### DEPARTMENT OF JUSTICE
Antitrust Division

Main Justice Building 950 Pennsylvania Avenue, N.W. Washington, D.C. 2053 0-0001 (202) 514-2401 / (202) 616-2645 (Fax) E-mail: antitrust@usdoj.gov Web site: http://www.usdoj.gov/atr

September 6, 2007

FACSIMILE TRANSMITTAL AND FIRST CLASS MAIL Warren Belmar, Esq. Deputy General Counsel for Energy Policy U.S. Department of Energy Washington, D.C. 20585 Dear Deputy General Counsel Belmar: I am responding to your August 7, 2007 letter seeking the views of the Attorney General about the potential impact on competition of the proposed final rule regarding energy conservation standards for liquid-immersed and medium-voltage, dry-type distribution transformers ("distribution transformers"). The Energy Policy and Conservation Act ("EPCA") authorizes the Department of Energy ("DOE") to establish energy conservation standards for a number of appliances where DOE determines that those standards would be technologically feasible, economically justified, and result in significant energy savings. Your request was submitted pursuant to Section 325(o)(2)(B)(I) of the Energy Policy and Conservation Act, 42 U.S.C. § 6291, 6295 ("EPCA"), which states that, before the Secretary of Energy may prescribe a new or amended energy conservation standard, the Secretary shall ask the Attorney General to make a determination of "the impact of any lessening of competition ... that is likely to result from the imposition of the standard." The Attorney General's responsibility for responding to requests from other departments about the effect of a program on competition has been delegated to the Assistant Attorney General for the Antitrust Division in 28 CFR § 0.40(g). In conducting its analysis the Antitrust Division examines whether a standard may lessen competition, for example, by 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. In addition to harming consumers directly through higher prices, these effects could undercut the ultimate goals of the legislation. Along with your request, you sent us the draft final rule and a number of other documents relating to distribution transformers, including the comments that had been submitted to DOE in response to the Notice of Proposed Rulemaking ("NOPR"), the Notice of Data Availability 

### DEPARTMENT OFJUSTICE 

### AntitrustDivision

Main Justice Building 950 PennsylvaniaAvenue, N.W. Washington, D.C. 20530-0001 (202) 514-24011 (202) 616-2645 (Fax) E-mail: antitrust@usdoj.gov Web site: http://www.usdoj.gov/atr

September 6, 2007

FACSIMILE TRANSMITTAL AND FIRST CLASS MAIL "

Warren Belmar, Esq. Deputy General Counsel for Energy Policy U.S. Department ofEnergy Washington, D.C. 20585

DearDeputy General Counsel Belmru':

I amrespondingto yOl.n- August 7, 2007 letter seeking the views ofthe Attorney General about the potential impact on competition ofthe proposedfinal rule regarding energy conservation standards for liquid-immersed and medium-voltage, dry-type distribution transformers ("distribution transformers"). The EnergyPolicy and Conservation Act ("EPCA") authorizes the Department ofEnergy ("DOE") to establish energy conservation standards for a number ofappliances where DOE determines thatthose standards would be technologically feasible, economicallyjustified, andresult in significant energy savings.

Your request was submitted pursuantto Section 325(0)(2)(B)(I) ofthe Energy Policy and Conservation Act, 42 U.S.C. § 6291,6295 ("EPCA"), which states that, before the Secretary of Energy mayprescribe a new or amended energy conservation standard, the Secretary shall ask the Attorney General to make a determination of"theimpact ofany lessening ofcompetition

... that is likelyto result from the imposition ofthe standard." The Attorney General's responsibility for responding to requests from other departments aboutthe effect ofa program on competitionhas been delegated to the Assistant Attorney General for the Antitrust Division in28 CFR 

### § 0.40(g). In conducting its analysis the Antitrust Division examines whether a standard may lessen competition, for example, byplacing certain manufacturers ofa product at an unjustified competitive disadvantage compared to other mrumfacturers, orby inducing avoidable inefficiencies in production or distribution ofparticularproducts. In addition to harming
consumers directly through higherprices, these effects could undercut the ultimate goals ofthe legislation. Along with your request, you sent us the draft final rule and a number ofother documents relating to distribution transformers, including the comments thathad been submitted to DOE in response to the Notice ofProposed Rulemaking ("NOPR"), the Notice ofData Availability 

### DEPARTMENT OFJUSTICE 

### AntitrustDivision

Main Justice Building 950 PennsylvaniaAvenue, N.W. Washington, D.C. 20530-0001 (202) 514-24011 (202) 616-2645 (Fax) E-mail: antitrust@usdoj.gov Web site: http://www.usdoj.gov/atr

September 6, 2007

FACSIMILE TRANSMITTAL AND FIRST CLASS MAIL "

Warren Belmar, Esq. Deputy General Counsel for Energy Policy U.S. Department ofEnergy Washington, D.C. 20585

DearDeputy General Counsel Belmru':

I amrespondingto yOl.n- August 7, 2007 letter seeking the views ofthe Attorney General about the potential impact on competition ofthe proposedfinal rule regarding energy conservation standards for liquid-immersed and medium-voltage, dry-type distribution transformers ("distribution transformers"). The EnergyPolicy and Conservation Act ("EPCA") authorizes the Department ofEnergy ("DOE") to establish energy conservation standards for a number ofappliances where DOE determines thatthose standards would be technologically feasible, economicallyjustified, andresult in significant energy savings.

Your request was submitted pursuantto Section 325(0)(2)(B)(I) ofthe Energy Policy and Conservation Act, 42 U.S.C. § 6291,6295 ("EPCA"), which states that, before the Secretary of Energy mayprescribe a new or amended energy conservation standard, the Secretary shall ask the Attorney General to make a determination of"theimpact ofany lessening ofcompetition

... that is likelyto result from the imposition ofthe standard." The Attorney General's responsibility for responding to requests from other departments aboutthe effect ofa program on competitionhas been delegated to the Assistant Attorney General for the Antitrust Division in28 CFR 

### § 0.40(g). In conducting its analysis the Antitrust Division examines whether a standard may lessen competition, for example, byplacing certain manufacturers ofa product at an unjustified competitive disadvantage compared to other mrumfacturers, orby inducing avoidable inefficiencies in production or distribution ofparticularproducts. In addition to harming
consumers directly through higherprices, these effects could undercut the ultimate goals ofthe legislation. Along with your request, you sent us the draft final rule and a number ofother documents relating to distribution transformers, including the comments thathad been submitted to DOE in response to the Notice ofProposed Rulemaking ("NOPR"), the Notice ofData Availability("NODA") issued by DOE earlier this year that discussed standards DOE was considering, and

comments DOE received regarding the NODA. In November of 2006, you requested DOJ's views regarding the NOPR, which proposed Trial Standard Level 2. By letter dated January 16, 2007, we responded that, based on our inquiry, we were concerned that the distributor transformer standard might adversely affect competition with respect to distribution transformers used in industries, such as underground coal mining, where physical conditions limit the size of equipment that can be effectively utilized. We urged DOE to consider creating an exception for distribution transformers used in industries with space constraints. You have addressed our concern by establishing a separate product class for underground mining transformers and excluding that class from the proposed final rule. Although our January 16, 2007 letter did not limit our concern to underground mining transformers, we believe DOE's decision to exclude underground mining transformers from the proposed final rule adequately addresses our concern. Our review of the NOPR was limited to the impact of Trial Standard Level 2 on competition. The proposed final rule would establish a more stringent standard than Trial Standard Level 2 for certain distribution transformers. Specifically, it establishes Trial Standard Level 3 as the standard for certain three phase liquid-immersed distribution transformers, with a commensurate standard for certain single phase liquid-immersed distribution transformers. To ascertain whether the more stringent standard would adversely impact competition, we have evaluated the comments DOE received in response to the NODA, which had stated DOE was contemplating Trial Standard Level 2 or 3 for three phase liquid-immersed distribution transformers. We have also conducted industry interviews. Based on this review, we have concluded that the proposed final rule's application of Trial Standard Level 3 to certain three phase liquid-filled distribution transformers and the comparable standard to certain single phase liquid-filled distribution transformers would not adversely affect competition. In conclusion, the Antitrust Division does not believe the proposed final rule would adversely affect competition.

Yours sincerely, 

# bQ&alAf1,cs^e^

Deborah A. Garza Acting Assistant Attorney General

Page 2 ("NODA") issued by DOE earlier this year that discussed standards DOE was considering, and comments DOE received regarding the NODA.

In November of2006, you requested DOJ's views regarding the NOPR, which proposed Trial Standard Level 2. By letter dated January 16,2007, we responded that, based on our inquiry, we were concerned that the distributortransfonner standard might adversely affect competition withrespect to distribution transformers used in industries, such as underground coal mining, where physical conditions limit the size ofequipment that canbe effectively utilized. We urged DOE to consider creating an exception for distribution transformers used in industries with space constraints.

You have addressed our concern by establishing a separate product class for underground mining transformers and excluding that class from the proposed final rule. Although our January 16, 2007 letter did not limit our concern to l.mderground mining transformers, we believe DOE's decisionto exclude underground mining transfonners from the proposed final rule adequately addresses our concern.
Ourreview oftheNOPR was limited to the impact ofTrial Standard Level 2 on competition. The proposed final rule would establish a more stringent standard than Trial Standard Level 2 for certain distribution transformers. Specifically, it establishes Trial Standard Level 3 as the standard for certainthree phase liquid-immersed distribution transformers, with a commensurate standard for certain single phase liquid-immersed distribution transformers. To ascertain whether the more stringent standard would adversely impact competition, we have evaluatedthe comments DOE received inresponse to the NODA, whichhad stated DOE was contemplating Trial Standard Level 2 or 3 for three phase liquid-immersed distribution transformers. We have also conducted industry interviews. Based on this review, we have concluded that the proposed final rule's application ofTrial Standard Level 3 to certain three phase liquid-filled distributiontransformers and the comparable standard to certain singlephase liquid-filled distribution transformers would not adversely affect competition.

In conclusion, the AntitmstDivision does not believe theproposed fmal rule would adversely affect competition.

Yours sincerely,

# ~m.\,t 

# A,6aea '<1Uc

DeborahA. Garza Acting Assistant Attorney General

Page 2 ("NODA") issued by DOE earlier this year that discussed standards DOE was considering, and comments DOE received regarding the NODA.

In November of2006, you requested DOJ's views regarding the NOPR, which proposed Trial Standard Level 2. By letter dated January 16,2007, we responded that, based on our inquiry, we were concerned that the distributortransfonner standard might adversely affect competition withrespect to distribution transformers used in industries, such as underground coal mining, where physical conditions limit the size ofequipment that canbe effectively utilized. We urged DOE to consider creating an exception for distribution transformers used in industries with space constraints.

You have addressed our concern by establishing a separate product class for underground mining transformers and excluding that class from the proposed final rule. Although our January 16, 2007 letter did not limit our concern to l.mderground mining transformers, we believe DOE's decisionto exclude underground mining transfonners from the proposed final rule adequately addresses our concern.
Ourreview oftheNOPR was limited to the impact ofTrial Standard Level 2 on competition. The proposed final rule would establish a more stringent standard than Trial Standard Level 2 for certain distribution transformers. Specifically, it establishes Trial Standard Level 3 as the standard for certainthree phase liquid-immersed distribution transformers, with a commensurate standard for certain single phase liquid-immersed distribution transformers. To ascertain whether the more stringent standard would adversely impact competition, we have evaluatedthe comments DOE received inresponse to the NODA, whichhad stated DOE was contemplating Trial Standard Level 2 or 3 for three phase liquid-immersed distribution transformers. We have also conducted industry interviews. Based on this review, we have concluded that the proposed final rule's application ofTrial Standard Level 3 to certain three phase liquid-filled distributiontransformers and the comparable standard to certain singlephase liquid-filled distribution transformers would not adversely affect competition.

In conclusion, the AntitmstDivision does not believe theproposed fmal rule would adversely affect competition.

Yours sincerely,

# ~m.\,t 

# A,6aea '<1Uc

DeborahA. Garza Acting Assistant Attorney General

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