .........  .........
1............................................          503         1190        86.56          903         20       26.7       73.3        8.5        2.6
2............................................          509         1133        82.42          890         33       27.5       72.5        8.8        2.6
3............................................          511         1079        78.48          873         49       23.6       76.4        7.5        2.2
4............................................          539          976        71.00          867         56       37.2       62.8       12.9        3.9
5............................................          544          955        69.45          864         58       38.0       62.0       13.4        4.0
6............................................          665          925        67.28          976        -53       74.0       26.0       42.3       12.6
7............................................        2,559          848        61.68        2,843     -1,921      100.0        0.0      418.9      124.7
--------------------------------------------------------------------------------------------------------------------------------------------------------


                           Table VI.18--Capacitor-Start Capacitor Run Motors: Space-Constrained Applications Customer Subgroup
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Life-cycle cost                       Life-cycle cost savings      Payback period years
                                              ----------------------------------------------------------------------------------------------------------
                                                                                                    Average      Consumers with
           Energy efficiency level               Average      Average      Average      Average      life-   ----------------------
                                                installed      annual       annual     life-cycle    cycle                           Average     Median
                                                 price $     energy use   operating      cost $       cost     Net cost     Net
                                                                kWh         cost $                 savings $      %      benefit %
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.....................................          579         2313       167.74        1,355  .........  .........  .........  .........  .........
1............................................          591         2212       160.38        1,331         24       29.2       70.8       10.9        3.3
2............................................          633         2053       148.85        1,320         35       47.4       52.6       19.0        5.8
3............................................          645         1998       144.88        1,312         43       47.2       52.8       19.2        5.9
4............................................          653         1991       144.36        1,316         40       49.3       50.7       21.1        6.5
5............................................          671         1981       143.61        1,330         26       55.4       44.6       25.3        7.8
6............................................          839         1914       138.80        1,476       -121       84.3       15.7       60.1       18.4
7............................................          854         1862       135.02        1,473       -118       82.5       17.5       56.3       17.1
8............................................        3,992         1815       131.61        4,597     -3,242      100.0        0.0      634.4      193.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

d. Rebuttable Presumption Payback
    As discussed in section III.D.2, EPCA provides a rebuttable 
presumption that, in essence, an energy conservation standard is 
economically justified if the increased purchase cost for a product 
that meets the standard is less than three times the value of the 
first-year energy savings resulting from the standard. However, DOE 
routinely conducts a full economic analysis that considers the full 
range of impacts, including those to the customer, manufacturer, 
Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) 
and 42 U.S.C. 6316(e)(1). The results of this analysis serve as the 
basis for DOE to evaluate definitively the economic justification for a 
potential standard level (thereby supporting or rebutting the results 
of any preliminary determination of economic justification).
    For comparison with the more detailed analysis results, DOE 
calculated a rebuttable presumption payback period for each TSL. Table 
VI.19 and Table VI.20 show the rebuttable presumption payback periods 
for the representative product classes. No polyphase TSL has a 
rebuttable presumption payback period of less than 3 years. For CSIR 
and CSCR motors, TSLs 1 through 3 have rebuttable presumption payback 
periods of less than 3 years.

 Table VI.19--Rebuttable-Presumption Payback Periods for Representative
             Polyphase Small Electric Motors (1 hp, 4 Poles)
------------------------------------------------------------------------
                                                              Payback
                           TSL                             period years
------------------------------------------------------------------------
1.......................................................             3.3
2.......................................................             3.0
3.......................................................             3.3
4.......................................................             3.8
4b......................................................             4.9
5.......................................................             7.9
6.......................................................            10.2
7.......................................................            45.7
------------------------------------------------------------------------


[[Page 10923]]


  Table VI.20--Rebuttable-Presumption Payback Periods for Representative Capacitor-Start Small Electric Motors
----------------------------------------------------------------------------------------------------------------
                                           Induction-run (\1/2\ hp, 4 poles)   Capacitor-run (\3/4\ hp 4 poles)
                                         -----------------------------------------------------------------------
                   TSL                                       Payback period                      Payback period
                                             CSIR level           years          CSCR level           years
----------------------------------------------------------------------------------------------------------------
1.......................................                 4               1.7                 2               1.5
2.......................................                 4               1.7                 3               2.7
3.......................................                 5               2.5                 3               2.7
4.......................................                 6               4.1                 4               3.3
5.......................................                 6               4.1                 3               2.7
6.......................................                 7              17.7                 8              35.5
7.......................................                 7              17.7                 3               2.7
8.......................................                 7              17.7                 7               6.0
----------------------------------------------------------------------------------------------------------------

2. Economic Impact on Manufacturers
    For the NOPR, DOE used the INPV in the MIA to compare the financial 
impacts of different TSLs on small electric motor manufacturers. 74 FR 
61464-69. The INPV is the sum of all net cash flows discounted by the 
industry's cost of capital (discount rate). DOE used the GRIM to 
compare the INPV of the base case (no new energy conservation 
standards) to that of each TSL for the small electric motor industry. 
To evaluate the range of cash-flow impacts on this industry, DOE 
constructed different scenarios using two different assumptions for 
manufacturer markups: (1) The preservation-of-return-on-invested-
capital scenario, and (2) the preservation-of-operating-profit 
(absolute dollars) scenario. These two scenarios correspond to the 
range of anticipated market responses, and results in a unique set of 
cash flows and corresponding industry value at each TSL. These steps 
allowed DOE to compare the potential impacts on the industry as a 
function of TSLs in the GRIM. The difference in INPV between the base 
case and the standards case is an estimate of the economic impacts that 
implementing that standard level would have on the entire industry. For 
today's notice, DOE continues to use the above methodology and presents 
the results in the subsequent sections. See chapter 12 of the TSD for 
additional information on MIA methodology and results.
a. Industry Cash-Flow Analysis Results
    Using the two different markup scenarios, DOE estimated the impact 
of new standards for small electric motors on the INPV of the small 
electric motors manufacturing industry. The impact consists of the 
difference between the INPV in the base case and the INPV in the 
standards case. INPV is the primary metric used in the MIA, and 
represents one measure of the fair value of the industry in today's 
dollars. DOE calculated the INPV by summing all of the annual net cash 
flows, discounted at the small electric motor industry's cost of 
capital or discount rate.
    To assess the lower end of the range of potential impacts for the 
small electric motor industry, DOE considered a scenario where a 
manufacturer's percentage return on working capital and capital 
invested in fixed assets (net plant, property, and equipment), the year 
after the new energy conservation standards become effective, is the 
same as in the base case. This scenario is called the preservation-of-
return-on-invested-capital scenario. To assess the higher end of the 
range of potential impacts for the small electric motor industry, DOE 
considered a scenario in which the absolute dollar amount of the 
industry's base-case operating profit (earnings before interest and 
taxes) remains the same and does not increase in the year after 
implementation of the standards. This scenario is called the 
preservation-of-operating-profit (absolute dollars) scenario. For both 
markup scenarios, DOE considered the same reference shipment scenario 
found in the NIA. Table VI.21 through Table VI.24 show the range of 
changes in INPV that DOE estimates could result from the TSLs DOE 
considered for this final rule. The results present the impacts of 
energy conservation standards for polyphase small electric motors 
separately and combine the impacts for CSIR and CSCR small electric 
motors. The tables also present the equipment conversion costs and 
capital conversion costs that the industry would incur at each TSL.

                                      Table VI.21--Manufacturer Impact Analysis for Polyphase Small Electric Motors
                                              [Preservation of return on invested capital markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                                 Units             Base  -------------------------------------------------------------------------------
                                                                   case       1         2         3         4        4b         5         6         7
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.................................  2009$ millions..........       70    69         70        71        70        73        82        88       165
Change in INPV.......................  2009$ millions..........  .......    (0.19)      0.34      0.98      0.57      3.37     12.62     18.54     95.27
                                       %.......................  .......    (0.27)      0.49      1.41      0.82      4.84     18.15     26.65    136.95
Equipment Conversion Costs...........  2009$ millions..........  .......     1.9        1.9       1.9       3.8       3.8       3.8       5.8       7.7
Capital Conversion Costs.............  2009$ millions..........  .......     0.4        0.7       0.7       0.9       1.9       7.1      10.7      37.3
Total Investment Required............  2009$ millions..........  .......     2.3        2.6       2.7       4.7       5.7      10.9      16.5      45.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                      Table VI.22--Manufacturer Impact Analysis for Polyphase Small Electric Motors
                                                   [Preservation of operating profit markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Trial standard level
                                         Units         Base case ---------------------------------------------------------------------------------------
                                                                      1          2          3          4          4b         5          6          7
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................  2009$ millions.....         70     68         68         67         66         64         58         52          0

[[Page 10924]]

 
Change in INPV..................  2009$ millions.....  .........     (1.49)     (1.86)     (2.26)     (3.58)     (5.43)    (11.80)    (17.51)    (69.47)
                                  %..................  .........     (2.15)     (2.67)     (3.25)     (5.15)     (7.80)    (16.96)    (25.16)    (99.85)
Equipment Conversion Costs......  2009$ millions.....  .........      1.9        1.9        1.9        3.8        3.8        3.8        5.8        7.7
Capital Conversion Costs........  2009$ millions.....  .........      0.4        0.7        0.7        0.9        1.9        7.1       10.7       37.3
Total Investment Required.......  2009$ millions.....  .........      2.3        2.6        2.7        4.7        5.7       10.9       16.5       45.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    Table VI.23--Manufacturer Impact Analysis for CSIR and CSCR Small Electric Motors
                                              [Preservation of return on invested capital markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Trial standard level
                                         Units         Base case ---------------------------------------------------------------------------------------
                                                                      1          2          3          4          5          6          7          8
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................  2009$ millions.....        279    287        289        295        311        308        466        297        325
Change in INPV..................  2009$ millions.....  .........      8.40       9.46      16.27      32.15      28.48     186.60      18.40      46.35
                                  %..................  .........      3.01       3.39       5.83      11.52      10.20      66.87       6.59      16.61
Equipment Conversion Costs......  2009$ millions.....  .........     16.7       16.7       24.9       25.3       24.9       33.7       24.9       25.3
Capital Conversion Costs........  2009$ millions.....  .........      9.4       10.5       16.5       21.7       18.3       79.9       20.7       29.0
Total Investment Required.......  2009$ millions.....  .........     26.1       27.2       41.4       47.0       43.2      113.6       45.5       54.3
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                    Table VI.24--Manufacturer Impact Analysis for CSIR and CSCR Small Electric Motors
                                                   [Preservation of operating profit markup scenario]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Trial standard level
                                         Units         Base case ---------------------------------------------------------------------------------------
                                                                      1          2          3          4          5          6          7          8
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV............................  2009$ millions.....        279    259        258        247        236        239        127        245        226
Change in INPV..................  2009$ millions.....  .........    (19.99)    (20.79)    (32.42)    (43.15)    (40.09)   (152.05)    (34.05)    (52.58)
                                  %..................  .........     (7.16)     (7.45)    (11.62)    (15.46)    (14.37)    (54.49)    (12.20)    (18.84)
Equipment Conversion Costs......  2009$ millions.....  .........     16.7       16.7       24.9       25.3       24.9       33.7       24.9       25.3
Capital Conversion Costs........  2009$ millions.....  .........      9.4       10.5       16.5       21.7       18.3       79.9       20.7       29.0
Total Investment Required.......  2009$ millions.....  .........     26.1       27.2       41.4       47.0       43.2      113.6       45.5       54.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

Polyphase Small Electric Motors
    DOE estimated the impacts on INPV at TSL 1 to range from $0.19 
million to -$1.49 million, or a change in INPV of -0.27 percent to -
2.15 percent. At this level, industry cash flow decreases by 
approximately 13.3 percent, to $4.84 million, compared to the base-case 
value of $5.58 million in the year leading up to the energy 
conservation standards. TSL 1 represents an efficiency increase of 2 
percent over the baseline for polyphase motors. The majority of 
manufacturers have motors that meet this efficiency level. All 
manufacturers that were interviewed stated that their existing motor 
designs allow for simple modifications that would require minor capital 
and equipment conversion costs to reach TSL 1. A possible modification 
analyzed in the engineering analysis is a roughly 7 percent increase in 
the number of laminations within both space-constrained and non space-
constrained motors. Manufacturers indicated that modifications like 
increased laminations could be made within existing baseline motor 
designs without significantly altering their size. In addition, these 
minor design changes will not raise the production costs beyond the 
cost of most motors sold today, resulting in minimal impacts on 
industry value.
    DOE estimated the impacts in INPV at TSL 2 to range from $0.34 
million to -$1.86 million, or a change in INPV of 0.49 percent to 2.67 
percent. At this level, industry cash flow decreases by approximately 
15.6 percent, to $4.71 million, compared to the base-case value of 
$5.58 million in the year leading up to the energy conservation 
standards. TSL 2 represents an efficiency increase of 4 percent over 
the baseline for polyphase motors. Similar to TSL 1, at TSL 2 
manufacturers stated that their existing motor designs allow for simple 
modifications that would entail only minor capital and equipment 
conversion costs. A possible modification analyzed in the engineering 
analysis increases the number of laminations by approximately 15 
percent from the baseline within both space-constrained and non space-
constrained motors. Manufacturers indicated that these modifications 
could be made within baseline motor designs without significantly 
changing their size. At TSL 2, the production costs of standards 
compliant motors do not increase enough to significantly affect INPV.
    At TSL 3, DOE estimated the impacts in INPV to range from $0.98 
million to -$2.26 million, or a change in INPV of 1.41 percent to -3.25 
percent. At this level, industry cash flow decreases by approximately 
16.4 percent, to $4.67 million, compared to the base-case value of 
$5.58 million in the year leading up to the energy conservation 
standards. TSL 3 represents an efficiency increase of 6 percent over 
the baseline for polyphase motors. Similar to TSL 1 and TSL 2, at TSL 3 
manufacturers stated that their existing motor designs would still 
allow for

[[Page 10925]]

simple modifications that would not require significant capital and 
equipment conversion costs. In the engineering analysis, standards 
compliant motors that meet the efficiency requirements at TSL 3 have 
17-percent increase in the number of laminations compared to the 
baseline design within both space-constrained and non space-constrained 
motors. These changes do not result in significant impacts on INPV.
    At TSL 4, DOE estimated the impacts in INPV to range from $0.57 
million to -$3.58 million, or a change in INPV of 0.82 percent to -5.15 
percent. At this level, industry cash flow decreases by approximately 
27.7 percent, to $4.03 million, compared to the base-case value of 
$5.58 million in the year leading up to the energy conservation 
standards. TSL 4 represents an efficiency increase of 7 percent over 
the baseline for polyphase motors. Most manufacturers that were 
interviewed are able to reach this level without significant redesigns. 
At TSL 4, a possible design pathway for manufacturers could be to 
increase the number of laminations by approximately 20 percent over the 
baseline designs within space-constrained and non space-constrained 
motors.
    At TSL 4b, DOE estimated the impacts in INPV to range from $3.37 
million to -$5.43 million, or a change in INPV of 4.84 percent to -7.80 
percent. At this level, industry cash flow decreases by approximately 
36.0 percent, to $3.57 million, compared to the base-case value of 
$5.58 million in the year leading up to the energy conservation 
standards. TSL 4b represents an efficiency increase of 8 percent over 
the baseline for polyphase motors. Most manufacturers that were 
interviewed are able to reach this level without significant redesigns. 
A possible redesign for non space-constrained motors would include 
increasing the number of laminations by 47 percent relative to the 
baseline motor design. For space-constrained motors, redesigns could 
require up to 20 percent more laminations of better grade electrical 
steel. However, manufacturers reported that efficiency levels similar 
to TSL 4b would be the highest achievable before required efficiencies 
could significantly change motor designs and production equipment. 
However, setting a level higher than TSL 4b may require significant 
motor size changes.
    At TSL 5, DOE estimated the impacts in INPV to range from $12.62 
million to -$11.80 million, or a change in INPV of 18.15 percent to -
16.96 percent. At this level industry cash flow decreases by 
approximately 77.7 percent, to $1.24 million, compared to the base-case 
value of $5.58 million in the year leading up to the energy 
conservation standards. TSL 5 represents an efficiency increase of 10 
percent over the baseline for polyphase motors. TSL 5 is equivalent to 
the current NEMA premium level that manufacturers produce for medium-
sized electric motors.
    Although some manufacturers reported having existing small electric 
motors that reach TSL 5, the designs necessary are more complex than 
their cost optimized designs at lower TSLs. A possible redesign for non 
space-constrained motors would include adding up to 49 percent more 
laminations relative to the baseline motor design and improving the 
grade of steel. For space-constrained motors, redesigns could require 
up to 114 percent more laminations of a thinner and higher grade of 
steel. Manufacturers are concerned that redesigns at TSL 5 could 
increase the size of the motors if they do not currently have motors 
that reach the NEMA premium efficiency levels. A shift to larger motors 
could be detrimental to sales due to the inability of OEMs to use 
standards-compliant motors as direct replacements in some applications.
    According to manufacturers, at TSL 5, the industry would incur 
significantly higher capital and equipment conversion costs in 
comparison to the lower efficiency levels analyzed. DOE estimates that 
the capital and equipment conversion costs required to make the 
redesigns at TSL 5 would be approximately four times the amount 
required to meet TSL 1. At TSL 5 manufacturers would also be required 
to shift their entire production of baseline motors to higher priced 
and higher efficiency motors, making their current cost-optimized 
designs obsolete. These higher production costs could have a greater 
impact on the industry value if operating profit does not increase. 
Manufacturers indicated that setting energy conservation standards at 
TSL 5 could cause some manufacturers to consider exiting the small 
electric motor market because of the lack of resources, potentially 
unjustifiable investments for a small segment of their business, and 
the possibility of lower revenues if OEMs will not accept large motors.
    At TSL 6, DOE estimated the impacts in INPV to range from $18.54 
million to -$17.51 million, or a change in INPV of 26.65 percent to -
25.16 percent. At this level industry cash flow decreases by 
approximately 117.2 percent, to -$0.96 million, compared to the base-
case value of $5.58 million in the year leading up to the energy 
conservation standards. TSL 6 represents an efficiency increase of 12 
percent over the baseline for polyphase motors. Currently, no small 
electric motors are rated above the equivalent to the NEMA premium 
standard (TSL 5). Possible redesigns for space-constrained motors at 
TSL 6 include the use of copper rotors and a 114-percent increase in 
the number of laminations of a thinner and higher grade of steel. These 
changes would cause manufacturers to incur significant capital and 
equipment conversion costs to redesign their space-constrained motors 
due to the lack of experience in using copper.
    According to manufacturers, copper tooling is significantly 
costlier and not currently used by any manufacturers for the production 
of small electric motors. If copper rotor designs are required, 
manufacturers with in-house die-casting capabilities will need 
completely new machinery to process copper. Manufacturers that 
outsource rotor production would pay higher prices for their rotor 
designs. In both cases, TSL 6 results in significant equipment 
conversion costs to modify current manufacturing processes in addition 
to redesigning motors to use copper in the applications of general 
purpose small electric motors. Largely due to the significant changes 
to space-constrained motors, DOE estimates that at TSL 6 manufacturers 
would incur close to seven times the total conversion costs required at 
TSL 1 (a total of approximately $16.5 million). However, for non space-
constrained motors, manufacturers are able to redesign their existing 
motors without the use of copper rotors by using twice the number of 
laminations that are contained in the baseline design. Therefore, for 
non space-constrained motors the impacts at TSL 6 are significantly 
less because manufacturers can maintain existing manufacturing 
processes without the potentially significant changes associated with 
copper rotors. At TSL 6 the impacts for non space-constrained motors 
are mainly due to higher motor costs and the possible decrease in 
profitability if manufacturers are unable to fully pass through their 
higher production costs.
    At TSL 7, DOE estimated the impacts in INPV to range from $95.27 
million to -$69.47 million, or a change in INPV of 136.95 percent to -
99.85 percent. At this level industry cash flow decreases by 
approximately 342.4 percent, to -$13.52 million, compared to the base-
case value of $5.58 million in the year leading up to the energy 
conservation standards. TSL 7 represents an

[[Page 10926]]

efficiency increase of 14 percent over the baseline for polyphase 
motors.
    Currently, the market does not have any motors that reach TSL 7. At 
TSL 7, space-constrained motor designs may require the use of copper 
rotors and premium electrical steels, such as the Hiperco steel used in 
DOE's design. There is some uncertainty about the magnitude of the 
impacts on the industry of using Hiperco steel. Manufacturers were 
unsure about the required conversion costs to reach TSL 7 because of 
the unproven properties and applicability of the technology in the 
general purpose motors covered by this rulemaking.
    Significant R&D for both manufacturing processes and motor 
redesigns would be necessary to understand the applications of premium 
steels to general purpose small electric motors. According to 
manufacturers, requiring this technology could cause some competitors 
to exit the small electric motor market. If manufacturers' concerns of 
having to use both copper rotors and new steels materialize, 
manufacturers could be significantly impacted. For non space-
constrained motors, DOE estimates that manufacturers would require the 
use of copper rotors but not premium steels. If manufacturers are 
required to redesign non-spaced constrained motors with copper, the 
total conversion costs for the industry increases greatly because all 
motors require substantially different production equipment. Finally, 
the production costs of motors that meet TSL 7 could be up to 18 times 
higher than the production costs of baseline motors. The cost to 
manufacture standards-compliant motors could have a significant impact 
on the industry if operating profit does not increase with production 
costs.
Capacitor-Start, Induction Run and Capacitor-Start, Capacitor-Run Small 
Electric Motors
    At TSL 1, DOE estimated the impacts in INPV to range from $8.4 
million to -$19.99 million, or a change in INPV of 3.01 percent to -
7.16 percent. At this level, industry cash flow decreases by 
approximately 41.3 percent, to $13.13 million, compared to the base-
case value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 1 represents an efficiency increase of 19-
percent over the baseline for CSIR motors and 10-percent over the 
baseline for CSCR motors. At TSL 1 for CSIR motors, DOE estimates 
manufacturers would need to increase the number of laminations for 
space-constrained motors by approximately 33 percent and use a thinner 
and higher grade of steel. For non space-constrained CSIR motors, 
manufacturers could increase laminations by approximately 61 percent 
with the use of a better grade of electric steel. For space-constrained 
CSCR motors, manufacturers could increase laminations by ten percent 
and use a higher grade of steel. For non space-constrained CSCR motors, 
manufacturers could increase laminations by approximately 37 percent. 
For both CSIR and CSCR motors, the additional stack length needed to 
reach TSL 1 is still within the tolerances of many manufacturers' 
existing motors. DOE estimates that these changes would cause the 
industry to incur capital and equipment conversion costs of 
approximately $26.1 million to reach TSL 1. While TSL 1 would increase 
production costs, the cost increases are not enough to severely affect 
INPV under the scenarios analyzed.
    At TSL 2, DOE estimated the impacts in INPV to range from $9.46 
million to -$20.79 million, or a change in INPV of 3.39 percent to -
7.45 percent. At this level, industry cash flow decreases by 
approximately 43.5 percent, to $12.65 million, compared to the base-
case value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 2 represents an efficiency increase of 19 
percent over the baseline for CSIR motors and 13-percent over the 
baseline for CSCR motors. For CSIR motors, the same changes to meet TSL 
1 are necessary for TSL 2. For CSCR motors, TSL 2 represents what 
manufacturers would consider a NEMA Premium equivalent efficiency 
level. The changes required for CSCR motors could cause manufacturers 
to incur additional capital conversion costs to accommodate the 
required increase in laminations. Imposing standards at TSL 2 would 
increase production costs for both CSIR and CSCR motors, but the cost 
increases for both types of motors are not enough to severely affect 
INPV.
    At TSL 3, DOE estimated the impacts in INPV to range from $16.27 
million to -$32.42 million, or a change in INPV of 5.83 percent to -
11.62 percent. At this level, industry cash flow decreases by 
approximately 66.5 percent, to $7.51 million, compared to the base-case 
value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 3 represents an efficiency increase of 23 
percent over the baseline for CSIR motors and 13 percent over the 
baseline for CSCR motors. At TSL 3, space-constrained CSIR motors could 
require redesigns that use copper rotors. Using copper rotors for 
space-constrained CSIR motors could cause manufacturers to incur 
approximately $41.4 million in capital and equipment conversion costs, 
largely to purchase the equipment necessary to produce these redesigned 
motors.
    As with polyphase motors, manufacturers reported that copper rotor 
tooling is significantly costlier than traditional aluminum rotor 
tooling and not currently used by the industry for the production of 
small electric motors. Similarly, in-house die-casting capabilities 
would need completely new machinery to process copper and the 
alternative of outsourcing rotor production would greatly increase 
material costs. For non space-constrained CSIR motors, manufacturers 
could redesign motors by increasing the number of laminations without 
the use of copper rotors, resulting in significantly smaller impacts. 
At TSL 3, the impacts for non-space-constrained motors are mainly due 
to higher motor material costs and a possible decline in profit 
margins. TSL 3 represents what manufacturers would consider a NEMA 
Premium equivalent efficiency level for CSCR motors. The required 
efficiencies for space-constrained CSCR motors could be met by 
manufacturers by increasing the number of laminations by 15 percent and 
using higher steel grades. The required efficiencies for non-spaced 
constrained CSCR motors could be met by increasing the number of 
laminations by 53 percent. Because the redesigns for CSCR motors are 
less substantial, the impacts at TSL 3 are driven largely by the 
required CSIR efficiencies.
    At TSL 4, DOE estimated the impacts in INPV to range from $32.15 
million to -$43.15 million, or a change in INPV of 11.52 percent to -
15.46 percent. At this level, industry cash flow decreases by 
approximately 77.5 percent, to $5.02 million, compared to the base-case 
value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 4 represents an efficiency increase of 27 
percent over the baseline for CSIR motors and 15 percent over the 
baseline for CSCR motors. TSL 4 currently represents a NEMA premium 
equivalent level for CSIR motors. Possible redesigns for both CSIR and 
CSCR motors to meet TSL 4 involve both increasing the number of 
laminations as well as using higher grades of steel.
    For space-constrained CSIR motors, redesigns could require the use 
of copper rotors. Because of these redesigns, standards-compliant 
motors at TSL 4 have significantly higher costs than manufacturers' 
baseline motors.

[[Page 10927]]

These changes increase the engineering and capital resources that must 
be employed, especially for CSCR motors. The negative impacts at TSL 4 
are driven by the conversion costs that potentially require some 
single-phase motors to use copper rotors, and the higher production 
costs of standards-compliant motors.
    At TSL 5, DOE estimated the impacts in INPV to range from $28.48 
million to -$40.09 million, or a change in INPV of 10.20 percent to -
14.37 percent. At this level, industry cash flow decreases by 
approximately 70.2 percent, to $6.66 million, compared to the base-case 
value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 5 represents an efficiency increase of 27 
percent over the baseline for CSIR motors and 13 percent over the 
baseline for CSCR motors. TSL 5 represents NEMA premium equivalent 
efficiency levels for both CSIR and CSCR motors.
    At TSL 5, space-constrained CSIR motors could require the use of 
copper rotors. The required efficiencies for non space-constrained CSIR 
motors could be met by manufacturers by increasing the number of 
laminations by 82 percent and using a higher grade of steel. The 
required efficiencies for space-constrained CSCR motors could be met by 
manufacturers by increasing the number of laminations by 15 percent and 
using higher steel grades. The required efficiencies for non-spaced 
constrained CSCR motors could be met by increasing the number of 
laminations by 53 percent.
    Although manufacturers reported that meeting TSL 5 is feasible, the 
production costs of motors at TSL 5 increase substantially and require 
approximately $43.2 million in total capital and equipment conversion 
costs. The negative impacts at TSL 5 are driven by these conversion 
costs that potentially require some CSIR motors to use copper rotors, 
and the impacts on profitability if the higher production costs of 
standards-compliant motors cannot be fully passed through to customers.
    At TSL 6, DOE estimated the impacts in INPV to range from $186.60 
million to -$152.05 million, or a change in INPV of 66.87 percent to -
54.49 percent. At this level, industry cash flow decreases by 
approximately 205.8 percent, to -$22.67 million, compared to the base-
case value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 6 represents an efficiency increase of 33 
percent over the baseline for CSIR motors and 23 percent over the 
baseline for CSCR motors.
    Currently, the market does not have any CSIR and CSCR motors that 
reach TSL 6. TSL 6 represents the max-tech efficiency level for both 
CSIR and CSCR motors. In addition to the possibility of using copper 
rotors for both CSIR and CSCR motors, at TSL 6, space-constrained motor 
designs could require premium steels, such as Hiperco. There is 
uncertainty about the impact of Hiperco steel on the industry, 
primarily due to uncertainty about capital conversion costs required to 
use a new type of steel. Significant R&D in manufacturing processes 
would be necessary to understand the applications of these premium 
steels in general purpose small electric motors. Because all space-
constrained motors could require copper rotors and premium steels and 
all non-spaced constrained motors could require copper rotors, the 
capital conversion costs are a significant driver of INPV at TSL 6. 
Finally, the production costs of motors that meet TSL 6 can be as high 
as 13 times the production cost of baseline motors, which impact 
profitability if the higher production costs cannot be fully passed 
through to OEMs. Manufacturers indicated that the potentially large 
impacts on the industry at TSL 6 could force some manufacturers to exit 
the small electric motor market because of the lack of resources and 
what could be an unjustifiable investment for a small segment of their 
total business.
    At TSL 7, DOE estimated the impacts in INPV to range from $18.40 
million to -$34.05 million, or a change in INPV of 6.59 percent to -
12.20 percent. At this level, industry cash flow decreases by 
approximately 74.7 percent, to $5.66 million, compared to the base-case 
value of $22.38 million in the year leading up to the energy 
conservation standards. TSL 7 represents an efficiency increase of 33 
percent over the baseline for CSIR motors and 13 percent over the 
baseline for CSCR motors.
    TSL 7 corresponds to the NEMA premium equivalent efficiency for 
CSCR motors. The required efficiencies for space-constrained CSCR 
motors could be met by manufacturers by increasing the number of 
laminations by 15 percent and using higher steel grades. The required 
efficiencies for non space-constrained CSCR motors could be met by 
increasing the number of laminations by 53 percent. Consequently, the 
industry is not severely impacted by the CSCR efficiency requirements 
at TSL 7 because these design changes could be met with relatively 
minor changes to baseline designs.
    However, there are no CSIR motors currently on the market that 
reach TSL 7 (the max-tech efficiency level for CSIR). At TSL 7 space-
constrained CSIR redesigns could require the use of both copper rotors 
and premium steels while non space-constrained CSIR motors could 
require only copper rotors. Manufacturers continue to have the same 
concerns about copper rotors and premium steels for CSIR motors as with 
other efficiency levels that may require these technologies. The 
impacts on INPV from CSIR motors are mainly associated with estimated 
shipments of non-space constrained CSIR motors and how investments 
exclude premium steels in motor redesigns. The INPV impacts for all 
single-phase motors at TSL 7 are less severe than at TSL 6 due to a 
change in balance of shipments between CSIR and CSCR motors. At TSL 7, 
the possible high cost of CSIR motors would likely cause customers to 
migrate to CSCR motors.
    In its analysis, DOE assumed that manufacturers would not invest in 
all the alternative technologies for CSIR motors in light of the 
expected migration to CSCR motors. At TSL 7, the industry is impacted 
(though to a lesser extent than at TSL 6) by the high conversion costs 
for CSIR motors, for which manufacturers must invest even though these 
are a small portion of total shipments after standards. However, 
because the total volume of single-phase motors does not decline with 
the shift from CSIR to CSCR motors, the higher revenues from standards-
compliant CSCR motors mitigate redesign costs for CSIR motors.
    At TSL 8, DOE estimated the impacts in INPV to range from $46.35 
million to -$52.58 million, or a change in INPV of 13.07 percent to -
16.17 percent. At this level, industry cash flow decreases by 
approximately 92.1 percent, to $1.77 million, compared to the base-case 
value of $22.38 million in the year leading up to the compliance date 
for the energy conservation standards. TSL 8 represents an efficiency 
increase of 33 percent over the baseline for CSIR motors and 20 percent 
over the baseline for CSCR motors.
    As with TSL 7, CSIR motors are at the max-tech efficiency level at 
TSL 8. However, the impacts on INPV are worse at TSL 7 because the 
efficiency requirements for CSCR motors increase. At TSL 8, both space-
constrained and non space-constrained CSCR motors could require the use 
of copper, which increases the total conversion costs for the industry. 
Manufacturers continue to share the same concerns about the copper and 
premium steel investments for CSCR and CSIR motors as at TSL 6

[[Page 10928]]

and TSL 7. Like TSL 7, TSL 8 causes a migration of CSIR motors to CSCR 
motors. DOE assumed that manufacturers would fully incur the required 
conversion costs for CSCR, but partially for CSIR motors, due to the 
low market share of CSIR motors after the energy conservation standards 
must be met. After these standards apply, the shift to CSCR motors 
increases total industry revenue and helps to mitigate impacts related 
to capital conversion costs necessary for CSIR motors to use 
alternative technologies.
b. Impacts on Employment
    As discussed in the NOPR and for today's final rule, DOE does not 
believe that standards would materially alter the domestic employment 
levels of the small electric motors industry under any of the TSLs 
considered for today's final rule. 74 FR 61469. Even if DOE set new 
efficiency levels high enough to cause some manufacturers to exit the 
small electric motor market, the direct employment impact would likely 
be minimal. Id. Most covered small motors are manufactured on shared 
production lines and in factories that also produce a substantial 
number of other products. If a manufacturer decided to exit the market, 
these employees would likely be used in some other capacity, reducing 
the number of headcount reductions. These manufacturers estimated that 
no production jobs would be lost due to energy conservation standards, 
but rather the engineering departments could be reduced by up to one 
engineer per dropped product line.
    The employment impacts calculated by DOE are independent of the 
employment impacts from the broader U.S. economy, which are documented 
in chapter 15 of the TSD accompanying this notice and discussed in 
section VI.C.3. Based on available data and its analyses, DOE does not 
believe that the effects of today's rule would substantially impact 
employment levels in the small electric motor industry. For further 
information and results on direct employment see chapter 12 of the TSD.
c. Impacts on Manufacturing Capacity
    As detailed in the NOPR, no change in the fundamental assembly of 
small electric motors would be required by DOE adoption of any of the 
TSLs considered for today's rule, and none of the TSLs would require 
replacing or adding to existing facilities to manufacture. 74 FR 61469-
70. For today's final rule, DOE continues to believe manufacturers can 
use any available excess capacity to mitigate any possible capacity 
constraint as a result of energy conservation standards. In DOE's view, 
it is more likely that some motors would be discontinued due to lower 
demand after the promulgation of a standard. For further explanation of 
the impacts on manufacturing capacity for small electric motors, see 
chapter 12 of the TSD.
d. Impacts on Subgroups of Manufacturers
    For the reasons stated in the NOPR, including its conclusion that 
no small manufacturers produced small electric motors, DOE did not 
analyze manufacturer subgroups in the small electric motor industry. 74 
FR 61470. DOE did not receive further information or comment that would 
otherwise change its views.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several regulations may have 
serious consequences for some manufacturers, groups of manufacturers, 
or an entire industry. Assessing the impact of a single regulation may 
overlook this cumulative regulatory burden.
    DOE recognizes that each regulation can significantly affect 
manufacturers' financial operations. Multiple regulations affecting the 
same manufacturer can reduce manufacturers' profits and may cause 
manufacturers to exit from the market. DOE did not identify any 
additional DOE regulations that would affect the manufacturers of small 
electric motors apart from the ones discussed in the NOPR. 74 FR 61470. 
These included other DOE regulations and international standards. DOE 
recognizes that each regulation has the potential to impact 
manufacturers' financial operations. For further information about the 
cumulative regulatory burden on the small electric motors industry, see 
chapter 12 of the TSD.
3. National Net Present Value and Net National Employment
    The NPV analysis estimates the cumulative benefits or costs to the 
Nation, discounted to 2009$ in the year 2010, of particular standard 
levels relative to a base case of no new standard. In accordance with 
OMB guidelines on regulatory analysis (OMB Circular A-4, section E, 
September 17, 2003), DOE estimated NPVs using both a 7 percent and 3 
percent real discount rate. The 7 percent rate is an estimate of the 
average before tax rate of return to private capital in the U.S. 
economy. This rate reflects the returns to real estate and small 
business capital as well as corporate capital. DOE used this discount 
rate to approximate the opportunity cost of capital in the private 
sector, since recent OMB analysis has found the average rate of return 
to capital to be near this rate. DOE also used the 3 percent discount 
rate to capture the potential effects of standards on private 
consumption (e.g., through higher prices for equipment and purchase of 
reduced amounts of energy). This rate represents the rate at which 
society discounts future consumption flows to their present value. This 
rate can be approximated by the real rate of return on long-term 
Government debt (e.g., the yield on Treasury notes minus the annual 
rate of change in the Consumer Price Index), which has averaged about 3 
percent on a pre-tax basis for the last 30 years.
    The NPV was calculated using DOE's reference shipments forecast, 
which is based on the AEO 2010 Early Release forecast. In this 
scenario, shipments display an elasticity of -0.25, which allows for a 
market shift to enclosed motors when open motors become more expensive 
than their enclosed equivalents. DOE used its calibrated reference 
model for the market dynamics of CSIR and CSCR motors. DOE's reference 
scenario also includes 100 percent of the cost or benefit from changes 
in reactive power charges, which are faced either by electricity 
customers or by utilities (which then include them in electricity 
rates). Table VI.25 and Table VI.26 show the estimated NPV at each of 
the TSLs for polyphase and capacitor-start small electric motors. For 
polyphase motors, the NPV is positive at TSLs 1 through 5 using a 7-
percent discount rate, and is positive for TSLs 1 through 6 using a 3-
percent discount rate. For capacitor-start motors, NPV is positive at 
all TSLs except TSL 6. The latter TSL corresponds to max-tech 
efficiency levels for both CSIR and CSCR motors, which have high 
installed costs and negative lifecycle cost savings. See TSD Chapter 10 
for more detailed NPV results.
    Across motors, for certain TSLs, DOE estimates there will be a net 
national savings or positive NPV from the standard, even though a 
majority of motor customers may face life-cycle cost increases. Life-
cycle cost increases result from the large number of small electric 
motors installed in applications with very low operating hours. The 
consumers of these motors cannot recover the increased equipment costs 
through decreased electricity costs, thus experiencing life-cycle cost 
increases. On the other hand, a substantial minority of motors run at 
nearly all hours of the day and thus obtain

[[Page 10929]]

relatively large savings from the standard.
    Table VI.25 and Table VI.26 show DOE's estimates of net present 
value for each TSL DOE considered for this final rule.

 Table VI.25--Cumulative Net Present Value for Polyphase Small Electric
          Motors (Impact for Equipment Sold From 2015 to 2045)
------------------------------------------------------------------------
                                                    Net present value
                                                      billion 2009$
             Trial standard level              -------------------------
                                                7% Discount  3% Discount
                                                    rate         rate
------------------------------------------------------------------------
1.............................................         0.10         0.26
2.............................................         0.22         0.55
3.............................................         0.41         1.01
4.............................................         0.42         1.05
4b............................................         0.54         1.44
5.............................................         0.16         0.77
6.............................................        -0.22         0.06
7.............................................        -6.82       -12.65
------------------------------------------------------------------------


   Table VI.26--Cumulative Net Present Value for Capacitor-Start Small
      Electric Motors (Impact for Equipment Sold From 2015 to 2045)
------------------------------------------------------------------------
                                             Net present value billion
                                                       2009$
          Trial standard level           -------------------------------
                                            7% Discount     3% Discount
                                               rate            rate
------------------------------------------------------------------------
1.......................................            3.01            7.03
2.......................................            3.05            7.13
3.......................................            2.83            6.87
4.......................................            1.97            5.35
5.......................................            2.08            5.57
6.......................................           -9.29          -16.23
7.......................................            4.74           11.08
8.......................................            3.03            8.14
------------------------------------------------------------------------

    As discussed in section VI.C.1.b above, DOE estimated LCC and 
payback periods under a sensitivity case using data on motor shipments 
distributions provided by OEMs via a survey conducted by NEMA. Under 
this sensitivity case lifecycle costs increase for polyphase and CSCR 
motor users, but decrease for CSIR motor users. DOE estimates there is 
a net increase in national benefits from the standards promulgated in 
today's rule using the new information provided by NEMA, with energy 
savings increasing from 2.20 to 2.68 quads, and NPV increasing from 
$12.52 to $19.75 billion, using a 3 percent discount rate.
    DOE also analyzed the effect of NEMA's assertion that 95 percent of 
motors are used in space-constrained applications. However, at the 
capacitor-start efficiency levels in today's rule, DOE estimates that 
97 percent of the CSIR market will migrate to CSCR motors assuming only 
20 percent of the market is space-constrained. Therefore, increasing 
the assumption of the fraction of CSIR motors that is space-constrained 
to 95-percent only affects the 3-percent of the CSIR market that had 
not already migrated to CSCR motors under DOE's reference case, and has 
little effect on the estimates of national energy savings.
    Chapter 10 of the TSD has details on the national impacts for the 
reference case, while the national impacts for these sensitivity cases 
are presented in appendix 10A.
    DOE also estimated for each TSL the indirect employment impact of 
standards--the impact on the economy in general--in addition to 
considering the direct employment impacts on manufacturers of products 
covered in this rulemaking as discussed in section VI.C.2.b. DOE 
expects the net monetary savings from standards to be redirected to 
other forms of economic activity. DOE also expects these shifts in 
spending and economic activity to affect the demand for labor. As shown 
in Table VI.27 and Table VI.28, DOE estimates that net indirect 
employment impacts from energy conservation standards for small 
electric motors would be positive but very small relative to total 
national employment. Specifically, DOE's analysis indicates that the 
number of jobs that may be generated by 2045 through indirect impacts 
ranges from 47 to 6,300 for the TSLs for polyphase small motors, and 
from 1,100 to 18,700 for the TSLs for capacitor-start small motors. 
These increases would likely be sufficient to offset fully any adverse 
impacts on employment that might occur in the small electric motors 
industry. For details on the employment impact analysis methods and 
results, see TSD Chapter 14.

 Table VI.27--Net Increase in National Indirect Employment Under Polyphase Small Electric Motor Trial Standards
                                                     Levels
----------------------------------------------------------------------------------------------------------------
                                                                  2015         2020         2030         2045
                    Trial standard level                       thousands    thousands    thousands    thousands
----------------------------------------------------------------------------------------------------------------
1...........................................................        0.047        0.136        0.222        0.299
2...........................................................        0.084        0.254        0.418        0.565
3...........................................................        0.151        0.463        0.761        1.030
4...........................................................        0.190        0.539        0.874        1.178

[[Page 10930]]

 
4b..........................................................        0.356        0.915        1.446        1.942
5...........................................................        0.661        1.347        2.016        2.668
6...........................................................        0.901        1.679        2.448        3.219
7...........................................................        2.349        3.621        4.921        6.343
----------------------------------------------------------------------------------------------------------------


   Table VI.28--Net Increase in National Indirect Employment Under Capacitor-Start Small Electric Motor Trial
                                                Standards Levels
----------------------------------------------------------------------------------------------------------------
                                                                  2015         2020         2030         2045
                    Trial standard level                       thousands    thousands    thousands    thousands
----------------------------------------------------------------------------------------------------------------
1...........................................................        1.113        3.645        5.249        7.062
2...........................................................        1.119        3.674        5.293        7.123
3...........................................................        1.577        4.512        6.398        8.557
4...........................................................        2.287        5.561        7.716       10.236
5...........................................................        2.248        5.529        7.686       10.204
6...........................................................        8.042       12.159       15.350       19.569
7...........................................................        1.776        5.795        8.340       11.216
8...........................................................        2.322        9.591       13.880       18.701
----------------------------------------------------------------------------------------------------------------

4. Impact on Utility or Performance of Equipment
    As explained in sections III.D.1.d and V.B.4 of the NOPR, users of 
these motors will not face a reduction in small electric motor utility 
or performance under the levels examined under this rulemaking. DOE has 
not received any additional information suggesting that such a 
reduction would occur. Accordingly, DOE has concluded that no lessening 
of the utility or performance of the small electric motors under 
consideration in this rulemaking would result from adoption of any of 
the TSLs considered for this final rule. 74 FR 61419, 61476.
5. Impact of Any Lessening of Competition
    As discussed in the November 2009 NOPR, 74 FR 61419, 61476, and in 
section III.D.1.e of this final rule, DOE considers any lessening of 
competition that is likely to result from standards. The Attorney 
General determines the impact, if any, of any such lessening of 
competition.
    The DOJ concluded that the standards DOE proposed for small 
electric motors in the November 2009 NOPR could increase costs for 
consumers who need to replace either a polyphase or capacitor-start 
small electric motor in existing equipment. This is because compliance 
with these standards may require manufacturers to increase the size of 
their motors such that the larger motors may not fit into existing 
space-constrained equipment. In turn, owners with a broken motor may 
need to replace the entire piece of equipment or attempt to have the 
motor repaired, which could be costly. DOJ requested that DOE consider 
this impact, and, as warranted, consider exempting from the standard 
the manufacture and marketing of certain replacement small electric 
motors for a limited period of time. (DOJ, No. 29 at pp. 1-2) DOJ does 
not believe the proposed standard would likely lead to a lessening of 
competition.
    For its final rule on energy conservations standards for small 
electric motors, DOE considered the issue raised by DOJ. DOE believes 
it adequately accounts for the impacts on those consumers that purchase 
motors for space-constrained applications by developing motors with 
higher costs for what it estimates as space-constrained. Furthermore, 
DOE does not believe it is necessary to exempt motors manufactured to 
replace motors in space-constrained applications because these motors 
are not marketed as ``for replacement purposes,'' enforcing such a 
standard could be problematic. In addition, an exemption for 
replacement motors would also apply to motors in non-space constrained 
applications potentially significantly reducing energy savings of this 
rule. Lastly, DOE believes that the five-year period before the 
effective date will give customers or OEMs sufficient time to account 
for any changes to motor sizes or to stockpile replacement motors for 
their applications.
    The Attorney General's response is reprinted at the end of this 
rule.
6. Need of the Nation To Conserve Energy
    Improving the energy efficiency of small electric motors, where 
economically justified, would likely improve the security of the 
Nation's energy system by reducing overall demand for energy, thus 
reducing the Nation's reliance on foreign sources of energy. Reduced 
electricity demand might also improve the reliability of the 
electricity system, particularly during peak-load periods. As a measure 
of this reduced demand, DOE expects the energy savings from today's 
standards to eliminate the need for approximately 2.16 gigawatts (GW) 
of generating capacity by 2045 and in 2045, to save an amount of 
electricity greater than that generated by eight 250 megawatt power 
plants.
    Enhanced energy efficiency also produces environmental benefits in 
the form of reduced emissions of air pollutants and greenhouse gases 
associated with energy production. Table VI.29 and Table VI.30 provide 
DOE's estimate of cumulative CO<INF>2</INF>, NO<INF>X</INF>, and Hg 
emissions reductions that would result from the TSLs considered in this 
rulemaking. The expected energy savings from these standards may also 
reduce the cost of maintaining nationwide emissions standards and 
constraints. In the environmental assessment (EA; chapter 15 of the TSD 
accompanying this notice), DOE reports estimated annual changes in 
CO<INF>2</INF>, NO<INF>X</INF>, and Hg emissions attributable to each 
TSL. The cumulative CO<INF>2</INF>, NO<INF>X</INF>, and Hg emissions 
reductions from polyphase motors range up to 23.2 Mt, 16.9 kt, and

[[Page 10931]]

0.12 ton, respectively, and up to 121.7 Mt, 88.9 kt, and 0.47 ton, 
respectively, from single-phase motors.

 Table VI.29--Polyphase Small Electric Motors: Cumulative CO2 and Other
                          Emissions Reductions
       [Cumulative reductions for products sold from 2015 to 2045]
------------------------------------------------------------------------
                                            Emissions reductions
       Trial standard level       --------------------------------------
                                     CO2  Mt      NOX  kt      Hg  tons
------------------------------------------------------------------------
1................................          2.3          1.6        0.013
2................................          4.6          3.3        0.025
3................................          8.3          5.9        0.046
4................................          9.3          6.7        0.051
4b...............................         15.4         11.0        0.085
5................................         18.3         13.1        0.101
6................................         19.5         13.9        0.108
7................................         21.2         15.2        0.117
------------------------------------------------------------------------


 Table VI.30--Capacitor-Start Small Electric Motors: Cumulative CO2 and
                       Other Emissions Reductions
       [Cumulative reductions for products sold from 2015 to 2045]
------------------------------------------------------------------------
                                            Emissions reductions
       Trial standard level       --------------------------------------
                                     CO2  Mt      NOX  kt      Hg  tons
------------------------------------------------------------------------
1................................         62.9         45.1        0.265
2................................         63.5         45.5        0.267
3................................         71.7         51.4        0.302
4................................         80.5         57.7        0.339
5................................         81.0         58.1        0.341
6................................         88.5         63.5        0.373
7................................         96.8         69.5        0.408
8................................        111.4         80.0        0.469
------------------------------------------------------------------------

    As noted in section IV.L of this final rule, DOE does not report 
SO<INF>2</INF> emissions reductions from power plants because DOE is 
uncertain that an energy conservation standard would affect the overall 
level of U.S. SO<INF>2</INF> emissions due to emissions caps. DOE also 
did not include NO<INF>X</INF> emissions reduction from power plants in 
states subject to CAIR because an energy conservation standard would 
likely not affect the overall level of NO<INF>X</INF> emissions in 
those states due to the emissions caps mandated by CAIR.
    In the NOPR, DOE also investigated and considered the potential 
monetary benefit of any reduced CO<INF>2</INF>, SO<INF>2</INF>, 
NO<INF>X</INF>, and Hg emissions that could result from the TSLs it 
considered. 74 FR 61448-53, 61477-84. To estimate the likely monetary 
benefits of CO<INF>2</INF> emission reductions associated with the 
potential standards, DOE valued the potential global benefits resulting 
from such reductions at the interim values of $5, $10, $20, $34 and $57 
per metric ton in 2007 (in 2008$), and also valued the domestic 
benefits at approximately $1 per metric ton. 74 FR 61452. For today's 
final rule DOE has updated its analysis to reflect the outcome of the 
most recent interagency process regarding the social cost of carbon 
dioxide emissions (SCC). See section IV.M for a full discussion. The 
four values of CO<INF>2</INF> emissions reductions resulting from that 
process are $4.70/ton (the average value from a distribution that uses 
a 5% discount rate), $21.40/ton (the average value from a distribution 
that uses a 3% discount rate), $35.10/ton (the average value from a 
distribution that uses a 2.5% discount rate), and $65/ton (the 95th 
percentile value from a distribution that uses a 3% discount rate). 
These values are expressed in 2007$ and correspond to the value of 
emission reductions in 2010; the values for later years are higher due 
to increasing damages as the magnitude of climate change increases. 
Table VI.31 and Table VI.32 present the global values of emissions 
reductions at each TSL. Domestic values are calculated as a range from 
7% to 23% of the global values, and these results are presented in 
Table VI.33 and Table VI.34.

 Table VI.31--Estimates of Global Present Value of CO2 Emissions Reductions for the Period 2015-2045 Under Polyphase Small Electric Motor Trial Standard
                                                     Levels at SCC-Scenario-Consistent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Estimated                Global value of CO2 emission reductions, million 2009$
                                                             cumulative CO2  ---------------------------------------------------------------------------
                           TSL                                  emission      5% discount rate,  3% discount rate,    2.5% discount    3% discount rate,
                                                             reductions, Mt        average*           average*        rate, average*    95th percentile*
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................................                2.3                  8                 40                 68                122
2........................................................                4.6                 16                 81                138                248
3........................................................                8.3                 28                146                248                445
4........................................................                9.3                 32                165                280                502
4b.......................................................               15.4                 52                272                462                828
5........................................................               18.3                 62                323                550                986

[[Page 10932]]

 
6........................................................               19.5                 66                344                585               1049
7........................................................               21.2                 72                375                638               1144
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the social cost of emissions and whether it is an average value or drawn from a different
  part of the distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this
  notice, and incorporate the escalation of the SCC with each year.


  Table VI.32--Estimates of Global Present Value of CO2 Emissions Reductions for the Period 2015-2045 Under Capacitor-Start Small Electric Motor Trial
                                                Standard Levels at SCC-Scenario-Consistent Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Estimated                Global value of CO2 emission reductions, million 2009$
                                                             cumulative CO2  ---------------------------------------------------------------------------
                           TSL                                  emission      5% discount rate,  3% discount rate,    2.5% discount    3% discount rate,
                                                             reductions, Mt        average*           average*        rate, average*    95th percentile*
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................................               62.9                216               1118               1900               3410
2........................................................               63.5                218               1129               1918               3444
3........................................................               71.7                246               1275               2167               3890
4........................................................               80.5                277               1432               2432               4367
5........................................................               81.0                278               1441               2448               4394
6........................................................               88.5                304               1574               2674               4801
7........................................................               96.8                333               1722               2926               5253
8........................................................              111.4                383               1982               3368               6046
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the social cost of emissions and whether it is an average value or drawn from a different
  part of the distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this
  notice, and incorporate the escalation of the SCC with each year.


   Table VI.33--Estimates of Domestic Present Value of CO2 Emissions Reductions for the Period 2015-2045 Under
          Polyphase Small Electric Motor Trial Standard Levels at SCC-Scenario-Consistent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                              Domestic value of CO2 emission reductions, million 2009$ *
                                     ---------------------------------------------------------------------------
                 TSL                  5% discount rate,  3% discount rate,    2.5% discount    3% discount rate,
                                          average**          average**       rate, average**   95th percentile**
----------------------------------------------------------------------------------------------------------------
1...................................            0.5-1.8            2.8-9.2           4.8-15.7           8.5-28.1
2...................................            1.1-3.6           5.7-18.7           9.7-31.8          17.3-57.0
3...................................            2.0-6.4          10.2-33.5          17.4-57.1         31.1-102.3
4...................................            2.2-7.3          11.5-37.9          19.6-64.4         35.1-115.5
4b..................................             3.7-12          19.0-62.5         32.3-106.3         58.0-190.5
5...................................           4.3-14.3          22.6-74.4         38.5-126.5         69.0-226.8
6...................................           4.6-15.2          24.1-79.1         41.0-134.6         73.4-241.2
7...................................           5.0-16.6          26.3-86.3         44.7-146.7         80.1-263.0
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the social cost of emissions and whether it is an
  average value or drawn from a different part of the distribution. Values presented in the table are based on
  escalating 2007$ to 2009$ for consistency with other values presented in this notice, and incorporate the
  escalation of the SCC with each year.


   Table VI.34--Estimates of Domestic Present Value of CO2 Emissions Reductions for the Period 2015-2045 Under
       Capacitor-Start Small Electric Motor Trial Standard Levels at SCC-Scenario-Consistent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                              Domestic value of CO2 emission reductions, million 2009$ *
                                     ---------------------------------------------------------------------------
                 TSL                  5% discount rate,  3% discount rate,    2.5% discount    3% discount rate,
                                          average**          average**       rate, average**   95th percentile**
----------------------------------------------------------------------------------------------------------------
1...................................              15-50             78-257            133-437            239-784
2...................................              15-50             79-260            134-441            241-792
3...................................              17-57             89-293            152-498            272-895
4...................................              19-64            100-329            170-559           306-1004
5...................................              19-64            101-331            171-563           308-1011
6...................................              21-70            110-362            187-615           336-1104
7...................................              23-77            121-396            205-673           368-1208

[[Page 10933]]

 
8...................................              27-88            139-456            236-775           423-1391
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the social cost of emissions and whether it is an
  average value or drawn from a different part of the distribution. Values presented in the table are based on
  escalating 2007$ to 2009$ for consistency with other values presented in this notice, and incorporate the
  escalation of the SCC with each year.

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO<INF>2</INF> and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed in 
this rulemaking on reducing CO<INF>2</INF> emissions is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO<INF>2</INF> and other GHG emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this rule the most 
recent values and analyses resulting from the ongoing interagency 
review process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NO<INF>X</INF> and Hg emissions 
reductions anticipated to result from amended standards for SEMs. The 
dollar per ton values that DOE used are discussed in section IV.M of 
this final rule. Table VI.35 through Table VI.38 present the estimates 
calculated using seven percent and three percent discount rates, 
respectively.

Table VI.35--Estimates of Value of Reductions of NOX and Hg Emissions Under Polyphase Small Electric Motor Trial
                                Standard Levels at a Seven Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                       Value of NOX
                                   Cumulative NOX        emission        Cumulative Hg     Value of Hg emission
         Polyphase TSL                emission         reductions,          emission       reductions,  million
                                   reductions, kt     million 2009$      reductions, t             2009$
----------------------------------------------------------------------------------------------------------------
1..............................               1.62  0.11 to 1.18.....              0.013  0.00 to 0.12.
2..............................               3.29  0.23 to 2.39.....              0.025  0.01 to 0.25.
3..............................               5.91  0.42 to 4.29.....              0.046  0.01 to 0.45.
4..............................               6.67  0.47 to 4.84.....              0.051  0.01 to 0.51.
4b.............................              11.00  0.78 to 7.99.....              0.085  0.02 to 0.84.
5..............................              13.09  0.92 to 9.51.....              0.101  0.02 to 1.00.
6..............................              13.93  0.98 to 10.11....              0.108  0.02 to 1.06.
7..............................              15.19  1.07 to 11.03....              0.117  0.03 to 1.16.
----------------------------------------------------------------------------------------------------------------


Table VI.36--Estimates of Value of Reductions of NOX and Hg Emissions Under Polyphase Small Electric Motor Trial
                                Standard Levels at a Three Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                       Value of NOX
                                   Cumulative NOX        emission        Cumulative Hg     Value of Hg emission
         Polyphase TSL                emission         reductions,          emission       reductions,  million
                                   reductions, kt     million 2009$      reductions, t             2009$
----------------------------------------------------------------------------------------------------------------
1..............................               1.62  0.34 to 3.46.....              0.013  0.01 to 0.24.
2..............................               3.29  0.68 to 7.01.....              0.025  0.01 to 0.48.
3..............................               5.91  1.22 to 12.59....              0.046  0.02 to 0.87.
4..............................               6.67  1.38 to 14.21....              0.051  0.02 to 0.98.
4b.............................              11.00  2.28 to 23.45....              0.085  0.04 to 1.62.
5..............................              13.09  2.71 to 27.90....              0.101  0.04 to 1.93.
6..............................              13.93  2.89 to 29.68....              0.108  0.05 to 2.05.
7..............................              15.19  3.15 to 32.37....              0.117  0.05 to 2.24.
----------------------------------------------------------------------------------------------------------------


[[Page 10934]]


Table VI.37--Estimates of Value of Reductions of NOX and Hg Emissions Under Capacitor-Start Small Electric Motor
                             Trial Standard Levels at a Seven Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                       Value of NOX
                                   Cumulative NOX        emission        Cumulative Hg     Value of Hg emission
      Capacitor-start TSL             emission         reductions,          emission       reductions,  million
                                   reductions, kt     million 2009$      reductions, t             2009$
----------------------------------------------------------------------------------------------------------------
1..............................              45.10  3.50 to 35.97....              0.265  0.06 to 2.79.
2..............................              45.54  3.53 to 36.23....              0.267  0.06 to 2.82.
3..............................              51.44  3.99 to 41.03....              0.302  0.07 to 3.18.
4..............................              57.74  4.48 to 46.05....              0.339  0.08 to 3.57.
5..............................              58.11  4.51 to 46.34....              0.341  0.08 to 3.60.
6..............................              63.48  4.93 to 50.63....              0.373  0.09 to 3.93.
7..............................              69.47  5.39 to 55.40....              0.408  0.10 to 4.30.
8..............................              79.95  6.20 to 63.76....              0.469  0.11 to 4.95.
----------------------------------------------------------------------------------------------------------------


Table VI.38--Estimates of Value of Reductions of NOX and Hg Emissions Under Capacitor-Start Small Electric Motor
                             Trial Standard Levels at a Three Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                       Value of NOX
                                   Cumulative NOX        emission        Cumulative Hg     Value of Hg emission
      Capacitor-start TSL             emission          reductions          emission        reductions  million
                                  reductions (kt)     million 2009$      reductions (t)            2009$
----------------------------------------------------------------------------------------------------------------
1..............................              45.10  9.60 to 98.70....              0.265  0.12 to 5.22.
2..............................              45.54  9.69 to 99.66....              0.267  0.12 to 5.27.
3..............................              51.44  10.95 to 112.58..              0.302  0.13 to 5.95.
4..............................              57.74  12.29 to 126.37..              0.339  0.15 to 6.68.
5..............................              58.11  12.37 to 127.17..              0.341  0.15 to 6.72.
6..............................              63.48  13.52 to 138.94..              0.373  0.17 to 7.34.
7..............................              69.47  14.79 to 152.03..              0.408  0.18 to 8.04.
8..............................              79.95  17.02 to 174.97..              0.469  0.21 to 9.25.
----------------------------------------------------------------------------------------------------------------

    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
VI.40 through Table VI.43 present the NPV values for small electric 
motors that would result if DOE were to add the estimates of the 
potential benefits resulting from reduced CO<INF>2</INF>, 
NO<INF>X</INF>, and Hg emissions in each of four valuation scenarios to 
the NPV of consumer savings calculated for each TSL considered in this 
rulemaking, at both a seven percent and three percent discount rate. 
The CO<INF>2</INF> values used in the columns of each table correspond 
with the four scenarios for the valuation of CO<INF>2</INF> emission 
reductions presented in section IV.M. Table VI.39 shows an example of 
the calculation of the NPV including benefits from emissions reductions 
for the case of TSL 7 for capacitor-start motors and TSL 4b for 
polyphase motors.
    Although adding the value of consumer savings to the values of 
emission reductions provides a valuable perspective, the following 
should be considered: (1) The national consumer savings are domestic 
U.S. consumer monetary savings found in market transactions, while the 
values of emissions reductions are based on estimates of marginal 
social costs, which, in the case of CO<INF>2</INF>, are based on a 
global value. (2) The assessments of consumer savings and emission-
related benefits are performed with different computer models, leading 
to different time frames for analysis. For small electric motors, the 
present value of national consumer savings is measured for the period 
in which units shipped from 2015 to 2045 continue to operate. However, 
the time frames of the benefits associated with the emission reductions 
differ. For example, the value of CO<INF>2</INF> emissions reductions 
reflects the present value of all future climate-related impacts due to 
emitting a ton of carbon dioxide in that year, out to 2300.

Table VI.39--Estimate of Adding Net Present Value of Consumer Savings to
    Present Value of Global Monetized Benefits From CO2, NOX, and Hg
 Emissions Reductions at TSL 7 for Capacitor-Start Motors and TSL 4b for
                      Polyphase Motors (2015-2045)
------------------------------------------------------------------------
                                                  Present
                                                   value       Discount
                   Category                       billion        rate
                                                   2009$      (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings.......................         7.6              7
                                                     17.1              3
CO2 Monetized Value..........................  ............
(at $4.7/Metric Ton) *                                0.38             5
CO2 Monetized Value..........................  ............
(at $21.4/Metric Ton) *                               1.99             3
CO2 Monetized Value..........................  ............
(at $35.1/Metric Ton) *                               3.39           2.5

[[Page 10935]]

 
CO2 Monetized Value..........................  ............
(at $64.9/Metric Ton) *                               6.08             3
NOX Monetized Value..........................  ............
(at $2,437/Metric Ton)                                0.03             7
                                                      0.10             3
Hg Monetized Value...........................  ............
(at $17 million/Metric Ton)                           0.003            7
                                                      0.005            3
Total Monetary Benefits **...................         9.7              7
                                                     19.2              3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Total Monetary Costs.........................         2.4              7
                                                      4.5              3
------------------------------------------------------------------------
                           Net Benefits/Costs
------------------------------------------------------------------------
Including CO2, NOX, and Hg **................         7.3              7
                                                     14.6              3
------------------------------------------------------------------------
* These values represent global values (in 2007$) of the social cost of
  CO2 emissions in 2010 under several scenarios. The values of $4.7,
  $21.4, and $35.1 per ton are the averages of SCC distributions
  calculated using 5%, 3%, and 2.5% discount rates, respectively. The
  value of $64.9 per ton represents the 95th percentile of the SCC
  distribution calculated using a 3% discount rate. See section IV.M for
  details.
** Total Monetary Benefits for both the 3% and 7% cases utilize the
  central estimate of social cost of CO2 emissions calculated at a 3%
  discount rate (averaged across three IAMs), which is equal to $21.4/
  ton in 2010 (in 2007$).


 Table VI.40--Estimates of Adding Net Present Value of Consumer Savings (at 7% Discount Rate) to Net Present Value of Low, Central, and High-End Global
       Monetized Benefits From CO2, NOX, and Hg Emissions Reductions at All Trial Standard Levels for Polyphase Small Electric Motors (2015-2045)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Consumer NPV at 7% discount rate added with:
                                                 -------------------------------------------------------------------------------------------------------
                                                  CO2 value of $4.7/metric     CO2 value of $21.4/       CO2 value of $35.1/       CO2 value of $64.9/
                       TSL                         ton CO2* and low values     metric ton CO2* and       metric ton CO2* and    metric ton CO2* and high
                                                      for NOX and Hg **       medium values for NOX     medium values for NOX     values for NOX and Hg
                                                        billion 2009$       and Hg *** billion 2009$  and Hg *** billion 2009$     **** billion 2009$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................                     0.11                      0.14                      0.17                      0.22
2...............................................                     0.24                      0.30                      0.36                      0.47
3...............................................                     0.44                      0.56                      0.66                      0.86
4...............................................                     0.45                      0.59                      0.70                      0.93
4b..............................................                     0.59                      0.82                      1.01                      1.38
5...............................................                     0.22                      0.49                      0.72                      1.16
6...............................................                    (0.15)                     0.13                      0.37                      0.84
7...............................................                    (6.75)                    (6.44)                    (6.18)                    (5.66)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These label values per ton represent the global negative externalities of CO2 in 2010, in 2007$. Their present values have been calculated with
  scenario-consistent discount rates. See section IV.M for a full discussion of the derivation of these values.
** Low Values correspond to $447 per ton of NOX emissions and $0.764 million per ton of Hg emissions.
*** Medium Values correspond to $2,519 per ton of NOX emissions and $17.2 million per ton of Hg emissions.
**** High Values correspond to $4,591 per ton of NOX emissions and $33.7 million per ton of Hg emissions.


 Table VI.41--Estimates of Adding Net Present Value of Consumer Savings (at 3% Discount Rate) to Net Present Value of Low, Central, and High-End Global
       Monetized Benefits From CO2, NOX, and Hg Emissions Reductions at All Trial Standard Levels for Polyphase Small Electric Motors (2015-2045)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Consumer NPV at 3% discount rate added with:
                                                 -------------------------------------------------------------------------------------------------------
                                                  CO2 value of $4.7/metric     CO2 value of $21.4/       CO2 value of $35.1/       CO2 value of $64.9/
                       TSL                         ton CO2* and low values     metric ton CO2* and       metric ton CO2* and    metric ton CO2* and high
                                                      for NOX and Hg **       medium values for NOX     medium values for NOX     values for NOX and Hg
                                                        billion 2009$       and Hg *** billion 2009$  and Hg *** billion 2009$     **** billion 2009$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................                     0.27                      0.30                      0.33                      0.39
2...............................................                     0.57                      0.64                      0.69                      0.81
3...............................................                     1.04                      1.16                      1.27                      1.47
4...............................................                     1.08                      1.22                      1.34                      1.57
4b..............................................                     1.49                      1.73                      1.92                      2.29

[[Page 10936]]

 
5...............................................                     0.83                      1.11                      1.34                      1.79
6...............................................                     0.13                      0.42                      0.66                      1.14
7...............................................                   (12.57)                   (12.26)                   (11.99)                   (11.47)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These label values per ton represent the global negative externalities of CO2 in 2010, in 2007$. Their present values have been calculated with
  scenario-consistent discount rates. See section IV.M for a full discussion of the derivation of these values.
** Low Values correspond to $447 per ton of NOX emissions and $0.764 million per ton of Hg emissions.
*** Medium Values correspond to $2,519 per ton of NOX emissions and $17.2 million per ton of Hg emissions.
**** High Values correspond to $4,591 per ton of NOX emissions and $33.7 million per ton of Hg emissions.


 Table VI.42--Estimates of Adding Net Present Value of Consumer Savings (at 7% Discount Rate) to Net Present Value of Low, Central, and High-End Global
    Monetized Benefits from CO2, NOX, and Hg Emissions Reductions at All Trial Standard Levels for Capacitor-Start Small Electric Motors (2015-2045)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Consumer NPV at 7% discount rate added with:
                                                 -------------------------------------------------------------------------------------------------------
                                                  CO2 value of $4.7/metric     CO2 value of $21.4/       CO2 value of $35.1/       CO2 value of $64.9/
                       TSL                         ton CO2* and low values     metric ton CO2* and       metric ton CO2* and    metric ton CO2* and high
                                                      for NOX and Hg **       medium values for NOX     medium values for NOX     values for NOX and Hg
                                                        billion 2009$       and Hg *** billion 2009$  and Hg *** billion 2009$     **** billion 2009$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................                     3.23                      4.15                      4.93                      6.46
2...............................................                     3.27                      4.20                      4.99                      6.53
3...............................................                     3.08                      4.13                      5.02                      6.76
4...............................................                     2.25                      3.43                      4.43                      6.39
5...............................................                     2.36                      3.55                      4.56                      6.52
6...............................................                    (8.98)                    (7.69)                    (6.59)                    (4.43)
7...............................................                     5.08                      6.50                      7.70                     10.05
8...............................................                     3.42                      5.05                      6.44                      9.14
--------------------------------------------------------------------------------------------------------------------------------------------------------


 Table VI.43--Estimates of Adding Net Present Value of Consumer Savings (at 3% Discount Rate) to Net Present Value of Low, Central, and High-End Global
    Monetized Benefits from CO2, NOX, and Hg Emissions Reductions at All Trial Standard Levels for Capacitor-Start Small Electric Motors (2015-2045)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Consumer NPV at 3% discount rate added with:
                                                 -------------------------------------------------------------------------------------------------------
                                                  CO2 value of $4.7/metric     CO2 value of $21.4/       CO2 value of $35.1/       CO2 Value of $64.9/
                       TSL                         ton CO2* and low values     metric ton CO2* and       metric ton CO2* and    metric ton CO2* and high
                                                      for NOX and Hg **       medium values for NOX     medium values for NOX     values for NOX and Hg
                                                        billion 2009$       and Hg *** billion 2009$  and Hg *** billion 2009$     **** billion 2009$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................                     7.26                      8.21                      8.99                     10.54
2...............................................                     7.36                      8.32                      9.11                     10.68
3...............................................                     7.13                      8.21                      9.10                     10.88
4...............................................                     5.64                      6.85                      7.86                      9.85
5...............................................                     5.86                      7.08                      8.09                     10.10
6...............................................                   (15.91)                   (14.58)                   (13.48)                   (11.28)
7...............................................                    11.43                     12.89                     14.09                     16.49
8...............................................                     8.54                     10.22                     11.61                     14.37
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These label values per ton represent the global negative externalities of CO2 in 2010, in 2007$. Their present values have been calculated with
  scenario-consistent discount rates. See section IV.M for a full discussion of the derivation of these values.
** Low Values correspond to $447 per ton of NOX emissions and $0.764 million per ton of Hg emissions.
*** Medium Values correspond to $2,519 per ton of NOX emissions and $17.2 million per ton of Hg emissions.
**** High Values correspond to $4,591 per ton of NOX emissions and $33.7 million per ton of Hg emissions.

7. Other Factors
    In developing today's standards, the Secretary took into 
consideration the following additional factors: (1) Harmonization of 
standards for small electric motors with existing standards under EPCA 
for medium-sized polyphase general purpose motors; (2) the impact, on 
consumers who need to use CSIR motors, of substantially higher prices 
for such motors caused by some

[[Page 10937]]

potential standard levels; and (3) the potential for standards to 
reduce reactive power, and thereby cause lower costs for supplying 
electricity.

D. Conclusion

    EPCA contains criteria for prescribing new or amended energy 
conservation standards. DOE must prescribe standards only for those 
small electric motors for which DOE: (1) Has determined that standards 
would be technologically feasible and economically justified and would 
result in significant energy savings, and (2) has prescribed test 
procedures. (42 U.S.C. 6295(o)(2)(B), 6316(a), and 6317(b)) Moreover, 
any standards for this equipment must achieve the maximum improvement 
in energy efficiency that is technologically feasible and economically 
justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) In determining whether 
a standard is economically justified, DOE must determine whether the 
benefits of the standard exceed its burdens when considering the seven 
factors discussed in section III.D.1. (42 U.S.C. 6295(o)(2)(B)(i) and 
6316(a))
    In evaluating standards for small electric motors, DOE analyzed 
polyphase and capacitor-start motors independently of one another, and 
considered eight TSLs for polyphase equipment and eight TSLs for 
capacitor-start equipment. For reasons explained in the NOPR, DOE 
combined CSCR and CSIR motors into a single set of TSLs for capacitor-
start motors, with each TSL being a combination of CSIR and CSCR 
efficiency levels. 74 FR 61484.
    In selecting today's energy conservation standards for small 
electric motors, DOE started by examining the TSL with the highest 
energy savings, and determined whether that TSL was economically 
justified. Upon finding a TSL not to be justified, DOE considered 
sequentially lower TSLs until it identified the highest level that was 
economically justified. (Such level would necessarily also be 
technologically feasible and result in a significant conservation of 
energy because all of the TSLs considered for this final rule meet 
those criteria.) DOE notes that for polyphase small electric motors, 
the TSL with the highest energy savings is also the max-tech efficiency 
level, but, as explained in the NOPR, the same is not true for 
capacitor-start motors. 74 FR 61484.
    Table VI.44 and Table VI.45 summarize the results of DOE's 
quantitative analysis, based on the assumptions and methodology 
discussed above, of each TSL DOE considered for this rule. They will 
aid the reader in the discussion of costs and benefits of each TSL. In 
some cases, the tables present a range of results. The range of values 
reported for industry impacts represents the results for the two markup 
scenarios--preservation-of-return-on-invested-capital and preservation-
of-operating-profit (absolute dollars)--that DOE used to estimate 
manufacturer impacts.
    In addition to the quantitative results, DOE also considers other 
burdens and benefits that affect economic justification. These include 
pending standards for medium motors as a result of EISA 2007.
1. Polyphase Small Electric Motors
    Table VI.44 presents a summary of the quantitative analysis results 
for each TSL for polyphase small electric motors.

                                      Table VI.44--Summary of Polyphase Small Electric Motors Analytical Results *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Trial standard level
             Criteria             ----------------------------------------------------------------------------------------------------------------------
                                       TSL 1         TSL 2         TSL 3         TSL 4        TSL 4b          TSL 5           TSL 6           TSL 7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy Savings (quads)...          0.05          0.09          0.17          0.19          0.29            0.34            0.37             0.37
    @ 7% Discount Rate...........          0.01          0.02          0.04          0.05          0.07            0.09            0.09             0.09
    @ 3% Discount Rate...........          0.03          0.05          0.09          0.10          0.15            0.18            0.19             0.20
    Generation Capacity Reduction          0.05          0.09          0.16          0.19          0.31            0.36            0.39             0.42
     (GW)........................
NPV (2009$ billions)
    @ 7% discount................          0.10          0.22          0.41          0.42          0.54            0.16          (0.22)           (6.82)
    @ 3% discount................          0.26          0.55          1.01          1.05          1.44            0.77          (0.06)          (12.65)
Industry Impacts
    Change in INPV (2009$          (0.19)-(1.49   0.34-(1.86)   0.98-(2.26)   0.57-(3.58)   3.37-(5.43)   12.62-(11.80)   18.54-(17.51)    95.27-(69.47)
     millions)...................             )
    Change in INPV (%)...........  (0.27)-(2.15   0.49-(2.67)   1.41-(3.25)   0.82-(5.15)   4.84-(7.80)   18.15-(16.96)   26.65-(25.16)   136.95-(99.85)
                                              )
Cumulative Emission Reduction
    CO2 (Mt).....................           2.3           4.6           8.3           9.3          15.4            18.3            19.5             21.2
    Value of CO2 reductions               8-122        16-248        28-445        32-502        52-828          62-986         66-1049          72-1144
     (2009$ millions) **.........
    NOX (kt).....................           1.6           3.3           5.9           6.7          11.0            13.1            13.9             15.2
    Value of NOX reductions at 7%     0.11-1.18     0.23-2.39     0.42-4.29     0.47-4.84     0.78-7.99       0.92-9.51      0.98-10.11       1.07-11.03
     discount rate (2009$
     millions)...................
    Value of NOX reductions at 3%     0.34-3.46     0.68-7.01    1.22-12.59    1.38-14.21    2.28-23.45      2.71-27.90      2.89-29.68       3.15-32.37
     discount rate (2009$
     millions)...................
    Hg (t).......................         0.013         0.025         0.046         0.051         0.085           0.101           0.108            0.117
    Value of Hg reductions at 7%      0.00-0.12     0.01-0.25     0.01-0.45     0.01-0.51     0.02-0.84       0.02-1.00       0.02-1.06        0.03-1.16
     discount rate (2009$
     millions)...................
    Value of Hg reductions at 3%      0.01-0.24     0.01-0.48     0.02-0.87     0.02-0.98     0.04-1.62       0.04-1.93       0.05-2.05        0.05-2.24
     discount rate (2009$
     millions)...................
Life-cycle Cost of Rep. Product
 Class
    Customers with increase in             46.8          41.3          40.6          45.1          51.2            65.8            77.4             96.8
     LCC (%).....................
    Customers with savings in LCC          53.2          58.7          59.4          54.9          48.8            34.3            22.6              3.2
     (%).........................
    Mean LCC (2009$).............         1,261         1,249         1,237         1,240         1,240           1,291           1,339            2,095
    Mean LCC Savings (2009$).....             8            19            31            29            28            (23)            (71)            (827)

[[Page 10938]]

 
Life-cycle Cost of all Product
 Classes, Weighted by Shipments
    Customers with increase in             44.7          39.2          38.7          42.7          49.2            63.2            74.8             96.2
     LCC (%).....................
    Customers with savings in LCC          55.3          69.8          61.3          57.3          50.8            36.8            25.2              3.8
     (%).........................
    Mean LCC (2009$).............         1,314         1,302         1,287         1,289         1,288           1,337           1,383            2,131
    Mean LCC Savings (2009$).....             9            22            36            34            36            (13)            (60)            (808)
Payback Period (years)
    Average......................          21.1          17.3          17.2          19.8          24.1            40.2            52.6            234.6
    Median.......................           6.7           5.4           5.3           6.2           7.4            11.7            16.1             48.7
Employment Impact
    Indirect Impacts (2045)                0.30          0.57          1.03          1.18          1.94            2.67            3.22             6.34
     (jobs, `000)................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Range of global values for the SCC of emissions reductions, representing a range of scenarios as described in section IV.M and summarized in Table
  VI.31, with discount rates ranging from 2.5% to 5%.

    First, DOE considered TSL 7, the most efficient level for polyphase 
small electric motors. TSL 7 would save an estimated 0.37 quad of 
energy through 2045, an amount DOE considers significant. Discounted at 
seven percent, the projected energy savings through 2045 would be 0.09 
quad. For the Nation as a whole, DOE projects that TSL 7 would result 
in a net decrease of $6.82 billion in NPV, using a discount rate of 
seven percent. The emissions reductions at TSL 7 are 21.2 Mt of 
CO<INF>2</INF>, up to 15.2 kt of NO<INF>X</INF>, and up to 0.117 ton of 
Hg. These reductions have a value of up to $1,144 million for 
CO<INF>2</INF> (using the 95th percentile value at a 3 percent discount 
rate), and a value of up to $11.0 million for NO<INF>X</INF>, and $1.16 
million for Hg at a discount rate of seven percent. At the central 
value for the social cost of carbon, the estimated monetized benefit of 
CO<INF>2</INF> emissions reductions is $375 million at a discount rate 
of three percent. DOE also estimates that at TSL 7, total electric 
generating capacity in 2030 will decrease compared to the base case by 
0.42 GW.
    At TSL 7, DOE projects that the average polyphase small electric 
motor customer purchasing equipment in 2015 will experience an increase 
in LCC of $827 compared to the baseline. DOE estimates the fraction of 
customers experiencing LCC increases will be 96.8 percent. The median 
PBP for the average polyphase small electric motor customer at TSL 7, 
48.7 years, is projected to be substantially longer than the mean 
lifetime of the equipment. When all polyphase product classes are 
considered and weighted by shipments, DOE estimates that small electric 
motor customers experience slightly lower increases in LCC of $808.
    The projected change in industry value ranges from a decrease of 
$69.5 million to an increase of $95.3 million. The impacts are driven 
primarily by the assumptions regarding the ability to pass on larger 
increases in MPCs to the customer. At TSL 7, DOE recognizes the risk of 
very large negative impacts if manufacturers' expectations about 
reduced profit margins are realized. In particular, if the high end of 
the range of impacts is reached as DOE expects, TSL 7 could result in a 
net loss of 99.9 percent in INPV to the polyphase small motor industry. 
DOE believes manufacturers would likely have a more difficult time 
maintaining current gross margin levels with larger increases in 
manufacturing production costs, as standards increase the need for 
capital conversion costs, equipment retooling, and increased research 
and development spending. Specifically, at this TSL, the majority of 
manufacturers would need to significantly redesign all of their 
polyphase small electric motors.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 7, the Secretary has reached the following 
conclusion: At TSL 7, the benefits of energy savings, emissions 
reductions (both in physical reductions and the monetized value of 
those reductions), would be outweighed by the economic burden of a net 
cost to the Nation (over 30 years), the economic burden to customers 
(as indicated by the large increase in life-cycle cost) and the 
potentially large reduction in INPV for manufacturers resulting from 
large conversion costs and reduced gross margins. Consequently, the 
Secretary has concluded that trial standard level 7 is not economically 
justified.
    DOE then considered TSL 6, which would likely save an estimated 
0.37 quad of energy through 2045, an amount DOE considers significant. 
Discounted at seven percent, the projected energy savings through 2045 
would be 0.09 quad. For the Nation as a whole, DOE projects that TSL 6 
would result in a net decrease of $220 million in NPV, using a discount 
rate of seven percent. The estimated emissions reductions at TSL 6 are 
19.5 Mt of CO<INF>2</INF>, up to 13.9 kt of NO<INF>X</INF>, and up to 
0.108 ton of Hg. These reductions have a value of up to $1,049 million 
for CO<INF>2</INF> (using the 95th percentile value at a 3 percent 
discount rate), and a value of up to $10.1 million for NO<INF>X</INF>, 
and $1.06 million for Hg, at a discount rate of seven percent. At the 
central value for the social cost of carbon, the estimated monetized 
benefit of CO<INF>2</INF> emissions reductions is $344 million at a 
discount rate of three percent. Total electric generating capacity in 
2030 is estimated to decrease compared to the base case by 0.39 GW 
under TSL 6.
    At TSL 6, DOE projects that the average polyphase small electric 
motor customer purchasing equipment in 2015 will experience an increase 
in LCC of $71 compared to the baseline. DOE estimates the fraction of 
customers experiencing LCC increases will be seven percent. The median 
PBP for the average polyphase small electric motor customer at TSL 6, 
16.1 years, is projected to be substantially longer than the mean 
lifetime of the equipment. When all polyphase product classes are 
considered and weighted by shipments, DOE estimates that small electric 
motor customers experience slightly lower increases in LCC of $60.
    The projected change in industry value ranges from a decrease of 
$17.5 million to an increase of $18.5 million. The impacts are driven 
primarily by the

[[Page 10939]]

assumptions regarding the ability to pass on larger increases in MPCs 
to the customer. At TSL 6, DOE recognizes the risk of very large 
negative impacts if manufacturers' expectations about reduced profit 
margins are realized. In particular, if the high end of the range of 
impacts is reached as DOE expects, TSL 6 could result in a net loss of 
25.2 percent in INPV to the polyphase small motor industry. DOE 
believes manufacturers would likely have a more difficult time 
maintaining current gross margin levels with larger increases in 
manufacturing production costs, as standards increase the need for 
capital conversion costs, equipment retooling, and increased research 
and development spending. Specifically, at this TSL, the majority of 
manufacturers would need to significantly redesign all of their 
polyphase small electric motors.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 6, the Secretary has reached the following 
conclusion: At TSL 6, the benefits of energy savings, emissions 
reductions (both in physical reductions and the monetized value of 
those reductions), would be outweighed by the economic burden of a net 
cost to the Nation (over 30 years), the economic burden to consumers 
(as indicated by the increased life-cycle cost), and the potential 
reduction in INPV for manufacturers resulting from large conversion 
costs and reduced gross margins. Consequently, the Secretary has 
concluded that trial standard level 6 is not economically justified.
    DOE then considered TSL 5, which provides for polyphase small 
electric motors the maximum efficiency level that the analysis showed 
to have positive NPV for the Nation. TSL 5 would likely save an 
estimated 0.34 quad of energy through 2045, an amount DOE considers 
significant. Discounted at seven percent, the projected energy savings 
through 2045 would be 0.09 quad. For the Nation as a whole, DOE 
projects that TSL 5 would result in a net increase of $160 million in 
NPV, using a discount rate of seven percent. The estimated emissions 
reductions at TSL 5 are 18.3 Mt of CO<INF>2</INF>, up to 13.1 kt of 
NO<INF>X</INF>, and up to 0.101 ton of Hg. These reductions have a 
value of up to $986 million for CO<INF>2</INF> (using the 95th 
percentile value at a 3 percent discount rate), and a value of up to 
$9.5 million for NO<INF>X</INF>, and $1.0 million for Hg, at a discount 
rate of seven percent. At the central value for the social cost of 
carbon, the estimated benefit of CO<INF>2</INF> emissions reductions is 
$323 million at a discount rate of three percent. Total electric 
generating capacity in 2030 is estimated to decrease compared to the 
base case by 0.36 GW under TSL 5.
    At TSL 5, DOE projects that the average polyphase small electric 
motor customer purchasing the equipment in 2015 will experience an 
increase in LCC of $23 compared to the baseline representative unit for 
analysis (1 hp, 4 pole polyphase motor). This corresponds to 
approximately a 1.8 percent increase in average LCC. Based on this 
analysis, DOE estimates that approximately 66 percent of customers 
would experience LCC increases and that the median PBP would be 11.7 
years, which is longer than the mean lifetime of the equipment. 
However, in consideration of the relatively small percentage increase 
in LCC at TSL 5, DOE examined sensitivity analyses to assess the 
likelihood of consumers in fact experiencing significant LCC increases. 
These included calculating a shipment-weighted LCC savings.
    At TSL 5, when accounting for the full-range of horsepowers and 
pole configurations of polyphase motors, the average LCC increase is 
reduced to $13. This corresponds to approximately 63 percent of 
customers experiencing an increase in LCC, with the remaining 37 
percent, those with greater operating hours, realizing net savings.
    The projected change in industry value ranges from a decrease of 
$11.8 million to an increase of $12.6 million. The impacts are driven 
primarily by the assumptions regarding the ability to pass on larger 
increases in MPCs to the customer. At TSL 5, DOE recognizes the risk of 
negative impacts if manufacturers' expectations about reduced profit 
margins are realized. If the high end of the range of impacts is 
reached, TSL 5 could result in a net loss of 17.0 percent in INPV to 
the polyphase small motor industry.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 5, the Secretary has reached the following 
conclusion: At TSL 5, the benefits of energy savings and emissions 
reductions (both in physical reductions and the monetized value of 
those reductions) would be outweighed by the economic burden to 
consumers (as indicated by the increased life-cycle cost). 
Consequently, the Secretary has concluded that trial standard level 5 
is not economically justified.
    DOE then considered TSL 4b, which is at an efficiency level added 
to the analysis in response to comments presented on the NOPR. TSL 4b 
would likely save an estimated 0.29 quad of energy through 2045, an 
amount DOE considers significant. Discounted at seven percent, the 
projected energy savings through 2045 would be 0.07 quad. For the 
Nation as a whole, DOE projects that TSL 4b would result in a net 
increase of $540 million in NPV, using a discount rate of seven 
percent. The estimated emissions reductions at TSL 4b are 15.4 Mt of 
CO<INF>2</INF>, up to 11.0 kt of NO<INF>X</INF>, and up to 0.085 ton of 
Hg. These reductions have a value of up to $828 million for 
CO<INF>2</INF> (using the 95th percentile value at a 3 percent discount 
rate), and a value of up to $8.0 million for NO<INF>X</INF>, and $0.8 
million for Hg, at a discount rate of seven percent. At the central 
value for the social cost of carbon, the estimated benefit of 
CO<INF>2</INF> emissions reductions is $272 million at a discount rate 
of three percent. Total electric generating capacity in 2030 is 
estimated to decrease compared to the base case by 0.31 GW under TSL 
4b.
    At TSL 4b, DOE projects that the average polyphase small electric 
motor customer purchasing the equipment in 2015 will experience a 
reduction in LCC of $28 compared to the baseline representative unit 
for analysis (1 hp, 4 pole polyphase motor). This corresponds to 
approximately a 2.2 percent reduction in average LCC. Based on this 
analysis, DOE estimates that approximately 51 percent of customers 
would experience LCC increases and that the median PBP would be 7.4 
years, which is only slightly longer than the mean lifetime of the 
equipment. However, in consideration of the relatively small percentage 
decrease in LCC at TSL 4b, DOE examined sensitivity analyses to assess 
the likelihood of consumers experiencing significant LCC increases. 
These included calculating a shipment-weighted LCC savings.
    At TSL 4b, when accounting for the full-range of horsepowers and 
pole configurations of polyphase motors, the average LCC savings 
increase to $36. This corresponds to approximately 49 percent of 
customers experiencing an increase in LCC, with the remaining 51 
percent realizing net savings.
    The projected change in industry value ranges from a decrease of 
$5.4 million to an increase of $3.4 million. The impacts are driven 
primarily by the assumptions regarding the ability to pass on larger 
increases in MPCs to the customer. At TSL 4b, DOE recognizes the risk 
of negative impacts if manufacturers' expectations about reduced profit 
margins are realized. If the high end of the range of impacts is 
reached, TSL 4b could result in a net loss of 7.8 percent in INPV to 
the polyphase small motor industry.
    Trial standard level 4b has other advantages that are not directly 
economic. This level sets standards for

[[Page 10940]]

many product classes that are approximately harmonized with the 
efficiency level for medium motors to be implemented in 2010 which 
requires four-pole, 1-hp polyphase motors to be at least 85.5% 
efficient. Since many--but not all--three digit frame size polyphase 
motors of this size can also be used in two-digit frames with minimal 
adjustment, DOE believes that there is a benefit to harmonizing small 
polyphase and medium polyphase motor efficiency standards in this size 
range. In particular, DOE does not believe the design changes necessary 
for TSL 4b would force all manufacturers to significantly redesign all 
of their polyphase small electric motors or their production processes. 
Therefore, DOE believes manufacturers are not at a significant risk to 
experience highly negative impacts.
    After considering the analysis and the benefits and burdens of 
trial standard level 4b, the Secretary has reached the following 
conclusion: Trial standard level 4b offers the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified, and will result in significant conservation of energy. The 
Secretary has reached the conclusion that the benefits of energy 
savings and emissions reductions (both in physical reductions and the 
monetized value of those reductions) outweigh the potential reduction 
in INPV for manufacturers and the economic burden on consumers, which 
is relatively small on average. Therefore, DOE today adopts the energy 
conservation standards for polyphase small electric motors at trial 
standard level 4b.
2. Capacitor-Start Small Electric Motors
    Table VI.45 presents a summary of the quantitative analysis results 
for each TSL for capacitor-start small electric motors.

                                   Table VI.45--Summary of Capacitor-Start Small Electric Motors Analytical Results *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Trial standard level
             Criteria             ----------------------------------------------------------------------------------------------------------------------
                                       TSL 1         TSL 2         TSL 3         TSL 4         TSL 5          TSL 6           TSL 7           TSL 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary Energy Savings (quads)...          1.18          1.19          1.36          1.47          1.47            1.61            1.91             2.33
    @ 7% Discount Rate...........          0.31          0.31          0.36          0.39          0.39            0.43            0.51             0.62
    @ 3% Discount Rate...........          0.63          0.64          0.73          0.79          0.79            0.87            1.03             1.25
Generation Capacity Reduction              1.21          1.22          1.38          1.54          1.55            1.70            1.86             2.14
 (GW)............................
NPV (2009$ billions)
    @ 7% discount................          3.01          3.05          2.83          1.97          2.08          (9.29)            4.74             3.03
    @ 3% discount................          7.03          7.13          6.87          5.35          5.57         (16.23)           11.08             8.14
Industry Impacts
    Change in INPV (2009$          8.40-(19.99)  9.46-(20.79)  16.27-(32.42  32.15-(42.15  28.48-(40.09  186.60-(152.05   18.40-(34.05)    46.35-(52.58)
     millions)...................                                         )             )             )               )
    Change in INPV (%)...........   3.01-(7.16)   3.39-(7.45)  5.83-(11.62)  11.52-(15.46  10.20-(14.37   66.87-(54.49)    6.59-(12.20)    16.61-(18.84)
                                                                                        )             )
Cumulative Emission Reduction
    CO2 (Mt).....................          6.29          63.5          71.7          80.5          81.0            88.5            96.8            111.4
    Value of CO2 reductions            216-3410      218-3444      246-3890      277-4367      278-4394        304-4801        333-5253         383-6046
     (2009$ millions) **.........
    NOX (kt).....................          45.1         45.54         51.44         57.74         58.11           63.48           69.47            79.95
    Value of NOX reductions at 7%      3.5-36.0      3.5-36.2      4.0-41.0      4.5-46.0      4.5-46.3        4.9-50.6        5.4-55.4         6.2-63.8
     discount rate (2009$
     millions)...................
    Value of NOX reductions at 3%      9.6-98.7     9.7-100.0    11.0-112.6    12.3-126.4    12.4-127.2      13.5-138.9      14.8-152.0       17.0-175.0
     discount rate (2009$
     millions)...................
    Hg (t).......................         0.265         0.267         0.302         0.339         0.341           0.373           0.408            0.469
    Value of Hg reductions at 7%      0.06-2.79     0.06-2.82     0.07-3.18     0.08-3.57     0.08-3.60       0.09-3.93       0.10-4.30        0.11-4.95
     discount rate (2009$
     millions)...................
    Value of Hg reductions at 3%      0.12-5.22     0.12-5.27     0.13-5.95     0.15-6.68     0.15-6.72       0.17-7.34       0.18-8.04        0.21-9.25
     discount rate (2009$
     millions)...................
Life-cycle Cost of Rep. Product
 Class
    CSIR
        Customers with increase            32.0          32.0          41.6          54.9          54.9            65.6            65.6             65.6
         in LCC (%)..............
        Customers with savings in          68.0          68.0          58.4          45.1          45.1            34.5            34.5             34.5
         LCC (%).................
        Mean LCC (2009$).........           857           857           868           902           902           1,285           1,285            1,285
        Mean LCC Savings (2009$).            58            58            47            13            13           (369)           (369)            (369)
    CSCR
        Customers with increase            46.5          47.8          47.8          54.9          47.8            98.6            47.8             74.7
         in LCC (%)..............
        Customers with savings in          53.6          52.2          52.2          45.1          52.2             1.4            52.2             25.3
         LCC (%).................
        Mean LCC (2009$).........         1,005         1,002         1,002         1,015         1,002           1,856           1,002            1,078
        Mean LCC Savings (2009$).            21            24            24            11            24           (830)              24             (52)
CSIR migrating to CSCR weighted
 results ***
    Customers with increase in             32.5          32.5          41.7          55.0          55.0            66.0            53.7             60.6
     LCC (%).....................
    Customers with savings in LCC          67.5          67.5          58.3          45.0          45.0            34.0            46.3             39.4
     (%).........................
    Mean LCC (2009$).............           854           854           865           899           899           1,282             891              917

[[Page 10941]]

 
    Mean LCC Savings (2009$).....            58            58            47            15            15           (370)              23              (3)
Life-cycle Cost of all Product
 Classes, Weighted by Shipments
    CSIR
        Customers with increase            30.7          30.7          40.2          54.1          54.1            65.1            65.1             65.1
         in LCC (%)..............
        Customers with savings in          69.3          69.3          59.8          45.9          45.9            34.9            34.9             34.9
         LCC (%).................
        Mean LCC (2009$).........           859           859           870           903           903           1,287           1,287            1,287
        Mean LCC Savings (2009$).            62            62            51            17            17           (367)           (367)            (367)
    CSCR
        Customers with increase            38.4          39.7          39.7          46.1          39.7            94.7            39.7             65.0
         in LCC (%)..............
        Customers with savings in          61.6          60.3          60.3          53.9          60.3             5.3            60.3             35.0
         LCC (%).................
        Mean LCC (2009$).........         1,299         1,289         1,289         1,304         1,289           2,228           1,289            1,364
        Mean LCC Savings (2009$).            50            60            60            45            60           (879)              60             (15)
Market Share ****--CSIR (%)......            99            98            98            96            95             100               3                7
Payback Period (years)
    CSIR
        Average..................          10.5          10.5          15.1          24.9          24.9           108.5           108.5            108.5
        Median...................           3.1           3.1           4.5           7.0           7.0            11.9            11.9             11.9
    CSCR
        Average..................          14.8          15.3          15.3          19.5          15.3           200.0            15.3             34.8
        Median...................           4.4           4.5           4.5           5.9           4.5            37.6             4.5             10.0
Employment Impact
    Indirect Impacts (2045)                7.06          7.12          8.56         10.24         10.20           19.57           11.22           18.70
     (jobs, `000)-...............
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount indicated.
** Range of global values for the SCC of emissions reductions, representing a range of scenarios as described in section IV.M and summarized in Table
  VI.31, with discount rates ranging from 2.5% to 5%.
*** Shipments-weighted based on market share product switching model.
**** Base case market share is 95 percent CSIR and 5 percent CSCR.

    First, DOE considered TSL 8, the combination of CSIR and CSCR 
efficiency levels generating the greatest national energy savings. TSL 
8 would likely save an estimated 2.33 quads of energy through 2045, an 
amount DOE considers significant. Discounted at seven percent, the 
projected energy savings through 2045 would be 0.62 quad. For the 
Nation as a whole, DOE projects that TSL 8 would result in a net 
benefit of $3.03 billion in NPV, using a discount rate of seven 
percent. The estimated emissions reductions at TSL 8 are up to 111.4 Mt 
of CO<INF>2</INF>, up to 80.0 kt of NO<INF>X</INF>, and up to 0.469 ton 
of Hg. These reductions have a value of up to $6,046 million for 
CO<INF>2</INF> (using the 95th percentile value at a 3 percent discount 
rate), and a value of up to $63.8 million for NO<INF>X</INF>, and $4.95 
million for Hg at a discount rate of seven percent. At the central 
value for the social cost of carbon, the estimated benefit of 
CO<INF>2</INF> emissions reductions is $1,982 million at a discount 
rate of three percent. DOE also estimates that at TSL 8, total electric 
generating capacity in 2030 will decrease compared to the base case by 
2.14 GW.
    At TSL 8, DOE projects that for the average customer, compared to 
the baseline, the LCC of a CSIR and CSCR motor will increase by $369 
and $52, respectively. At TSL 8, DOE estimates the fraction of 
customers experiencing LCC increases will be 66 percent for CSIR motors 
and 75 percent for CSCR motors. The median PBP for the average 
capacitor-start small electric motor customers at TSL 8, 11.9 years for 
CSIR motors and 10.0 years for CSCR motors, is projected to be 
substantially longer than the mean lifetime of the equipment. DOE also 
considered market migration between CSIR and CSCR users and how that 
would affect the LCC of CSIR users at TSL 8. DOE estimates that at this 
TSL it will be more cost-effective for many CSIR consumers to purchase 
a CSCR motor instead, with only a slight $3 increase in the average LCC 
over that of the baseline CSIR motor. In total, 61 percent of consumers 
who migrate from a CSIR to a CSCR motor will experience LCC increases.
    DOE also examined LCC savings using a full distribution of motor 
sizes and speeds. Under these conditions, for the average customer, the 
LCC of a CSIR and CSCR motor will increase by $367 and $15, 
respectively, compared to the baseline. At TSL 8, DOE estimates the 
fraction of customers experiencing LCC increases will be 65 percent for 
both CSIR and CSCR motors.
    The projected change in industry value ranges from a decrease of 
$52.58 million to an increase of $46.35 million. The impacts are driven 
primarily by the assumptions regarding the ability to pass on larger 
increases in MPCs to the customer as well as the necessary estimated 
investments. At TSL 8, DOE recognizes the risk of negative impacts if 
manufacturers' expectations about reduced profit margins are realized. 
In particular, if the high end of the range of impacts is reached as 
DOE expects, TSL 8 could result in a net loss of 18.84 percent in INPV 
to the capacitor-start small motor industry. DOE believes manufacturers 
would likely have a more difficult time maintaining current gross 
margin levels with larger increases in manufacturing production costs, 
as standards increase the need for capital conversion costs, equipment 
retooling, and increased research and development spending. 
Specifically, at this TSL, the majority of manufacturers would need to 
significantly redesign all of their capacitor-start small electric 
motors.
    After carefully considering the analysis and weighing the benefits 
and

[[Page 10942]]

burdens of TSL 8, the Secretary has reached the following conclusion: 
At TSL 8, the benefits of energy savings, emissions reductions (both in 
physical reductions and the monetized value of those reductions), and 
the positive net economic savings (over 30 years) would be outweighed 
by the economic burden on existing CSCR customers and CSIR customers 
who do not migrate from CSIR to CSCR motors (as indicated by the large 
increase in LCC) and the potentially large reduction in INPV for 
manufacturers resulting from large conversion costs and reduced gross 
margins. Consequently, the Secretary has concluded that trial standard 
level 8 is not economically justified.
    DOE then considered TSL 7, which would likely save an estimated 
1.91 quads of energy through 2045, an amount DOE considers significant. 
Discounted at seven percent, the projected energy savings through 2045 
would be 0.51 quad. For the Nation as a whole, DOE projects that TSL 7 
would result in a net benefit of $4.74 billion in NPV, using a discount 
rate of seven percent. The estimated emissions reductions at TSL 7 are 
up to 96.8 Mt of CO<INF>2</INF>, up to 69.5 kt of NO<INF>X</INF>, and 
up to 0.408 ton of Hg. These reductions have a value of up to $5,253 
million for CO<INF>2</INF> (using the 95th percentile value at a 3 
percent discount rate), and a value of up to $55.4 million for 
NO<INF>X</INF>, and $4.30 million for Hg at a discount rate of seven 
percent. At the central value for the social cost of carbon, the 
estimated benefit of CO<INF>2</INF> emissions reductions is $1,722 
million at a discount rate of three percent. Total electric generating 
capacity in 2030 is estimated to decrease compared to the base case by 
1.86 GW under TSL 7.
    At TSL 7, DOE projects that for the average customer, the LCC of 
capacitor-start small electric motors will increase by $369 for CSIR 
motors and decrease by $24 for CSCR motors compared to the baseline. At 
TSL 7, DOE estimates the fraction of CSIR customers experiencing LCC 
increases will be 66 percent, but only 48 percent for CSCR motor 
customers. However, DOE believes that at this TSL, which is the max-
tech efficiency level for CSIR motors, the relative difference in cost 
between a CSIR motor and a CSCR motor becomes substantial and will have 
large effects on customers. Rather than buy an expensive CSIR motor, 
those customers whose applications permit them to will purchase a CSCR 
motor with the same number of poles and horsepower ratings. DOE is 
unsure of the magnitude of the migration of CSIR users to CSCR motors, 
but estimates that customers that purchase a CSCR motor rather than a 
CSIR motor will reduce their LCC by $23 on average, compared to the 
baseline CSIR motor. On a national level, DOE estimates that the market 
share of CSCR motors could grow from 5 percent of all capacitor-start 
motors to 97 percent once the compliance date for these standards is 
effective. Even though switching from a CSIR to a CSCR motor would 
result in a reduction in LCC on average, DOE estimates that 
approximately 54 percent of CSIR customers that switch would still 
experience an LCC increase.
    DOE also examined LCC savings with a full distribution of motor 
sizes and speeds. Under these conditions, for the average customer, 
compared to the baseline, the LCC of a CSIR and CSCR motor will 
increase by $367 and decrease by $60, respectively. DOE also examined 
what fraction of motors would have increases in LCC. At TSL 7, DOE 
estimates that 65 percent of CSIR motor customers who do not switch to 
CSCR motors, and 40 percent of CSCR motor customers, will experience 
increased LCC.
    The projected change in industry value ranges from a decrease of 
$34.05 million to an increase of $18.40 million. The impacts are driven 
primarily by the assumptions regarding the ability to pass on larger 
increases in MPCs to the customer as well as the necessary estimated 
investments. At TSL 7, DOE recognizes the risk of negative impacts if 
manufacturers' expectations about reduced profit margins are realized. 
In particular, if the high end of the range of impacts is reached as 
DOE expects, TSL 7 could result in a net loss of 12.20 percent in INPV 
to the capacitor-start small motor industry. At this TSL, the 
combination of efficiency levels could cause a migration from CSIR 
motors to CSCR motors; however, DOE believes that the capital 
conversion costs, equipment retooling and R&D spending associated with 
this migration would not be severe.
    After carefully considering the analysis and weighing the benefits 
and burdens of TSL 7, the Secretary has reached the following 
conclusion: Trial standard level 7 offers the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified and will result in significant conservation of energy. The 
Secretary has reached the conclusion that the benefits of energy 
savings, emissions reductions (both in physical reductions and the 
monetized value of those reductions), the positive net economic savings 
to the Nation (over 30 years) and the harmonization of efficiency 
requirements between CSIR and CSCR motors would outweigh the potential 
reduction in INPV for manufacturers and the economic burden on those 
CSIR customers who are unable to switch to CSCR motors. Further, 
benefits from carbon dioxide reductions (at a central value calculated 
using a three percent discount rate) would increase NPV by $1,722 
million (2009$). These benefits from carbon dioxide emission 
reductions, when considered in conjunction with the consumer savings 
NPV and other factors described above support DOE's tentative 
conclusion that trial standard level 7 is economically justified. 
Therefore, DOE today adopts the energy conservation standards for 
capacitor-start small electric motors at trial standard level 7.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (October 4, 1993), requires each agency to 
identify the problem the agency intends to address that warrants new 
agency action (including, where applicable, the failures of private 
markets or public institutions), as well as assess the significance of 
that problem, to enable assessment of whether any new regulation is 
warranted. EPCA requires DOE to establish standards for the small 
motors covered in today's rulemaking. In addition, today's standards 
also address the following: (1) Misplaced incentives, which separate 
responsibility for selecting equipment and for paying their operating 
costs; and (2) Lack of consumer information and/or information 
processing capability about energy efficiency opportunities. The market 
for small electric motors is dominated by the presence and actions of 
OEMs, who sell small electric motors to end-users as a component of a 
larger piece of equipment. There is a very large diversity of equipment 
types that use small electric motors and the market for any particular 
type of equipment may be very small. Consumers lack information and 
choice regarding the motor component. OEMs and consumers may be more 
concerned with other aspects of the application system than with 
selecting the most cost effective motor for the end user. Space 
constraints may also restrict the ability of the consumer to replace 
the motor with a more efficient model.
    In addition, DOE has determined that today's regulatory action is a 
``significant regulatory action'' under section 3(f)(1) of Executive 
Order 12866. Accordingly, section 6(a)(3) of the Executive Order 
required that DOE prepare a regulatory

[[Page 10943]]

impact analysis (RIA) on today's final rule and that the Office of 
Information and Regulatory Affairs (OIRA) in the OMB review this rule. 
DOE presented to OIRA for review the final rule and other documents 
prepared for this rulemaking, including the RIA, and has included these 
documents in the rulemaking record. They are available for public 
review in the Resource Room of DOE's Building Technologies Program, 950 
L'Enfant Plaza, SW., Suite 600, Washington, DC 20024, (202) 586-2945, 
between 9 a.m. and 4 p.m., Monday through Friday, except Federal 
holidays.
    The NOPR contained a summary of the RIA, which evaluated the extent 
to which major alternatives to standards for small electric motors 
could achieve significant energy savings at reasonable cost, as 
compared to the effectiveness of the proposed rule. 74 FR 61493-96. The 
complete RIA (Regulatory Impact Analysis for Proposed Energy 
Conservation Standards for Small Electric Motors) is contained in the 
TSD prepared for today's rule. The RIA consists of: (1) A statement of 
the problem addressed by this regulation and the mandate for government 
action, (2) a description and analysis of the feasible policy 
alternatives to this regulation, (3) a quantitative comparison of the 
impacts of the alternatives, and (4) the national economic impacts of 
today's standards.
    The major alternatives DOE analyzed were: (1) No new regulatory 
action; (2) financial incentives, including tax credits and rebates; 
(3) revisions to voluntary energy efficiency targets; and (4) bulk 
government purchases. DOE evaluated each alternative in terms of its 
ability to achieve significant energy savings at reasonable costs, and 
compared it to the effectiveness of the proposed rule.

                       Table VII.1--Non-Regulatory Alternatives for Small Electric Motors
----------------------------------------------------------------------------------------------------------------
                                                                            Net present value[dagger] billion $
                 Policy alternatives                    Energy savings   ---------------------------------------
                                                            quads *        7% Discount rate    3% Discount rate
----------------------------------------------------------------------------------------------------------------
No New Regulatory Action............................                0.00                0.00                0.00
Consumer Rebates at TSL 4b (Polyphase) and TSL 3                    0.17                0.49                1.13
 (Single-Phase).....................................
Consumer Rebates at TSL 4b (Polyphase) and TSL 2                    0.27                0.72                1.69
 (Single-Phase).....................................
Consumer Rebates at TSL 4b (Polyphase) and TSL 3                    0.60                1.76                4.03
 (Capacitor-Start Capacitor-Run Only)...............
Consumer Tax Credits................................                0.11                0.35                0.80
Manufacturer Tax Credits............................                0.07                0.25                0.56
Voluntary Efficiency Targets........................                0.42                0.95                2.29
Bulk Government Purchases...........................                0.18                0.44                1.04
Proposed Standards at TSL 4b (Polyphase) and TSL 7                  2.20                5.28               12.52
 (Capacitor-Start)..................................
----------------------------------------------------------------------------------------------------------------
* Energy savings are in source quads from 2015 and 2045.
[dagger] Net present value (NPV) is the value of a time series of costs and savings. DOE determined the NPV from
  2015 to 2065 in billions of 2009$.

    The net present value amounts shown in Table VII.1 refer to the NPV 
for consumers. The costs to the government of each policy (such as 
rebates or tax credits) are not included in the costs for the NPV 
since, on balance, consumers are both paying for (through taxes) and 
receiving the benefits of the payments. For each of the policy 
alternatives other than standards, Table VII.1 shows the energy savings 
and NPV in the case where the CSIR and CSCR market share shift in 
response to the policy prior to 2015, or immediately in 2015 when 
compliance with the standards would be required. The NES and NPV in the 
case of the proposed standard are shown as a range between this 
scenario and a scenario in which the market shift takes ten years to 
complete, and begins in 2015 . The following paragraphs discuss each of 
the policy alternatives listed in Table VII.1. (For more details see 
TSD, RIA.)
    No new regulatory action. The case in which no regulatory action is 
taken with regard to small electric motors constitutes the ``base 
case'' (or ``No Action'') scenario. In this case, between 2015 and 
2045, capacitor-start small electric motors purchased in or after 2015 
are expected to consume 1.91 quads of primary energy (in the form of 
losses), while polyphase small electric motors purchased in or after 
2015 are expected to consume 0.29 quad of primary energy. Since this is 
the base case, energy savings and NPV are zero by definition.
    Rebates. DOE evaluated the possible effect of a rebate consistent 
with current motor rebate practices in the promotion of premium 
efficiency motors which cover a portion of the incremental price 
difference between equipment meeting baseline efficiency levels and 
equipment meeting improved efficiency requirements. The current average 
motor rebate for an efficient 1-horsepower motor is approximately $25, 
and DOE scaled this rebate to be approximately proportional to the 
retail price of the motor. DOE evaluated rebates targeting TSL 4b for 
polyphase motors, and evaluated several target efficiency levels for 
capacitor-start motors (including TSLs 7, 5, 3, and 2). Existing rebate 
programs for polyphase motors target three-digit frame series motors 
with efficiencies equivalent to TSL 4b for small polyphase motors. At 
rebate efficiency levels corresponding to TSL 7 and 5 for capacitor-
start motors, DOE estimates that rebates consistent with current 
practice would have an insignificant impact on increasing the market 
share of CSIR motors. For this case, meeting the target level requires 
the purchase of a motor with a very high average first cost because for 
TSL 7, CSIR motors are at the maximum technologically feasible 
efficiency. As a result, rebates targeting TSLs 3 and 2 have larger 
energy savings. TSLs 7, 5, 3, and 2 correspond to the same efficiency 
level (EL 3) for CSCR motors.
    For rebate programs targeting TSL 4b for polyphase motors and TSL 3 
for capacitor start motors, DOE estimates the market share of equipment 
meeting the energy efficiency levels targeted would increase from 0 
percent to 0.4 percent for polyphase motors, from 0 percent to 0.2 
percent for capacitor-start, induction-run motors, and from 26.0 to 
42.6 percent for capacitor-start, capacitor-run motors. DOE assumed the 
impact of this policy would be to permanently transform the market so 
that the shipment-weighted efficiency gain seen in the first year of 
the program would be maintained throughout the forecast period. At the 
estimated participation rates, the rebates would provide 0.17 quad of 
national energy

[[Page 10944]]

savings and an NPV of $0.49 billion (at a 7-percent discount rate).
    DOE found that a rebate targeting the efficiency levels 
corresponding to TSL 2 for capacitor-start motors would result in 
larger energy savings than one targeting the efficiency levels of TSL 
3, TSL 5 or TSL 7. Such rebates would increase the market share among 
capacitor-start induction-run motors meeting the efficiency level 
corresponding to TSL 2 from 2.0 percent to 11.7 percent. Combined with 
unchanged polyphase motor rebates targeting TSL 4b, DOE estimates these 
rebates would provide 0.27 quad of national energy savings and an NPV 
of $0.72 billion (at a 7-percent discount rate).
    DOE also analyzed an alternative rebate program for capacitor-start 
motors which would give rebates of twice the value of the previously-
analyzed rebate for CSCR motors which meet the requirements of TSL 7 (a 
$50 rebate for a 1 HP motor, scaled to other product classes), and no 
rebates for CSIR motors. DOE estimates that these rebates would have no 
effect on the efficiency distribution of capacitor-start induction-run 
motors, and would increase the market share among capacitor-start 
capacitor-run motors meeting TSL 7 from 26.0 percent to 89.4 percent. 
Combined with unchanged polyphase motor rebates at TSL 4b, DOE 
estimates these rebates would provide 0.60 quad of national energy 
savings and an NPV of $1.76 billion (at a 7-percent discount rate).
    Although DOE estimates that rebates will provide national benefits, 
they are much smaller than the benefits resulting from national 
performance standards. Thus, DOE rejected rebates as a policy 
alternative to national performance standards.
    Consumer Tax Credits. If customers were offered a tax credit 
equivalent to the amount mentioned above for rebates, DOE's research 
suggests that the number of customers buying a small electric motor 
that would take advantage of the tax credit would be approximately 60 
percent of the number that would take advantage of rebates. Thus, as a 
result of the tax credit, the percentage of customers purchasing the 
products with efficiencies corresponding to TSL 4b or higher for 
polyphase motors would increase from 8.0 percent to 15.0 percent; the 
market share of capacitor-start motors meeting TSL 3 would increase 
from 0 percent to 0.1 percent for capacitor-start, induction-run 
motors, and from 26.0 percent to 36.0 percent for capacitor-start, 
capacitor-run motors. DOE assumed the impact of this policy would be to 
permanently transform the market so that the shipment-weighted 
efficiency gain seen in the first year of the program would be 
maintained throughout the forecast period. DOE estimated that tax 
credits would yield a fraction of the benefits that rebates would 
provide. DOE rejected rebates, as a policy alternative to national 
performance standards, because the benefits that rebates provide are 
much smaller than those resulting from performance standards. Thus, 
because consumer tax credits provide even smaller benefits than 
rebates, DOE also rejected consumer tax credits as a policy alternative 
to national performance standards.
    Manufacturer Tax Credits. DOE believes even smaller benefits would 
result from availability of a manufacturer tax credit program that 
would effectively result in a lower price to the consumer by an amount 
that covers part of the incremental price difference between products 
meeting baseline efficiency levels and those meeting TSL 4b for 
polyphase small electric motors and TSL 3 for capacitor-start small 
electric motors. Because these tax credits would go to manufacturers 
instead of customers, DOE believes that fewer customers would be aware 
of this program relative to a consumer tax credit program. DOE assumes 
that 50 percent of the customers who would take advantage of consumer 
tax credits would buy more-efficient products offered through a 
manufacturer tax credit program. Thus, as a result of the manufacturer 
tax credit, the percentage of customers purchasing the more-efficient 
products would increase from 8.0 percent to 11.5 percent (i.e., 50 
percent of the impact of consumer tax credits) for polyphase motors, 
from 0 percent to 0.1 percent for capacitor-start, induction-run 
motors, and from 26.0 percent to 31.0 percent for capacitor-start, 
capacitor-run motors.
    DOE assumed the impact of this policy would be to permanently 
transform the market so that the shipment-weighted efficiency gain seen 
in the first year of the program will be maintained throughout the 
forecast period. DOE estimated that manufacturer tax credits would 
yield a fraction of the benefits that consumer tax credits would 
provide. DOE rejected consumer tax credits as a policy alternative to 
national performance standards because the benefits that consumer tax 
credits provide are much smaller than those resulting from performance 
standards. Thus, because manufacturer tax credits provide even smaller 
benefits than consumer tax credits, DOE also rejected manufacturer tax 
credits as a policy alternative to national performance standards.
    Voluntary Energy-Efficiency Targets. There are no current Federal 
or industry marketing efforts to increase the use of efficient small 
electric motors which meet the requirements of TSL 4b for polyphase 
small electric motors or TSL 7 for capacitor-start small electric 
motors. NEMA and the Consortium for Energy Efficiency promote ``NEMA 
Premium'' efficient three-digit frame series motors, and DOE analyzed 
this program as a model for the market effects of a similar program for 
small electric motors. DOE evaluated the potential impacts of such a 
program that would encourage purchase of products meeting the trial 
standard level efficiency levels. DOE modeled the voluntary efficiency 
program based on this scenario and assumed that the resulting shipment-
weighted efficiency gain would be maintained throughout the forecast 
period. DOE estimated that the enhanced effectiveness of voluntary 
energy-efficiency targets would provide 0.42 quad of national energy 
savings and an NPV of $0.95 billion (at a 7-percent discount rate). 
Although this would provide national benefits, they are much smaller 
than the benefits resulting from national performance standards. Thus, 
DOE rejected use of voluntary energy-efficiency targets as a policy 
alternative to national performance standards.
    Bulk Government Purchases. Under this policy alternative, the 
government sector would be encouraged to purchase increased amounts of 
polyphase equipment that meet the efficiency levels in trial standard 
level 4b and capacitor-start equipment that meets the efficiency levels 
in trial standard level 7. Federal, State, and local government 
agencies could administer such a program. At the Federal level, this 
would be an enhancement to the existing Federal Energy Management 
Program (FEMP). DOE modeled this program by assuming an increase in 
installation of equipment meeting the efficiency levels of the target 
standard levels among the commercial and public buildings and 
operations which are run by government agencies. DOE estimated that 
bulk government purchases would provide 0.18 quad of national energy 
savings and an NPV of $0.44 billion (at a 7-percent discount rate), 
benefits which are much smaller than those estimated for national 
performance standards. DOE rejected bulk government purchases as a 
policy alternative to national performance standards.
    National Performance Standards. None of the regulatory alternatives 
DOE

[[Page 10945]]

examined would save as much energy or have an NPV as high as the 
standards in today's final rule. Also, several of the alternatives 
would require new enabling legislation, because DOE does not have 
authority to implement those alternatives. Additional detail on the 
regulatory alternatives is found in the RIA chapter in the TSD.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site, http://www.gc.doe.gov.
    DOE reviewed today's final rule under the provisions of the 
Regulatory Flexibility Act and the procedures and policies published on 
February 19, 2003. A regulatory flexibility analysis examines the 
impact of the rule on small entities and considers alternative ways of 
reducing negative impacts.
    In the context of this rulemaking, ``small businesses,'' as defined 
by the Small Business Administration (SBA), for the small electric 
motor manufacturing industry are manufacturing enterprises with 1,000 
employees or fewer. See http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf. DOE used this small business 
definition to determine whether any small entities would be required to 
comply with the rule. (65 FR 30836, 30850 (May 15, 2000), as amended at 
65 FR 53533, 53545 (September 5, 2000) and codified at 13 CFR part 121. 
The size standards are listed by NAICS code and industry description. 
The manufacturers impacted by this rule are generally classified under 
NAICS 335312, ``Motor and Generator Manufacturing,'' which sets a 
threshold of 1,000 employees or less for an entity in this category to 
be considered a small business.
    As explained in the NOPR, DOE identified producers of equipment 
covered by this rulemaking, which have manufacturing facilities located 
within the United States and could be considered small entities, by two 
methods: (1) Asking larger manufacturers in MIA interviews to identify 
any competitors they believe may be a small business, and (2) 
researching NEMA-identified fractional horsepower motor manufacturers. 
DOE then looked at publicly-available data and contacted manufacturers, 
as necessary, to determine if they meet the SBA's definition of a small 
manufacturing company. In total, DOE identified 11 companies that could 
potentially be small businesses. During initial review of the 11 
companies in its list, DOE either contacted or researched each company 
to determine if it sold covered small electric motors. Based on its 
research, DOE screened out companies that did not offer motors covered 
by this rulemaking. Consequently, DOE estimated that only one out of 11 
companies listed were potentially small business manufacturers of 
covered products. DOE then contacted this potential small business 
manufacturer and determined that the company's equipment would not be 
covered by this proposed rulemaking. Thus, based on its initial 
screening and subsequent interviews, DOE did not identify any company 
as a small business manufacturer based on SBA's definition of a small 
business manufacturer for this industry. (74 FR 61410, 61496). For 
today' final rule, DOE did not identify any additional companies that 
would be potential small business manufacturer based on SBA's 
definition of a small business manufacturer for the small electric 
motor industry.
    DOE reviewed the standard levels considered in today's final rule 
under the provisions of the Regulatory Flexibility Act and the 
procedures and policies published on February 19, 2003. On the basis of 
the foregoing, DOE reaffirms the certification. Therefore, DOE has not 
prepared a final regulatory flexibility analysis for this rule.

C. Review Under the Paperwork Reduction Act

    This rulemaking imposes no new information or recordkeeping 
requirements. Accordingly, OMB clearance is not required under the 
Paperwork Reduction Act. (44 U.S.C. 3501, et seq.)

D. Review Under the National Environmental Policy Act

    DOE prepared an environmental assessment of the impacts of today's 
standards which it published as chapter 15 within the TSD for the final 
rule. DOE found the environmental effects associated with today's 
standard levels for small electric motors to be insignificant. 
Therefore, DOE is issuing a FONSI pursuant to NEPA (42 U.S.C. 4321 et 
seq.), the regulations of the Council on Environmental Quality (40 CFR 
parts 1500-1508), and DOE's regulations for compliance with NEPA (10 
CFR part 1021). The FONSI is available in the docket for this 
rulemaking.

E. Review Under Executive Order 13132

    DOE reviewed this rule pursuant to Executive Order 13132, 
``Federalism,'' 64 FR 43255 (August 4, 1999), which imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. In accordance with DOE's statement of policy describing 
the intergovernmental consultation process it will follow in the 
development of regulations that have federalism implications, 65 FR 
13735 (March 14, 2000), DOE examined the November 2009 proposed rule 
and determined that the rule would not have a substantial direct effect 
on the States, on the relationship between the National Government and 
the States, or on the distribution of power and responsibilities among 
the various levels of Government. See 74 FR 61497. DOE received no 
comments on this issue in response to the NOPR, and its conclusions on 
this issue are the same for the final rule as they were for the 
proposed rule. Therefore, DOE has taken no further action in today's 
final rule with respect to Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4729 (February 7, 1996)) imposes on 
Federal agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity, (2) write 
regulations to minimize litigation, and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. Section 3(b) of Executive 
Order 12988 specifically requires that Executive agencies make every 
reasonable effort to ensure that the regulation: (1) Clearly specifies 
the preemptive effect, if any; (2) clearly specifies any effect on 
existing Federal law or regulation; (3) provides a clear legal standard 
for affected conduct while promoting simplification and

[[Page 10946]]

burden reduction; (4) specifies the retroactive effect, if any; (5) 
adequately defines key terms; and (6) addresses other important issues 
affecting clarity and general draftsmanship under any guidelines issued 
by the Attorney General. Section 3(c) of Executive Order 12988 requires 
Executive agencies to review regulations in light of applicable 
standards in section 3(a) and section 3(b) to determine whether they 
are met or it is unreasonable to meet one or more of them. DOE has 
completed the required review and determined that, to the extent 
permitted by law, the final regulations meet the relevant standards of 
Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    As indicated in the NOPR, DOE reviewed the proposed rule under 
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) 
(UMRA), which imposes requirements on Federal agencies when their 
regulatory actions will have certain types of impacts on State, local, 
and Tribal governments and the private sector. See 74 FR 61497. DOE 
concluded that this rule would not contain an intergovernmental 
mandate, but would likely result in expenditures of $100 million or 
more after 2015 for private sector commercial and industrial users of 
equipment with small electric motors. DOE estimated annualized impacts 
for the final standards using the results of the national impacts 
analysis. The national impact analysis results expressed as annualized 
values are $961-$1,146 million in total annualized benefits from the 
final rule, $264 million in annualized costs, and $698-$882 million in 
annualized net benefits. Details are provided in chapter 10 of the TSD. 
Therefore, DOE must publish a written statement assessing the costs, 
benefits, and other effects of the rule on the national economy.
    Section 205 of UMRA also requires DOE to identify and consider a 
reasonable number of regulatory alternatives before promulgating a rule 
for which UMRA requires such a written statement. DOE must select from 
those alternatives the most cost-effective and least burdensome 
alternative that achieves the objectives of the rule, unless DOE 
publishes an explanation for doing otherwise or the selection of such 
an alternative is inconsistent with law.
    Today's energy conservation standards for small electric motors 
would achieve the maximum improvement in energy efficiency that DOE has 
determined to be both technologically feasible and economically 
justified. A discussion of the alternatives considered by DOE is 
presented in the regulatory impact analysis section of the TSD for this 
rule. Also, Section 202(c) of UMRA authorizes an agency to prepare the 
written statement required by UMRA in conjunction with or as part of 
any other statement or analysis that accompanies the proposed rule. (2 
U.S.C. 1532(c)) The TSD, preamble, and regulatory impact analysis for 
today's final rule contain a full discussion of the rule's costs, 
benefits, and other effects on the national economy, and therefore 
satisfy UMRA's written statement requirement.

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

    DOE determined that, for this rulemaking, it need not prepare a 
Family Policymaking Assessment under Section 654 of the Treasury and 
General Government Appropriations Act, 1999 (Pub. L. 105-277). See 74 
FR 61497. DOE received no comments concerning Section 654 in response 
to the NOPR, and, therefore, has taken no further action in today's 
final rule with respect to this provision.

I. Review Under Executive Order 12630

    DOE determined under Executive Order 12630, ``Governmental Actions 
and Interference with Constitutionally Protected Property Rights,'' 53 
FR 8859 (March 18, 1988), that today's rule would not result in any 
takings that might require compensation under the Fifth Amendment to 
the U.S. Constitution. See 74 FR 61497-98. DOE received no comments 
concerning Executive Order 12630 in response to the NOPR, and, 
therefore, has taken no further action in today's final rule with 
respect to this Executive Order.

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed today's final rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355 
(May 22, 2001) requires Federal agencies to prepare and submit to the 
Office of Information and Regulatory Affairs (OIRA) a Statement of 
Energy Effects for any proposed significant energy action. DOE 
determined that today's rule, which sets energy conservation standards 
for small electric motors, is not a ``significant energy action'' 
within the meaning of Executive Order 13211. See 74 FR 61498. 
Accordingly, DOE did not prepare a Statement of Energy Effects on the 
proposed rule. DOE received no comments on this issue in response to 
the NOPR. As with the proposed rule, DOE has concluded that today's 
final rule is not a significant energy action within the meaning of 
Executive Order 13211, and has not prepared a Statement of Energy 
Effects on the final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    In consultation with the Office of Science and Technology Policy 
(OSTP), OMB issued on December 16, 2004, its ``Final Information 
Quality Bulletin for Peer Review'' (the Bulletin). 70 FR 2664. (January 
14, 2005) The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information.
    As set forth in the NOPR, DOE held formal in-progress peer reviews 
of the types of analyses and processes that DOE has used to develop the 
energy efficiency standards in today's rule, and issued a report on 
these peer reviews. The report is available at http://www.eere.energy.gov/buildings/appliance_standards/peer_review.html. 
See 74 FR 61498.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of today's final rule prior to the effective 
date set forth at the outset of this notice. The report will state that 
it has been determined that the rule is a ``major rule'' as defined by 
5 U.S.C. 804(2). DOE also will submit the supporting analyses to the 
Comptroller General in the U.S. Government Accountability Office

[[Page 10947]]

(GAO) and make them available to each House of Congress.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of today's final 
rule.

List of Subjects in 10 CFR Part 431

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

    Issued in Washington, DC, on February 22, 2010.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

0
For the reasons stated in the preamble, DOE amends part 431 of chapter 
II of title 10, of the Code of Federal Regulations, to read as set 
forth below.

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

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

    Authority:  42 U.S.C. 6291-6317.


0
2. Section 431.446 is revised to read as follows:

Energy Conservation Standards


Sec.  431.446  Small electric motors energy conservation standards and 
their effective dates.

    (a) Each small electric motor manufactured (alone or as a component 
of another piece of non-covered equipment) after February 28, 2015, 
shall have an average full load efficiency of not less than the 
following:

------------------------------------------------------------------------
                                        Average full load efficiency
                                  --------------------------------------
                                                 Polyphase
    Motor horsepower/standard     --------------------------------------
       kilowatt equivalent             Open motors (number of poles)
                                  --------------------------------------
                                        6            4            2
------------------------------------------------------------------------
0.25/0.18........................         67.5         69.5         65.6
0.33/0.25........................         71.4         73.4         69.5
0.5/0.37.........................         75.3         78.2         73.4
0.75/0.55........................         81.7         81.1         76.8
1/0.75...........................         82.5         83.5         77.0
1.5/1.1..........................         83.8         86.5         84.0
2/1.5............................          N/A         86.5         85.5
3/2.2............................          N/A         86.9         85.5
------------------------------------------------------------------------


 
                                        Average full load efficiency
                                  --------------------------------------
                                     Capacitor-start capacitor-run and
    Motor horsepower/standard          capacitor-start induction-run
       kilowatt equivalent        --------------------------------------
                                       Open motors (number of poles)
                                  --------------------------------------
                                        6            4            2
------------------------------------------------------------------------
0.25/0.18........................         62.2         68.5         66.6
0.33/0.25........................         66.6         72.4         70.5
0.5/0.37.........................         76.2         76.2         72.4
0.75/0.55........................         80.2         81.8         76.2
1/0.75...........................         81.1         82.6         80.4
1.5/1.1..........................          N/A         83.8         81.5
2/1.5............................          N/A         84.5         82.9
3/2.2............................          N/A          N/A         84.1
------------------------------------------------------------------------

    (b) For purposes of determining the required minimum average full 
load efficiency of an electric motor that has a horsepower or kilowatt 
rating between two horsepower or two kilowatt ratings listed in any 
table of efficiency standards in paragraph (a) of this section, each 
such motor shall be deemed to have a listed horsepower or kilowatt 
rating, determined as follows:
    (1) A horsepower at or above the midpoint between the two 
consecutive horsepower ratings shall be rounded up to the higher of the 
two horsepower ratings;
    (2) A horsepower below the midpoint between the two consecutive 
horsepower ratings shall be rounded down to the lower of the two 
horsepower ratings; or
    (3) A kilowatt rating shall be directly converted from kilowatts to 
horsepower using the formula 1 kilowatt = (1/0.746) hp, without 
calculating beyond three significant decimal places, and the resulting 
horsepower shall be rounded in accordance with paragraphs (b)(1) or 
(b)(2) of this section, whichever applies.

Appendix

    [The following letter from the Department of Justice will not 
appear in the Code of Federal Regulations.]

Department of Justice, Antitrust Division, Main Justice Building, 
950 Pennsylvania Avenue, NW., Washington, DC 20530-0001, (202) 514-
2401/(202) 616-2645(f), <a href="/cdn-cgi/l/email-protection#e2838c968b9690979196cc839690a29791868d88cc858d94"><span class="__cf_email__" data-cfemail="dbbab5afb2afa9aea8aff5baafa99baea8bfb4b1f5bcb4ad">[email protected]</span></a>, http://www.usdoj.gov/atr.

January 25, 2010.

Robert H. Edwards, Jr., Deputy General Counsel for Energy Policy, 
Department of Energy, Washington, DC 20585.

    Dear Deputy General Counsel Edwards: I am responding to your 
November 19, 2009 letter seeking the views of the Attorney General 
about the potential impact on competition of proposed energy 
conservation standards for small electric motors. Your request was 
submitted pursuant to Section 325(o)(2)(B)(i)(V) of the Energy 
Policy and Conservation Act, as amended, (``EPCA''), 42 U.S.C. Sec.  
6295(o)(B)(i)(V), which requires the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for

[[Page 10948]]

responding to requests from other departments about the effect of a 
program on competition has been delegated to the Assistant Attorney 
General for the Antitrust Division in 28 CFR Sec.  0.40(g).
    In conducting its analysis the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice, leaving consumers with fewer 
competitive alternatives, placing certain manufacturers of a product 
at an unjustified competitive disadvantage compared to other 
manufacturers, or by inducing avoidable inefficiencies in production 
or distribution of particular products.
    We have reviewed the proposed standards contained in the Notice 
of Proposed Rulemaking (``NOPR'')(74 Fed. Reg. 61410) and attended 
the December 17, 2009 public hearing on the proposed standard.
    Based on our review of the record, the proposed standards for 
small electric motors could increase costs for consumers who need to 
replace small electric motors in existing equipment. Proposed Trial 
Standard Level (TSL) 5 for polyphase small electric motors and TSL 7 
for all capacitor-start small electric motors apply to motors sold 
as replacements as well as to those built into original equipment. 
We understand that compliance with those standards could require 
manufacturers to increase the size of their motors such that the 
larger motors will not fit into existing space constrained 
equipment. In such a case, owners of existing equipment with a 
broken motor would have to either replace the entire piece of 
equipment or attempt to repair the motor. Such equipment owners 
would not have the option of simply replacing the existing small 
electric motor, thus limiting the range of competitive alternatives 
available to them. This may be quite onerous to consumers when the 
motor is only a small component of the total cost of the item and 
repairing the motor is difficult or costly. We ask the Department of 
Energy to take this possible impact into account and consider, as is 
warranted, exempting from the proposed standard the manufacture and 
marketing of certain replacement small electric motors for a limited 
period in time.

    Sincerely,

Christine A. Varney,
Assistant Attorney General.

[FR Doc. 2010-4358 Filed 3-8-10; 8:45 am]
BILLING CODE 6450-01-P


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