. /' 

441 G St. N.W. 

Washington, DC 20548 

8-325919 

June 13, 2014 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

The Honorable Mary L. Landrieu 

Chair 

The Honorable Lisa Murkowski 

Ranking Member 

Committee on Energy and Natural Resources 

United States Senate 

The Honorable Fred Upton 

Chairman 

The Honorable Henry A Waxman 

Ranking Member 

Committee on Energy and Commerce 

House of Representatives 

Subject: Department of Energy: Energy Conservation Program: Energy Conservation Standards for 

Commercial and Industrial Electric Motors 

Pursuant to section 801 (a)(2)(A) of title 5, United States Code, this is our report on a major rule 

promulgated by the Department of Energy (Energy) entitled "Energy Conservation Program: Energy 

Conservation Standards for Commercial and Industrial Electric Motors" (RIN: 1904-AC28). We received 

the rule on May 29, 2014. It was published in the Federal Register as a final rule on May 29, 2014, with a 

stated effective date of July 28, 2014. 79 Fed. Reg. 30,934. 

The final rule establishes energy conservation standards for a number of different groups of electric 

motors that Energy has not previously regulated. For those groups of electric motors currently regulated, 

this rulemaking would maintain the current energy conservation standards for some electric motor types 

and amend the energy conservation standards for other electric motor types. Energy determined that the 

new and amended energy conservation standards for this equipment would result in significant 

conservation of energy and are technologically feasible and economically justified. 

Enclosed is our assessment of Energy's compliance with the procedural steps required by section 

801 (a)(1 )(B)(i) through (iv) of title 5 with respect to the rule. Our review of the procedural steps taken 

indicates that Energy complied with the applicable requirements. 

If you have any questions about this report or wish to contact GAO officials responsible for the evaluation 

work relating to the subject matter of the rule, please contact Shirley A Jones, Assistant General 

Counsel, at (202) 512-8156. 

£~o~~ Robert J. Cramer 

Managing Associate General Counsel 

Enclosure 

cc: Daniel Cohen 

Assistant General Counsel for Legislation, 

Regulation and Energy Efficiency 

Department of Energy 

GA0-14-669R 
REPORT UNDER 5 U.S.C. § 801 (a)(2)(A) ON A MAJOR RULE 

ISSUED BY THE 

DEPARTMENT OF ENERGY 

ENTITLED 

"ENERGY CONSERVATION PROGRAM: 

ENERGY CONSERVATION STANDARDS FOR 

COMMERCIAL AND INDUSTRIAL ELECTRIC MOTORS" 

(RIN: 1904-AC28) 

(i) Cost-benefit analysis 

ENCLOSURE 

The Department of Energy (Energy) discussed the costs and benefits of this final rule. Energy 

calculated that the weighted average life cycle cost savings for consumers of the three 

equipment class groups covered by this rule are $160, $53, and none (because the standard 

level is the same as the baseline and, thus, no customers are affected), respectively. The 

weighted median payback periods for the three groups are 2.9 years, 4.5 years, and none. 

Energy also calculated the impact on manufacturers. Using a real discount rate of 9.1 percent, 

Energy estimated that the industry net present value (INPV) for manufacturers of electric motors 

is $3,478 million. Under the standards in this rule, Energy expects that manufacturers may lose 

up to 10.0 percent of their INPV, approximately $348 million. Additionally, Energy does not 

expect any plant closings or significant loss of employment based on the energy conservation 

standards in this rule. 

Energy also estimated the national benefits and costs of this final rule. For electric motors 

shipped in 2016 to 2045, Energy estimates that the present value of the total national economic 

benefits is $30.9 billion using a 7 percent discount rate and $54.4 billion using a 3 percent 

discount rate. Energy further estimates that the present value of the total national costs is $6.9 

billion using a 7 percent discount rate and $12.5 billion using a 3 percent discount rate. In 

addition to its present value estimates, Energy also calculated annualized benefits and costs of 

this rule. Using a 7 percent discount rate for benefits and costs other than C02 reduction (for 

which Energy used a 3 percent discount rate along with the average social cost of carbon series 

(SCC) that uses a 3 percent discount rate) the cost of the standards in this rule is $517 million 

per year in increased equipment costs (incremental installed costs), while the estimated benefits 

are $1,367 million per year in reduced equipment operating costs, $614 million in C02 emission 

reductions, and $23.3 million in reduced NOx emissions. In this case, the net benefits would 

amount to $1,488 million per year. Using a 3 percent discount rate for all benefits and costs and 

the average SCC series, the estimated cost of the standards in this rule is $621 million per year 

in increased equipment costs, while the estimated benefits are $2,048 million per year in 

reduced operating costs, $614 million in C02 emission reductions, and $32.9 million in reduced 

NOx emissions. In this case, the net benefit would amount to approximately $2,074 million per 

year. 

(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA). 5 U.S.C. §§ 603-605, 607, 

and 609 

Energy prepared a final regulatory flexibility analysis for this final rule. The analysis included 

(1) a description and estimated number of small entities regulated; (2) a description and 

estimate of compliance requirements; (3) any duplication, overlap, or conflict with other rules 

and regulations; and (4) significant alternatives to the rule. 

GA0-14-669R 
(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995. 

2 U.S.C. §§ 1532-1535 

Energy has concluded that this final rule would likely require expenditures of $100 million or 

more. Such expenditures may include investment in research and development and in capital 

expenditures by electric motor manufacturers in the years between the final rule and the 

compliance date for the new standards, and incremental additional expenditures by consumers 

to purchase higher-efficiency electric motors, starting at the compliance date for the applicable 

standard. Energy stated that this final rule establishes energy conservation standards for 

electric motors that are designed to achieve the maximum improvement in energy efficiency that 

Energy has determined to be both technologically feasible and economically justified. 

(iv) Other relevant information or requirements under acts and executive orders 

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. 

On September 28, 2010, Energy published a framework document for this rulemaking. 75 Fed. 

Reg. 59,657. In response to public comments, on March 30, 2011, Energy published a Request 

for Information (RFI) seeking public comments from interested parties regarding establishment 

of energy conservation standards for several types of definite and special purpose motors. 76 

Fed. Reg. 17,577. On July 23, 2012, Energy published a preliminary analysis notice of 

availability. 77 Fed. Reg. 43,015. Comments on these items were addressed in the notice of 

proposed rulemaking Energy published on December 6, 2013. 78 Fed. Reg. 73,589. Energy 

received comments on the proposed rule, to which they responded in this final rule. 

Paperwork Reduction Act (PRA}, 44 U.S.C. §§ 3501-3520 

Energy determined that this final rule contains an information collection requirement under the 

Act. This requirement has been approved by the Office of Management and Budget (OMB) 

under OMB control number 1910-1400. Energy estimates that the public reporting burden for 

the certification will average 20 hours per response, including the time for reviewing instructions, 

searching existing data sources, gathering and maintaining the data needed, and completing 

and reviewing the collection of information. 

Statutory authorization for the rule 

Energy promulgated this final rule under the authority of sections 6291 to 6317 of title 42, United 

States Code. 

Executive Order Nos. 12,866 and 13,563 (Regulatory Planning and Review) 

Energy determined that this final rule is significant under the Order, and it has been reviewed by 

OMB. 

Executive Order No. 13, 132 (Federalism) 

On March 14, 2000, Energy published a statement of policy describing the intergovernmental 

consultation process it would follow in the development of these regulations. 65 Fed. Reg. 

13, 735. The Energy and Conservation Act of 1975 (EPCA) governs and prescribes federal 

preemption of state regulations as to energy conservation for the equipment that is the subject 

this final rule. States can petition Energy for exemption from such preemption to the extent, and 

based on criteria, set forth in EPCA. 42 U.S.C. § 6297. Energy determined that no further 

action is required by the Order. 

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