[Federal Register Volume 80, Number 63 (Thursday, April 2, 2015)]
[Proposed Rules]
[Pages 17826-17892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-06947]



[[Page 17825]]

Vol. 80

Thursday,

No. 63

April 2, 2015

Part II





 Department of Energy





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10 CFR Parts 429 and 431





 Energy Conservation Program: Energy Conservation Standards for Pumps; 
Proposed Rules

Federal Register / Vol. 80 , No. 63 / Thursday, April 2, 2015 / 
Proposed Rules

[[Page 17826]]


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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2011-BT-STD-0031]
RIN 1904-AC54


Energy Conservation Program: Energy Conservation Standards for 
Pumps

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

ACTION: Notice of proposed rulemaking (NOPR) and public meeting.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, sets forth a variety of provisions designed to improve energy 
efficiency. Part C of Title III, which for editorial reasons was re-
designated as Part A-1 upon incorporation into the U.S. Code, 
establishes the ``Energy Conservation Program for Certain Industrial 
Equipment.'' The covered equipment includes pumps. In this document, 
DOE proposes to establish new energy conservation standards for pumps 
and announces a public meeting to receive comment on these proposed 
standards and associated analyses and results.

DATES: 
    Meeting: DOE will hold a public meeting on Wednesday, April 29, 
2015, from 2 p.m. to 5 p.m., in Washington, DC. The meeting will also 
be broadcast as a webinar. See section VIII Public Participation for 
webinar registration information, participant instructions, and 
information about the capabilities available to webinar participants.
    Comments: DOE will accept comments, data, and information regarding 
this notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than June 1, 2015. See section VIII Public 
Participation for details.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at 
(202) 586-2945. Persons can attend the public meeting via webinar. For 
more information, refer to the Public Participation section near the 
end of this NOPR.
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards for pumps, and provide docket number EE-2011-BT-
STD-0031 and/or regulatory information number (RIN) number 1904-AC54. 
Comments may be submitted using any of the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: <a href="/cdn-cgi/l/email-protection#b8e8cdd5c8cb8a888989ebecfc88888b89f8dddd96dcd7dd96dfd7ce"><span class="__cf_email__" data-cfemail="0757726a777435373636545343373734364762622963686229606871">[email protected]</span></a> . Include the docket number 
and/or RIN in the subject line of the message.
    3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building 
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW., 
Washington, DC, 20585-0121. If possible, please submit all items on a 
CD. It is not necessary to include printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC, 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
<a href="/cdn-cgi/l/email-protection#2e6d464f4a717d717946475a4b434f406e41434c004b415e00494158"><span class="__cf_email__" data-cfemail="94d7fcf5f0cbc7cbc3fcfde0f1f9f5fad4fbf9f6baf1fbe4baf3fbe2">[email protected]</span></a>.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VIII of this 
document (Public Participation).
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at regulations.gov. All 
documents in the docket are listed in the regulations.gov index. 
However, some documents listed in the index, such as those containing 
information that is exempt from public disclosure, may not be publicly 
available.
    A link to the docket Web page can be found at: www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0031. This Web page will contain a 
link to the docket for this NOPR on the regulations.gov site. The 
regulations.gov Web page will contain simple instructions on how to 
access all documents, including public comments, in the docket. See 
section VIII for further information on how to submit comments through 
www.regulations.gov.
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
<a href="/cdn-cgi/l/email-protection#4b09392e252f2a650e2f3c2a392f380b2e2e652f242e652c243d"><span class="__cf_email__" data-cfemail="0644746368626728436271677462754663632862696328616970">[email protected]</span></a>.

FOR FURTHER INFORMATION CONTACT: John Cymbalsky, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Program, EE-5B, 1000 Independence Avenue SW., Washington, 
DC, 20585-0121. Telephone: (202) 287-1692. Email: <a href="/cdn-cgi/l/email-protection#7404011904073411115a101b115a131b02"><span class="__cf_email__" data-cfemail="5c2c29312c2f1c393972383339723b332a">[email protected]</span></a>.
    Elizabeth Kohl, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC, 20585-
0121. Telephone: (202) 586-9507. Email: <a href="/cdn-cgi/l/email-protection#f1b49d988b9093948599dfba9e999db19980df959e94df969e87"><span class="__cf_email__" data-cfemail="8acfe6e3f0ebe8effee2a4c1e5e2e6cae2fba4eee5efa4ede5fc">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits
II. Introduction
    A. Authority
    B. Background
    C. Relevant Industry Sectors
III. General Discussion
    A. Rulemaking Approach
    1. Harmonization
    2. Regulatory Options
    B. Definition of Covered Equipment
    C. Scope of the Energy Conservation Standards in This Rulemaking
    D. Test Procedure and Metric
    1. PER Rating of a Minimally Compliant Pump
    E. Compliance Date
    F. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    G. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    H. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared To Increase in Price
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Comments
    A. Market and Technology Assessment
    1. Equipment Classes
    2. Scope of Analysis and Data Availability
    a. Radially Split, Multi-Stage, Vertical, In-Line, Diffuser 
Casing (RSV)
    b. Vertical Turbine Submersible (VTS).1800
    3. Technology Assessment
    a. General Discussion of Technology Options
    b. Additional Technology Options
    c. Applicability of Technology Options To Reduced Diameter 
Impellers

[[Page 17827]]

    d. Elimination of Technology Options Due to Low Energy Savings 
Potential
    B. Screening Analysis
    1. Screened Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Representative Equipment for Analysis
    a. Representative Configuration Selection
    b. Baseline Configuration
    2. Design Options
    3. Available Energy Efficiency Improvements
    4. Efficiency Levels Analyzed
    a. Maximum Technologically Feasible Levels
    5. Manufacturers Production Cost Assessment Methodology
    a. Changes in MPC Associated With Hydraulic Redesign
    b. Manufacturer Production Cost (MPC) Model
    6. Product and Capital Conversion Costs
    7. Manufacturer Markup Analysis
    a. Industry-Average Markups
    b. Individual Manufacturer Markup Structures
    c. Industry-Wide Markup Structure
    8. MSP-Efficiency Relationship
    D. Markups Analysis
    E. Energy Use Analysis
    1. Duty Point
    2. Pump Sizing
    3. Operating Hours
    4. Load Profiles
    5. Equipment Losses
    F. Life-Cycle Cost and Payback Period Analysis
    1. Approach
    2. Life-Cycle Cost Inputs
    a. Equipment Prices
    b. Installation Costs
    c. Annual Energy Use
    d. Electricity Prices
    e. Maintenance Costs
    f. Repair Costs
    g. Equipment Lifetime
    h. Discount Rates
    3. Payback Period
    4. Rebuttable-Presumption Payback Period
    G. Shipments Analysis
    H. National Impact Analysis
    1. Approach
    a. National Energy Savings
    b. Net Present Value
    2. Base-Case and Standards-Case Distribution of Efficiencies
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis
    a. GRIM Key Inputs
    b. GRIM Scenarios
    3. Manufacturer Interviews
    a. Alignment With European Union Energy Efficiency Standards
    b. Pattern Production and Engineering Constraints
    c. Conversion Requirements
    d. Exclusion of Specific Pump Types
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    2. Valuation of Other Emissions Reductions
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results
    A. Trial Standard Levels
    1. Trial Standard Level Formulation Process and Criteria
    2. Trial Standard Level Equations
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Commercial Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Impacts on Direct Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Equipment
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    C. Proposed Standards
    1. Benefits and Burdens of Trial Standard Levels Considered for 
Pumps
    2. Summary of Benefits and Costs (Annualized) of the Proposed 
Standards
VI. Labeling and Certification Requirements
    A. Labeling
    B. Certification Requirements
    1. Certification Report Requirements
    2. Definition of Manufacturer
    C. Enforcement Provisions
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. `Description and Estimated Number of Small Entities Regulated
    2. Description and Estimate of Compliance Requirements
    3. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    4. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VIII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
IX. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

    The proposed standards for pumps (collectively, ``pumps'') set 
forth in today's rule reflect the consensus of a stakeholder 
negotiation. A working group was established under the Appliance 
Standards and Rulemaking Federal Advisory Committee (ASRAC) in 
accordance with the Federal Advisory Committee Act (FACA) and the 
Negotiated Rulemaking Act (NRA). (5 U.S.C. App. 2; 5 U.S.C. 561-570, 
Pub. L. 104-320.) The purpose of the working group was to discuss and, 
if possible, reach consensus on proposed standards for pump energy 
efficiency. On June 19, 2014, the working group successfully reached 
consensus on proposed energy conservation standards for specific 
rotodynamic, clean water pumps used in a variety of commercial, 
industrial, agricultural, and municipal applications. See section II.B 
for further discussion of the working group, section II.C for the 
industry sectors covered, and section III.C for a description of the 
relevant pumps.
    DOE's proposed standards, which are consistent with the working 
group recommendations, are shown in Table I.1 and consist of pump 
energy index (PEI) values. Under the proposed standards, a pump model 
would be compliant if its PEI rating is less than or equal to the 
proposed standard. PEI is defined as the pump efficiency rating (PER) 
for a given pump model (at full impeller diameter), divided by a 
calculated minimally compliant PER for the given pump model. PER is 
defined as a weighted average of the electric input power supplied to 
the pump over a specified load profile, represented in units of 
horsepower (hp).
    The minimally compliant PER is unique to each pump model and is a 
function of specific speed (a dimensionless index describing the 
geometry of the pump) and each pump model's flow at best efficiency 
point (BEP), as well as a specified C-value. A C-value is the 
translational component of a three-dimensional polynomial equation that 
describes the attainable hydraulic efficiency of pumps as a function of 
flow at BEP, specific speed, and C-value. Thus, when a C-value is used 
to define an efficiency level, that efficiency level can be considered 
equally attainable across the full scope of flow and specific speed 
encompassed by this proposed rule.
    A certain percentage of pumps currently on the market will not meet 
each efficiency level. That percentage can be referred to as the 
efficiency percentile. For example, if 10% of the

[[Page 17828]]

pumps on the market do not meet a specified efficiency level, that 
efficiency level represents the lower 10th percentile of efficiency. 
The efficiency percentile is an effective descriptor of the impact of a 
selected efficiency level (selected C-value) on the current market.
    The C-values proposed by DOE in Table I.1 correspond to the lower 
25th percentile of efficiency for End Suction Close-Coupled (ESCC), End 
Suction Frame Mounted/Own Bearings (ESFM), In-line (IL), and Vertical 
Turbine Submersible (VTS) equipment classes. The C-values for the 
radially split, multi-stage, vertical, in-line, diffuser casing (RSV) 
equipment class were targeted to harmonize with the standards recently 
enacted in the European Union,\1\ as models in the RSV equipment class 
are known to be global platforms with no differentiation between 
products sold into the United States and European Union markets.\2\ 
Section III.D describes the PEI metric in further detail.
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    \1\ Council of the European Union. 2012. Commission Regulation 
(EU) No 547/2012 of 25 June 2012 implementing Directive 2009/125/EC 
of the European Parliament and of the Council with regard to 
ecodesign requirements for water pumps. Official Journal of the 
European Union. L 165, 26 June 2012, pp. 28-36.
    \2\ Market research, limited confidential manufacturer data, and 
direct input from the CIP working group indicate that RSV models 
sold in the United States market are global platforms with hydraulic 
designs equivalent to those in the European market.
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    These proposed standards, if adopted, would apply to all equipment 
listed in Table I.1 and manufactured in, or imported into, the United 
States on or after the date four years after the publication of any 
final rule for this rulemaking.

                           Table I.1--Proposed Energy Conservation Standards for Pumps
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                                                         Proposed standard      Efficiency
                   Equipment class *                       level ** (PEI)       percentile     Proposed C-values
----------------------------------------------------------------------------------------------------------------
ESCC.1800.CL...........................................               1.00                 25             128.47
ESCC.3600.CL...........................................               1.00                 25             130.42
ESCC.1800.VL...........................................               1.00                 25             128.47
ESCC.3600.VL...........................................               1.00                 25             130.42
ESFM.1800.CL...........................................               1.00                 25             128.85
ESFM.3600.CL...........................................               1.00                 25             130.99
ESFM.1800.VL...........................................               1.00                 25             128.85
ESFM.3600.VL...........................................               1.00                 25             130.99
IL.1800.CL.............................................               1.00                 25             129.30
IL.3600.CL.............................................               1.00                 25             133.84
IL.1800.VL.............................................               1.00                 25             129.30
IL.3600.VL.............................................               1.00                 25             133.84
RSV.1800.CL............................................               1.00         [dagger] 0             129.63
RSV.3600.CL............................................               1.00         [dagger] 0             133.20
RSV.1800.VL............................................               1.00         [dagger] 0             129.63
RSV.3600.VL............................................               1.00         [dagger] 0             133.20
VTS.1800.CL............................................               1.00                 25             134.13
VTS.3600.CL............................................               1.00                 25             134.13
VTS.1800.VL............................................               1.00                 25             134.13
VTS.3600.VL............................................               1.00                 25             134.13
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* Equipment class designations consist of a combination (in sequential order separated by periods) of: (1) An
  equipment family (ESCC = end suction close-coupled, ESFM = end suction frame mounted, IL = inline, RSV =
  radially split, multi-stage, vertical, in-line, diffuser casing, VTS = vertical turbine submersible); (2) a
  nominal design speed (1800 = 1800 revolutions per minute (rpm), 3600 = 3600 rpm); and (3) an operating mode
  (CL = constant load, VL = variable load). For example, ``ESCC.1800.CL'' refers to the ``end suction close-
  coupled, 1,800 rpm, constant load'' equipment class. See discussion in chapter 5 of the NOPR technical support
  document (TSD) for a more detailed explanation of the equipment class terminology.
** A pump model is compliant if its PEI rating is less than or equal to the proposed standard.
[dagger] The standard level for RSV was set at a level that harmonized with the current European Union energy
  conservation standard level. See discussion in section IV.A.2.a for more detail regarding matters related to
  harmonization.

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of pumps, as measured by the average 
life-cycle cost (LCC) savings and the simple payback period (PBP).\3\ 
The average LCC savings are positive for all equipment classes for 
which consumers would be impacted by the proposed standards \4\ and the 
PBP is less than the average lifetime of pumps, which is estimated to 
range between 11 and 23 years depending on equipment class, with an 
average of 15 years (see section IV.F.2.g).
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    \3\ The average LCC savings are measured relative to the base-
case efficiency distribution, which depicts the market in the 
compliance year (see section IV.H.2). The simple PBP, which is 
designed to compare specific pump efficiency levels, is measured 
relative to the baseline model (see section IV.C.1.b).
    \4\ DOE also calculates a distribution of LCC savings; the 
percentage of consumers that would have negative LCC savings (net 
cost) under the proposed standards is shown in section V.B.1.a.

     Table I.2--Impacts of Proposed Energy Conservation Standards on
                           Consumers of Pumps
------------------------------------------------------------------------
                                       Average LCC       Simple payback
          Equipment class            savings (2013$)     period (years)
------------------------------------------------------------------------
ESCC.1800.........................               $164                2.2
ESCC.3600.........................                 92                1.0
ESFM.1800.........................                173                2.8
ESFM.3600.........................                547                0.8

[[Page 17829]]

 
IL.1800...........................                149                2.8
IL.3600...........................                139                1.9
RSV.1800..........................                N/A                N/A
RSV.3600..........................                N/A                N/A
VTS.1800..........................                N/A                N/A
VTS.3600..........................                7.2                4.2
------------------------------------------------------------------------
Notes: DOE relied on available data for bare pumps with no information
  on configuration. Therefore, DOE conducted analysis at the level of
  equipment type and nominal design speed only. DOE is proposing
  identical standards for both CL and VL equipment classes. Economic
  results are not presented for RSV classes because the proposed
  standard is at the baseline. For the VTS.1800 class, which has a small
  market share, DOE [did not conduct a separate analysis for this class
  and is instead proposing to adopt the same levels as for the VTS.3600
  class.

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year of the manufacturer 
impacts analysis through the end of the analysis period (2015 to 2049). 
Using a real discount rate of 11.8 percent,\5\ DOE estimates that INPV 
for manufacturers of pumps is $121.4 million in 2013$ for the base 
case. Under the proposed standards, DOE expects that INPV will change 
by -32.5 percent to 6.9 percent. Industry conversion costs total $78.4 
million.
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    \5\ DOE estimated draft financial metrics, including the 
industry discount rate, based on data from Securities and Exchange 
Commission (SEC) filings. DOE presented the draft financial metrics 
to manufacturers in MIA interviews and adjusted those values based 
on feedback from industry. The complete set of financial metrics and 
more detail about the methodology can be found in section 12.4.3 of 
TSD chapter 12.
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C. National Benefits \6\
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    \6\ All monetary values in this section are expressed in 2013 
dollars and are discounted to 2015.
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    DOE's analyses indicate that the proposed standards would save a 
significant amount of energy. The lifetime savings for pumps purchased 
in the 30-year period that begins in the first full year of compliance 
\7\ with new standards (2020-2049) amount to 0.28 quadrillion Btu 
(quads).\8\ This is a savings of one percent relative to the energy use 
of this equipment in the base case without new standards.
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    \7\ In this case, the compliance date of any final standards is 
estimated to be very late 2019, so the analysis period begins in 
2020.
    \8\ A quad is equal to 10\15\ British thermal units (Btu).
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    The cumulative net present value (NPV) of total consumer costs and 
savings of the proposed standards for pumps ranges from $0.41 billion 
(at a 7-percent discount rate) to $1.11 billion (at a 3-percent 
discount rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased equipment costs 
for equipment purchased in 2020-2049.
    In addition, the proposed standards would have significant 
environmental benefits. The energy savings would result in cumulative 
emission reductions of 16 million metric tons (Mt) \9\ of carbon 
dioxide (CO<INF>2</INF>), 77 thousand tons of methane (CH<INF>4</INF>), 
13 thousand tons of sulfur dioxide (SO<INF>2</INF>), 25 thousand tons 
of nitrogen oxides (NO<INF>X</INF>), 0.23 thousand tons of nitrous 
oxide (N<INF>2</INF>O), and 0.04 tons of mercury (Hg).\10\ The 
cumulative reduction in CO<INF>2</INF> emissions through 2030 amounts 
to 2.5 Mt, which is equivalent to the emissions associated with the 
annual electricity use of 0.36 million homes.
---------------------------------------------------------------------------

    \9\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO<INF>2</INF> are presented in short tons.
    \10\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook 2014 (AEO 2014) Reference case, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2013.
---------------------------------------------------------------------------

    The value of the CO<INF>2</INF> reductions is calculated using a 
range of values per metric ton of CO<INF>2</INF> (otherwise known as 
the Social Cost of Carbon, or SCC) developed by a recent Federal 
interagency process.\11\ The derivation of the SCC values is discussed 
in section IV.L. Using discount rates appropriate for each set of SCC 
values, DOE estimates the present monetary value of the CO<INF>2</INF> 
emissions reduction is between $0.11 billion and $1.6 billion. DOE also 
estimates the present monetary value of the NO<INF>X</INF> emissions 
reduction, is $13 million at a 7-percent discount rate and $30 million 
at a 3-percent discount rate.\12\
---------------------------------------------------------------------------

    \11\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866. Interagency 
Working Group on Social Cost of Carbon, United States Government. 
May 2013; revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
    \12\ DOE is currently investigating valuation of avoided Hg and 
SO<INF>2</INF> emissions.
---------------------------------------------------------------------------

    Table 1.3 summarizes the national economic costs and benefits 
expected to result from the proposed standards for pumps.

 Table I.3--Summary of National Economic Benefits and Costs of Proposed
                Energy Conservation Standards for Pumps *
------------------------------------------------------------------------
                                      Present value
             Category                (billion 2013$)   Discount rate (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings............                0.6                  7
                                                  1.4                  3
CO2 Reduction Monetized Value                     0.1                  5
 ($12.0/t case) **................
CO2 Reduction Monetized Value                     0.5                  3
 ($40.5/t case) **................
CO2 Reduction Monetized Value                     0.8                2.5
 ($62.4/t case) **................
CO2 Reduction Monetized Value                     1.6                  3
 ($119/t case) **.................

[[Page 17830]]

 
NOX Reduction Monetized Value (at                0.01                  7
 $2,684/ton) **...................               0.03                  3
                                   -------------------------------------
    Total Benefits [dagger].......                1.1                  7
                                                  1.9                  3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Incremental Installed Costs.......                0.2                  7
                                                  0.3                  3
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction                     0.9                  7
 Monetized Value [dagger].........                1.6                  3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with pumps
  shipped in 2020-2049. These results include benefits to consumers
  accruing after 2049 from equipment purchased in 2020-2049. The results
  account for the incremental variable and fixed costs incurred by
  manufacturers from the standard, some of which may be incurred in
  preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in
  2013$, in 2015 under several scenarios of the updated SCC values. The
  first three cases use the averages of SCC distributions calculated
  using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate. The SCC time series incorporate an
  escalation factor.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
  the series corresponding to average SCC with 3-percent discount rate
  ($40.5/t case).

    The benefits and costs of today's proposed standards, for equipment 
sold in 2020-2049, can also be expressed in terms of annualized values. 
The annualized monetary values are the sum of (1) the annualized 
national economic value of the benefits from consumer operation of 
equipment that meets the new or amended standards (consisting primarily 
of operating cost savings from using less energy, minus increases in 
equipment purchase and installation costs, which is another way of 
representing consumer NPV), and (2) the annualized monetary value of 
the benefits of emission reductions, including CO<INF>2</INF> emission 
reductions.\13\
---------------------------------------------------------------------------

    \13\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total customer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2015. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO<INF>2</INF> reductions, for which DOE used case-specific discount 
rates, as shown in Table I.3. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year, that yields the same present value.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO<INF>2</INF> emission reductions provides a useful perspective, two 
issues should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions, whereas the value of CO<INF>2</INF> reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO<INF>2</INF> savings are performed with different methods 
that use different time frames for analysis. The national operating 
cost savings is measured for the lifetime of pumps shipped in 2020-
2049. The SCC values, on the other hand, reflect the present value of 
some future climate-related impacts resulting from the emission of one 
ton of carbon dioxide in each year. These impacts continue well beyond 
2100.
    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.4. The results under the primary 
estimate are as follows. Using a 7-percent discount rate for benefits 
and costs other than CO<INF>2</INF> reduction, for which DOE used a 3-
percent discount rate along with the average SCC series that has a 
value of $40.5/t in 2015, the cost of the standards proposed in today's 
rule is $16.9 million per year in increased equipment costs, while the 
benefits are $60 million per year in reduced equipment operating costs, 
$29 million in CO<INF>2</INF> reductions, and $1.3 million in reduced 
NO<INF>X</INF> emissions. In this case, the net benefit amounts to $73 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the average SCC series that has a value of $40.5/t in 2015, 
the cost of the standards proposed in today's rule is $17.5 million per 
year in increased equipment costs, while the benefits are $81 million 
per year in reduced operating costs, $29 million in CO<INF>2</INF> 
reductions, and $1.7 million in reduced NO<INF>X</INF> emissions. In 
this case, the net benefit amounts to $94 million per year.

                              Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Pumps
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Million 2013$/year
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                        Low net benefits estimate  High net benefits estimate
                                                                          Primary  estimate *                  *                           *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings............  7%..............................  60........................  54........................  67.
                                    3%..............................  81........................  72........................  93.
CO2 Reduction Monetized Value       5%..............................  8.........................  8.........................  9.
 ($12.0/t case) *.

[[Page 17831]]

 
CO2 Reduction Monetized Value       3%..............................  29........................  27........................  31.
 ($40.5/t case) *.
CO2 Reduction Monetized Value       2.5%............................  42........................  39........................  46.
 ($62.4/t case) *.
CO2 Reduction Monetized Value       3%..............................  89........................  83........................  97.
 ($119/t case) *.
NOX Reduction Monetized Value (at   7%..............................  1.3.......................  1.3.......................  1.4.
 $2,684/ton) **.                    3%..............................  1.7.......................  1.6.......................  1.9.
Total Benefits [dagger]...........  7% plus CO2 range...............  69 to 150.................  63 to 138.................  78 to 166.
                                    7%..............................  90........................  82........................  100.
                                    3% plus CO2 range...............  91 to 172.................  81 to 156.................  104 to 192.
                                    3%..............................  112.......................  100.......................  126.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Equipment      7%..............................  16.9......................  18.6......................  17.2.
 Costs.                             3%..............................  17.5......................  19.5......................  17.7.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger]....................  7% plus CO2 range...............  53 to 133.................  44 to 119.................  61 to 148.
                                    7%..............................  73........................  63........................  83.
                                    3% plus CO2 range...............  74 to 155.................  62 to 136.................  86 to 174.
                                    3%..............................  94........................  80........................  108.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with pumps shipped in 2020-2049. These results include benefits to consumers which
  accrue after 2049 from the products purchased in 2020-2049. The results account for the incremental variable and fixed costs incurred by manufacturers
  due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize
  projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental equipment costs
  reflect a constant rate in the Primary Estimate, an increase rate in the Low Benefits Estimate, and a decline rate in the High Benefits Estimate. The
  methods used to derive projected price trends are explained in section IV.F.2.a.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three
  cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.5/t
  case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO2 values.

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. DOE further notes that equipment 
achieving these standard levels is already commercially available for 
all equipment classes covered by today's proposal. Based on the 
analyses described above, DOE has tentatively concluded that the 
benefits of the proposed standards to the nation (energy savings, 
positive NPV of consumer benefits, consumer LCC savings, and emission 
reductions) would outweigh the burdens (loss of INPV for manufacturers 
and LCC increases for some consumers).
    DOE also considered higher and lower energy efficiency levels as 
trial standard levels, and is still considering them in this 
rulemaking. However, DOE has tentatively concluded that the potential 
burdens of these energy efficiency levels would outweigh the projected 
benefits. Based on consideration of the public comments DOE receives in 
response to this notice and related information collected and analyzed 
during the course of this rulemaking, DOE may adopt energy efficiency 
levels presented in this notice that are either higher or lower than 
the proposed standards, or some combination of level(s) that 
incorporate the proposed standards in part.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying today's proposal, as well as some of the relevant historical 
background related to the establishment of standards for pumps.

A. Authority

    Title III of the Energy Policy and Conservation Act of 1975 
``EPCA''), Public Law 94-163, codified at 42 U.S.C. 6291 et seq., sets 
forth a variety of provisions designed to improve energy efficiency. 
Part C of Title III, which for editorial reasons was re-designated as 
Part A-1 upon incorporation into the U.S. Code (42 U.S.C. 6311-6317, as 
codified), establishes the ``Energy Conservation Program for Certain 
Industrial Equipment.'' The covered equipment includes pumps, the 
subject of today's notice. (42 U.S.C. 6311(1)(A).) \14\ There are 
currently no energy conservation standards for pumps.
---------------------------------------------------------------------------

    \14\ All references to EPCA in this document refer to the 
statute as amended through the American Energy Manufacturing 
Technical Corrections Act of 2012, Public Law 112-210 (Dec. 18, 
2012).
---------------------------------------------------------------------------

    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to 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).) Furthermore, the new or amended 
standard must result in a significant conservation of energy. (42 
U.S.C. 6295(o)(3)(B) and 6316(a).)
    DOE's energy conservation program for covered equipment consists 
essentially of four parts: (1) Testing; (2) labeling; (3) the 
establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. Subject to certain criteria 
and conditions, DOE is required to develop test procedures to measure 
the energy efficiency, energy use, or

[[Page 17832]]

estimated annual operating cost of each covered product. (42 U.S.C. 
6314.) Manufacturers of covered equipment must use the prescribed DOE 
test procedure as the basis for certifying to DOE that their equipment 
comply with the applicable energy conservation standards adopted under 
EPCA and when making representations to the public regarding the energy 
use or efficiency of those products. (42 U.S.C. 6314(d).) Similarly, 
DOE must use these test procedures to determine whether the products 
comply with standards adopted pursuant to EPCA. Id. DOE has proposed a 
test procedure for pumps through a separate rulemaking. Any final test 
procedures would appear at title 10 of the Code of Federal Regulations 
(CFR) part 431.
    When setting standards for the equipment addressed by today's 
notice, EPCA prescribes specific statutory criteria for DOE to 
consider. See generally 42 U.S.C. 6313(a)(6)(A)-(C), 6295(o), and 
6316(a). As indicated previously, any new or amended standard for 
covered equipment must be designed to achieve the maximum improvement 
in energy efficiency that is technologically feasible and economically 
justified. Furthermore, DOE may not adopt any standard that would not 
result in the significant conservation of energy. Moreover, DOE may not 
prescribe a standard: (1) For certain equipment, including pumps, if no 
test procedure has been established for the equipment, or (2) if DOE 
determines by rule that the proposed standard is not technologically 
feasible or economically justified. 42 U.S.C. 6295(o); 6316(a). In 
considering whether a proposed standard is economically justified, DOE 
must determine whether the benefits of the standard exceed its burdens. 
DOE must make this determination after receiving comments on the 
proposed standard, and by considering, to the greatest extent 
practicable, the following seven factors:
    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 products that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy, or as applicable, water, 
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 and water conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I) through (VII) and 6316(a).)
    The Secretary may not prescribe an amended or new standard if 
interested persons have established by a preponderance of the evidence 
that the standard is likely to result in the unavailability in the 
United States of any covered product- or equipment-type (or class) of 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as those 
generally available in the United States. (42 U.S.C. 6295(o)(4) and 
6316(a).)
    There is a rebuttable presumption that a standard is economically 
justified if the Secretary finds that the additional cost to the 
consumer of purchasing equipment complying with an energy conservation 
standard level will be less than three times the value of the energy 
savings during the first year that the consumer will receive as a 
result of the standard, as calculated under the applicable test 
procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a).)
    Additionally, EPCA specifies requirements when promulgating a 
standard for a type or class of covered equipment that has two or more 
subcategories. DOE must specify a different standard level than that 
which applies generally to such type or class of equipment for any 
group of covered equipment that have the same function or intended use 
if DOE determines that equipment within such group (A) consume a 
different kind of energy from that consumed by other covered equipment 
within such type (or class); or (B) have a capacity or other 
performance-related feature which other equipment within such type (or 
class) do not have and such feature justifies a higher or lower 
standard. (42 U.S.C. 6295(q)(1) and 6316(a).) In determining whether a 
performance-related feature justifies a different standard for a group 
of equipment, DOE must consider such factors as the utility to the 
consumer of the feature and other factors DOE deems appropriate. Any 
rule prescribing such a standard must include an explanation of the 
basis on which such higher or lower level was established. (42 U.S.C. 
6295(q)(2) and 6316(a).)
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a) through (c) and 6316(a).) DOE may, 
however, grant waivers of Federal preemption for particular State laws 
or regulations, in accordance with the procedures and other provisions 
set forth under 42 U.S.C. 6297(d).

B. Background

    DOE does not currently have a test procedure or energy conservation 
standards for pumps. In considering whether to establish standards for 
pumps, DOE issued a Request for Information (RFI) on June 13, 2011. (76 
FR 34192.) DOE received several comments in response to the RFI. In 
December 2011, DOE received a letter from the Appliance Standards 
Awareness Project (ASAP) and the Hydraulic Institute indicating that 
efficiency advocates (including ASAP, American Council for an Energy-
Efficient Economy, Natural Resources Defense Council, and Northwest 
Energy Efficiency Alliance) and pump manufacturers (as represented by 
the Hydraulic Institute) had initiated discussions regarding potential 
energy conservation standards for pumps. (EERE-2011-BT-STD-0031-0011.) 
In subsequent letters in March and April 2012, and in a meeting with 
DOE in May 2012, the stakeholders reported on a tentative path forward 
on energy conservation standards for water pumps, inclusive of the 
motor and controls, and certification and labeling. (EERE-2011-BT-STD-
0031-0010 and -0012.)
    On February 1, 2013, DOE published a notice in the Federal Register 
that announced the availability of the ``Commercial and Industrial 
Pumps Energy Conservation Standard Framework Document,'' solicited 
comment on the document, and invited all stakeholders to a public 
meeting to discuss the document. (78 FR 7304.) The Framework Document 
described the procedural and analytical approaches that DOE anticipated 
using to evaluate energy conservation standards for pumps, addressed 
stakeholder comments related to the RFI, and identified and solicited 
comment on various issues to be resolved in the rulemaking. (EERE-2011-
BT-STD-0031-0013.)
    DOE held the framework public meeting on February 20, 2013 and 
received many comments that helped identify and resolve issues 
pertaining to pumps relevant to this rulemaking.

[[Page 17833]]

These comments are discussed in subsequent sections of this notice.
    As noted previously, DOE established a working group to negotiate 
proposed energy conservation standards for pumps. Specifically, on July 
23, 2013, DOE issued a notice of intent to establish a commercial and 
industrial pumps working group (``CIP Working Group''). (78 FR 44036.) 
The working group was established under the Appliance Standards and 
Rulemaking Federal Advisory Committee (ASRAC) in accordance with the 
Federal Advisory Committee Act (FACA) and the Negotiated Rulemaking Act 
(NRA). (5 U.S.C. App. 2; 5 U.S.C. 561-570, Pub. L. 104-320.) The 
purpose of the working group was to discuss and, if possible, reach 
consensus on proposed standard levels for the energy efficiency of 
pumps. The working group was to consist of representatives of parties 
having a defined stake in the outcome of the proposed standards, and 
the group would consult as appropriate with a range of experts on 
technical issues.
    DOE received 19 nominations for membership. Ultimately, the working 
group consisted of 16 members, including 1 member from the ASRAC and 1 
DOE representative. (See Table II.1) The working group met in-person 
during 7 sets of meetings held December 18-19, 2013 and January 30-31, 
March 4-5, March 26-27, April 29-30, May 28-29, and June 17-19, 2014.

      Table II.1--ASRAC Pump Working Group Members and Affiliations
------------------------------------------------------------------------
                  Member                             Affiliation
------------------------------------------------------------------------
Lucas Adin................................  U.S. Department of Energy.
Tom Eckman................................  Northwest Power and
                                             Conservation Council (ASRAC
                                             Member).
Robert Barbour............................  TACO, Inc.
Charles Cappelino.........................  ITT Industrial Process.
Greg Case.................................  Pump Design, Development and
                                             Diagnostics.
Gary Fernstrom............................  Pacific Gas & Electric
                                             Company, San Diego Gas &
                                             Electric Company, Southern
                                             California Edison, and
                                             Southern California Gas
                                             Company.
Mark Handzel..............................  Xylem Corporation.
Albert Huber..............................  Patterson Pump Company.
Joanna Mauer..............................  Appliance Standards
                                             Awareness Project.
Doug Potts................................  American Water.
Charles Powers............................  Flowserve Corporation,
                                             Industrial Pumps.
Howard Richardson.........................  Regal Beloit.
Steve Rosenstock..........................  Edison Electric Institute.
Louis Starr...............................  Northwest Energy Efficiency
                                             Alliance.
Greg Towsley..............................  Grundfos USA.
Meg Waltner...............................  Natural Resources Defense
                                             Council.
------------------------------------------------------------------------

    To facilitate the negotiations, DOE provided analytical support and 
supplied the group with a variety of analyses and presentations, all of 
which are available in the docket (www.regulations.gov/#!docketDetail;D=EERE-2013-BT-NOC-0039). These analyses and 
presentations, developed with direct input from the working group 
members, include preliminary versions of many of the analyses discussed 
in today's NOPR, including a market and technology assessment; 
screening analysis; engineering analysis; energy use analysis; markups 
analysis; life cycle cost and payback period analysis; shipments 
analysis; national impact analysis; and manufacturer impact analysis.
    On June 19, 2014, the working group reached consensus on proposed 
energy conservation standards for specific types of pumps. The working 
group assembled their recommendations into a term sheet (See EERE-2013-
BT-NOC-0039-0092) that was presented to, and approved by the ASRAC on 
July 7, 2014. DOE considered the approved term sheet, along with other 
comments received during the rulemaking process, in developing proposed 
energy conservation standards.

C. Relevant Industry Sectors

    The energy conservation standards proposed in this NOPR will 
primarily affect the pump and pumping equipment manufacturing industry. 
The North American Industry Classification System (NAICS) classifies 
this industry under code 333911. DOE identified 86 manufacturers of 
pumps covered under this proposed rule, with 56 of those being domestic 
manufacturers. The leading U.S. industry association for the pumps 
covered under this proposed rule is the Hydraulic Institute (HI).

III. General Discussion

    In developing this NOPR, DOE reviewed the recommendations in the 
term sheet produced by the CIP Working Group, as well as the 13 
comments it received in response to the February 2013 Framework 
Document. Commenters included: Engineered Software, Inc.; Richard Shaw; 
Grundfos Pumps Corporation; the Hydraulic Institute (HI); Pacific Gas 
and Electric Company, San Diego Gas and Electric, Southern California 
Gas Company, and Southern California Edison (the preceding four 
commenters hereafter referred to collectively as the CA IOUs); National 
Fire Protection Association (NFPA); Air-Conditioning, Heating, and 
Refrigeration Institute (AHRI); Colombia Engineering; Earthjustice; 
Edison Electric Institute (EEI); The Appliance Standards Awareness 
Project (ASAP), Alliance to Save Energy (ASE), American Council for an 
Energy Efficient Economy (ACEEE), Earthjustice, and Natural Resources 
Defense Council (NRDC) (the preceding five commenters hereafter 
referred to collectively as the Advocates); and the Northwest Energy 
Efficiency Alliance and the Northwest Power and Conservation Council 
(hereafter referred to as NEEA/NPCC). DOE addressed all relevant 
stakeholder comments and requests throughout this NOPR. DOE notes that 
comments addressed in this NOPR reflect the views of the stakeholders 
at the close of the framework comment period in May 2013. DOE 
recognizes that the working group's ASRAC-approved term sheet may 
represent views that have progressed since the time of the framework 
comments. As such, when addressing comments, DOE has noted where 
stakeholder views have changed.

A. Rulemaking Approach

1. Harmonization
    In response to the Framework Document, HI and Grundfos recommended 
that DOE harmonize its efforts with the approach followed by the 
European Union (EU). (HI, No. 25 at p. 2; Grundfos, No. 24 at p. 2.) HI 
noted that harmonizing with the EU provides a logical and consistent 
path forward for U.S. manufacturers who have international operations 
and who export equipment from the U.S. to markets worldwide. Id. 
Grundfos also suggested that DOE should harmonize with the EU on 
specific issues, including: (1) nomenclature and definitions, (2) test 
procedures, and (3) use of the Minimum Efficiency Index (MEI), 
including the applicable equation and constants. Grundfos also 
suggested limiting this initial rulemaking to address 1 potential 
standards for clean water pumps (as opposed to expanding the scope to

[[Page 17834]]

include other pump types). Id. DOE notes that throughout the course of 
negotiations, the CIP Working Group members, including HI and Grundfos, 
made recommendations that in many cases did not completely harmonize 
with the EU approach. The level of harmonization reflected in this NOPR 
and the associated test procedure NOPR directly results from these 
working group recommendations. This is discussed with more specificity 
in the applicable sections of the preamble.
2. Regulatory Options
    In the Framework Document, DOE considered the following options for 
regulation:
    1. Defining and establishing standards for the pump exclusive of 
the motor (i.e., the bare pump), except possibly for submersible pumps. 
This option follows the current EU approach for clean water pumps.
    2. Defining and establishing standards for the pump inclusive of 
the motor and controls, if the pump is sold with them. Using this 
approach, each pump equipment class would be sub-divided into two 
categories: (1) Without variable-speed drive (VSD) (pump is sold with 
or without a motor), and (2) with VSD (VSD included only if the pump is 
sold with a motor).\15\
---------------------------------------------------------------------------

    \15\ For the purposes of this rulemaking, ``VSD'' will be used 
when discussing speed control of pumps in general. Variable 
frequency drive (VFD) will be used when specifically discussing 
continuous control of AC induction motors.
---------------------------------------------------------------------------

    3. Defining and establishing standards for the pump inclusive of 
the motor, if the pump is sold with a motor, and considering the VSD as 
a design option to improve the efficiency of pumps sold with motors. 
Each pump equipment class could be divided into two further categories: 
(1) without motor (or VSD), and (2) with motor (with or without VSD). 
(EERE-2011-BT-0031-0013)
    DOE also discussed the metrics it was considering for each option, 
shown in Table III.1.

 Table III.1--Tentative Metrics for Pump Regulatory Options as Proposed
                          in Framework Document
------------------------------------------------------------------------
                                    Equipment class
        Regulatory option                 set               Metric
------------------------------------------------------------------------
1. Bare Pumps...................  N/A...............  Pump efficiency at
                                                       three points.
2. Pumps inclusive of motor and   Pumps Without VSD   Pump efficiency at
 VSD.                              (with or without    three points.
                                   motor).            Overall efficiency
                                  Pumps With VSD....   at three points.
3. Pumps inclusive of motor,      Pumps Without       Pump efficiency at
 with VSD as a design option for   Motor.              three points.
 all pumps sold with motors.      Pumps With Motor    Potentially based
                                   (with or without    on motor/VSD
                                   VSD).               input power at
                                                       multiple load
                                                       points.*
------------------------------------------------------------------------
* DOE stated that it may also consider the use of pump efficiency as an
  additional labeling requirement.

    In response, commenters recommended various approaches for dealing 
with pumps inclusive of the motor and/or controls:
    <bullet> The Advocates, NEEA/NPCC, and the CA IOUs recommended a 
modified regulatory option 3, in which pumps sold with motors below a 
certain horsepower (hp) limit might be required to be sold with VSDs. 
(Advocates, No. 32 at pp. 5-6; NEEA/NPVCC, No. 33 at p. 2; CA IOUs, No. 
26 at p. 3.) The CA IOUs did not see the value in having an equipment 
class just for pump+motor+VSD (as in regulatory option 2). (CA IOUs, 
No. 26 at p. 3.)
    <bullet> HI and Grundfos both supported an approach where the pump 
would be regulated inclusive of the motor and controls, which would, in 
their view, be likely to achieve significantly greater savings than an 
approach based only on the bare pump. (Grundfos, No. 24 at p. 1; HI, 
No. 25 at p. 2.) HI believes that a large majority of systems can 
benefit from VSDs. (HI, No. 25 at p. 28.) HI and Grundfos agreed that 
system feedback control is necessary in this approach. (Grundfos, No. 
24 at p. 9; HI, No. 25 at p. 27.) Specifically, HI and Grundfos 
proposed a two-prong approach: that all pumps be required to meet the 
MEI (Minimum Efficiency Index, based on the metric of pump efficiency), 
while pumps sold with motors and VSDs would also have another electric 
input power-based metric as a label or standard. (HI, No. 25 at p. 2; 
Grundfos, No. 24 at p.10.) The HI and Grundfos (European) approaches 
are similar but not identical.
    <bullet> EEI stated that analyzing energy (and setting standards) 
on the basis of pumps including their motors is the preferred approach, 
although EEI was not opposed to establishing pump standards based on 
`pump only' performance characteristics. EEI did not support 
establishing standards based on pump performance with a VSD controller, 
as pumps are used in a variety of applications and not all are a good 
fit with VSDs. EEI also noted that it was unaware of any other DOE 
rulemaking where an optional, external component has been proposed as 
part of the test procedure or standard. (EEI, No. 31 at p. 3.)
    <bullet> AHRI noted that unless DOE develops coverage of all 
possible combinations of pumps inclusive of the motor and controls, a 
regulatory regime may inadvertently cover only 10 percent of the 
possible combinations that are in use. (AHRI, No. 28 at pp.1-2.)
    The CIP Working Group ultimately recommended an alternative 
regulatory option that considers pumps inclusive of motors and 
controls, but applies essentially the same metric to all pumps, 
regardless of how they are sold. (EERE-2013-BT-NOC-0039-0092; 
Recommendations Nos. 1, 9, and 11.) DOE's proposal is consistent with 
the recommendation of the working group. The details of the proposed 
regulatory structure are discussed in the remainder of this NOPR.
    DOE recognizes that some pumps, particularly in the agricultural 
sector, may be sold and operated with non-electric drivers, such as 
engines, steam turbines, or generators. The CIP Working Group 
recommended that pumps sold with non-electric drivers be rated as a 
bare pump, excluding the energy performance of the non-electric driver. 
(Docket No. EERE-2013-BT-NOC-0039, No. 92, Recommendation #3 at p. 2) 
DOE believes that there is insufficient technical merit or potential 
for additional energy savings to justify the additional burden 
associated with rating and certifying pumps sold with non-electric 
drivers inclusive of those drivers. This is described in more detail in 
the test procedure NOPR.

B. Definition of Covered Equipment

    Although pumps are listed as covered equipment under 42 U.S.C. 
6311(1)(A), the term ``pump'' is not defined in EPCA. In the test 
procedure NOPR, DOE proposed a definition for ``pump'' clarify what 
would constitute the

[[Page 17835]]

covered equipment. The definition reflects the consensus reached by the 
CIP Working Group in its negotiations: ``Pump'' means equipment 
designed to moves liquids (which may include entrained gases, free 
solids, and totally dissolved solids) by physical or mechanical action 
and includes a bare pump and, if included by the manufacturer at the 
time of sale, mechanical equipment, driver and controls. In the test 
procedure NOPR, DOE also proposed definitions for ``bare pump,'' 
``mechanical equipment,'' ``driver,'' and ``controls,'' as recommended 
by the CIP Working Group.

C. Scope of the Energy Conservation Standards in this Rulemaking

    DOE is considering applying a bifurcated approach that would set 
out the scope of the types of pumps that would be subject to the test 
procedure and energy conservation standards, along with potential 
energy conservation standards that would apply to these pumps. The 
pumps for which DOE is proposing to set energy conservation standards 
for in this rulemaking are consistent with the CIP Working Group's 
recommendations as well as the proposals in the test procedure NOPR, 
and consist of the following categories:
    <bullet> End suction close coupled,
    <bullet> End suction frame mounted/own bearings,
    <bullet> In-line,
    <bullet> Radially split, multi-stage, vertical, in-line, diffuser 
casing, and
    <bullet> Vertical turbine submersible.
    DOE proposed definitions for these pumps in the test procedure 
NOPR.
    For the equipment categories included in this rulemaking, DOE 
proposes to consider energy conservation standards only for clean water 
pumps. In the test procedure, DOE proposed to define ``clean water 
pump'' as a pump that is designed for use in pumping water with a 
maximum non-absorbent free solid content of 0.25 kilograms per cubic 
meter, and with a maximum dissolved solid content of 50 kilograms per 
cubic meter, provided that the total gas content of the water does not 
exceed the saturation volume, and disregarding any additives necessary 
to prevent the water from freezing at a minimum of -10 [deg]C.
    In the test procedure NOPR, DOE also proposed to define several 
kinds of pumps that are clean water pumps, as defined, but would not be 
subject to the proposed test procedure, in accordance with CIP Working 
Group recommendations. DOE proposes that these pumps would also not be 
subject to the proposed energy conservation standards:
    (a) Fire pumps;
    (b) Self-priming pumps;
    (c) Prime-assist pumps;
    (d) Sealless pumps;
    (e) Pumps designed to be used in a nuclear facility subject to 10 
CFR part 50--Domestic Licensing of Production and Utilization 
Facilities; and
    (f) A pump meeting the design and construction requirements set 
forth in Military Specification MIL-P-17639F, ``Pumps, Centrifugal, 
Miscellaneous Service, Naval Shipboard Use'' (as amended).
    The test procedure NOPR included further definitions for ``fire 
pump,'' ``self-priming pump,'' ``prime-assist pump,'' and ``sealless 
pump.''
    For pumps meeting the definition of a clean water pump, with 
certain exceptions as noted above, DOE proposes to set energy 
conservation standards only for pumps with the following 
characteristics, which are identical to those for which DOE proposed 
the test procedure apply and are in accordance with CIP Working Group 
recommendations:
    <bullet> 1-200 hp (shaft power at BEP at full impeller diameter for 
the number of stages required for testing to the standard);
    <bullet> 25 gallons/minute and greater (at BEP at full impeller 
diameter);
    <bullet> 459 feet of head maximum (at BEP at full impeller 
diameter);
    <bullet> Design temperature range from -10 to 120 degrees C;
    <bullet> Pumps designed to operate with either: (1) a 2- or 4-pole 
induction motor, or (2) a non-induction motor with a speed of rotation 
operating range that includes speeds of rotation between 2,880 and 
4,320 revolutions per minute and/or 1,440 and 2,160 revolutions per 
minute; \16\ and
---------------------------------------------------------------------------

    \16\ The CIP Working Group recommendation specified pumps 
designed for nominal 3600 or 1800 revolutions per minute (rpm) 
driver speed. However, it was intended that this would include pumps 
driven by non-induction motors as well. DOE believes that its 
clarification accomplishes the same intent while excluding niche 
pumps sold with non-induction motors that may not be able to be 
tested according to the proposed test procedure. The test procedure 
NOPR contains additional details.
---------------------------------------------------------------------------

    <bullet> 6 inch or smaller bowl diameter (VTS/HI VS0).
    DOE also proposed in the test procedure that all pump models must 
be rated and certified in a full impeller configuration, as recommended 
by the CIP Working Group. (See EERE-2013-BT-NOC-0039-0092, 
Recommendation No. 7.) \17\ DOE proposed a definition for full impeller 
in its test procedure NOPR.
---------------------------------------------------------------------------

    \17\ The CIP Working Group made this recommendation because a 
given pump may be distributed to a particular customer with its 
impeller trimmed, and impeller trim has a direct impact on a pump's 
performance characteristics. For any pump sold with a trimmed 
impeller, it was recommended that the certification rating for that 
pump model with a full diameter impeller would apply. This approach 
would limit the overall burden when measuring the energy efficiency 
of a given pump. In addition, a rating at full impeller diameter 
will typically be the most consumptive rating for the pump.
---------------------------------------------------------------------------

D. Test Procedure and Metric

    DOE is currently conducting a rulemaking to establish a uniform 
test procedure for determining the energy efficiency of pumps, as well 
as sampling plans for the purposes of demonstrating compliance with any 
energy conservation standards for this equipment that DOE adopts. In 
the test procedure NOPR, DOE proposed to prescribe test methods for 
measuring the efficiency of pumps, inclusive of motors and/or controls, 
by measuring the produced hydraulic power and measuring or calculating 
the shaft power and/or electric input power to the motor or controls. 
Consistent with the recommendations of the CIP Working Group, DOE 
proposed that these methods be based on Hydraulic Institute (HI) 
Standard 40.6-2014, ``Hydraulic Institute Standard for Method for 
Rotodynamic Pump Efficiency Testing,'' hereinafter referred to as ``HI 
40.6-2014.'' (See EERE-2013-BT-NOC-0039-0092, Recommendation No. 10.) 
DOE proposed additions to HI 40.6-2014 to account for the energy 
performance of motors and/or controls, which is not addressed in the 
scope of HI 40.6-2014.
    The test procedure NOPR proposes that the energy conservation 
standards for pumps be expressed in terms of a constant load PEI 
(PEI<INF>CL</INF>) for pumps sold without continuous or non-continuous 
controls (i.e., either bare pumps or pumps sold inclusive of motors but 
not continuous or non-continuous controls) or a variable load PEI 
(PEI<INF>VL</INF>) for pumps sold with continuous or non-continuous 
controls. The PEI<INF>CL</INF> or PEI<INF>VL</INF>, as applicable, 
describes the weighted average performance of the rated pump, inclusive 
of any motor and/or controls, at specific load points, normalized with 
respect to the performance of a ``minimally compliant pump'' (as 
defined in section III.D.1) without controls. The metrics are defined 
as follows:

[[Page 17836]]

[GRAPHIC] [TIFF OMITTED] TP02AP15.000

Where:

<bullet> PER<INF>CL</INF> is the equally-weighted average electric 
input power to the pump measured (or calculated) at the driver input 
over a specified load profile, as tested in accordance with the DOE 
test procedure. This metric applies only to pumps in a fixed speed 
equipment class. For bare pumps, the test procedure would specify 
the default motor loss values to use in the calculations of driver 
input.
<bullet> PER<INF>VL</INF> is the equally-weighted average electric 
input power to the pump measured (or calculated) at the controller 
input over a specified load profile as tested in accordance with the 
DOE test procedure. This metric applies only to pumps in a variable 
speed equipment class.
<bullet> PER<INF>STD</INF> is the PER rating of a minimally 
compliant pump (as defined in section III.D.1). It can be described 
as the allowable weighted average electric input power to the 
specific pump, as calculated in the test procedure. This metric 
applies to all equipment classes.

    A value of PEI greater than 1.00 would indicate that the pump is 
less efficient than DOE's energy conservation standard and does not 
comply, while a value less than 1.00 would indicate that the pump is 
more efficient than the standard requires.
1. PER Rating of a Minimally Compliant Pump
    DOE is considering using a standardized, minimally compliant bare 
pump, inclusive of a minimally compliant motor, as a reference pump for 
each combination of flow at BEP and specific speed. The minimally 
compliant pump would be defined as a function of certain physical 
properties of the bare pump, such as flow at BEP and specific speed 
(Ns), as used in the EU MEI approach. In the MEI approach, a single 
polynomial equation defines a three-dimensional surface over which 
minimum efficiency varies across a range of both flow and Ns. The EU 
uses the same equation for all equipment classes, changing only one 
value--the C-value--to raise or lower the surface along a vertical axis 
to cut off a certain percentage of pumps, but without adjusting any 
variables that would change the shape of the efficiency surface. HI and 
Grundfos supported the EU MEI approach, which eliminates the least 
efficient pumps by type category. (HI, No. 25 at p. 2; Grundfos, No. 24 
at p. 14.) HI added that Ns versus flow rate is the most practical 
approach to use when predicting efficiency for a particular class of 
pump types. (HI, No. 25 at p. 37.)
    Grundfos recommended use of the EU equation as well as the same C-
values used in the EU, which would result in exact harmonization. 
(Grundfos, No. 24 at p. 14.) However, HI recommended DOE use the EU 
equation but with an updated C-value. HI added that although a better 
data fit could be obtained by changing other coefficients, such 
complexity is not warranted. (HI, No. 25 at pp. 4-5, 32, 40.)
    After reviewing stakeholder comments, as well as discussions of the 
CIP Working Group, DOE is proposing to base its PER rating using the 
EU's equation, but modifying the C-values as suggested by HI to better 
reflect the U.S. market. Specifically, DOE proposes to use the same 
equation used by the EU to develop its standard (i.e., to determine the 
shape of the efficiency surface), translated to 60 Hz electrical input 
power and English units \18\ as shown in equation 2, to determine the 
efficiency of a minimally compliant pump:
---------------------------------------------------------------------------

    \18\ The equation to define the minimally compliant pump in the 
EU is of the same form, but employs different coefficients to 
reflect the fact that the flow will be reported in m\3\/hr at 50 Hz 
and the specific speed will also be reported in metric units. 
Specific speed is a dimensionless quantity, but has a different 
magnitude when calculated using metric versus English units.
[GRAPHIC] [TIFF OMITTED] TP02AP15.004

---------------------------------------------------------------------------
Where:

Q = flow at BEP in gallons per minute at 60 Hz,
Ns = specific speed at 60 Hz, and
C = an intercept that is set for the surface based on the speed of 
rotation and equipment category of the pump model.

    The C-value is the translational component of the three-dimensional 
polynomial equation. Adjusting the C-value increases or decreases the 
pump efficiency of a minimally compliant pump.
    The calculated efficiency of the minimally compliant pump is 
reflective of the pump efficiency at BEP. This value is adjusted to 
determine the minimally compliant pump efficiency at 75 percent and 110 
percent of BEP flow using the scaling values implemented in the EU 
regulations for clean water pumps. Namely, the efficiency at 75 percent 
of BEP flow is assumed to be 94.7 percent of that at 100 percent of BEP 
flow and the pump efficiency at 110 percent of BEP flow is assumed to 
be 98.5 percent of that at 100 percent of BEP flow, as shown in 
equation 3:

[[Page 17837]]

[GRAPHIC] [TIFF OMITTED] TP02AP15.001

Where:

[omega]<INF>i</INF> = weighting at each rating point (equal 
weighting--0.3333);
P<INF>Hydro,i</INF> = the pump power output at rating point i of the 
tested pump;
[eta]<INF>pump,STD</INF> = the minimally compliant pump efficiency, 
as determined in accordance with equation 52;
L<INF>i</INF> = the motor losses at each load point i, as determined 
in accordance with the procedure specified in the DOE test 
procedure; and
i = 75%, 100%, and 110% of BEP flow, as determined in accordance 
with the DOE test procedure.

    Equation 3 also demonstrates how a ratio of the minimally compliant 
pump efficiency and the hydraulic output power for the rated pump is 
used to determine the input power to a minimally compliant pump at each 
load point. Note that the pump hydraulic output power for the minimally 
compliant pump is the same as that for the particular pump being 
evaluated. The calculated shaft input power for the minimally compliant 
pump at each load point would then be combined with a minimally 
compliant motor for that default motor construction and horsepower and 
the default part-load loss curve, described in the proposed DOE test 
procedure, to determine the input power to the motor at each load 
point. Under this proposal, the applicable minimum motor efficiency is 
determined as a function of construction (i.e., open or enclosed), 
number of poles, and horsepower as specified by DOE's existing energy 
conservation standards for electric motors at 10 CFR 431.25. 
PER<INF>STD</INF> is then determined as the weighted average input 
power to the motor at each load point, as shown in equation 3.
    DOE selected several C-values to establish the efficiency levels 
analyzed in this proposal. Each C-value and efficiency level accounts 
for pump efficiency at all load points as well as motor losses, and 
does so equivalently across the full scope of flow and specific speed 
encompassed by this proposed rule. See section IV.C.4 for a complete 
examination of the efficiency levels analyzed in this rulemaking.

E. Compliance Date

    Consistent with the recommendations of the CIP Working Group, see 
EERE-2013-BT-NOC-0039-0092, p. 4, Recommendation No. 9, DOE proposes to 
require that its standards would apply to equipment manufactured 
beginning on the date four years after the publication date of the 
final rule. DOE estimates that any final rule would publish in late 
2015, resulting in a compliance date for the standards in late 2019. In 
its analysis, DOE used an analysis period of 2020 through 2049.

F. Technological Feasibility

1. General
    EPCA requires that any new or amended energy conservation standard 
that DOE prescribes be designed to achieve the maximum improvement in 
energy efficiency that DOE determines is technologically feasible. (42 
U.S.C. 6295(o)(2)(A) and 6316(a).) In each energy conservation 
standards rulemaking, DOE conducts a screening analysis based on 
information gathered on all current technology options and prototype 
designs that could improve the efficiency of the products or equipment 
that are the subject of the rulemaking. As the first step in such an 
analysis, DOE develops a list of technology options for consideration 
in consultation with manufacturers, design engineers, and other 
interested parties. DOE then determines which of those means for 
improving efficiency are technologically feasible.
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, and service; (2) adverse 
impacts on product utility or availability; and (3) adverse impacts on 
health or safety. (10 CFR part 430, subpart C, appendix A, section 
4(a)(4)(ii) through (iv).) Section IV.B of this NOPR discusses the 
results of the screening analysis for pumps, particularly the designs 
DOE considered, those it screened out, and those that are the basis for 
the trial standard levels (TSLs) in this proposed rulemaking. For 
further details on the screening analysis for this rulemaking, see 
chapter 4 of the NOPR TSD.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt a new or amended standard for a type or 
class of covered equipment, it must determine the maximum improvement 
in energy efficiency or maximum reduction in energy use that is 
technologically feasible for such product. (42 U.S.C. 6295(p)(1) and 
6316(a).) Accordingly, in the engineering analysis, DOE determined the 
maximum technologically feasible (``max-tech'') improvements in energy 
efficiency for pumps, using the design options that passed the 
screening analysis.

G. Energy Savings

1. Determination of Savings
    EPCA provides that any new or amended energy conservation standard 
that DOE prescribes shall be designed to achieve the maximum 
improvement in energy efficiency that DOE determines is economically 
justified. (42 U.S.C. 6295(o)(2)(A) and (B) and 6316(a).) In addition, 
in determining whether such standard is technologically feasible and 
economically justified, DOE may not prescribe standards for certain 
types or classes of pumps if such standards would not result in 
significant energy savings. (42 U.S.C. 6295(o)(3)(B) and 6316(a).)
    For each TSL, DOE projected energy savings from the pumps that are 
the subject of this rulemaking purchased in the 30-year period that 
begins in the first full year of compliance with new standards (2020-
2049).\19\ The savings are measured over the entire lifetime of pumps 
purchased in the 30-year analysis period. DOE quantified the energy 
savings attributable to each TSL as the difference in energy 
consumption between each standards case and the base case. The base 
case represents a projection of energy consumption that currently 
exists in the marketplace in the absence of mandatory efficiency 
standards, and it considers market forces and policies that affect 
demand for more efficient products. To estimate the base case, DOE used 
data provided

[[Page 17838]]

by the CIP Working Group, as discussed in section IV.H.2.
---------------------------------------------------------------------------

    \19\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a nine-year period.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from potential new standards for the equipment 
that is the subject of this rulemaking. The NIA spreadsheet model 
(described in section IV.H of this notice) calculates energy savings in 
site energy, which is the energy directly consumed by products at the 
locations where they are used. For electricity, DOE reports national 
energy savings in terms of primary energy savings, which is the savings 
in the energy that is used to generate and transmit the site 
electricity. To calculate this primary energy savings, DOE derives 
annual conversion factors from the model used to prepare the Energy 
Information Administration's (EIA) most recent Annual Energy Outlook 
(AEO).
    DOE also estimates full-fuel-cycle (FFC) energy savings, as 
discussed in DOE's statement of policy and notice of policy amendment. 
76 FR 51282 (August 18, 2011), as amended at 77 FR 49701 (August 17, 
2012). The FFC metric includes the energy consumed in extracting, 
processing, and transporting primary fuels (i.e., coal, natural gas, 
petroleum fuels) and, thus, presents a more complete picture of the 
impacts of energy efficiency standards. DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
covered equipment. For more information on FFC energy savings, see 
section IV.H.1.a.
2. Significance of Savings
    As noted above, EPCA prohibits DOE from adopting a standard for a 
covered product unless such standard would result in ``significant'' 
energy savings. (42 U.S.C. 6295(o)(3)(B) and 6316(a).) Although the 
term ``significant'' is not defined in the Act, the U.S. Court of 
Appeals for the District of Columbia Circuit, in Natural Resources 
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), 
opined that Congress intended ``significant'' energy savings in the 
context of EPCA to be savings that were not ``genuinely trivial.'' The 
energy savings for today's proposed standards (presented in section 
V.B.3.a) are nontrivial and, therefore, DOE considers them 
``significant'' within the meaning of section 325 of EPCA.

H. Economic Justification

1. Specific Criteria
    EPCA provides seven factors to be evaluated in determining whether 
a potential energy conservation standard is economically justified. (42 
U.S.C. 6295(o)(2)(B)(i) and 6316(a).) The following sections discuss 
how DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential new or amended standard 
on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 
discussed in section IV.J. DOE first uses an annual cash-flow approach 
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation-and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include industry net present 
value (INPV), which values the industry on the basis of expected future 
cash flows; cash flows by year; changes in revenue and income; and 
other measures of impact, as appropriate. Second, DOE analyzes and 
reports the impacts on different types of manufacturers, including 
impacts on small manufacturers. Third, DOE considers the impact of 
standards on domestic manufacturer employment and manufacturing 
capacity, as well as the potential for standards to result in plant 
closures and loss of capital investment. Finally, DOE takes into 
account cumulative impacts of various DOE regulations and other 
regulatory requirements on manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and payback period (PBP) associated with new or amended 
standards. These measures are discussed further in the following 
section. For consumers in the aggregate, DOE also calculates the 
national net present value of the economic impacts applicable to a 
particular rulemaking. DOE also evaluates the LCC impacts of potential 
standards on identifiable subgroups of consumers that may be affected 
disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered equipment that are 
likely to result from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(II) and 
6316(a).) DOE conducts this comparison in its LCC and PBP analysis.
    The LCC is the sum of the purchase price of a piece of equipment 
(including its installation) and the operating expense (including 
energy, maintenance, and repair expenditures) discounted over the 
lifetime of the equipment. The LCC analysis requires a variety of 
inputs, such as equipment prices, equipment energy consumption, energy 
prices, maintenance and repair costs, equipment lifetime, and consumer 
discount rates. To account for uncertainty and variability in specific 
inputs, such as equipment lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value. For 
its analysis, DOE assumes that consumers will purchase the covered 
equipment in the first year of compliance with new standards.
    The LCC savings for the efficiency levels considered in today's 
NOPR are calculated relative to a base case that reflects projected 
market trends in the absence of new standards. DOE identifies the 
percentage of consumers estimated to receive LCC savings or experience 
an LCC increase, in addition to the average LCC savings associated with 
a particular standard level. DOE's LCC and PBP analysis is discussed in 
further detail in section IV.F.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 
6316(a).) As discussed in section IV.H, DOE uses the NIA spreadsheet to 
project national energy savings.
d. Lessening of Utility or Performance of Products
    In establishing classes of equipment, and in evaluating design 
options and the impact of potential standard levels, DOE evaluates 
potential standards that would not lessen the utility or performance of 
the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 6316(a).) 
Based on data available to DOE, the standards proposed in today's 
notice would not reduce the utility or performance of the products 
under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a proposed standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V) and 6316(a).) It also directs the Attorney General 
to determine the impact, if any, of any

[[Page 17839]]

lessening of competition likely to result from a proposed standard and 
to transmit such determination to the Secretary within 60 days of the 
publication of a proposed rule, together with an analysis of the nature 
and extent of the impact. (42 U.S.C. 6295(o)(2) (B)(ii) and 6316(a).) 
DOE will transmit a copy of this proposed rule to the Attorney General 
with a request that the Department of Justice (DOJ) provide its 
determination on this issue. DOE will respond to the Attorney General's 
determination in the final rule.
f. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a).) The energy 
savings from new or amended standards are likely to provide 
improvements to the security and reliability of the nation's energy 
system. Reductions in the demand for electricity also may result in 
reduced costs for maintaining the reliability of the nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how standards may affect the nation's needed power generation capacity, 
as discussed in section IV.M.
    New or amended standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with energy production. DOE reports the 
emissions impacts from the proposed standards, and from each TSL it 
considered, in section V.B.6 of this notice. DOE also reports estimates 
of the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L.
g. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) 
and 6316(a).) In developing the proposed standard, DOE has also 
considered the term sheet of recommendations voted on by the CIP 
Working Group and approved by the ASRAC. (See EERE-2013-BT-NOC-0039-
0092.) DOE has weighed the value of such negotiation in establishing 
the standards proposed in today's rule. DOE has encouraged the 
negotiation of proposed standard levels, in accordance with the FACA 
and the NRA, as a means for interested parties, representing diverse 
points of view, to analyze and recommend energy conservation standards 
to DOE. Such negotiations may often expedite the rulemaking process. In 
addition, standard levels recommended through a negotiation may 
increase the likelihood for regulatory compliance, while decreasing the 
risk of litigation.
2. Rebuttable Presumption
    EPCA creates a rebuttable presumption that an energy conservation 
standard is economically justified if the additional cost to the 
consumer of a product that meets the standard is less than three times 
the value of the first year's energy savings resulting from the 
standard, as calculated under the applicable DOE test procedure. (42 
U.S.C. 6295(o)(2)(B)(iii) and 6316(a).) DOE's LCC and PBP analyses 
generate values used to calculate the effects that proposed energy 
conservation standards would have on the payback period for consumers. 
These analyses include, but are not limited to, the three-year payback 
period contemplated under the rebuttable-presumption test. In addition, 
DOE routinely conducts an economic analysis that considers the full 
range of impacts to consumers, manufacturers, the nation, and the 
environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) and 6316(a). 
The results of this analysis serve as the basis for DOE's evaluation of 
the economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section V.B.1.c of this proposed rule.

IV. Methodology and Discussion of Comments

    DOE used four analytical tools to estimate the impact of today's 
proposed standards. The first tool is a spreadsheet that calculates LCC 
and PBP of potential new energy conservation standards. The second tool 
is a spreadsheet that provides shipments forecasts calculates national 
energy savings and net present value resulting from potential energy 
conservation standards. DOE uses the third spreadsheet tool, the 
Government Regulatory Impact Model (GRIM), to assess manufacturer 
impacts. Additionally, DOE used output from the latest version of EIA's 
National Energy Modeling System (NEMS) for the emissions and utility 
impact analyses. NEMS is a public domain, multi-sector, partial 
equilibrium model of the U.S. energy sector. EIA uses NEMS to prepare 
its Annual Energy Outlook (AEO), a widely known energy forecast for the 
United States.

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 (e.g., manufacturer specification 
sheets, industry publications) and data submitted by manufacturers, 
trade associations, and other stakeholders. The subjects addressed in 
the market and technology assessment for this rulemaking include: (1) 
Quantities and types of equipment sold and offered for sale; (2) retail 
market trends; (3) equipment covered by the rulemaking; (4) equipment 
classes; (5) manufacturers; (6) regulatory requirements and non-
regulatory programs (such as rebate programs and tax credits); and (7) 
technologies that could improve the energy efficiency of the equipment 
under examination. DOE researched manufacturers of pumps and made a 
particular effort to identify and characterize small business 
manufacturers in this sector. See chapter 3 of the NOPR TSD for further 
discussion of the market and technology assessment.
1. Equipment Classes
    When evaluating and establishing energy conservation standards, DOE 
divides covered equipment into equipment classes by the type of energy 
used or by capacity or other performance-related features that would 
justify a different standard from that which would apply to other 
equipment classes. DOE proposes dividing pumps into equipment classes 
based on the following three factors:
    1. Basic pump equipment type,
    2. Configuration, and
    3. Nominal design speed.
    DOE notes that some clean water pumps are sold for use with engines 
or turbines rather than electric motors, and as such, would use a 
different fuel type (i.e., fossil fuels rather than electricity). 
However, because of the small market share of clean water pumps using 
these fuel types, in the test procedure NOPR, DOE proposed that any 
pump sold with, or for use with, a driver other than an electric motor 
would be rated as a bare pump.\20\ Therefore, DOE did not

[[Page 17840]]

disaggregate equipment classes by fuel type.
---------------------------------------------------------------------------

    \20\ Such a rating would include the hydraulic efficiency of the 
bare pump as well as the efficiency of a minimally-compliant 
electric motor, as described in section III.D.1.
---------------------------------------------------------------------------

    As discussed in section III.C, the five pump equipment types 
considered in this rulemaking, each of which DOE proposes would form 
the basis for an individual equipment class, include:
    <bullet> End suction close coupled (ESCC);
    <bullet> End suction frame mounted/own bearings (ESFM);
    <bullet> In-line (IL);
    <bullet> Radially split, multi-stage, vertical, in-line, diffuser 
casing (RSV); and
    <bullet> Vertical turbine submersible (VTS).
    A pump's configuration is defined by the equipment with which it is 
sold. Pumps sold inclusive of motors and continuous or non-continuous 
controls (as defined in the test procedure NOPR), capable of operation 
at multiple driver shaft speeds are defined as variable load (VL); 
pumps sold as bare pumps or with motors without such controls, capable 
only of operation at a fixed shaft speed, are defined as constant load 
(CL).\21\
---------------------------------------------------------------------------

    \21\ In the Framework Document, DOE explored identifying 
specific equipment types that would always be used in a variable 
load application. In response, HI and Grundfos reported that 
application, rather than pump type or equipment class, controls 
whether the pump can be used in a variable load application. 
(Grundfos, No. 24 at p. 21; HI, No. 25 at p. 37).) The proposal is 
based on the assumption that a pump sold with speed controls is 
intended for a variable load application.
---------------------------------------------------------------------------

    In the Framework Document, DOE requested comment on the use of pump 
design speed as a feature that distinguishes equipment classes as well 
as the burden associated with testing under multiple speeds. HI 
reported that often a manufacturer will need to make modifications to 
pumps that will be run at higher speed to allow for greater bearing 
loads. These may include changing the bearing frame size or modifying 
the axial thrust balancing device, which will impact pump efficiency. 
These potential modifications will vary by equipment class. (HI, No. 25 
at p. 37-38.) Grundfos also added that speed is considered during the 
design of the pump, specifically as it relates to the design of the 
shaft and bearings. (Grundfos, No.24 at p. 23.) HI noted that pumps 
designed for different speeds are normally tested over the range of 
speeds for which the pumps will be offered for sale. A pump 
manufacturer offering the same pump at different speeds will have to 
account for any speed-related effects on efficiency and determine if 
the pump is compliant with the required MEI level at all offered 
speeds. (HI, No.25 at p. 38.) Both HI and Grundfos recommended 
harmonizing equipment classes with the EU, which regulates pumps 
designed for two- and four-pole nominal driver speeds separately, but 
at 60 Hz frequency. (Grundfos, No. 24 at p. 22; HI, No. 25 at p. 38.)
    The CIP Working Group also recommended separate energy efficiency 
standards for equipment types at the nominal speeds for two- and four-
pole motors. (See EERE-2013-BT-NOC-0039-0092, p. 4, Recommendation No. 
9.) In its analysis, DOE found that across the market, pumps at each 
nominal speed demonstrate distinctly different performance. To account 
for this variability, DOE proposes that for both constant load and 
variable load pumps, the equipment classes should also be 
differentiated on the basis of nominal design speed. Within the scope 
of this proposed rule, pumps may be defined as being designed for 
either 3,600 or 1,800 rpm nominal driver speeds. Pumps defined as 
having a 3,600 rpm nominal driver speed are designed to operate with a 
2-pole induction motor or with a non-induction motor with a speed of 
rotation operating range that includes speeds of rotation between 2,880 
and 4,320 rpm. Pumps defined as having an 1,800 rpm nominal driver 
speed are designed to operate with a 4-pole induction motor or with a 
non-induction motor with a speed of rotation operating range that 
includes speeds of rotation between 1,440 and 2,160 rpm. Throughout 
this document, a 3,600 rpm nominal speed is abbreviated as 3600, and a 
1,800 rpm nominal speed is abbreviated as 1800.
    Taking into account the basic pump equipment type, nominal design 
speed, and configuration, DOE proposes the following twenty equipment 
classes for the types of pumps to be addressed by this rulemaking:
    <bullet> ESCC.1800.CL;
    <bullet> ESCC.3600.CL;
    <bullet> ESCC.1800.VL;
    <bullet> ESCC.3600.VL;
    <bullet> ESFM.1800.CL;
    <bullet> ESFM.3600.CL;
    <bullet> ESFM.1800.VL;
    <bullet> ESFM.3600.VL;
    <bullet> IL.1800.CL;
    <bullet> IL.3600.CL;
    <bullet> IL.1800.VL;
    <bullet> IL.3600.VL;
    <bullet> RSV.1800.CL;
    <bullet> RSV.3600.CL;
    <bullet> RSV.1800.VL;
    <bullet> RSV.3600.VL;
    <bullet> VTS.1800.CL;
    <bullet> VTS.3600.CL;
    <bullet> VTS.1800.VL; and
    <bullet> VTS.3600.VL.
    Chapter 3 of the NOPR TSD provides further detail on the definition 
of equipment classes.
    As noted in section III.D, as proposed in the test procedure NOPR, 
CL equipment classes would be rated with the PEI<INF>CL</INF> metric, 
and VL equipment classes would be rated with the PEI<INF>VL</INF> 
metric. For today's NOPR, however, DOE relied on available data for 
bare pumps. Therefore, DOE's analysis is based on equipment type and 
nominal design speed only--reported results do not use a ``.CL'' or 
``.VL'' designation. DOE is proposing identical standards for both CL 
and VL equipment classes.
2. Scope of Analysis and Data Availability
    DOE collected data to conduct all NOPR analyses for the following 
equipment classes directly:
    <bullet> ESCC.1800;
    <bullet> ESCC.3600;
    <bullet> ESFM.1800;
    <bullet> ESFM.3600;
    <bullet> IL.1800;
    <bullet> IL.3600; and
    <bullet> VTS.3600.
    The following subsections summarize DOE's approach for the 
remaining equipment classes:
    <bullet> RSV.1800;
    <bullet> RSV.3600; and
    <bullet> VTS.1800.
a. Radially Split, Multi-Stage, Vertical, In-Line, Diffuser Casing 
(RSV)
    DOE used available information to identify baseline and the maximum 
technologically feasible (``max-tech'') efficiency levels for this 
class. Specifically DOE's contractors used market research and 
confidential manufacturer information to establish a database of RSV 
models. The DOE contractor database represented models offered for sale 
in the United States by three major manufacturers of RSV pumps. DOE 
reviewed the efficiency data for these RSV pumps and found no models to 
be less efficient than the European Union's MEI 40 standard level, 
which took effect on January 1, 2015 \22\. Details of this analysis are 
presented in Chapter 5 of the TSD. This analysis, in conjunction with 
confidential discussions with manufacturers led DOE to conclude that 
RSV models sold in the United States market are global platforms with 
hydraulic designs equivalent to those in the European market. As such, 
DOE presented this conclusion to the CIP Working Group for 
consideration, where it was supported and reaffirmed on numerous 
occasions (See, e.g. EERE-

[[Page 17841]]

2013-BT-NOC-0039-0109 at pp. 91-97, EERE-2013-BT-NOC-0039-0105 at pp. 
293-300, EERE-2013-BT-NOC-0039-0106 at pp. 38-40, 62-67, 88-95; EERE-
2013-BT-NOC-0039-0108 at pp. 119.)
---------------------------------------------------------------------------

    \22\ Council of the European Union. 2012. Commission Regulation 
(EU) No 547/2012 of 25 June 2012 implementing Directive 2009/125/EC 
of the European Parliament and of the Council with regard to 
ecodesign requirements for water pumps. Official Journal of the 
European Union. L 165, 26 June 2012, pp. 28-36.
---------------------------------------------------------------------------

    As a result of the conclusion that RSV models sold in the United 
States market are global platforms with hydraulic designs equivalent to 
those in the European market, DOE proposes to set the baseline and max-
tech levels equal to those established in Europe. Specifically, the 
baseline would be the European minimum efficiency standard,\23\ and the 
max-tech level would be the European level referred to as ``the 
indicative benchmark for the best available technology.'' \24\
---------------------------------------------------------------------------

    \23\ Note that this NOPR and the European Union regulation use 
different metrics to represent efficiency. DOE used available data 
to establish harmonized baseline and max-tech efficiency levels 
using the DOE metric.
    \24\ Council of the European Union. 2012. Commission Regulation 
(EU) No 547/2012 of 25 June 2012 implementing Directive 2009/125/EC 
of the European Parliament and of the Council with regard to 
ecodesign requirements for water pumps. Official Journal of the 
European Union. L 165, 26 June 2012, pp. 28-36.
---------------------------------------------------------------------------

    Although DOE was able to establish a baseline and max-tech level 
using aspects of what has already been adopted for the European market, 
DOE was unable to develop a cost-efficiency relationship or additional 
efficiency levels for RSV, due to lack of available cost data for this 
equipment. As a result, DOE has proposed a standard level for RSV that 
is equivalent to the baseline, consistent with the recommendation of 
the CIP Working Group. (See EERE-2013-BT-NOC-0039-0092, p. 4, 
Recommendation No. 9.) Based on the data available and recommendation 
of the CIP Working Group, DOE concludes that this standard level is 
representative of the typical minimum efficiency configuration sold in 
this equipment class, and no significant impact is expected for either 
the consumers or manufacturers.
    Chapter 5 of the NOPR TSD provides complete details on RSV data 
availability and the development of the baseline efficiency level.
    DOE seeks comment on its assumption that all RSV models sold in the 
United States are based on a global platform. This is identified as 
Issue 1 in section VIII.E, ``Issues on Which DOE Seeks Comment.''
b. Vertical Turbine Submersible (VTS).1800
    Market research, confidential manufacturer data, and direct input 
from the CIP Working Group indicate that the 4-pole electric motor-
driven submersible vertical turbine (VTS.1800) is a very uncommon pump 
configuration in the marketplace. Existing models are hydraulically 
identical to the 2-pole-based model, with the only differences being in 
the type of motor used. This means that every 4-pole-based model is 
constructed from a bare pump that was originally designed for use with 
a 2-pole motor. Total shipments for this equipment class are estimated 
to be less than 1 percent of the VTS.3600 equipment class. On the 
recommendation of the CIP Working Group (See EERE-2013-BT-NOC-0039-0105 
at pp. 300-308; EERE-2013-BT-NOC-0039-0106 at pp. 38-40, 62-67, 88-95), 
DOE proposes efficiency levels for VTS.1800 equal to that of the 
VTS.3600 equipment class. Chapter 5 of NOPR TSD provides complete 
details on the development of the VTS.1800 efficiency levels.
    DOE seeks comment on whether any pump models would meet the 
proposed standard at a nominal speed of 3600 but fail at a nominal 
speed of 1800 if the same C-values were used for each equipment class. 
This issue is identified as Issue 2 in section VIII.E, ``Issues on 
Which DOE Seeks Comment.''
3. Technology Assessment
    In the Framework Document, DOE listed the following technologies 
that can improve pump efficiency:
    <bullet> Improved hydraulic design;
    <bullet> Improved surface finish on wetted components;
    <bullet> Reduced running clearances;
    <bullet> Reduced mechanical friction in seals;
    <bullet> Reduction of other volumetric losses;
    <bullet> Addition of a variable speed drive (VSD);
    <bullet> Improvement of VSD efficiency; and
    <bullet> Reduced VSD standby and off mode power usage.
    Chapter 3 of the NOPR TSD details each of these technology options. 
DOE solicited and received numerous stakeholder comments regarding 
these options in the Framework Document. The following sections 
summarize the stakeholder comments.
a. General Discussion of Technology Options
    In the Framework Document, DOE requested comment on the 
applicability of the technology options presented and the accuracy of 
the potential efficiency gains listed. HI agreed that the presented 
technology options are applicable to the types of pumps being 
discussed, but it emphasized that DOE's estimates of potential 
efficiency gains are representative of the differences between the very 
worst and very best in class pump designs. HI also stated that the 
estimated efficiency gains listed by DOE in the Framework document are 
likely to be larger than the gains that would be realized for pumps 
that would be subject to an efficiency standard. (HI, Framework Public 
Meeting Transcript at pp. 297-298; HI, No. 25 at p. 9; HI, No. 25 at p. 
39.)
    Grundfos also commented on the applicability of the technology 
options. They suggested that certain design options are interrelated, 
noting that optimizing components such as the impeller (i.e., the 
primary rotating component of a centrifugal pump) and volute (i.e., the 
primary static component of a centrifugal pump) can reduce volumetric 
losses and improve efficiency. (Grundfos, No. 24 at p. 25.) Grundfos 
suggested that using combinations of options, such as hydraulic 
redesign, reduced running clearance, and reduced volumetric losses, may 
all be incorporated into the design of the pump to optimize the desired 
characteristics. (Id.)
    DOE has incorporated both of these suggestions into its market and 
technology, screening, and engineering analyses.
b. Additional Technology Options
    The CA IOUs recommended that DOE evaluate technology options that 
facilitate maintenance or improve average performance over a pump's 
lifetime. These include wear rings, flange taps, and compression 
sleeves. (CA IOUs, No. 26 at pp. 3, 4.) DOE evaluated all available 
technology options related to pump performance and efficiency, as 
defined by the proposed PEI metric and test procedure. While the 
technology options proposed by the CA IOUs may improve maintainability 
and average performance over a pump's lifetime, they were not found to 
have a significant impact on pump efficiency (as defined by the test 
procedure) as stand-alone technology options and, thus, were not 
considered in the analysis.
c. Applicability of Technology Options to Reduced Diameter Impellers
    In the Framework Document, DOE also solicited comments on how the 
technology options might impact pumps with reduced diameter impellers. 
In response, HI observed that pursuing efficiency improvements specific 
to only trimmed impellers would prove costly and result in only minor 
efficiency gains. (HI, No. 25 at p. 39.) Grundfos noted that 
modifications in the pump design to achieve improved

[[Page 17842]]

performance are not specific to the impeller trim, but to the design of 
all components as a whole. (Grundfos, No. 24 at p. 26.)
    DOE is proposing to set energy conservation standards for pump 
efficiency based on the pump's full impeller diameter characteristics, 
which would require testing the pump at its full impeller diameter. As 
such, DOE's analyses of technology options have been made with respect 
to the full diameter model. In proposing to set standards only on the 
full diameter, DOE considered that improvements made to the full 
diameter pumps will also improve the efficiency for all trimmed or 
reduced diameter variants.
d. Elimination of Technology Options Due to Low Energy Savings 
Potential.
    DOE eliminated some technologies that were determined to provide 
little or no potential for efficiency improvement for one of the 
following additional reasons: (a) The technology does not significantly 
improve efficiency; (b) the technology is not applicable to the 
equipment being considered for coverage or does not significantly 
improve efficiency across the entire scope of each equipment class; and 
(c) efficiency improvements from the technology degrade quickly.
    DOE found that most of the technology options identified in the 
Framework Document have limited potential to improve the efficiency of 
pumps. In addition, DOE found that several of the options also do not 
pass the screening criteria listed in section III.B. DOE discusses the 
elimination of all of these technologies in section III.B.

B. Screening Analysis

    DOE generally uses four screening factors to determine which 
technology options are suitable for further consideration in a 
standards rulemaking. If a technology option fails to meet any one of 
the factors, it is removed from consideration. The factors for 
screening design options include:
    (1) Technological feasibility. Technologies incorporated in 
commercial products or in working prototypes will be considered 
technologically feasible.
    (2) Practicability to manufacture, install and service. If mass 
production of a technology in commercial products and reliable 
installation and servicing of the technology could be achieved on the 
scale necessary to serve the relevant market at the time of the 
effective date of the standard, then that technology will be considered 
practicable to manufacture, install and service.
    (3) Adverse impacts on product utility or product availability.
    (4) Adverse impacts on health or safety. 10 CFR part 430, subpart 
C, appendix A, sections (4)(a)(4) and (5)(b).
1. Screened Out Technologies
Improved Surface Finish on Wetted Components
    Grundfos suggested that smoothing the surface finish of pump 
components is a time consuming manual activity that should not be 
considered to be a practical manufacturing process. (Grundfos, No. 24 
at pp. 25-26.) Additionally, HI responded to DOE's initial estimates of 
available efficiency improvement by noting that its experience has 
shown that smoothing and surface finish have very little effect at 
higher specific speeds and for the range of pumps that are commonly in 
service. (HI, No. 25 at p. 39.) HI, Grundfos, and ACEEE all suggested 
that gains in efficiency from improved surface finish and smoothing are 
non-persistent, with the surface finish quickly being degraded in most 
applications. (HI, No.25 at pp. 9, 39; Grundfos, No. 24 at p. 25; 
ACEEE, Framework Public Meeting Transcript at p. 299.) Based on these 
comments, the agreement of the CIP Working Group (EERE-2013-BT-NOC-
0039-0109 at pp. 91-97 pp. 46-50), and the information obtained from 
manufacturer interviews, DOE observed that, at this time, manual 
smoothing poses a number of significant drawbacks--(1) the process is 
manually-intensive, which makes it impractical to implement in a 
production environment, (2) the efficiency improvements from this 
process degrade over a short period of time, and (3) the relative 
magnitude of efficiency improvements are small (e.g., approximately 
20:1 for a baseline pump with a specific speed of 2,500 RPMs) when 
compared to other options, such as hydraulic redesign. Consequently, 
after considering these limitations and the relative benefits that 
might be possible from including this particular option, DOE concluded 
that manual smoothing operations would not be likely to significantly 
improve the energy efficiency across the entire scope of each equipment 
class DOE is currently examining. Consequently, DOE screened this 
technology option out. Chapters 3 and 4 of NOPR TSD provide further 
details on the justification for screening out this technology.
    In addition to smoothing operations, DOE also evaluated two 
additional methods for improving surface finish; (1) surface coating or 
plating, and (2) improved casting techniques. In addition to being 
unable to significantly improve efficiency across the entire scope of 
each equipment class, surface coatings and platings were also screened 
out due to reliability and durability concerns, and improved casting 
techniques were screened out because the efficiency improvements from 
the technology degrade quickly. Chapters 3 and 4 of NOPR TSD provide 
further details on these methods for surface finish improvement, and 
justification for screening out.
Reduced Running Clearances
    Grundfos stated that reducing running clearances is a method used 
by most manufacturers in the design of the individual components with 
the use of wear rings. (Grundfos, No. 24 at p.25.) HI suggested that 
the reduction in running clearances may improve efficiency in some 
applications, depending on specific speed, but it noted that reduced 
running clearances may also lead to mechanical reliability problems 
leading to the added expense of larger (stiffer) shafts, larger 
bearings, and advanced or more costly wear ring materials. (HI, No. 25 
at p. 39.) HI and ACEEE also suggest that the efficiency improvements 
from tightened running clearances degrade quickly. (HI, Framework 
Public Meeting Transcript at p. 329; ACEEE, Framework Public Meeting 
Transcript at p. 299.)
    Manufacturer interview responses indicate that clearances are 
currently set as tight as possible, given the limitations of current 
wear ring materials, machining tolerances, and pump assembly practices. 
To tighten clearance any further without causing operational contact 
between rotating and static components would require larger (stiffer) 
shafts, and larger (stiffer) bearings. Without these stiffer 
components, operational contact will lead to accelerated pump wear and 
loosened clearances. Loosened clearances cause the initial efficiency 
improvements to quickly degrade. Alternatively, the use of larger 
components to improve the stiffness to appropriate levels results in 
increased mechanical losses. These losses negate the potential 
improvements gained from reduced clearances. Consequently, DOE proposes 
to eliminate this technology option because of the reliability concerns 
highlighted by HI and the concerns of quickly degrading efficiency 
improvements highlighted by HI and ACEEE. For additional details on the 
screening of reduced running clearances, see chapter 4 of the NOPR TSD.

[[Page 17843]]

Reduced Mechanical Friction in Seals
    DOE evaluated mechanical seal technologies that offered reduced 
friction when compared to commonly used alternatives. DOE concluded 
from this evaluation that the reduction in friction resulting from 
improved mechanical seals would be too small to significantly improve 
efficiency across the entire scope of each equipment class. For 
additional details, see chapters 3 and 4 of the NOPR TSD.
Reduction of Other Volumetric Losses
    The most common causes of volumetric losses (other than previously 
discussed technology options) are thrust balance holes. (Thrust balance 
holes are holes located in the face of an impeller that act to balance 
the axial loads on the impeller shaft and thus reduce wear on rub 
surfaces and bearings). DOE found that removal of thrust balance holes 
from existing impellers will reduce pump reliability. DOE notes that 
manufacturers may be able to decrease volumetric losses by reducing the 
number and/or diameter of thrust balance holes as a part of a full 
hydraulic redesign. For additional details, see chapters 3 and 4 of the 
NOPR TSD.
Addition of a Variable Speed Drive (VSD)
    Grundfos suggested that variable speed drives are a proven method 
to optimize pump operation and reduce energy consumption. (Grundfos, 
No. 24 at p. 25.) DOE agrees that variable speed drives are a proven 
method to optimize pump operation, but only for certain pump 
applications for which standards are being considered. DOE's analysis 
has shown that there are many applications for these types of pumps 
that will not benefit from a VSD. For common applications, such as 
systems that have unvarying flow and head requirements (constant load), 
on/off operation, or high percentages of static head,\25\ VFDs may not 
save energy and may even increase energy consumption when factoring in 
the efficiency of the VFD unit. EEI reported that technologies that 
reduce power factor below 85 percent should be screened out because of 
deleterious impacts on the electric grid but that most VSDs will not 
reduce power factors to levels that would create extra costs for 
consumers. (EEI, No. 31 at p. 4.)
---------------------------------------------------------------------------

    \25\ Static head is the component of total dynamic head that 
results from the fluid being lifted a certain height above the pump. 
Unlike dynamic head, static head requirements stay constant across 
the system curve, even at zero flow.
---------------------------------------------------------------------------

    Because there are many application types and load profiles that 
would not benefit from a VSD, and many applications for which energy 
use would increase with a VSD, DOE has eliminated the use of VSDs from 
the list of technology options. For additional details, see chapters 3 
and 4 of the NOPR TSD.
Improvement of VSD Efficiency
    Grundfos stated that proper selection, operation and integration of 
a VSD with a pump and motor are more important than improving the 
efficiency of the VSD alone. (Grundfos, No. 24 at p. 25.) Because DOE 
has eliminated the use of VSDs as a technology option, improvement of 
VSD efficiency will also not be considered as technology option. For 
additional details, see chapters 3 and 4 of the NOPR TSD.
Reduced VSD Standby and Off Mode Power Usage
    Grundfos stated that reducing VSD standby and off mode power usage 
has a minor impact on energy efficiency, but can add to the efficiency 
of the control strategy. (Grundfos, No. 24 at p. 25.) Available 
information supports Grundfos' characterization of the relative 
benefits of improved VSD efficiency and reduced standby and off mode 
power usage. Although improving VSD efficiency and standby/off mode 
power may help improve overall pump efficiency, DOE has concluded that 
not all pumps for which DOE is considering standards in this rule would 
benefit from the use of a VSD. In addition, VSD standby and off model 
power usage would not impact the PEI rating of equipment as tested 
under the DOE test procedure. As such, DOE is not considering improved 
VSD efficiency and reduced standby and off mode power usage as design 
options in the engineering analysis. For additional details, see 
chapter 4 of the NOPR TSD.
2. Remaining Technologies
    DOE found that only improved hydraulic design met all four 
screening criteria to be examined further in DOE's analysis. HI 
commented that hydraulic redesign will be the most prominent method 
used to improve efficiency because many of the easy to implement 
efficiency gains, such as tighter clearances, have already been 
explored by manufacturers. (HI, Framework Public Meeting Transcript at 
p. 328.) The results of DOE's screening analysis support HI's comment.
    Improved hydraulic design is technologically feasible, as there is 
equipment on the market that has utilized this technology option. DOE 
also finds that improved hydraulic design meets the other screening 
criteria (i.e., practicable to manufacture, install, and service and no 
adverse impacts on consumer utility, product availability, health, or 
safety). As such, DOE considered hydraulic redesign as a design option 
in the engineering analysis. For additional details, see chapter 4 of 
the NOPR TSD.

C. Engineering Analysis

    The engineering analysis determines the manufacturing costs of 
achieving increased efficiency or decreased energy consumption. DOE 
historically has used the following three methodologies to generate the 
manufacturing costs needed for its engineering analyses: (1) The 
design-option approach, which provides the incremental costs of adding 
to a baseline model design options that will improve its efficiency; 
(2) the efficiency-level approach, which provides the relative costs of 
achieving increases in energy efficiency levels, without regard to the 
particular design options used to achieve such increases; and (3) the 
cost-assessment (or reverse engineering) approach, which provides 
``bottom-up'' manufacturing cost assessments for achieving various 
levels of increased efficiency, based on detailed data as to costs for 
parts and material, labor, shipping/packaging, and investment for 
models that operate at particular efficiency levels.
    DOE conducted the engineering analyses for this rulemaking using a 
design-option approach. The decision to use this approach was made due 
to several factors, including the wide variety of equipment analyzed, 
the lack of numerous levels of equipment efficiency currently available 
in the market, and the limited design options available for the 
equipment. More specifically, for the hydraulic redesign option, DOE 
used industry research to determine changes in manufacturing costs and 
energy efficiency. DOE directly analyzed costs for the equipment 
classes listed in section IV.A.2. Consistent with HI's recommendation 
(HI, Framework Public Meeting Transcript at p. 329) and available data, 
DOE concluded that it was infeasible to determine the upfront costs 
(engineering time, tooling, new patterns, qualification, etc.) 
associated with hydraulic redesign via reverse engineering.
    The following sections briefly discuss the methodology used in the 
engineering analysis. Complete details of the engineering analysis are 
available in chapter 5 of the NOPR TSD.

[[Page 17844]]

1. Representative Equipment for Analysis
a. Representative Configuration Selection
    For the engineering analysis, DOE directly analyzed the cost-
efficiency relationship for all equipment classes specified in in 
section IV.A.1, over the full range of sizes, for all pumps falling 
within the proposed scope. Within the engineering analysis, ``size'' is 
defined by a pump's flow at BEP and specific speed. Analyzing over the 
full size range allowed DOE to use representative configurations for 
each equipment class, rather than an approach that analyzes a 
representative unit from each class. A representative unit has a 
defined size and defined features, while a representative configuration 
defines only the features of the pump, allowing the cost-efficiency 
analysis to consider a large range of data points that occur over the 
full range of sizes. This method addresses the concerns of both EEI and 
HI that the equipment classes considered by DOE encompass too much 
variation to effectively be characterized by one representative unit. 
(EEI, Framework Public Meeting Transcript at pp. 275-276; HI, Framework 
Public Meeting Transcript at p. 286.)
    In selecting representative configurations, DOE researched the 
offerings of major manufacturers to select configurations generally 
representative of the typical offerings produced within each equipment 
class. Configurations and features were based on high-shipment-volume 
designs prevalent in the market. The key features that define each 
representative configuration include impeller material, impeller 
production method, volute/casing material, volute/casing production 
method, and seal type.
    For the ESCC, ESFM, and IL equipment classes, the representative 
configuration was defined as a pump fitted with a cast bronze impeller; 
cast-iron volute; and mechanical seal. For the RSV and VTS equipment 
classes, the representative configuration was defined as a pump fitted 
with sheet metal-based fabricated stainless-steel impeller(s), and 
sheet metal-based fabricated stainless-steel casing and internal static 
components. Chapter 5 of the TSD provides further detail on 
representative configurations.
b. Baseline Configuration
    The baseline configuration defines the lowest efficiency equipment 
in each analyzed equipment class. This configuration represents 
equipment that utilizes the lowest efficiency technologies present in 
the market. Because DOE directly analyzed the cost-efficiency 
relationship over the full range of sizes, DOE defined a baseline 
configuration applicable across all sizes, rather than a more specific 
baseline model. This baseline configuration ultimately defines the 
energy consumption and associated cost for the lowest efficiency 
equipment analyzed in each class.
    DOE established baseline configurations by reviewing available 
manufacturer performance and sales data for equipment manufactured at 
the time of the analysis. Chapter 5 of the NOPR TSD sets forth the 
process that DOE used to select the baseline configuration for each 
equipment class and discusses the baseline in greater detail.
2. Design Options
    After conducting the screening analysis and removing from 
consideration technologies that did not warrant inclusion on technical 
grounds, DOE considered hydraulic redesign as a design option in the 
NOPR engineering analysis.
3. Available Energy Efficiency Improvements
    For each equipment class, DOE assessed the available energy 
efficiency improvements resulting from a hydraulic redesign. This 
assessment was informed by manufacturer performance and cost data, 
confidential manufacturer interview responses, general industry 
research, and stakeholder input gathered at the CIP Working Group 
public meetings. DOE concluded that a hydraulic redesign is capable of 
improving the efficiency of a pump up to and including the max-tech 
level (discussed in section IV.C.4.a). The efficiency gains that a 
manufacturer realizes from a hydraulic redesign are expected to be 
commensurate with the level of effort and capital a manufacturer 
invests in redesign. Section IV.C.7 discusses the relationship between 
efficiency gains and conversion cost in more detail.
4. Efficiency Levels Analyzed
    In assessing the cost associated with hydraulic redesign, and 
carrying through to all downstream analyses, DOE analyzed several 
efficiency levels. Each level consists of a specific C-value, as shown 
in Table IV.1. (See section III.D.1 for more information about C-values 
and the related equations.)

                                           Table IV.1--Efficiency Levels Analyzed With Corresponding C-Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                EL0             EL1            EL 2            EL 3            EL 4            EL 5
                                                         -----------------------------------------------------------------------------------------------
                                                                                                                                               70th
                     Equipment class                                           10th            25th            40th            55th         Efficiency
                                                             Baseline       Efficiency      Efficiency      Efficiency      Efficiency    percentile/max
                                                                            percentile      percentile      percentile      percentile         tech
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800...............................................          134.43          131.63          128.47          126.67          125.07          123.71
ESCC.3600...............................................          135.94          134.60          130.42          128.92          127.35          125.29
ESFM.1800...............................................          134.99          132.95          128.85          127.04          125.12          123.71
ESFM.3600...............................................          136.59          134.98          130.99          129.26          127.77          126.07
IL.1800.................................................          135.92          133.95          129.30          127.30          126.00          124.45
IL.3600.................................................          141.01          138.86          133.84          131.04          129.38          127.35
RSV.1800 *..............................................          129.63             N/A             N/A             N/A             N/A          124.73
RSV.3600 *..............................................          133.20             N/A             N/A             N/A             N/A          129.10
VTS.1800................................................          137.62          135.93          134.13          130.83          128.92          127.29
VTS.3600................................................          137.62          135.93          134.13          130.83          128.92          127.29
--------------------------------------------------------------------------------------------------------------------------------------------------------
* For RSV equipment, DOE established only baseline and max-tech efficiency levels due to limited data availability.


[[Page 17845]]

a. Maximum Technologically Feasible Levels
    Efficiency level five (EL5), as shown in Table IV.1, represents the 
maximum technologically feasible (``max-tech'') efficiency level for 
the ESCC, ESFM, IL, and VTS equipment classes. EL1 represents max-tech 
for the RSV equipment classes. To set the max-tech level for the 
applicable equipment classes, DOE performed an analysis to determine 
the maximum improvement in energy efficiency that is technologically 
feasible for each equipment class.
    DOE considers technologies to be technologically feasible if they 
are incorporated in any currently available equipment or working 
prototypes. A max-tech level results from the combination of design 
options predicted to result in the highest efficiency level possible 
for an equipment class.
    In the case of pumps, DOE determined, based on available 
information and consistent with the conclusions of the CIP Working 
Group, that pumps are a mature technology, with all available design 
options already existing in the marketplace.\26\ Therefore, DOE assumed 
in its analysis that the max-tech efficiency level coincides with the 
maximum available efficiency already offered in the marketplace. As a 
result, DOE performed a market-based analysis to determine max-tech/
max-available levels. The analysis resulted in the 70th efficiency 
percentile being consider max-tech for each equipment class. A 
preliminary version of this analysis was provided to the CIP Working 
Group during the April 29-30, 2014 meetings. (EERE-2013-BT-NOC-0039-
0051, pp. 17-32) This analysis proposed the 70th efficiency percentile 
as the max-tech level and solicited feedback on alternative opinions. 
Ultimately no alternative feedback on max-tech was received, and the 
CIP Working Group implicitly agreed with DOE's proposal, and 
incorporated the 70th efficiency percentile as the highest TSL level 
evaluated. Chapter 5 of NOPR TSD provides complete details on DOE's 
market-based max-tech analysis and results.
---------------------------------------------------------------------------

    \26\ See EERE-2013-BT-NOC-0039-0072, pp.103-105.
---------------------------------------------------------------------------

    DOE's market-based approach directly addresses Grundfos' concerns 
(in response to the Framework Document) that it is difficult to 
accurately predict maximum efficiency levels using theoretical models. 
(Grundfos, No. 24 at p. 28).
    In response to the CA IOUs concerns that manufacturers might not be 
currently making the most efficient pumps possible in all segments of 
the market. See CA IOUs, Framework Public Meeting Transcript at p. 331, 
DOE notes that the maximum available efficiency level was determined 
using a regression analysis across pumps of all sizes within each 
equipment class. As such, a broadly applicable max-tech/max-available 
level was developed, which does not provide any advantage or 
disadvantage to current low efficiency sub-segments of the market.
5. Manufacturers Production Cost Assessment Methodology
a. Changes in MPC Associated With Hydraulic Redesign
    DOE performed an analysis for each equipment class to determine the 
change in manufacturer production cost (MPC), if any, associated with a 
hydraulic redesign. For this analysis, DOE reviewed the manufacturer 
selling price (MSP), component cost, performance, and efficiency data 
supplied by both individual manufacturers and HI. DOE, with the support 
of the majority of the CIP Working Group, concluded that for all 
equipment classes, a hydraulic redesign is not expected to increase the 
MPC of the representative pump configuration used for analysis.\27\ 
Specifically, a hydraulic redesign is not expected to increase 
production or purchase cost of a pump's two primary components; the 
impeller and the volute.
---------------------------------------------------------------------------

    \27\ Refer to the following transcripts in which the conclusion 
of no change in MPC with improved efficiency is presented to the 
working group and discussed: EERE-2013-BT-NOC-0039-0072, pp. 114-130 
and pp. 270-273; EERE-2013-BT-NOC-0039-0109, p.264).
---------------------------------------------------------------------------

    DOE acknowledges that actual changes in MPC experienced by 
individual manufacturers will vary, and that in some cases redesigns 
may actually increase or decrease the cost of the impeller and/or 
volute. However, available information indicates that the flat MPC-
versus-efficiency relationship best represents the aggregated pump 
industry as a whole. Chapter 5 of the NOPR TSD provides complete 
details on DOE's MPC-efficiency analysis and results.
b. Manufacturer Production Cost (MPC) Model
    For each equipment class, DOE developed a scalable cost model to 
estimate MPC across all pump sizes. Given a pump's specific speed and 
BEP flow, the cost model outputs an estimated MPC. Because hydraulic 
redesign is not expected to result in an increase in MPC, the model is 
efficiency-independent and predicts the same MPC for all pumps of the 
identical BEP flow, specific speed, and equipment class, regardless of 
efficiency.
    The DOE MPC model was developed using data supplied by both HI and 
individual manufacturers. This data set includes information on the 
MSP, manufacturer markup, shipments volumes, model performance and 
efficiency, and various other parameters. Chapter 5 of the NOPR TSD 
provides additional detail on the development of the MPC model.
6. Product and Capital Conversion Costs
    DOE expects that hydraulic redesigns will result in significant 
conversion costs for manufacturers as they attempt to bring their pumps 
into compliance with the proposed standard. DOE classified these 
conversion costs into two major groups: (1) Product conversion costs 
and (2) capital conversion costs. Product conversion costs are 
investments in research, development, testing, marketing, and other 
non-capitalized costs necessary to make product designs comply with a 
new or amended energy conservation standard. Capital conversion costs 
are investments in property, plant, and equipment necessary to adapt or 
change existing production facilities such that new product designs can 
be fabricated and assembled.
    To evaluate the magnitude of the product and capital conversion 
costs the pump industry would incur to comply with new energy 
conservation standards, DOE used a bottom-up approach. For this 
approach, DOE first determined the industry-average cost, per model, to 
redesign pumps of varying sizes to meet each of the proposed efficiency 
levels. DOE then modeled the distribution of unique pump models that 
would require redesign at each efficiency level. For each efficiency 
level, DOE multiplied each unique failing model by its associated cost 
to redesign and summed the total to reach an estimate of the total 
product and capital conversion cost for the industry.
    Data supplied to DOE by HI was used as the basis for the industry-
average cost, per model, to redesign a failing pump model. HI, through 
an independent third party, surveyed 15 manufacturers regarding the 
product and conversion costs associated with redesigning one-, 50-, and 
200-hp pumps from the 10th to the 40th percentile of market efficiency. 
Specifically, HI's survey contained cost categories for the following: 
Redesign; prototype and initial test; patterns and tooling; testing; 
working capital; and marketing.

[[Page 17846]]

    DOE validated the HI survey data with independent analysis and 
comparable independently collected manufacturer interview data. In 
addition, data from the EU pumps regulation preparatory study \28\ was 
used to augment the HI survey data and scale costs to various 
efficiency levels above and below the 40th percentile.
---------------------------------------------------------------------------

    \28\ AEA Energy & Environment. 2008, Appendix 6: Lot 11--
`Circulators in buildings,' Report to European Commission.
---------------------------------------------------------------------------

    During the framework meeting, CA IOUs recommended that DOE use 
mature market estimates to determine costs associated with efficiency 
improvements rather than an approach based on the current market. (CA 
IOUs, Framework Public Meeting Transcript, No. 19, at pp. 324, 345.) In 
previous rules, the CA IOUs commented that the cost to improve 
efficiency has been overestimated. DOE recognizes the concerns of the 
CA IOUs and notes that hydraulic redesigns are a mature technology 
option and as such, the redesign costs used in the NOPR analysis 
represent the mature market cost of the technology option.
    DOE used a pump model database, developed by its contractors, 
containing various performance parameters, to model the distribution of 
unique pump models that would require redesign at each efficiency 
level. The DOE contractor database is comprised of a combination of 
data supplied by HI and data collected independently from manufacturers 
by the DOE. For the ESCC, ESFM, IL, and VT equipment classes, the 
database is of suitable size to be representative of the industry as a 
whole. Table IV.2 presents the resulting product and capital conversion 
costs for each equipment class, at each efficiency level. Complete 
details on the calculation of industry aggregate product and capital 
conversion costs are found in chapter 5 of the NOPR TSD.

                                               Table IV.2--Total Conversion Cost at Each Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
 All values in millions of dollars        EL 0            EL 1            EL 2            EL 3            EL 4                       EL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC/ESFM *........................              $0           $12.4           $49.4          $110.6          $210.4  $344.7.
IL.................................               0             5.1            20.0            45.3            88.2  144.0.
VTS................................               0             2.5             9.3            19.2            37.8  61.3.
RSV................................               0             N/A             N/A             N/A             N/A  Data Not Available.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Due to commonality in design and components, DOE calculated the conversion costs for ESCC and ESFM in aggregate. These values were later
  disaggregated, as appropriate, in downstream analyses.

7. Manufacturer Markup Analysis
    To account for manufacturers' non-production costs and profit 
margin, DOE applies a non-production cost multiplier (the manufacturer 
markup) to the full MPC. The resulting MSP is the price at which the 
manufacturer can recover all production and non-production costs and 
earn a profit. To meet the new energy conservation standards proposed 
in this rule, DOE expects that manufacturers will hydraulically 
redesign their product lines, which may result in new and increased 
capital and equipment conversion costs. Depending on the competitive 
environment for this equipment, some or all of the increased conversion 
costs may be passed from manufacturers to retailers and eventually to 
consumers in the form of higher purchase prices. The MSP should be high 
enough to recover the full cost of the equipment (i.e., full production 
and non-production costs) and overhead (including amortized product and 
capital conversion costs), and still yield a profit. The manufacturer 
markup has an important bearing on profitability. A high markup under a 
standards scenario suggests manufacturers can readily pass along more 
of the increased capital and equipment conversion costs to consumers. A 
low markup suggests that manufacturers will not be able to recover as 
much of the necessary investment in plant and equipment.
    DOE developed initial estimates of the base case manufacturer 
markups based on corporate annual reports, Securities and Exchange 
Commission (SEC) 10-K filings, confidential manufacturer data, and 
comments made publicly during the CIP Working Group negotiations.
    To support the downstream analyses, DOE investigated industry 
markups in detail, characterizing industry-average markups, individual 
manufacturer markup structures, and the industry-wide markup structure.
a. Industry-Average Markups
    Industry-average manufacturer markups were developed by weighting 
individual manufacturer markup estimates on a market share basis, as 
manufacturers with larger market shares more significantly affect the 
market average.
b. Individual Manufacturer Markup Structures
    Using data and information gathered during the manufacturer 
interviews, DOE concluded that within an equipment class, each 
manufacturer maintains a flat markup. This means that each manufacturer 
targets a single markup value for models offered in an equipment class, 
regardless of size, efficiency, or other design features. Tiered 
product offerings and markups do not exist at the individual 
manufacturer level.
c. Industry-Wide Markup Structure
    DOE also used the markup data gathered during the manufacturer 
interviews to assess the industry-wide markup structure. Although 
tiered product offerings and markups do not exist at the individual 
manufacturer level, DOE concluded that when analyzed as whole, the 
industry exhibits a relationship between manufacturer markup and 
efficiency. DOE's analysis showed that on the industry-wide scale, the 
lowest efficiency models tend to garner lower markups than higher 
efficiency models, up to about the 25th percentile of efficiency. 
Beyond the 25th percentile, the relationship flattens out, and no 
correlation is seen between markup and efficiency. The data suggest 
that this relationship is a result of certain manufacturers positioning 
themselves with more or less efficient product portfolios and charging 
markups commensurate with their position in the marketplace. They also 
indicate (consistent with the views of the CIP Working Group) that the 
market does not value efficiency beyond the lower 25th percentile. 
(EERE-2013-BT-NOC-0039-0072, pp. 269-278; EERE-2013-BT-NOC-0039-0054, 
pp. 67-69.) In both private interviews and public working group 
comments, manufacturers held the view that efficiency is not currently 
the primary selling point or cost driver for the

[[Page 17847]]

majority of pumps within the scope of the proposed rule. Rather, other 
factors, such as reliability, may influence price significantly and are 
known to be more influential in the purchaser's decision making 
process. (EERE-2013-BT-NOC-0039-0072, pp. 269-278.)
    DOE notes that the development of the markup-efficiency 
relationship was based on data from the IL equipment class. DOE, with 
support of the CIP Working Group, concludes that the markup structure 
of the IL equipment class is representative of the ESCC, ESFM, and VTS 
equipment classes.\29\ DOE applied the IL markup-efficiency 
relationship to these equipment classes, for use in the analyses 
presented in this NOPR. Chapter 5 of the NOPR TSD provides complete 
details the markup-efficiency relationship analysis and results.
---------------------------------------------------------------------------

    \29\ Refer to the following transcript in which the conclusion 
that the markup structure of the IL equipment class is 
representative of the ESCC, ESFM, and VTS equipment classes is 
presented to the working group and no negative feedback is received: 
EERE-2013-BT-NOC-0039-0072, pp. 292-295.
---------------------------------------------------------------------------

8. MSP-Efficiency Relationship
    Ultimately, the goal of the engineering analysis is to develop an 
MSP-Efficiency relationship that can be used in downstream rulemaking 
analyses such as the Life Cycle Cost (LCC) analysis, the Payback Period 
(PBP) analysis, and the Manufacturer Impact Analysis (MIA).
    For the downstream analyses, DOE evaluated the base case MSP-
Efficiency relationship as well as two separate MSP-Efficiency 
relationship scenarios to represent the uncertainty regarding the 
potential impacts on prices and profitability for manufacturers 
following the implementation of new energy conservation standards. The 
two scenarios are: (1) Flat pricing, and (2) cost recovery pricing. 
These scenarios result in varying revenue and cash flow impacts and 
were chosen to represent the lower and upper bounds of potential 
revenues for manufacturers.
    The base pricing scenario represents a snapshot of the pump market, 
as it stands prior to this rulemaking. The base pricing scenario was 
developed by applying the markup-efficiency relationship presented in 
section IV.C.7.c to the MPC model presented in section IV.C.5.a. Both 
the markup and MPC model are based on data supplied by individual 
manufacturers. From these data, DOE created a scalable model that can 
determine MSP as a function of efficiency, specific speed, and flow at 
BEP.
    Under the flat pricing standards case scenario, DOE maintains the 
same pricing as in the base case, which resulted in no price changes at 
a given efficiency level for the manufacturer's first consumer. Because 
this pricing scenario assumes that manufacturers would not increase 
their pricing as a result of standards, even as they incur conversion 
costs, this scenario is considered a lower bound for revenues.
    In the cost recovery pricing scenario, manufacturer pricing is set 
so that manufacturers recover their conversion costs over the analysis 
period. This cost recovery is enabled by an increase in mark-up, which 
results in higher sales prices for pumps even as MPCs stay the same. 
The cost recovery calculation assumes manufacturers raise prices on 
models where a redesign is necessitated by the standard. The additional 
revenue due to the increase in markup results in manufacturers 
recovering 100 percent of their conversion costs over the 30-year 
analysis period, taking into account the time-value of money. The final 
MSP-efficiency relationship for this scenario is created by applying 
the markup-efficiency relationship to the MPC cost model presented in 
section IV.C.5.b., resulting in a scalable model that can determine MSP 
as a function of efficiency, specific speed, and flow at BEP. In the 
LCC and NIA analysis, DOE evaluated only the cost recovery pricing 
scenario, as it would be the most conservative case for consumers, 
resulting in the fewest benefits.\30\
---------------------------------------------------------------------------

    \30\ The cost recovery pricing scenario is the most conservative 
case (ie,i.e., resulting in the fewest benefits) for consumers and 
the most positive case for manufacturers (ie,i.e., resulting in the 
fewest negative impacts). In the MIA, DOE analyses this scenario and 
the flat pricing scenario, which results in the most positive case 
for consumer and the most conservative case for manufacturers.
---------------------------------------------------------------------------

D. Markups Analysis

    DOE uses markups (e.g., manufacturer markups, distributor markups, 
contractor markups) and sales taxes to convert the MSP estimates from 
the engineering analysis to consumer prices, which are then used in the 
LCC and PBP analysis and in the manufacturer impact analysis. The 
markups are multipliers that represent increases above the MSP. DOE 
develops baseline and incremental markups based on the equipment 
markups at each step in the distribution chain. The incremental markup 
relates the change in the manufacturer sales price of higher-efficiency 
models (the incremental cost increase) to the change in the consumer 
price.
    Before developing markups, DOE defines key market participants and 
identifies distribution channels. In the Framework Document, DOE 
presented initial information regarding the distribution channels for 
pumps. DOE revised these channels and their assigned market share in 
response to manufacturer interviews and discussions in the CIP Working 
Group. (See, e.g., EERE-2013-BT-NOC-0039-0072, pp. 327-330.) Based on 
this information, DOE proposes to use the following main distribution 
channels that describe how pumps pass from the manufacturer to end-
users: (1) Manufacturer to distributor to contractor to end-users (70 
percent of sales); (2) manufacturer to distributor to end-users (17 
percent of sales); (3) manufacturer to original equipment manufacturer 
to end-users (8 percent of sales); (4) manufacturer to end-users (2 
percent of sales); and (5) manufacturer to contractor to end-users (1 
percent of sales). Other distribution channels exist but are estimated 
to account for a minor share of pump sales (combined 2 percent).
    To develop markups for the parties involved in the distribution of 
the equipment, DOE utilized several sources, including: (1) The U.S. 
Census Bureau 2007 Economic Census Manufacturing Industry Series (NAICS 
33 Series) \31\ to develop original equipment manufacturer markups; (2) 
the U.S. Census Bureau 2012 Annual Wholesale Trade Survey, Hardware, 
and Plumbing and Heating Equipment and Supplies Merchant Wholesalers 
\32\ to develop distributor markups; and (3) 2013 RS Means Electrical 
Cost Data \33\ to develop mechanical contractor markups.
---------------------------------------------------------------------------

    \31\ U.S. Census Bureau (2007). Economic Census Manufacturing 
Industry Series (NAICS 33 Series) http://www.census.gov/manufacturing/asm.
    \32\ U.S. Census Bureau (2012). Annual Wholesale Trade Survey, 
Hardware, and Plumbing and Heating Equipment and Supplies Merchant 
Wholesalers (NAICS 4237). http://www.census.gov/wholesale/index.html.
    \33\ RS Means (2013), Electrical Cost Data, 36th Annual Edition 
(Available at: http://www.rsmeans.com).
---------------------------------------------------------------------------

    In addition to the markups, DOE derived State and local taxes from 
data provided by the Sales Tax Clearinghouse.\34\ These data represent 
weighted-average taxes that include county and city rates. DOE derived 
shipment-weighted-average tax values for each region considered in the 
analysis.
---------------------------------------------------------------------------

    \34\ Sales Tax Clearinghouse, Inc. (last accessed on January 10, 
2014), State sales tax rates along with combined average city and 
county rates, http://thestc.com/STrates.stm.
---------------------------------------------------------------------------

    In the Framework Document, DOE also considered accounting for 
shipping costs in its markups analysis. In response to the Framework 
Document,

[[Page 17848]]

Grundfos noted that transportation and shipping costs from freight 
companies and package delivery companies are based on size, weight and 
transit time requirements. (Grundfos, No. 24 at p. 31.) DOE's 
understanding is that pump size and weight do not change with 
efficiency level; therefore, DOE did not account for shipping costs in 
this analysis.
    Chapter 6 of the NOPR TSD provides further detail on the estimation 
of markups.
    Because the identified market channels are complex and their 
characterization required a number of assumptions, DOE seeks input on 
its analysis of market channels for the above equipment classes, 
particularly related to whether the channels include all necessary 
intermediate steps, and the estimated market share of each channel. DOE 
identified this as Issue 3 under ``Issues on Which DOE Seeks Comment'' 
in section VIII.E of this NOPR.

E. Energy Use Analysis

    DOE analyzed the energy use of pumps to estimate the savings in 
energy costs that consumers would realize from more energy-efficient 
pump equipment. Annual energy use depends on a number of factors that 
depend on the utilization of the pump, particularly duty point (i.e., 
flow, head, and power required for a given application), pump sizing, 
annual hours of operation, load profiles, and equipment losses. The 
annual energy use is calculated as a weighted sum of input power 
multiplied by the annual operating hours across all load points.
1. Duty Point
    DOE researched information on duty points for the commercial, 
industrial, and agricultural sectors from a variety of sources. DOE 
identified statistical samples only for the agricultural sector. 
Therefore, DOE used manufacturer shipment data to estimate the 
distribution of pumps in use by duty point. To account for the wide 
range of pump duty points in the field, DOE placed pump models in bins 
with varying power capacities using the shipment data provided by 
individual manufacturers. DOE grouped all pump models into nine power 
bins on a log-scale between 1 and 200 hp. Then, for each equipment 
class, DOE grouped the pump models into nine flow bins on a log-scale 
between minimum flow at BEP and maximum flow at BEP. Based on the power 
and flow binning process, DOE defined a representative unit for each of 
the combined power and flow bins. Within each bin, DOE defined the pump 
performance data (power and flow at BEP, pump curve and efficiency 
curve) as the shipment-weighted averages over all units in the bin. DOE 
used these data to calculate the annual energy use for each of the 
equipment classes.
2. Pump Sizing
    In the Framework Document, DOE requested information on pump 
sizing. Grundfos noted that the general selection guidelines and other 
resources are available from HI and specific professional or trade 
associations such as ASHRAE.\35\ (Grundfos, No. 24 at p. 32.) DOE 
reviewed relevant guidelines and resources and introduced a variable 
called the BEP offset to capture variations in pump sizing practices in 
the field. The BEP offset is essentially the relative distance between 
the consumer's duty point and the pump's BEP. Pumps are often sized to 
operate within 75 percent to 110 percent of their BEP flow. Therefore, 
for this analysis, the BEP offset is assumed to be uniformly 
distributed between -0.25 (i.e., 25% less than BEP flow) and 0.1 (10% 
more than BEP flow).
---------------------------------------------------------------------------

    \35\ ASHRAE was formerly known as the American Society of 
Heating, Refrigerating and Air-Conditioning Engineers.
---------------------------------------------------------------------------

3. Operating Hours
    DOE estimated average annual operating hours by application based 
on inputs from a market expert and feedback from the CIP Working 
Group.\36\ DOE developed statistical distributions to use in its energy 
use analysis.
---------------------------------------------------------------------------

    \36\ Refer to the following transcripts in which operating hours 
are presented to the working group and no negative feedback is 
received: EERE-2013-BT-NOC-0039-0072, pp. 353-355; EERE-2013-BT-NOC-
0039-XXXX0109, pp. 128-140139-152.
---------------------------------------------------------------------------

    DOE requests information and data on average annual operating hours 
for the pump types and applications in the scope of this rulemaking. 
This is identified as Issue 4 in section VIII.E, ``Issues on Which DOE 
Seeks Comment.''
4. Load Profiles
    Information on typical load profiles for pumps is not available in 
the public domain. DOE requested information on load profiles in the 
Framework Document. Grundfos responded that available public data 
related to the use of pumps is very limited and provided a reference 
that may be considered for heating, cooling, and hot water load 
profiles: California's 2013 Title 24 Nonresidential Alternative 
Calculation Method (ACM) Reference Manual, Appendix 5.4B. (Grundfos, 
No. 24 at p. 32.) Grundfos also noted that general selection guidelines 
and other resources are available from HI and suggested that DOE review 
EU Commission Regulation No 547/2012 and the work being considered 
under the Ecodesign Preparatory Study (ENER Lot 29). (Grundfos, No. 24 
at p. 34.) HI mentioned that application-specific duty profiles could 
lead to confusion for pumps with motors and/or controls serving 
multiple applications and suggested that a single duty profile, 
consisting of equally weighted time intervals at 100 percent, 75 
percent, 50 percent, and 25 percent of the BEP flow, be used to 
evaluate pump efficiency. (HI, No. 25 at p. 43.)
    DOE reviewed the resources suggested by Grundfos, as well as other 
information on pump load profiles, such as building simulation files. 
DOE concluded, however, that these load profiles were not sufficiently 
representative of the variability expected in the field for commercial 
applications. In addition, DOE did not identify any similar information 
for other sectors, including the industrial, agricultural, and 
municipal sectors. However, DOE believed it would be appropriate to 
analyze more than one duty profile. Considering the range of all 
applications of the pump equipment classes for which DOE is considering 
standards, DOE developed four load profiles, characterized by different 
weights at 50 percent, 75 percent, 100 percent, and 110 percent of the 
flow at the duty point. These load profiles represent different types 
of loading conditions in the field: Flat load at BEP, flat/over-sized 
load weighted evenly at 50 percent and 75 percent BEP, variable load 
over-sized, and variable load under-sized. During the CIP Working Group 
negotiations, DOE initially proposed that each of these load profiles 
would be weighted equally in the consumer sample. However, a 
stakeholder commented that pumps generally operated on the pump curve 
to the left of the BEP (i.e., pumps generally require less flow than 
that provided at BEP) as opposed to beyond the BEP. (Charles 
Cappellino, ITT, EERE-2013-BT-NOC-0039-0072, p. 356.) This indicates 
that pumps are generally oversized rather than undersized. Therefore, 
DOE estimated that only 10 percent of consumers would use pumps with 
the variable load/undersized load profile; the remaining load profiles 
were estimated to apply to 30 percent of consumers each. DOE notes that 
changes in weighting across the load profiles have very little impact 
on energy use results.
    DOE requests information and data on typical load profiles for the 
pump types and applications in the scope of this

[[Page 17849]]

rulemaking. This is identified as Issue 5 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''
    To describe a pump's power requirements at points on the load 
profile away from the BEP, DOE used the shipment-weighted average pump 
curves, modeled as second-order polynomial functions, for each of the 
representative units.
5. Equipment Losses
    Using the duty point, load profile, and operational hours, DOE 
calculated the energy use required for the end-use (or the energy which 
that is converted to useful hydraulic horsepower). However, the total 
energy use by pumps also depends on pump losses, motor losses, and 
control losses.
    Pump losses account for the differences between pump shaft 
horsepower and hydraulic horsepower due to friction and other factors. 
DOE takes this into account using the efficiency information available 
in the manufacturer shipment data for each pump. To describe pump 
efficiency at points away from the BEP, DOE calculated shipment-
weighted average efficiency curves for each representative unit, 
modeled as second-order polynomial functions.
    In the Framework Document, DOE requested information on motor 
losses Grundfos noted that existing motor efficiency standards based on 
prior requirements set by the Energy Policy Act of 1992 (Pub. L. 102-
486, Oct. 24 1992) and the Energy Independence and Security Act of 2007 
(Pub. L. 110-140, Dec. 19, 2007) can be utilized as minimum efficiency 
levels. (Grundfos, No. 24 at p. 34) DOE used existing minimum motor 
efficiency standards in calculating annual energy use.
    In the Framework Document, DOE also requested information on 
variable frequency drive (VFD) efficiency. VFDs are the most common 
type of VSD used in the pump market; they automatically control the 
speed of a pump by adjusting frequency in response to system feedback. 
In this way, pumps can deliver the appropriate amount of flow required 
by the system with less head and power compared to reducing flow at 
full speed by closing a throttling valve. Grundfos noted that the 
efficiencies of a VFD vary by manufacturer and suggested that a 
sampling of these efficiencies can be obtained from the members of the 
Adjustable Speed Drive Systems group of the Industrial Automation 
section of the National Electrical Manufacturers Association (NEMA). 
(Grundfos, No. 24 at p. 34.) DOE has reviewed all available VFD 
efficiency information in developing the test procedure NOPR. However, 
DOE estimates that very few pump users operate their pumps with VFDs. 
(See section IV.H.1.a, the life-cycle cost analysis is not meant to 
represent national impacts, DOE's energy use analysis assumes that all 
users with variable loads throttled their pumps and therefore did not 
include VFD efficiency. This assumption allows for the analysis of 
impacts to the largest group of customers in the market (i.e., those 
that throttle their pumps). However, DOE considered use of VFDs--in the 
life-cycle cost customer subgroup and national impact analyses. (See 
section IV.I and IV.H.1.a, respectively.)
    As noted previously, DOE proposed in the test procedure NOPR that 
pumps sold with non-electric drivers be rated as bare pumps. Any 
hydraulic improvements made to the bare pump to comply with any 
applicable energy conservation standards would also result in energy 
savings if the pump is used with a non-electric driver. However, DOE 
estimated, based on information from consultants and the CIP Working 
Group, that only 1-2% of pumps in scope are driven by non-electric 
drivers. Therefore DOE accounted for the energy use of all pumps as 
electricity use and chose not to account for fuel use in its analysis.
    DOE requests comment on the percent of pumps in scope operated by 
each fuel type other than electricity (e.g., diesel, gasoline, liquid 
propane gas, or natural gas) and the efficiency or losses of each type 
of non-electric driver, including transmission losses if any, that 
would allow DOE to estimate the fuel use and savings of pumps sold with 
non-electric drivers. This is identified as Issue 6 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted the life-cycle cost (LCC) and payback period (PBP) 
analysis to estimate the economic impacts of potential standards on 
individual consumers of pump equipment. The LCC calculation considers 
total installed cost (equipment cost, sales taxes, distribution chain 
markups, and installation cost), operating expenses (energy, repair, 
and maintenance costs), equipment lifetime, and discount rate. DOE 
calculated the LCC for all consumers as if each would purchase a pump 
in the year the standard takes effect. DOE presumes that the purchase 
year for all pump equipment for purposes of the LCC calculation is 
2020, the first full year following the expected compliance date of 
late 2019. To compute LCCs, DOE discounted future operating costs to 
the time of purchase and summed them over the lifetime of the 
equipment.
    DOE analyzed the effect of changes in installed costs and operating 
expenses by calculating the PBP of potential standards relative to 
baseline efficiency levels. The PBP estimates the amount of time it 
would take the consumer to recover the incremental increase in the 
purchase price of more-efficient equipment through lower operating 
costs. In other words, the PBP is the change in purchase price divided 
by the change in annual operating cost that results from the energy 
conservation standard. DOE expresses this period in years. Similar to 
the LCC, the PBP is based on the total installed cost and operating 
expenses. However, unlike the LCC, DOE only considers the first year's 
operating expenses in the PBP calculation. Because the PBP does not 
account for changes in operating expense over time or the time value of 
money, it is also referred to as a simple PBP.
    DOE's LCC and PBP analyses are presented in the form of a 
spreadsheet model, available on DOE's Web site for pumps.\37\ DOE 
accounts for variability in energy use and prices, discount rates by 
doing individual LCC calculations for a large sample of pumps (10,000 
for each equipment class) that are assigned different installation 
conditions. Installation conditions include consumer attributes such as 
sector and application, and usage attributes such as duty point and 
annual hours of operation. Each pump installation in the sample is 
equally weighted. The simple average over the sample is used to 
generate national LCC savings by efficiency level. The results of DOE's 
LCC and PBP analysis are summarized in section V.B.1.a and described in 
detail in chapter 8 of the NOPR TSD.
---------------------------------------------------------------------------

    \37\ See http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/14.
---------------------------------------------------------------------------

1. Approach
    DOE conducted the LCC analysis by developing a large sample of 
10,000 pump installations, which represent the general population of 
pumps that would be affected by proposed energy conservation standards. 
Separate LCC analyses are conducted for each equipment class. 
Conceptually, the LCC distinguishes between the pump installation and 
the pump itself. The pump installation is characterized by a 
combination of consumer attributes (sector, application, electricity 
price, discount rate) and usage attributes (duty point, BEP offset, 
load profile, annual

[[Page 17850]]

hours of operation, mechanical lifetime) that do not change among the 
considered efficiency levels. The pump itself is the regulated 
equipment, so its efficiency and selling price change in the analysis.
    In the base case, which represents the market in the absence of new 
energy efficiency standards, DOE assigns a specific representative pump 
to each pump installation. These pumps are chosen from the set of 
representative units described in the energy use analysis. The relative 
weighting of different representative units in the LCC sample is 
determined based on 2012 shipments data supplied by the manufacturers.
    The base case also includes an estimate of the distribution of 
equipment efficiencies. DOE developed a base-case distribution of 
efficiency levels for pumps using the shipments data mentioned above. 
DOE assumed that this distribution would remain constant over time and 
applied the 2012 distribution in 2020. Out of this distribution, DOE 
assigns a pump efficiency based on the relative weighting of different 
efficiencies. Chapter 8 of the NOPR TSD contains details regarding the 
base case efficiency distribution.
    At each efficiency level, the pump assigned in the base case has a 
PEI rating that either would or would not meet a standard set at that 
efficiency level. If the pump would meet the standard at a given 
efficiency level, the installation is left unchanged. For that 
installation, the LCC at the given TSL is the same as the LCC in the 
base case and the standard does not impact that user. If the pump would 
not meet the standard at a given efficiency level, the base case pump 
is replaced with a compliant unit (i.e., a redesigned pump) having a 
higher selling price and higher efficiency, and the LCC is 
recalculated. The LCC savings at that efficiency level are defined as 
the difference between the LCC in the base case and the LCC for the 
more efficient pump. The LCC is calculated for each pump installation 
at each efficiency level.
    In the engineering analysis, DOE determines the total conversion 
costs required to bring the entire population of pump models up to a 
given efficiency level. DOE uses these conversion costs to calculate 
the selling price of a redesigned pump within each of the combined 
power and flow bins that define a representative unit. DOE assumes that 
all consumers whose base case pump would not meet the standard at a 
given efficiency level will purchase the new redesigned pump at the new 
selling price, and that manufacturers recover the total conversion 
costs at each efficiency level. DOE allocates conversion costs to each 
representative unit based on the proportion of total revenues generated 
by that unit in the base case.
    DOE calculates the selling price in two stages. In the first stage, 
for each equipment class and efficiency level, DOE calculates the total 
revenue generated from all failing units, adds the total conversion 
costs to the revenues from failing units to generate the new revenue 
requirement, and defines a markup as the ratio of the new revenue 
requirement to the base case revenue from failing units. This approach 
ensures that (1) the conversion costs are recovered from the sale of 
redesigned units and (2) the conversion costs are distributed across 
the different representative units in proportion to the amount of 
revenue each representative unit generates in the base case.
    In the second stage, DOE calculates a new selling price for each 
redesigned representative unit, i.e., for each of the combined power 
and flow bins. In the base case, each bin contains a set of pumps with 
varying efficiencies and varying prices. However, all pumps that fail 
at an efficiency level are given the same new price. Hence, the markup 
defined in stage one of the calculation cannot be applied directly to 
the selling price of a failing unit. Instead, DOE calculates revenues 
associates with all failing units in the bin, and applies the markup to 
this total to get the new revenue requirement for that bin. Then DOE 
defines the new selling price as the new revenue requirement divided by 
the number of failing units in the bin.
    In general, the economic inputs to the LCC, (e.g., discount rate 
and electricity price) depend on the sector, while the usage criteria 
(e.g., hours of operation) may depend on the application. For the pumps 
analysis, DOE considered four sectors: Industrial, commercial 
buildings, agricultural and municipal water utilities. DOE assigns 
electricity prices and discount rates based on the sector. DOE 
considered several applications, based on a review of available data, 
and determined that there is some correlation between application and 
operating hours. DOE did not find any information relating either the 
BEP offset (a pump sizing factor) or load profile to either sector or 
application, so DOE assigned these values randomly.
    As noted above, DOE determines the distribution of representative 
units in the pump installation sample from the shipments data. Each 
representative unit can be thought of as a pump that operates at a 
representative duty point. To assign the consumer attributes (sector, 
application etc.) to duty points, DOE reviewed several data sources to 
incorporate correlations between sector, application, equipment class 
and the distribution of duty points into the analysis. Specifically, 
DOE used a database of various industrial applications collected from 
several case studies and field studies, and a database on pump tests 
provided by the Pacific Gas & Electric Company, to construct the 
distribution of pumps by sector, application and speed as a function of 
power bin and equipment class. DOE used these distributions to 
determine the relative weighting of different sectors and applications 
in the LCC sample for each equipment class.
2. Life-Cycle Cost Inputs
    For each efficiency level DOE analyzed, the LCC analysis required 
input data for the total installed cost of the equipment, its operating 
cost, and the discount rate. Table IV.3 summarizes the inputs and key 
assumptions DOE used to calculate the consumer economic impacts of all 
energy efficiency levels analyzed in this rulemaking. A more detailed 
discussion of the inputs follows.

  Table IV.3--Summary of Inputs and Key Assumptions Used in the LCC and
                              PBP Analyses
------------------------------------------------------------------------
                      Inputs                             Description
------------------------------------------------------------------------
                        Affecting Installed Costs
------------------------------------------------------------------------
Equipment Price...................................  Equipment price
                                                     derived by
                                                     multiplying
                                                     manufacturer sales
                                                     price or MSP
                                                     (calculated in the
                                                     engineering
                                                     analysis) by
                                                     distribution
                                                     channel markups, as
                                                     needed, plus sales
                                                     tax from the
                                                     markups analysis.

[[Page 17851]]

 
Installation Cost.................................  Installation cost
                                                     assumed to not
                                                     change with
                                                     efficiency level,
                                                     and therefore is
                                                     not included in
                                                     this analysis.
------------------------------------------------------------------------
                        Affecting Operating Costs
------------------------------------------------------------------------
Annual Energy Use.................................  Annual unit energy
                                                     consumption for
                                                     each class of
                                                     equipment at each
                                                     efficiency level
                                                     estimated by sector
                                                     and application
                                                     using simulation
                                                     models.
Electricity Prices................................  DOE developed
                                                     average electricity
                                                     prices and
                                                     projections of
                                                     future electricity
                                                     prices based on
                                                     Annual Energy
                                                     Outlook 2014 (AEO
                                                     2014).\38\
Maintenance Cost..................................  Maintenance cost
                                                     assumed to not
                                                     change with
                                                     efficiency level,
                                                     and therefore is
                                                     not included in
                                                     this analysis.
Repair Cost.......................................  Repair cost assumed
                                                     to not change with
                                                     efficiency level,
                                                     and therefore is
                                                     not included in
                                                     this analysis.
------------------------------------------------------------------------
        Affecting Present Value of Annual Operating Cost Savings
------------------------------------------------------------------------
Equipment Lifetime................................  Pump equipment
                                                     lifetimes estimated
                                                     to range between 4
                                                     and 40 years, with
                                                     an average lifespan
                                                     of 15 years across
                                                     all equipment
                                                     classes, based on
                                                     estimates from
                                                     market experts and
                                                     input from the CIP
                                                     Working Group.\39\
Discount Rate.....................................  Mean real discount
                                                     rates for all
                                                     sectors that
                                                     purchase pumps
                                                     range from 3.4
                                                     percent for
                                                     municipal sector to
                                                     5.9 percent for
                                                     industrial sector.
Analysis Start Year...............................  Start year for LCC
                                                     is 2020, which is
                                                     the first full year
                                                     following the
                                                     estimated
                                                     compliance date of
                                                     late 2019.
------------------------------------------------------------------------
                       Analyzed Efficiency Levels
------------------------------------------------------------------------
Analyzed Efficiency Levels........................  DOE analyzed the
                                                     baseline efficiency
                                                     levels and five
                                                     higher efficiency
                                                     levels for each
                                                     equipment class.
                                                     See the engineering
                                                     analysis for
                                                     additional details
                                                     on selections of
                                                     efficiency levels
                                                     and cost.
------------------------------------------------------------------------

    DOE analyzed the baseline efficiency levels (reflecting the lowest 
efficiency levels currently on the market) and five higher efficiency 
levels for each equipment class analyzed. Chapter 5 of the NOPR TSD 
provides additional details on the selection of efficiency levels and 
cost.
---------------------------------------------------------------------------

    \38\ U.S. Energy Information Administration. Annual Energy 
Outlook 2014 (2014) DOE/EIA-0383(2014). (Last Accessed August 8, 
2014) (Available at: http://www.eia.gov/forecasts/aeo/).
    \39\ See for example, Docket No. EERE-2013-BT-NOC-0039-0073, p. 
153.
---------------------------------------------------------------------------

a. Equipment Prices
    The price of pump equipment reflects the application of 
distribution channel markups and sales tax to the manufacturer sales 
price (MSP), which is the cost established in the engineering analysis. 
For each equipment class, DOE generated MSPs for the baseline equipment 
and five higher equipment efficiencies in the engineering analysis. As 
described in section IV.D, DOE determined distribution channel costs 
and markups for pump equipment.
    The markup is the percentage increase in price as the pump 
equipment passes through distribution channels. As explained in section 
IV.D, DOE assumed that pumps are delivered by the manufacturer through 
one of five distribution channels. The overall markups used in LCC 
analyses are weighted averages of all of the relevant distribution 
channel markups.
    To project an equipment price trend for the NOPR, DOE derived an 
inflation-adjusted index of the Producer Price Index for pumps and 
pumping equipment over the period 1984-2013.\40\ These data show a 
general price index increase from 1987 through 2009. Since 2009, there 
has been no clear trend in the price index. Given the relatively slow 
global economic activity in 2009 through 2013, the extent to which the 
future trend can be predicted based on the last two decades is 
uncertain and the observed data do not provide a firm basis for 
projecting future cost trends for pump equipment. Therefore, DOE used a 
constant price assumption as the default trend to project future pump 
prices in 2020. Thus, prices projected for the LCC and PBP analysis are 
equal to the 2012 values for each efficiency level in each equipment 
class. Appendix 8A of the NOPR TSD describes the historical data that 
were considered.
---------------------------------------------------------------------------

    \40\ Series ID PCU333911333911; http://www.bls.gov/ppi/.
---------------------------------------------------------------------------

    DOE requests comments on the most appropriate trend to use for real 
(inflation-adjusted) pump prices. This is identified as Issue 7 in 
section VIII.E, ``Issues on Which DOE Seeks Comment.''
b. Installation Costs
    In the Framework Document, DOE requested information on whether 
installation costs would be expected to change with efficiency. 
Grundfos responded that this was not expected to occur for new 
installations, but noted that for existing installations, there may be 
additional costs to replace existing equipment with higher efficiency 
equipment for piping, electrical modifications, base and foundations, 
and code requirements for equipment rooms. (Grundfos, No. 24 at p. 34.) 
In the CIP Working Group, Grundfos and ITT Corporation also noted that 
the assumption of targeting identical flange or feet dimensions during 
redesign is reasonable, but that, as one drives to higher efficiency 
one may have to stretch the pump (i.e., change the dimensions from the 
base design) and change configurations. (See EERE-2013-BT-NOC-0039-
0109, pp.240-242), Grundfos stated that at some point within the range 
of efficiency levels under consideration, whether at PER 40 or 70 or 
some other point, the installation cost might change. In the absence of 
data to indicate at what efficiency level DOE may need to consider an 
increase in installation costs, DOE has not estimated installation 
costs for this analysis. DOE requests comment on whether any of the 
efficiency levels considered in this

[[Page 17852]]

NOPR might lead to an increase in installation costs and, if so, data 
regarding the magnitude of the increased cost for each relevant 
efficiency level. This is identified as Issue 8 in section VIII.E, 
``Issues on Which DOE Seeks Comment.''
c. Annual Energy Use
    DOE estimated the annual electricity consumed by each class of pump 
equipment, by efficiency level, based on the energy use analysis 
described in section IV.E and in chapter 7 of the NOPR TSD.
d. Electricity Prices
    Electricity prices are used to convert changes in the electric 
consumption from higher-efficiency equipment into energy cost savings. 
DOE used average national commercial and industrial electricity prices 
from the AEO 2014 reference case. DOE applied the commercial price to 
pump installations in the commercial sector and the industrial price to 
installations in the industrial, agricultural, and municipal sectors. 
To establish prices beyond 2040 (the last year in the AEO 2014 
projection, DOE extrapolated the trend in prices from 2030 to 2040 for 
both the commercial and industrial sectors.
    In response to the Framework Document and during the CIP Working 
Group meetings, EEI and the CA IOUs discussed consideration of reactive 
power prices in the analyses. Specifically, the CA IOUs recommended 
that DOE consider costs and value of power factor and reactive 
power.\41\ (CA IOUs, No. 26 at p. 4, EERE-2013-BT-NOC-0039-0072, p. 
341.) On the other hand, EEI stated that it may not be necessary to 
consider reactive power prices because most pumps, motors, and VSDs 
will not reduce power factors to levels that would create extra costs 
for consumers. (EEI, No. 31 at p. 4.) DOE is not considering motors or 
VSDs as technology options and concludes that any changes in pump 
efficiency would have very small impacts on power factor. As a result, 
DOE did not include reactive power prices in its analyses.
---------------------------------------------------------------------------

    \41\ Power factor is the ratio of real power flowing to the load 
to the apparent power in the circuit. Reactive power is power that 
is not transferred to the load but is required for electric motors 
to start.
---------------------------------------------------------------------------

e. Maintenance Costs
    During the CIP Working Group meetings, DOE indicated that its 
analysis assumed that maintenance costs would not change with 
efficiency level. (EERE-2013-BT-NOC-0039-0073, p. 135.) DOE did not 
receive any negative comments on this assumption, so DOE has not 
estimated a maintenance cost for this analysis.
f. Repair Costs
    DOE received information in response to the Framework Document 
(Grundfos, No. 24 at p. 35) and from the CIP Working Group that repair 
costs are not expected to change with efficiency level. Therefore, DOE 
has not estimated a repair cost for this analysis.
g. Equipment Lifetime
    DOE defines ``equipment lifetime'' as the age when a given 
commercial or industrial pump is retired from service. DOE consulted 
with market experts to establish typical equipment lifetimes, which 
included estimates of minimum and maximum lifetime. Consequently, DOE 
developed distributions of lifetimes that vary by equipment class. The 
average across all equipment classes is 15 years. DOE also used a 
distribution of mechanical lifetime in hours to allow a negative 
correlation between annual operating hours and lifetime in years--pumps 
with more annual operating hours tend to have shorter lifetimes. In 
addition, based on discussions in the CIP Working Group meetings (see, 
e.g., Docket No. EERE-2013-BT-NOC-0039-0073, p. 153), DOE introduced 
lifetime variation by pump speed--pumps running faster tend to have a 
shorter lifetime. Chapter 8 of the NOPR TSD contains a detailed 
discussion of equipment lifetimes.
h. Discount Rates
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. The cost of capital is 
commonly used to estimate the present value of cash flows to be derived 
from a typical company project or investment. Most companies use both 
debt and equity capital to fund investments, so the cost of capital is 
the weighted-average cost to the firm of equity and debt financing. For 
all but the municipal sector, DOE uses the capital asset pricing model 
to calculate the equity capital component, and financial data sources, 
primarily the Damodaran Online Web site,\42\ to calculate the cost of 
debt financing. DOE derived the discount rates by estimating the cost 
of capital of companies that purchase pumping equipment.
---------------------------------------------------------------------------

    \42\ Damodaran financial data used for determining cost of 
capital are available at: http://pages.stern.nyu.edu/~adamodar/ for 
commercial businesses (Last accessed February 12, 2014).
---------------------------------------------------------------------------

    For the municipal sector, DOE calculated the real average interest 
rate on state and local bonds over the period of 1983-2012 by adjusting 
the Federal Reserve Board nominal rates to account for inflation. This 
30-year average is assumed to be representative of the cost of capital 
relevant to municipal end users over the analysis period.
    More details regarding DOE's estimates of consumer discount rates 
are provided in chapter 8 of the NOPR TSD.
3. Payback Period
    The PBP measures the amount of time it takes the commercial 
consumer to recover the assumed higher purchase expense of more-
efficient equipment through lower operating costs. Similar to the LCC, 
the PBP is based on the total installed cost and the operating expenses 
for each application and sector, weighted by the probability of 
shipments to each market. Because the simple PBP does not take into 
account changes in operating expense over time or the time value of 
money, DOE considered only the first year's operating expenses to 
calculate the PBP, unlike the LCC, which is calculated over the 
lifetime of the equipment. Chapter 8 of the NOPR TSD provides 
additional details about the PBP calculation.
4. Rebuttable-Presumption Payback Period
    EPCA establishes a rebuttable presumption that a standard is 
economically justified if the Secretary finds that the additional cost 
to the consumer of purchasing a product complying with an energy 
conservation standard level will be less than three times the value of 
the energy (and, as applicable, water) savings during the first year 
that the consumer will receive as a result of the standard, as 
calculated under the test procedure in place for that standard. (42 
U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a).) For each considered 
efficiency level, DOE determines the value of the first year's energy 
savings by calculating the quantity of those savings in accordance with 
the applicable DOE test procedure, and multiplying that amount by the 
average energy price forecast for the year in which compliance with the 
amended standards would be required.

G. Shipments Analysis

    In its shipments analysis, DOE developed shipment projections for 
pumps and, in turn, calculated equipment stock over the course of the 
analysis period. DOE used the shipments projection and the equipment 
stock to determine the NES. The shipments portion of the spreadsheet 
model projects pump shipments from 2020 through 2049.
    In the Framework Document, DOE considered using the shipment data 
available from the U.S. Census Bureau.

[[Page 17853]]

In response, Grundfos and HI expressed concern that the Census 
descriptions did not match HI nomenclature. (Grundfos, No. 24 at p. 20; 
HI, No. 25 at p. 36.) HI further added that they did not find the 
Census data to be reliable (Id.) During the course of the CIP Working 
Group meetings, HI provided DOE with shipment estimates collected 
directly from its members (EERE-2013-BT-NOC-0039-0068).
    To develop the shipments model, DOE started with the 2012 shipment 
estimates by equipment type from HI. For the initial year, DOE 
distributed total shipments into the four sectors using estimates from 
the LCC, as discussed in section IV.F.1. To project shipments of pumps, 
DOE relied primarily on AEO 2014 forecasts of various indicators for 
each sector: (1) Commercial floor space; (2) value of manufacturing 
shipments; (3) value of agriculture, mining, and construction 
shipments; and (4) population (for the municipal sector).
    DOE used the 2012 total industry shipments by equipment class 
estimated by HI to distribute total shipments in each year into the 
five equipment types. DOE then used 2012 shipment data collected 
directly from manufacturers to distribute shipments into the further 
disaggregated equipment classes accounting for nominal speeds. The 
distribution of sectors changes over time as a result of each sector's 
differing forecast in AEO, while the distribution of equipment classes 
remains constant over time.
    DOE estimated that standards would have a negligible impact on pump 
shipments. Under most pricing scenarios, it is likely that following a 
standard, a consumer would be able to buy a more efficient pump for the 
same price as the less efficient pump they would have purchased before 
or without a standard. Therefore, rather than foregoing a pump purchase 
under a standards case, a consumer might simply switch brands or pumps 
to purchase a cheaper one that did not have to be redesigned. As a 
result, DOE used the same shipments projections in the standards case 
as in the base case. Chapter 9 of the TSD contains more details. DOE 
seeks comment on whether new standards would be likely to affect 
shipments. This is identified as Issue 9 under ``Issues on Which DOE 
Seeks Comment'' in section VIII.E of this NOPR.

H. National Impact Analysis

    The national impact analysis (NIA) evaluates the effects of energy 
conservation standards from a national perspective. This analysis 
assesses the net present value (NPV) (future amounts discounted to the 
present) and the national energy savings (NES) of total commercial 
consumer costs and savings expected to result from new standards at 
specific efficiency levels.
    The NES refers to cumulative energy savings for the lifetime of 
pumps shipped from 2020 through 2049. DOE calculated energy savings in 
each year relative to a base case, defined by the current market. DOE 
calculated net monetary savings in each year relative to the base case 
as the difference between total operating cost savings and increases in 
total installed cost. DOE accounted for operating cost savings until 
the year when the equipment installed in 2049 should be retired. 
Cumulative savings are the sum of the annual NPV over the specified 
period.
1. Approach
    The NES and NPV are a function of the total number of units in use 
and their efficiencies. Both the NES and NPV depend on annual shipments 
and equipment lifetime. Both calculations start by using the shipments 
estimate and the quantity of units in service derived from the 
shipments model.
    DOE used a spreadsheet tool, available on DOE's Web site for 
pumps,\43\ to calculate the energy savings and the national monetary 
costs and savings from potential standards. Interested parties can 
review DOE's analyses by changing various input quantities within the 
spreadsheet.
---------------------------------------------------------------------------

    \43\ DOE's Web page on pumps can be found at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/14.
---------------------------------------------------------------------------

    Unlike the LCC analysis, the NES spreadsheet does not use 
distributions for inputs or outputs, but relies on national average 
equipment costs and energy costs developed from the LCC analysis. DOE 
projected the energy savings, energy cost savings, equipment costs, and 
NPV of benefits for equipment sold in each pump class from 2020 through 
2049.
a. National Energy Savings
    DOE calculated the NES based on the difference between the per-unit 
energy use under a standards-case scenario and the per-unit energy use 
in the base case. The average energy per unit used by the pumps in 
service gradually decreases in the standards case relative to the base 
case because more-efficient pumps are expected to gradually replace 
less-efficient ones.
    Unit energy consumption values for each equipment class are taken 
from the LCC spreadsheet for each efficiency level and weighted based 
on market efficiency distributions. To estimate the total energy 
savings for each efficiency level, DOE first calculated the delta unit 
energy consumption (i.e., the difference between the energy directly 
consumed by a unit of equipment in operation in the base case and the 
standards case) for each class of pumps for each year of the analysis 
period. The analysis period begins with the first full year following 
the estimated compliance date of any new energy conservation standards 
(i.e., 2020). Second, DOE determined the annual site energy savings by 
multiplying the stock of each equipment class by vintage (i.e., year of 
shipment) by the delta unit energy consumption for each vintage (from 
step one). Third, DOE converted the annual site electricity savings 
into the annual amount of energy saved at the source of electricity 
generation (primary energy) using a time series of conversion factors 
derived from the AEO 2014 version of EIA's National Energy Modeling 
System (NEMS). Finally, DOE summed the annual primary energy savings 
for the lifetime of units shipped over a 30-year period to calculate 
the total NES. DOE performed these calculations for each efficiency 
level considered for pumps in this rulemaking.
    DOE has historically presented NES in terms of primary energy 
savings. On August 18, 2011, DOE published a final statement of policy 
in the Federal Register announcing its intention to use full-fuel-cycle 
(FFC) measures of energy use and greenhouse gas and other emissions in 
the national impact analyses and emissions analyses included in future 
energy conservation standards rulemakings. 76 FR 51281. After 
evaluating the approaches discussed in the August 18, 2011 notice, DOE 
published a statement of amended policy in the Federal Register in 
which DOE explained its determination that NEMS is the most appropriate 
tool for its FFC analysis and its intention to use NEMS for that 
purpose. 77 FR 49701 (August 17, 2012). Therefore, DOE used the NEMS 
model to conduct the FFC analysis. The approach used for this NOPR, and 
the FFC multipliers that were applied, are described in appendix 10B of 
the NOPR TSD.
    To properly account for national impacts, DOE adjusted the energy 
use and energy costs developed from the LCC spreadsheet. Specifically, 
in the LCC, DOE does not account for pumps sold with trimmed impellers 
or pumps used with VSDs, both of which may reduce the energy savings 
resulting from pump efficiency improvements.
    In response to the Framework Document, HI mentioned that the 
penetration of VSDs is increasing in the

[[Page 17854]]

market place and recommended that DOE explore the issue (HI, No. 25 at 
p. 43). DOE reviewed studies on VSD penetration and used an initial 
penetration of 3.2 percent in 1998 \44\ with a 5 percent annual 
increase.\45\ For more information on VSD penetration, see chapter 9 of 
the NOPR TSD. Although these studies are not specific to VFDs, DOE 
assumed all VSD use was attributable to VFD use, as VFDs are the most 
common type of VSD in the pumps market.\46\ Based on DOE's analysis of 
VFD users in the consumer subgroup analysis (see section IV.I), DOE 
assumed VFDs would reduce energy use by 39 percent on average, which 
also reduces the potential energy savings from higher efficiency. 
However, DOE assumed based on the difficulties with VFD installation 
and operation,\47\ that the full amount of potential savings would not 
be realized for all consumers. DOE is currently assuming an 
``effectiveness rate'' of 75 percent; in other words DOE is assuming 
that consumers will achieve on average only 75 percent of the 39 
percent estimated savings (i.e., 29 percent savings) because of 
improper installation, operation inconsistent with intended use, or 
other equipment problems.
---------------------------------------------------------------------------

    \44\ United States Industrial Electric Motor Systems Market 
Opportunities Assessment. Tech. Washington DC: U.S. Department of 
Energy's (DOE) Office of Energy Efficiency and Renewable Energy 
(EERE), 1998. Print.
    \45\ Almeida, A., Chretien, B., Falkner, H., Reichert, J., West, 
M., Nielsen, S., and Both, D. VSDs for Electric Motor Systems. Tech. 
N.p.: European Commission Directorate-General for Transport and 
Energy, SAVE II Programme 2000, n.d. Print.
    \46\ See for example:
    Energy Tips--Motor. Tech. Washington DC: U.S. Department of 
Energy's (DOE) Office of Energy Efficiency and Renewable Energy 
(EERE), 2008, Motor Tip Sheet #11,Print, p. 1.
    Variable Frequency Drives. Tech. Northwest Energy Efficiency 
Alliance, 2000, Report #00-054, Print, Exhibit 2.1.
    \47\ See for example: Variable speed drives: Introducing energy 
saving opportunities for business. London: Carbon Trust, 2011.
---------------------------------------------------------------------------

    In the CIP Working Group meetings, one stakeholder stated that half 
of pumps sold by manufacturers are trimmed (i.e., have impellers 
trimmed to meet customer needs) (Louis Starr, EERE-2013-BT-NOC-0039-
0072, p. 345), while another stated that the vast majority of pumps 
sold by manufacturers are trimmed (Al Huber, EERE-2013-BT-NOC-0039-
0009, p. 168). DOE also consulted a market expert who agreed that a 
majority of pumps are trimmed, and that the average trim is between 10 
to 20 percent. In the NIA, DOE assumed that for all equipment classes 
except VTS, 50 percent of pumps not sold with VFDs are sold with 
impellers trimmed to 85 percent of full impeller. According to the pump 
affinity laws, which are a set of relationships that can be used to 
predict the performance of a pump when its speed or impeller diameter 
is changed, such an impeller trim uses 61 percent of the power of full 
trim. Accordingly, DOE reduced the energy use for those consumers by 39 
percent. For the VTS equipment class, DOE assumed that pumps were not 
sold with trimmed impellers. A large percentage of these pumps are 
pressed stainless and will never be trimmed; the remainder of these 
pumps will be significantly less likely to be trimmed than other pump 
types because variability in the number of stages would be used in 
place of trimming the impellers.
    DOE used the penetration rate and power reduction values for VFDs 
and trimmed impellers, as well as the effectiveness rate for VFDs, to 
create an energy use adjustment factor time series in the NES 
spreadsheet. DOE seeks comment on the components of this adjustment. 
This matter is identified as Issue 10 under ``Issues on Which DOE Seeks 
Comment'' in section VIII.E of this NOPR.
    DOE considered whether a rebound effect applies to pumps. A rebound 
effect occurs when an increase in equipment efficiency leads to 
increased demand for its service. For example, when a consumer realizes 
that a more-efficient pump used for cooling will lower the electricity 
bill, that person may opt for increased comfort in the building by 
using the equipment more, thereby negating a portion of the energy 
savings. In commercial buildings, however, the person owning the 
equipment (i.e., the building owner) is usually not the person 
operating the equipment (i.e., the renter). Because the operator 
usually does not own the equipment, that person will not have the 
operating cost information necessary to influence their operation of 
the equipment. Therefore, DOE believes that a rebound effect is 
unlikely to occur in commercial buildings. In the industrial and 
agricultural sectors, DOE believes that pumps are likely to be operated 
whenever needed for the required process or irrigation demand, so a 
rebound effect is also unlikely to occur in the industrial and 
agricultural sectors. DOE seeks comment on whether a rebound effect 
should be included in the determination of annual energy savings. If a 
rebound effect should be included, DOE seeks data to assist in 
calculating the rebound effect. This matter is identified as Issue 11 
under ``Issues on Which DOE Seeks Comment'' in section VIII.E of this 
NOPR.
    DOE also considered whether there would be any spill-over effects 
related to an energy conservation standard for clean water pumps. 
Specifically, in the Framework Document, DOE requested information on 
whether design changes to clean water pumps would also be reflected in 
the design of pumps used in other processes and applications, thus 
saving additional energy not accounted for in the analysis of clean 
water pumps only. In response, Grundfos expected that design changes to 
clean water pumps would spill over, while HI believed that spillover 
was possible for a small number of design changes by pump manufacturers 
with modular designs. Grundfos and HI noted, however, that designs in 
alternate applications are very dependent on requirements for safety 
and reliability. (Grundfos, No. 24 at p. 4; HI No. 25 at p. 14.) 
Because DOE did not obtain any data indicating how much spillover might 
occur, DOE has not accounted for spillover effects in the NOPR 
analysis.
b. Net Present Value
    To estimate the NPV, DOE calculated the net impact as the 
difference between total operating cost savings and increases in total 
installed costs. DOE calculated the NPV of each considered standard 
level over the life of the equipment using the following three steps.
    First, DOE determined the difference between the equipment costs 
under the standard-level case and the base case to obtain the net 
equipment cost increase resulting from the higher standard level. As 
noted in section IV.F.2.a, DOE used a constant price assumption as the 
default price forecast. In addition, DOE considered two alternative 
price trends to investigate the sensitivity of the results to different 
assumptions regarding equipment price trends. One of these used an 
exponential fit on the deflated Producer Price Index (PPI) for pump and 
puming equipment manufacturing, and the other is based on the 
``deflator--industrial equipment'' forecast for AEO 2014. The 
derivation of these price trends is described in appendix 10B of the 
NOPR TSD.
    Second, DOE determined the difference between the base-case 
operating costs and the standard-level operating costs to obtain the 
net operating cost savings from each higher efficiency level.
    Third, DOE determined the difference between the net operating cost 
savings and the net equipment cost increase to obtain the net savings 
(or expense) for each year. DOE then discounted the annual net savings 
(or expenses) to 2015 and summed the discounted values to

[[Page 17855]]

provide the NPV for a standard at each efficiency level.
    In accordance with the Office of Management and Budget's (OMB's) 
guidelines on regulatory analysis,\48\ DOE calculated NPV using both a 
7-percent and a 3-percent real discount rate. The 7-percent rate is an 
estimate of the average before-tax rate of return on private capital in 
the U.S. economy. DOE used this discount rate to approximate the 
opportunity cost of capital in the private sector, because recent OMB 
analysis has found the average rate of return on capital to be near 
this rate. DOE used the 3-percent rate to capture the potential effects 
of standards on private consumption (e.g., through higher prices for 
equipment and reduced purchases 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 (i.e., yield on United States Treasury 
notes minus annual rate of change in the Consumer Price Index), which 
has averaged about 3 percent on a pre-tax basis for the past 30 years.
---------------------------------------------------------------------------

    \48\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/omb/circulars_a004_a-4.)
---------------------------------------------------------------------------

2. Base-Case and Standards-Case Distribution of Efficiencies
    As described in section IV.F.1, DOE developed a base-case 
distribution of efficiency levels for pumps using performance data 
provided by manufacturers. Because the available evidence suggests that 
there is no trend toward greater interest in higher pump efficiency, 
DOE assumed that the base case distribution would remain constant over 
time. The base-case efficiency distributions for each equipment class 
are presented in chapter 10 of the NOPR TSD. Furthermore, DOE has no 
reason to believe that implementation of standards would lead to an 
increased demand for more efficient equipment than the minimum 
available, and therefore does not use an efficiency trend in the 
standards-case scenarios.
    For each efficiency level analyzed, DOE used a ``roll-up'' scenario 
to establish the market shares by efficiency level for the year that 
compliance would be required with new standards (i.e., 2020). DOE 
concludes that equipment efficiencies in the base case that were above 
the standard level under consideration would not be affected. 
Information from certain manufacturers indicates that for pumps not 
meeting a potential standard at some of the lower efficiency levels, 
redesign would likely target an efficiency level higher than the 
minimum given the level of investment required for a redesign, and the 
relatively more modest change in investment to design a given pump to a 
higher level once redesign is already taking place. However, DOE has no 
data that clearly indicate what percentage of failing pumps would 
likely be redesigned to a level higher than the minimum, or how high 
that level would be. In the absence of such data, DOE does not assume 
that manufacturers would design to a level higher than required, to 
avoid overestimating the energy savings that would result from the 
rule.
    In response to the Framework Document, EEI commented that the 
federal regulations on motor efficiency and the requirements in the 
most recent building codes should be considered in the energy 
efficiency base case in the analyses. (EEI, No. 31 at p. 2.) DOE notes 
that its analysis incorporates the federal motor efficiency standards 
in its analysis but does not consider the use of motors more efficient 
than those standards. DOE also reviewed the relevant building codes and 
found that they do not place any requirements on pump efficiency.

I. Consumer Subgroup Analysis

    In the Framework Document, DOE requested input on any consumer 
subgroups that should be analyzed separately. Grundfos suggested that 
consumer subgroups should include commercial buildings, water 
utilities, and irrigation. (Grundfos, No. 24 at p. 36.) While DOE is 
not analyzing these different groups as part of its consumer subgroup 
analysis, it has considered these groups as part of the LCC analysis.
    For the consumer subgroup analysis, DOE estimated the impacts of 
the TSLs on the subgroup of consumers who operate their pumps with 
VFDs.\49\ DOE analyzed this subgroup because the lower power typically 
drawn by operating pumps at reduced speed may reduce the energy and 
operating cost savings to the consumer that would result from improved 
efficiency of the pump itself. DOE estimated the average LCC savings 
and simple PBP for the subgroup compared with the results from the full 
sample of pump consumers, which did not account for VFD use.
---------------------------------------------------------------------------

    \49\ In this analysis, DOE is not counting energy savings of 
switching from throttling a pump to using a VFD, as this is not a 
design option. DOE is simply analyzing the life-cycle costs of 
customers that use VFDs with their pumps.
---------------------------------------------------------------------------

J. Manufacturer Impact Analysis

1. Overview
    DOE performed a manufacturer impact analysis (MIA) to estimate the 
financial impact of energy conservation standards on manufacturers of 
pumps and to calculate the potential impact of such standards on direct 
employment and manufacturing capacity.
    The MIA has both quantitative and qualitative aspects. The 
quantitative portion of the MIA primarily relies on the Government 
Regulatory Impact Model (GRIM), an industry cash-flow model customized 
for this rulemaking. The key GRIM inputs are data on the industry cost 
structure, equipment costs, shipments, markups, and conversion 
expenditures. The key output is the industry net present value (INPV). 
Different sets of assumptions will produce different results. The 
qualitative portion of the MIA addresses factors such as equipment 
characteristics, as well as industry and market trends. Chapter 12 of 
the NOPR TSD describes the complete MIA.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the pumps industry that 
includes a top-down cost analysis of manufacturers that DOE used to 
derive preliminary financial inputs for the GRIM (e.g., sales, general, 
and administration (SG&A) expenses; research and development (R&D) 
expenses; and tax rates). DOE used public sources of information, 
including the Securities and Exchange Commission (SEC) 10-K filings 
\50\; corporate annual reports; the U.S. Census Bureau's Annual Survey 
of Manufacturers \51\; and Hoovers reports.\52\
---------------------------------------------------------------------------

    \50\ Filings & Forms, Securities and Exchange Commission (2013) 
(Available at: http://www.sec.gov/edgar.shtml) (Last accessed July 
2013).
    \51\ U.S. Census Bureau, Annual Survey of Manufacturers: General 
Statistics: Statistics for Industry Groups and Industries (2010) 
(Available at: <http://www.census.gov/manufacturing/asm/index.html>) 
(Last accessed July, 2013).
    \52\ Hoovers [bond] Company Information [bond] Industry 
Information [bond] Lists, D&B (2013) (Available at: http://www.hoovers.com/) (Last accessed July 2013).
---------------------------------------------------------------------------

    In phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the potential impacts of an energy conservation standard. 
In general, new or amended energy conservation standards can affect 
manufacturer cash flow in three distinct ways: (1) Create a need for 
increased investment; (2) raise production costs per unit; and (3) 
alter revenue due to higher per-unit prices and possible changes in 
sales volumes.
    In phase 3 of the MIA, DOE conducted detailed interviews with a 
representative cross-section of

[[Page 17856]]

manufacturers. During these interviews, DOE discussed engineering, 
manufacturing, procurement, and financial topics to validate 
assumptions used in the GRIM and to identify key issues or concerns. 
See section IV.I.3 for a description of the key issues manufacturers 
raised during the interviews.
    Additionally, in phase 3, DOE evaluates subgroups of manufacturers 
that may be disproportionately impacted by standards or that may not be 
accurately represented by the average cost assumptions used to develop 
the industry cash-flow analysis. For example, small manufacturers, 
niche players, or manufacturers exhibiting a cost structure that 
largely differs from the industry average could be more negatively 
affected. For today's NOPR, DOE analyzed small manufacturers as a 
subgroup.
    The Small Business Administration (SBA) defines a small business 
under North American Industry Classification System (NAICS) code 
333911, ``Pump and Pumping Equipment Manufacturing,'' as one having no 
more than 500 employees. During its research, DOE identified 25 
domestic companies that manufacture equipment covered by this 
rulemaking and qualify as small businesses under the SBA definition. 
Consistent with the requirements of the Regulatory Flexibility Act, 
DOE's analysis of the small business subgroup is discussed in section 
VII.B of this NOPR and chapter 12 of the NOPR TSD.
2. GRIM Analysis
    As discussed previously, DOE uses the GRIM to quantify the changes 
in cash flow that result in a higher or lower industry value due to 
energy conservation standards. The GRIM analysis uses a discounted 
cash-flow methodology that incorporates manufacturer costs, markups, 
shipments, and industry financial information as inputs. The GRIM 
models changes in MPCs, distributions of shipments, investments, and 
manufacturer margins that could result from new energy conservation 
standards. The GRIM spreadsheet uses the inputs to arrive at a series 
of annual cash flows, beginning in 2015 (the base year of the analysis) 
and continuing to 2049. DOE calculated INPVs by summing the stream of 
annual discounted cash flows during this period. DOE applied a discount 
rate of 11.8 percent, derived from industry financials and then 
modified according to feedback received during manufacturer interviews.
    In the GRIM, DOE calculates cash flows using standard accounting 
principles and compares changes in INPV between the base case and each 
TSL (the standards case). The difference in INPV between the base case 
and a standards case represents the financial impact of the energy 
conservation standard on manufacturers. Additional details about the 
GRIM, the discount rate, and other financial parameters can be found in 
chapter 12 of the NOPR TSD.
a. GRIM Key Inputs
Manufacturer Production Costs
    Manufacturer production costs (MPCs) are the cost to the 
manufacturer to produce a covered pump. The cost includes raw materials 
and purchased components, production labor, factory overhead, and 
production equipment depreciation. The changes, if any, in the MPC of 
the analyzed products can affect revenues, gross margins, and cash flow 
of the industry. In the MIA, DOE used the MPCs for each efficiency 
level calculated in the engineering analysis, as described in section 
IV.C.5 and further detailed in chapter 5 of the NOPR TSD. In addition, 
DOE used information from manufacturer interviews to disaggregate the 
MPCs into material, labor, and overhead costs.
Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by equipment 
class. For the base-case analysis, the GRIM uses the NIA base-case 
shipments forecasts from 2015 (the base year for the MIA analysis) to 
2049 (the last year of the analysis period). In the shipments analysis, 
DOE estimates the distribution of efficiencies in the base case for all 
equipment classes. See section IV.G for additional details.
    For the standards-case shipment forecast, the GRIM uses the NIA 
standards-case shipment forecasts. The NIA assumes that equipment 
efficiencies in the base case that do not meet the energy conservation 
standard in the standards case ``roll up'' to meet the standard after 
the compliance date. See section IV.G for additional details.
Product and Capital Conversion Costs
    Energy conservation standards can cause manufacturers to incur 
conversion costs to make necessary changes to their production 
facilities and bring product designs into compliance. DOE evaluated the 
level of conversion-related expenditures that would be needed to comply 
with each considered efficiency level in each equipment class. For the 
purpose of the MIA, DOE classified these conversion costs into two 
major groups: (1) Product conversion costs; and (2) capital conversion 
costs. Product conversion costs are investments in research, 
development, testing, and marketing, focused on making product designs 
comply with the energy conservation standard. Capital conversion costs 
are investments in property, plant, and equipment to adapt or change 
existing production facilities so that compliant equipment designs can 
be fabricated and assembled.
    To evaluate the magnitude of the product and capital conversion 
costs the pump industry would incur to comply with new energy 
conservation standards, DOE used a bottom-up approach. For this 
approach, DOE first determined the industry-average cost, per model, to 
redesign pumps of varying sizes to meet each of the proposed efficiency 
levels. DOE then modeled the distribution of unique pump models that 
would require redesign at each efficiency level. For each efficiency 
level, DOE multiplied each unique failing model by its associated cost 
to redesign it to comply with the applicable efficiency level and 
summed the total to reach an estimate of the total product and capital 
conversion cost for the industry. A more detailed description of this 
methodology can be found in engineering section IV.C.6.
    In general, DOE assumes that all conversion-related investments 
occur between the year of publication of the final rule and the year by 
which manufacturers must comply with the standard. The investment 
figures used in the GRIM can be found in section V.B.2 of today's 
notice. For additional information on the estimated product conversion 
and capital conversion costs, see chapter 12 of the NOPR TSD.
b. GRIM Scenarios
Markup Scenarios
    As discussed above, MSPs include direct manufacturing production 
costs (i.e., labor, material, and overhead estimated in DOE's MPCs), 
all non-production costs (i.e., SG&A, R&D, and interest), and profit. 
To account for manufacturers' non-production costs and profit margin, 
DOE applies a non-production cost multiplier (the manufacturer markup) 
to the full MPC. The resulting MSP is the price at which the 
manufacturer can recover all production and non-production costs and 
earn a profit. Modifying these markups in the standards case yields 
different sets of impacts on manufacturers.
    To meet new energy conservation standards, manufacturers must often 
invest in design changes that result in

[[Page 17857]]

changes to equipment design and production lines, which can result in 
changes to MPC and changes to working capital, as well as change to 
capital expenditures. Depending on the competitive pressures, some or 
all of the increased costs may be passed from manufacturers to the 
manufacturers' first consumer (typically a distributor) and eventually 
to consumers in the form of higher purchase prices. The MSP should be 
high enough to recover the full cost of the produced equipment (i.e., 
full production and non-production costs) and yield a profit. The 
manufacturer markup impacts profitability. A high markup under a 
standards scenario suggests manufacturers can readily pass along 
increases in variable costs and some of the capital and product 
conversion costs (the one-time expenditures) to consumers. A low markup 
suggests that manufacturers will not be able to recover as much of the 
necessary investment in plant and equipment.
    DOE developed initial estimates of the base case average 
manufacturer markup through an examination of corporate annual reports 
and Securities and Exchange Commission (SEC) 10-K reports. Furthermore, 
DOE refined the estimates of manufacturer markup by equipment class 
based on feedback received from manufacturers and information received 
from HI.
    For the MIA, DOE modeled two standards case markup scenarios to 
represent the uncertainty regarding the potential impacts on prices and 
profitability for manufacturers following the implementation of new 
energy conservation standards: (1) A flat markup scenario; and (2) a 
cost recovery markup scenario. These scenarios lead to different markup 
values that, when applied to the MPCs, result in varying revenue and 
cash flow impacts. DOE used these values to represent the lower and 
upper bounds of potential markups for manufacturers.
    Under the flat markup scenario, DOE maintains the same markup in 
the base case and standards case. This results in no price changes at a 
given efficiency level for the manufacturer's first consumer. Based on 
the MSP, component cost, performance, and efficiency data supplied by 
both individual manufacturers and HI, DOE concluded the non-production 
cost markup (which includes SG&A expenses, R&D expenses, interest, and 
profit) to vary by efficiency level. DOE calculated the flat markups as 
follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Baseline          TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC....................................................            1.37            1.38            1.39            1.39            1.39            1.39
ESFM....................................................            1.33            1.37            1.38            1.39            1.39            1.39
IL......................................................            1.43            1.46            1.47            1.47            1.47            1.47
VTS.....................................................            1.37            1.37            1.40            1.40            1.40            1.40
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Because this markup scenario assumes that manufacturers would not 
increase their pricing for a given efficiency level as a result of a 
standard even as they incur conversion costs, this markup scenario is 
considered a lower bound.
    In the cost recovery markup scenario, manufacturer markups are set 
so that manufacturers recover their conversion costs, which are 
investments necessary to comply with the new energy conservation 
standard, over the analysis period. That cost recovery is enabled by an 
increase in mark-up, which results in higher manufacturer sales prices 
for pumps even as manufacturer product costs stay the same. The cost 
recovery calculation assumes manufacturers raise prices only on models 
where a redesign is necessitated by the standard. The additional 
revenue due to the increase in markup results in manufacturers 
recovering 100% of their conversion costs over the 30-year analysis 
period, taking into account the time-value of money. DOE calculated the 
cost recovery markups are calculated as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Baseline          TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC....................................................            1.37            1.57            1.68            1.74            1.92            2.13
ESFM....................................................            1.33            1.45            1.51            1.54            1.61            1.70
IL......................................................            1.43            1.53            1.62            1.73            1.88            2.02
VTS.....................................................            1.37            1.49            1.47            1.54            1.65            1.77
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Because this markup scenario models the maximum level to which 
manufacturers would increase their pricing as a result of the given 
standard, this markup scenario is considered an upper bound to markups.
    Depending on the equipment class and the standard level being 
analyzed, the cost-recovery markup results in a simple payback period 
of 7 to 8 years for the industry. This means the total additional 
revenues due to a higher markup equal the industry conversion cost 
within seven to eight years, not taking into account the time value of 
money. The simple payback period varies at each TSL due to differences 
in the number of models requiring redesign, the total conversion costs, 
and the number of unit over which costs can be recouped. The simple 
payback timeframes are as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Baseline          TSL 1            TSL 2            TSL 3            TSL 4            TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Years.............................................               0                8                7                7                7                7
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The payback period is greatest at TSL 1 due to the relatively high 
numbers of models that require redesign as compared to the number of 
units sold at that level.
3. Manufacturer Interviews
    As part of the MIA, DOE discussed potential impacts of standards 
with ten pump manufacturers. The interviewed manufacturers account for 
approximately 40 percent of the domestic pump market. In interviews, 
DOE asked manufacturers to describe their major concerns about this 
rulemaking. This section (IV.J.3)

[[Page 17858]]

highlights manufacturers' interview statements that helped shaped DOE's 
understanding of the potential impacts of an energy conservation 
standard on the industry.
a. Alignment With European Union Energy Efficiency Standards
    Multiple manufacturers emphasized the importance of harmonizing 
U.S. energy conservation standards with existing EU standards for clean 
water pumps. Manufacturers stated that harmonized standards would 
promote regulatory consistency and would enable them to better 
coordinate product redesigns and reduce conversion costs. If U.S. and 
EU standards are not harmonized, some manufacturers noted they would 
have to carry a greater number of product lines to service separate 
markets or to comply with efficiency standards in both domestic and 
European markets. Manufacturers also indicated that harmonized 
standards could help to improve U.S. manufacturers' access to foreign 
markets and would help to avoid a situation where lower domestic 
standards enable EU-compliant manufacturers to market their pumps to 
U.S. consumers as more efficient than pumps manufactured domestically. 
Manufacturers noted that expansion beyond the EU Directive parameters 
will add complexity and cost to the tasks of the manufacturers and 
create a significant financial burden for manufacturers to comply with 
the standards, particularly with respect to double-suction pumps and 
vertical turbines beyond 6-inch bowl assemblies. See Section III.A.1.
    In contrast, one manufacturer stated that aligning U.S. standards 
with EU standards would give European manufacturers an advantage 
because they would have products that could immediately comply with the 
U.S. standard, while U.S. manufacturers would have conversion costs to 
achieve the new efficiency level.
b. Pattern Production and Engineering Constraints
    Many manufacturers raised concerns regarding potential tooling 
bottlenecks. In general, much of the industry relies on the same 
resources for patterns used to produce the impeller and bowl. 
Manufacturers were concerned there would not be enough pattern 
production capacity available if the entire industry attempted to 
redesign products within the same three to five year timeframe. 
Furthermore, manufacturers expressed concern surrounding insufficient 
availability of engineering resources (mainly design engineers) 
required to redesign a high volume of pump lines during a short time 
period. Manufacturers stated that limited pump design expertise in the 
industry could create time delays in complying with new standards.
c. Conversion Requirements
    Manufacturers raised concerns over potentially significant barriers 
to achieving compliance with new standards, particularly at higher 
efficiency levels. If U.S. standards exceeded levels comparable to an 
EU minimum efficiency index (MEI) \53\ of 0.4, several manufacturers 
indicated they would have to develop entirely new product platforms at 
significant cost. At an MEI of 0.7, many indicated they would close 
manufacturing facilities rather than upgrade them to comply with any 
efficiency standards. Additionally, manufacturers suggested that 
conversion requirements would likely accelerate trends toward industry 
consolidation, as smaller manufacturers elect to exit the market rather 
than invest in product redesigns.
---------------------------------------------------------------------------

    \53\ The EU sets efficiency standards based on desired 
percentages of the market to cut off, which it refers to as minimum 
efficiency indexes, or MEIs. A MEI of 0.4, for example, indicates an 
efficiency standard designed to eliminate the least efficient 40 
percent of products from the market.
---------------------------------------------------------------------------

d. Exclusion of Specific Pump Types
    Manufacturers expressed concern over which pumps would be included 
in the rulemaking; two of these manufacturers raised concerns 
specifically with the prospect of regulating circulator pumps (i.e., 
small pumps that circulate liquid in water heating or hydronic space 
conditioning systems in buildings). Manufacturers stated that compared 
to the European market, the U.S. market for circulator pumps is very 
small and would not present a large opportunity to save energy. 
Manufacturers also stated that the investment required by U.S. 
circulator pump manufacturers will be too high relative to the return 
on investment. They also mentioned that in most situations, due to the 
higher cost of high-efficiency equipment and the relatively low cost of 
energy in the U.S., consumers would not see a return on investment for 
a long period of time.

K. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of CO<INF>2</INF>, NO<INF>X</INF>, SO<INF>2</INF>, Hg, 
CH4, and N<INF>2</INF>O from new energy conservation standards for the 
considered pump equipment. In addition, DOE estimated emissions impacts 
in production activities (extracting, processing, and transporting 
fuels) that provide the energy inputs to power plants. These are 
referred to as ``upstream'' emissions. Together, these emissions 
account for the full-fuel-cycle (FFC). In accordance with DOE's FFC 
Statement of Policy (76 FR 51281, August 18, 2011, as amended at 77 FR 
49701, Aug. 17, 2012), this FFC analysis includes impacts on emissions 
of methane (CH<INF>4</INF>) and nitrous oxide (N<INF>2</INF>O), both of 
which are recognized as greenhouse gases.
    DOE primarily conducted the emissions analysis using emissions 
factors for CO<INF>2</INF> and most of the other gases derived from 
data in AEO 2014. Combustion emissions of CH<INF>4</INF> and 
N<INF>2</INF>O were estimated using emissions intensity factors 
published by the Environmental Protection Agency (EPA) through its GHG 
Emissions Factors Hub.\54\ DOE developed separate emissions factors for 
power sector emissions and upstream emissions. The method that DOE used 
to derive emissions factors is described in chapter 13 of the NOPR TSD.
---------------------------------------------------------------------------

    \54\ See: http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------

    For CH<INF>4</INF> and N<INF>2</INF>O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO<INF>2</INF>eq). Gases are converted to CO<INF>2</INF>eq 
by multiplying the physical units by the gas's global warming potential 
(GWP) over a 100-year time horizon. Based on the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change,\55\ DOE used 
GWP values of 28 for CH<INF>4</INF> and 265 for N<INF>2</INF>O.
---------------------------------------------------------------------------

    \55\ 1 IPCC, 2013: Climate Change 2013: The Physical Science 
Basis. Contribution of Working Group I to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Stocker, 
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. 
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge 
University Press, Cambridge, United Kingdom and New York, NY, USA, 
Chapter 8.
---------------------------------------------------------------------------

    EIA prepares the Annual Energy Outlook using NEMS. Each annual 
version of NEMS incorporates the projected impacts of existing air 
quality regulations on emissions. AEO 2014 generally represents current 
legislation and environmental regulations, including recent Government 
actions, for which implementing regulations were available as of 
October 31, 2013.
    SO<INF>2</INF> emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO<INF>2</INF> for affected EGUs in the 48 contiguous States and the 
District of Columbia (DC). SO<INF>2</INF> emissions from 28 eastern 
States and DC were also limited under the Clean Air Interstate Rule 
(CAIR; 70 FR 25162, May 12, 2005),

[[Page 17859]]

which created an allowance-based trading program that operates along 
with the Title IV program. CAIR was remanded to the U.S. Environmental 
Protection Agency (EPA) by the U.S. Court of Appeals for the District 
of Columbia Circuit, but it remained in effect. See North Carolina v. 
EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 531 F.3d 
896 (D.C. Cir. 2008). In 2011, EPA issued a replacement for CAIR, the 
Cross-State Air Pollution Rule (CSAPR). 76 FR 48208, August 8, 2011. On 
August 21, 2012, the D.C. Circuit issued a decision to vacate 
CSAPR.\56\ The court ordered EPA to continue administering CAIR. The 
emissions factors used for today's NOPR, which are based on AEO 2014, 
assume that CAIR remains a binding regulation through 2040.\57\
---------------------------------------------------------------------------

    \56\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012).
    \57\ On April 29, 2014, the U.S. Supreme Court reversed the 
judgment of the D.C. Circuit and remanded the case for further 
proceedings consistent with the Supreme Court's opinion. The Supreme 
Court held in part that EPA's methodology for quantifying emissions 
that must be eliminated in certain States due to their impacts in 
other downwind States was based on a permissible, workable, and 
equitable interpretation of the Clean Air Act provision that 
provides statutory authority for CSAPR. See EPA v. EME Homer City 
Generation, No 12-1182, slip op. at 32 (U.S. April 29, 2014). 
Because DOE is using emissions factors based on AEO 2014 for today's 
NOPR, the analysis assumes that CAIR, not CSAPR, is the regulation 
in force. The difference between CAIR and CSAPR is not relevant for 
the purpose of DOE's analysis of SO<INF>2</INF> emissions.
---------------------------------------------------------------------------

    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO<INF>2</INF> 
emissions allowances resulting from the lower electricity demand caused 
by the adoption of an efficiency standard could be used to permit 
offsetting increases in SO<INF>2</INF> emissions by any regulated EGU. 
In past rulemakings, DOE recognized that there was uncertainty about 
the effects of efficiency standards on SO<INF>2</INF> emissions covered 
by the existing cap-and-trade system, but it concluded that negligible 
reductions in power sector SO<INF>2</INF> emissions would occur as a 
result of standards.
    Beginning around 2016, however, SO<INF>2</INF> emissions will fall 
as a result of the Mercury and Air Toxics Standards (MATS) for power 
plants. 77 FR 9304, Feb. 16, 2012. In the final MATS rule, EPA 
established a standard for hydrogen chloride as a surrogate for acid 
gas hazardous air pollutants (HAP), and also established a standard for 
SO<INF>2</INF> (a non-HAP acid gas) as an alternative equivalent 
surrogate standard for acid gas HAP. The same controls are used to 
reduce HAP and non-HAP acid gas; thus, SO<INF>2</INF> emissions will be 
reduced as a result of the control technologies installed on coal-fired 
power plants to comply with the MATS requirements for acid gas. AEO 
2014 assumes that, in order to continue operating, coal plants must 
have either flue gas desulfurization or dry sorbent injection systems 
installed by 2016. Both technologies, which are used to reduce acid gas 
emissions, also reduce SO<INF>2</INF> emissions. Under the MATS, 
emissions will be far below the cap that would be established by CAIR, 
so it is unlikely that excess SO<INF>2</INF> emissions allowances 
resulting from the lower electricity demand would be needed or used to 
permit offsetting increases in SO<INF>2</INF> emissions by any 
regulated EGU. Therefore, DOE believes that energy efficiency standards 
will reduce SO<INF>2</INF> emissions in 2016 and beyond.
    CAIR established a cap on NO<INF>X</INF> emissions in 28 eastern 
States and the District of Columbia.\58\ Energy conservation standards 
are expected to have little effect on NO<INF>X</INF> emissions in those 
States covered by CAIR because excess NO<INF>X</INF> emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NO<INF>X</INF> emissions. However, 
standards would be expected to reduce NO<INF>X</INF> emissions in the 
States not affected by the caps, so DOE estimated NO<INF>X</INF> 
emissions reductions from the standards considered in today's NOPR for 
these States.
---------------------------------------------------------------------------

    \58\ CSAPR also applies to NO<INF>X</INF> and it would supersede 
the regulation of NO<INF>X</INF> under CAIR. As stated previously, 
the current analysis assumes that CAIR, not CSAPR, is the regulation 
in force. The difference between CAIR and CSAPR with regard to DOE's 
analysis of NO<INF>X</INF> emissions is slight.
---------------------------------------------------------------------------

    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps, and as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO 2014, which 
incorporates MATS.
    In response to the Framework Document, EEI noted that EPA projects 
significant reductions in particulate emissions from electric 
generating units as a result of MATS compliance. (EEI, No.31 at p. 4.) 
EEI also believed that DOE should incorporate the most recent AEO and 
EPA's most recent analyses in the emissions analysis. Power sector 
emissions of criteria air pollutants have dropped dramatically. (EEI, 
No. 31 at p. 4.) As discussed above, the AEO 2014 projections that 
serve as a reference case for measuring the impacts of potential 
standards account for the MATS and other emissions rules for which 
implementing regulations were available as of October 31, 2013.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this NOPR, DOE considered the 
estimated monetary benefits from the reduced emissions of 
CO<INF>2</INF> and NO<INF>X</INF> that are expected to result from each 
of the considered efficiency levels. To make this calculation similar 
to the calculation of the NPV of consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of equipment 
shipped in the forecast period for each efficiency level. This section 
summarizes the basis for the monetary values used for CO<INF>2</INF> 
and NO<INF>X</INF> emissions and presents the values considered in this 
rulemaking.
    For this NOPR, DOE is relying on a set of values for the social 
cost of carbon (SCC) that was developed by an interagency process. A 
summary of the basis for those values is provided in the following 
subsection, and a more detailed description of the methodologies used 
is provided as an appendix to chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
    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. Estimates of the SCC are provided 
in dollars per metric ton of carbon dioxide. 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.
    Under section 1(b)(6) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735, Oct. 4, 1993, agencies must, to the 
extent permitted by law, 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 monetized social benefits of 
reducing CO<INF>2</INF> emissions into cost-benefit analyses of 
regulatory actions. The estimates are presented with an acknowledgement 
of the many

[[Page 17860]]

uncertainties involved and with a clear understanding that they should 
be updated over time to reflect increasing knowledge of the science and 
economics of climate impacts.
    As part of the interagency process that developed the 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.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of challenges. A 
recent report from the National Research Council 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 questions of 
science, economics, and ethics and should be viewed as provisional.
    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
carbon dioxide emissions. The agency can estimate the benefits from 
reduced emissions in any future year 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 
the future benefits by an appropriate discount factor and summing 
across all affected years.
    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 improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and consider public comments 
as part of the ongoing interagency process.
e. Development of Social Cost of Carbon Values
    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$) of $55, $33, 
$19, $10, and $5 per metric ton of CO<INF>2</INF>. These interim values 
represented 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.
f. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specifically, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: The FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change. Each model 
was given equal weight in the SCC values that were developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four sets of SCC values for use in 
regulatory analyses. Three sets of values are based on the average SCC 
from three integrated assessment models, at discount rates of 2.5 
percent, 3 percent, and 5 percent. The fourth set, 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 climate change further out in the tails of the SCC distribution. 
The values grow in real terms over time. Additionally, the interagency 
group determined that a range of values from 7 percent to 23 percent 
should be used to adjust the global SCC to calculate domestic effects, 
although preference is given to consideration of the global benefits of 
reducing CO<INF>2</INF> emissions. Table IV.4 presents the values in 
the 2010 interagency group report,\59\ which is reproduced in appendix 
14A of the NOPR TSD.
---------------------------------------------------------------------------

    \59\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866, Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

[[Page 17861]]



                      Table IV.4--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                      [in 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                         Discount rate (%)
                                                 ---------------------------------------------------------------
                                                         5               3              2.5              3
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       Percentile
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------

    The SCC values used for today's notice were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\60\ (See appendix 
14B of the NOPR TSD for further information.) Table IV.5 shows the 
updated sets of SCC estimates in five year increments from 2010 to 
2050. Appendix 14B of the NOPR TSD provides the full set of SCC 
estimates. The central value that emerges is the average SCC across 
models at the 3 percent discount rate. However, for purposes of 
capturing the uncertainties involved in regulatory impact analysis, the 
interagency group emphasizes the importance of including all four sets 
of SCC values.
---------------------------------------------------------------------------

    \60\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).

                      Table IV.5--Annual SCC Values from 2013 Interagency Update, 2010-2050
                                      [in 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                         Discount rate (%)
                                                 ---------------------------------------------------------------
                                                         5               3              2.5              3
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              11              32              51              89
2015............................................              11              37              57             109
2020............................................              12              43              64             128
2025............................................              14              47              69             143
2030............................................              16              52              75             159
2035............................................              19              56              80             175
2040............................................              21              61              86             191
2045............................................              24              66              92             206
2050............................................              26              71              97             220
----------------------------------------------------------------------------------------------------------------

    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 Research 
Council report mentioned above 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 analytical challenges that 
are being addressed by the research community, including research 
programs housed in many of the Federal agencies participating in the 
interagency process to estimate the SCC. The interagency group intends 
to periodically review and reconsider those estimates to reflect 
increasing knowledge of the science and economics of climate impacts, 
as well as improvements in modeling.
    In summary, in considering the potential global benefits resulting 
from reduced CO<INF>2</INF> emissions, DOE used the values from the 
2013 interagency report, adjusted to 2013$ using the Gross Domestic 
Product price deflator. For each of the four cases specified, the 
values used for emissions in 2015 were $12.0, $40.5, $62.4, and $119 
per metric ton avoided (values expressed in 2013$). DOE derived values 
after 2050 using the relevant growth rates for the 2040-2050 period in 
the interagency update.
    DOE multiplied the CO<INF>2</INF> emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.

[[Page 17862]]

2. Valuation of Other Emissions Reductions
    As noted above, DOE has taken into account how new energy 
conservation standards would reduce NO<INF>X</INF> emissions in those 
22 States not affected by emissions caps. DOE estimated the monetized 
value of NO<INF>X</INF> emissions reductions resulting from each of the 
TSLs considered for today's NOPR based on estimates found in the 
relevant scientific literature. Estimates of monetary value for 
reducing NO<INF>X</INF> from stationary sources range from $476 to 
$4,893 per ton (2013$).\61\ DOE calculated monetary benefits using a 
medium value for NO<INF>X</INF> emissions of $2,684 per short ton (in 
2013$), and real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------

    \61\ U.S. Office of Management and Budget, 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. Available at: 
www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf.
---------------------------------------------------------------------------

    DOE is evaluating appropriate monetization of avoided 
SO<INF>2</INF> and Hg emissions in energy conservation standards 
rulemakings. It has not included such monetization in the current 
analysis.

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the power 
generation industry that would result from the adoption of new or 
amended energy conservation standards. In the utility impact analysis, 
DOE analyzes the changes in installed electrical capacity and 
generation that would result for each trial standard level. The 
analysis is based on published output from NEMS, which is a public 
domain, multi-sectored, partial equilibrium model of the U.S. energy 
sector. Each year, NEMS is updated to produce the AEO reference case as 
well as a number of side cases that estimate the economy-wide impacts 
of changes to energy supply and demand. DOE uses those published side 
cases that incorporate efficiency-related policies to estimate the 
marginal impacts of reduced energy demand on the utility sector. The 
output of this analysis is a set of time-dependent coefficients that 
capture the change in electricity generation, primary fuel consumption, 
installed capacity and power sector emissions due to a unit reduction 
in demand for a given end use. These coefficients are multiplied by the 
stream of electricity savings calculated in the NIA to provide 
estimates of selected utility impacts of new or amended energy 
conservation standards. Chapter 15 of the NOPR TSD describes the 
utility impact analysis in further detail.

N. Employment Impact Analysis

    Employment impacts include direct and indirect impacts. Direct 
employment impacts are any changes in the number of employees of 
manufacturers of the equipment subject to standards; the MIA addresses 
those impacts. Indirect employment impacts are changes in national 
employment that occur due to the shift in expenditures and capital 
investment caused by the purchase and operation of more-efficient 
equipment. Indirect employment impacts from standards consist of the 
jobs created or eliminated in the national economy due to: (1) Reduced 
spending by end users on energy; (2) reduced spending on new energy 
supply by the utility industry; (3) increased consumer spending on the 
purchase of new products; and (4) the effects of those three factors 
throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS). BLS regularly publishes its estimates of the 
number of jobs per million dollars of economic 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.\62\ There are many reasons for these differences, including 
wage differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data, net national employment may increase because of shifts 
in economic activity resulting from new energy conservation standards 
for pumps.
---------------------------------------------------------------------------

    \62\ See Bureau of Economic Analysis, ``Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II),'' U.S. Department of Commerce (1992).
---------------------------------------------------------------------------

    For the standard levels considered in this NOPR, DOE estimated 
indirect national employment impacts using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies version 3.1.1 
(ImSET).\63\ ImSET is a special-purpose version of the ``U.S. Benchmark 
National Input-Output'' (I-O) model, which was designed to estimate the 
national employment and income effects of energy-saving technologies. 
The ImSET software includes a computer-based I-O model having 
structural coefficients that characterize economic flows among the 187 
sectors. ImSET's national economic I-O structure is based on a 2002 
U.S. benchmark table, specially aggregated to the 187 sectors most 
relevant to industrial, commercial, and residential building energy 
use. DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run. For the NOPR, DOE used ImSET only to 
estimate short-term (through 2024) employment impacts.
---------------------------------------------------------------------------

    \63\ M. J. Scott, O. V. Livingston, P. J. Balducci, J. M. Roop, 
and R. W. Schultz, ImSET 3.1: Impact of Sector Energy Technologies, 
PNNL-18412, Pacific Northwest National Laboratory (2009) (Available 
at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf).
---------------------------------------------------------------------------

    For more details on the employment impact analysis, see chapter 16 
of the NOPR TSD.

V. Analytical Results

A. Trial Standard Levels

1. Trial Standard Level Formulation Process and Criteria
    DOE developed six efficiency levels, including a baseline level, 
for each equipment class analyzed in the LCC, NIA, and MIA. TSL 5 was 
selected at the max-tech level for these equipment classes, and also 
represented the highest energy savings, NPV, and net benefit to the 
nation scenario. TSL 1, TSL 2, TSL 3, and TSL 4 were selected to 
provide intermediate efficiency levels between the baseline efficiency 
level and TSL 5 and allow for an evaluation of manufacturer impact at 
each level. As discussed in section IV.A.2.a, for the RSV equipment 
classes, DOE proposed to set the baseline and max-tech levels equal to 
those established in Europe, but was unable to develop intermediate 
efficiency levels or TSLs due to lack of available cost data for this 
equipment. As a result, the baseline efficiency level

[[Page 17863]]

has been specified for all TSLs 1 through 4, with the max-tech level 
being specified for TSL 5. Table V.1 shows the mapping between TSLs and 
efficiency levels for all equipment classes.

                              Table V.1--Mapping Between TSLs and Efficiency Levels
----------------------------------------------------------------------------------------------------------------
          Equipment Class             Baseline      TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
ESCC.3600.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
ESFM.1800.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
ESFM.3600.........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
IL.1800...........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
IL.3600...........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
RSV.1800 *........................         EL 0         EL 0         EL 0         EL 0         EL 0         EL 5
RSV.3600 *........................         EL 0         EL 0         EL 0         EL 0         EL 0         EL 5
VTS.1800 *........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
VTS.3600..........................         EL 0         EL 1         EL 2         EL 3         EL 4         EL 5
----------------------------------------------------------------------------------------------------------------
* Equipment classes not analyzed due to lack of available data (in the case of RSV) or lack of market share (in
  the case of VTS.1800).

2. Trial Standard Level Equations
    Because the chosen efficiency metric, PEI, is a normalized metric 
targeted to create a standard level of 1.00, DOE has expressed its 
efficiency levels in terms of C-values. Each C-value represents a 
normalized efficiency for all size pumps, across the entire equipment 
class. (See section III.D.1 for more information about C-values and the 
related equations.) Table V.2 shows the appropriate C-values for each 
equipment class, at each TSL.

                                         Table V.2--C-Values at Each TSL
----------------------------------------------------------------------------------------------------------------
          Equipment class             Baseline      TSL 1        TSL 2        TSL 3        TSL 4        TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.........................       134.43       131.63       128.47       126.67       125.07       123.71
ESCC.3600.........................       135.94       134.60       130.42       128.92       127.35       125.29
ESFM.1800.........................       134.99       132.95       128.85       127.04       125.12       123.71
ESFM.3600.........................       136.59       134.98       130.99       129.26       127.77       126.07
IL.1800...........................       135.92       133.95       129.30       127.30       126.00       124.45
IL.3600...........................       141.01       138.86       133.84       131.04       129.38       127.35
RSV.1800 *........................       129.63       129.63       129.63       129.63       129.63       129.63
RSV.3600 *........................       133.20       133.20       133.20       133.20       133.20       133.20
VTS.1800 *........................       137.62       135.93       134.13       130.83       128.92       127.29
VTS.3600..........................       137.62       135.93       134.13       130.83       128.92       127.29
----------------------------------------------------------------------------------------------------------------
* Equipment classes not analyzed due to lack of available data (in the case of RSV) or lack of market share (in
  the case of VTS.1800).

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Consumers
    DOE analyzed the economic impacts on pump consumers by looking at 
the effects potential standards would have on the LCC and PBP, when 
compared to the base case described in section IV.F.1. DOE also 
examined the impacts of potential standards on consumer subgroups. 
These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    In general, higher-efficiency equipment would affect consumers in 
two ways: (1) Purchase price would increase over the price of less 
efficient equipment currently in the market, and (2) annual operating 
costs would decrease as a result of increased energy savings. Inputs 
used for calculating the LCC and PBP include total installed costs 
(i.e., equipment price plus installation costs), and operating costs 
(i.e., annual energy savings, energy prices, energy price trends, 
repair costs, and maintenance costs). The LCC calculation also uses 
equipment lifetime and a discount rate. Chapter 8 of the NOPR TSD 
provides detailed information on the LCC and PBP analyses.
    Table V.3 through Table V.16 show the LCC and PBP results for all 
efficiency levels considered for all analyzed equipment classes. The 
average costs at each TSL are calculated considering the full sample of 
consumers that have levels of efficiency in the base case equal to or 
above the given TSL (who are not affected by a standard at that TSL), 
as well as consumers who had non-compliant pumps in the base case and 
purchase more expensive and efficient redesigned pumps in the standards 
case. The simple payback and LCC savings are measured relative to the 
base-case efficiency distribution in the compliance year (see section 
IV.F.1 for a description of the base case).

[[Page 17864]]



                                        Table V.3--Average LCC and PBP Results by Efficiency Level for ESCC.1800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2013$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                   Efficiency level                     First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........          $1,639          $2,271         $17,546         $19,185  ..............              13
1.................................  1...................           1,672           2,261          17,470          19,142             3.3              13
2.................................  2...................           1,704           2,240          17,317          19,021             2.2              13
3.................................  3...................           1,768           2,222          17,177          18,945             2.6              13
4.................................  4...................           1,863           2,198          16,997          18,861             3.1              13
5.................................  5...................           2,026           2,172          16,796          18,822             3.9              13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


             Table V.4--LCC Savings Relative to the Base Case Efficiency Distribution for ESCC.1800
----------------------------------------------------------------------------------------------------------------
                                                                                 Life-cycle cost savings
                                                                       -----------------------------------------
                                                                        % of consumers that   Average savings *
                       TSL                           Efficiency level        experience     --------------------
                                                                       ---------------------
                                                                              Net Cost             (2013$)
----------------------------------------------------------------------------------------------------------------
1................................................                    1                   12                  $43
2................................................                    2                   11                  164
3................................................                    3                   23                  240
4................................................                    4                   30                  324
5................................................                    5                   42                  362
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.5--Average LCC and PBP Results by Efficiency Level for ESCC.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2013$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........          $1,092          $1,592          $9,823         $10,915  ..............              11
1.................................  1...................           1,098           1,588           9,800          10,898             1.4              11
2.................................  2...................           1,111           1,574           9,713          10,823             1.0              11
3.................................  3...................           1,141           1,565           9,653          10,794             1.8              11
4.................................  4...................           1,170           1,551           9,566          10,736             1.9              11
5.................................  5...................           1,215           1,528           9,422          10,638             1.9              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


             Table V.6--LCC Savings Relative to the Base Case Efficiency Distribution for ESCC.3600
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                                                                       % of consumers that    Average savings *
                      TSL                          Efficiency level         experience      --------------------
                                                                     -----------------------
                                                                             Net cost              (2013$)
----------------------------------------------------------------------------------------------------------------
1..............................................                    1                   0.7                   $17
2..............................................                    2                   1.8                    92
3..............................................                    3                  14                     122
4..............................................                    4                  14                     180
5..............................................                    5                  12                     278
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.7--Average LCC and PBP Results by Efficiency Level for ESFM.1800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2013$)
                                                         ----------------------------------------------------------------     Simple          Average
                TSL                   Efficiency level                     First year's      Lifetime                         payback        lifetime
                                                          Installed cost  operating cost  operating cost        LCC           (years)         (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........          $1,891          $3,424         $40,983         $42,874  ..............              23
1.................................  1...................           1,893           3,423          40,973          42,866             2.4              23
2.................................  2...................           1,943           3,406          40,759          42,701             2.8              23

[[Page 17865]]

 
3.................................  3...................           2,004           3,384          40,498          42,502             2.8              23
4.................................  4...................           2,151           3,342          39,988          42,139             3.1              23
5.................................  5...................           2,314           3,301          39,498          41,812             3.4              23
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


             Table V.8--LCC Savings Relative to the Base Case Efficiency Distribution for ESFM.1800
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                                                                       % of consumers that    Average savings *
                      TSL                          Efficiency level        experience      ---------------------
                                                                     ----------------------
                                                                            Net cost               (2013$)
----------------------------------------------------------------------------------------------------------------
1..............................................                    1                  0.26                  $8.0
2..............................................                    2                  6.5                  173
3..............................................                    3                 15                    372
4..............................................                    4                 24                    735
5..............................................                    5                 26                  1,062
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.9--Average LCC and PBP Results by Efficiency Level for ESFM 3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2013$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........          $1,349          $5,278         $51,268         $52,616  ..............              20
1.................................  1...................           1,357           5,271          51,201          52,558             1.2              20
2.................................  2...................           1,396           5,218          50,674          52,070             0.8              20
3.................................  3...................           1,441           5,171          50,214          51,655             0.9              20
4.................................  4...................           1,529           5,117          49,676          51,205             1.1              20
5.................................  5...................           1,648           5,036          48,890          50,538             1.2              20
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


             Table V.10--LCC Savings Relative to the Base Case Efficiency Distribution for ESFM.3600
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                      ------------------------------------------
                                                                        % of consumers that   Average savings *
                       TSL                          Efficiency level        experience      --------------------
                                                                      ----------------------
                                                                             Net cost              (2013$)
----------------------------------------------------------------------------------------------------------------
1...............................................                    1                  0.29                  $58
2...............................................                    2                  1.9                   547
3...............................................                    3                  4.7                   961
4...............................................                    4                  7.0                 1,411
5...............................................                    5                  8.4                 2,078
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                         Table V.11--Average LCC and PBP Results by Efficiency Level for IL.1800
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2013$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........          $2,128          $1,891         $16,760         $18,888  ..............              16
1.................................  1...................           2,145           1,884          16,692          18,837             2.3              16
2.................................  2...................           2,194           1,868          16,545          18,739             2.8              16
3.................................  3...................           2,281           1,852          16,407          18,688             3.9              16
4.................................  4...................           2,432           1,835          16,254          18,686             5.4              16

[[Page 17866]]

 
5.................................  5...................           2,614           1,811          16,040          18,654             6.1              16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


              Table V.12--LCC Savings Relative to the Base Case Efficiency Distribution for IL.1800
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                      ------------------------------------------
                                                                        % of consumers that   Average savings *
                       TSL                          Efficiency level        experience      --------------------
                                                                      ----------------------
                                                                             Net cost              (2013$)
----------------------------------------------------------------------------------------------------------------
1...............................................                    1                   1.8                  $51
2...............................................                    2                   6.9                  149
3...............................................                    3                  15                    200
4...............................................                    4                  25                    202
5...............................................                    5                  36                    234
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                         Table V.13--Average LCC and PBP Results by Efficiency Level for IL.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2013$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........          $1,473          $2,046         $14,211         $15,684  ..............              13
1.................................  1...................           1,484           2,038          14,155          15,639             1.4              13
2.................................  2...................           1,525           2,019          14,020          15,545             1.9              13
3.................................  3...................           1,578           1,997          13,865          15,443             2.1              13
4.................................  4...................           1,650           1,980          13,747          15,397             2.7              13
5.................................  5...................           1,797           1,946          13,510          15,307             3.2              13
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


              Table V.14--LCC Savings Relative to the Base Case Efficiency Distribution for IL.3600
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                      ------------------------------------------
                                                                        % of consumers that   Average savings *
                       TSL                          Efficiency level        experience      --------------------
                                                                      ----------------------
                                                                             Net cost              (2013$)
----------------------------------------------------------------------------------------------------------------
1...............................................                    1                  2.0                   $46
2...............................................                    2                 13                     139
3...............................................                    3                 11                     241
4...............................................                    4                 14                     288
5...............................................                    5                 20                     377
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).


                                        Table V.15--Average LCC and PBP Results by Efficiency Level for VTS.3600
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Average costs  (2013$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level       Installed     First year's      Lifetime                         (years)        lifetime
                                                               cost       operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Base Case...........            $692          $1,025          $5,857          $6,549  ..............              11
1.................................  1...................             697           1,025           5,855           6,551              11              11
2.................................  2...................             711           1,021           5,830           6,542             4.2              11
3.................................  3...................             732           1,002           5,726           6,458             1.7              11
4.................................  4...................             772             989           5,654           6,426             2.2              11
5.................................  5...................             821             977           5,584           6,405             2.7              11
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated considering all consumers. The PBP is measured relative to the base case.


[[Page 17867]]


             Table V.16--LCC Savings Relative to the Base Case Efficiency Distribution for VTS.3600
----------------------------------------------------------------------------------------------------------------
                                                                                Life-cycle cost savings
                                                                     -------------------------------------------
                                                                       % of consumers that    Average savings *
                      TSL                          Efficiency level        experience      ---------------------
                                                                     ----------------------
                                                                            Net Cost               (2013$)
----------------------------------------------------------------------------------------------------------------
1..............................................                    1                   1.4                $(2.4)
2..............................................                    2                  21                    7.2
3..............................................                    3                   4.4                 91
4..............................................                    4                   8.5                123
5..............................................                    5                  13                  144
----------------------------------------------------------------------------------------------------------------
* The calculation includes consumers with zero LCC savings (no impact).

b. Consumer Subgroup Analysis
    As shown in Table V.17 through Table V.23, the results of the life-
cycle cost subgroup analysis indicate that for all equipment classes 
analyzed, the VFD subgroup fared slightly worse than the average 
consumer, with the VFD subgroup being expected to have lower LCC 
savings and longer payback periods than average. This occurs mainly 
because with power reduction through use of a VFD, consumers use and 
save less energy from pump efficiency improvements than do consumers 
who do not use VFDs and so would benefit less from the energy 
savings.\64\ Chapter 11 of the NOPR TSD provides more detailed 
discussion on the LCC subgroup analysis and results.
---------------------------------------------------------------------------

    \64\ In this analysis, DOE does not count energy savings of 
switching from throttling a pump to using a VFD, as this is not a 
design option. Instead, DOE analyzes the life-cycle costs of 
consumers who use VFDs with their pumps.

                  Table V.17--Comparison of Impacts for VFD Users With Non-VFD Users, ESCC.1800
----------------------------------------------------------------------------------------------------------------
                                      Energy          LCC savings  (2013$ *)      Simple payback period  (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users    Non-VFD  users     VFD-users    Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1...............................               1             $12             $43             5.6             3.3
2...............................               2              71             164             3.6             2.2
3...............................               3              91             240             4.4             2.6
4...............................               4             104             324             5.2             3.1
5...............................               5              63             362             6.5             3.9
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                  Table V.18--Comparison of Impacts for VFD Users With Non-VFD Users, ESCC.3600
----------------------------------------------------------------------------------------------------------------
                                     Energy           LCC savings  (2013$ *)      Simple payback period  (years)
              TSL                  efficiency   ----------------------------------------------------------------
                                      level         VFD-users     Non-VFD  users     VFD-users    Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1..............................               1             $8.7             $17             2.3             1.4
2..............................               2             51                92             1.6             1.0
3..............................               3             57               122             2.8             1.8
4..............................               4             83               180             3.0             1.9
5..............................               5            127               278             3.0             1.9
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                  Table V.19--Comparison of Impacts for VFD Users With Non-VFD Users, ESFM.1800
----------------------------------------------------------------------------------------------------------------
                                    Energy           LCC savings  (2013$ *)       Simple payback period  (years)
              TSL                 efficiency   -----------------------------------------------------------------
                                     level         VFD-users      Non-VFD  users     VFD-users    Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1.............................               1             $4.3             $8.0             3.9             2.4
2.............................               2             85              173               4.6             2.8
3.............................               3            186              372               4.6             2.8
4.............................               4            355              735               5.1             3.1
5.............................               5            494            1,062               5.6             3.4
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


[[Page 17868]]


                  Table V.20--Comparison of Impacts for VFD Users With Non-VFD Users, ESFM.3600
----------------------------------------------------------------------------------------------------------------
                                      Energy          LCC savings  (2013$ *)      Simple payback period  (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users    Non-VFD  users     VFD-users    Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1...............................               1             $33             $58             2.0             1.2
2...............................               2             319             547             1.3             0.8
3...............................               3             558             961             1.4             0.9
4...............................               4             802           1,411             1.8             1.1
5...............................               5           1,168           2,078             2.0             1.2
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                   Table V.21--Comparison of Impacts for VFD Users With Non-VFD Users, IL.1800
----------------------------------------------------------------------------------------------------------------
                                     Energy           LCC savings  (2013$ *)      Simple payback period  (years)
              TSL                  efficiency   ----------------------------------------------------------------
                                      level         VFD-users     Non-VFD  users     VFD-users    Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1..............................               1             $26              $51             3.6             2.3
2..............................               2              67              149             4.5             2.8
3..............................               3              64              200             6.4             3.9
4..............................               4             6.3              202             8.8             5.4
5..............................               5            ($46)             234             9.9             6.1
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                   Table V.22--Comparison of Impacts for VFD Users With Non-VFD Users, IL.3600
----------------------------------------------------------------------------------------------------------------
                                      Energy          LCC savings  (2013$ *)      Simple payback period  (years)
               TSL                  efficiency   ---------------------------------------------------------------
                                       level         VFD-users    Non-VFD  users     VFD-users    Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1...............................               1             $25             $46             2.2             1.4
2...............................               2              67             139             3.1             1.9
3...............................               3             111             241             3.5             2.1
4...............................               4             113             288             4.3             2.7
5...............................               5             112             377             5.2             3.2
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.


                  Table V.23--Comparison of Impacts for VFD Users With Non-VFD Users, VTS.3600
----------------------------------------------------------------------------------------------------------------
                                                       LCC savings  (2013$ *)    Simple payback period  (years)
                                          Energy     -----------------------------------------------------------
                 TSL                    efficiency                   Non-VFD
                                           level       VFD-users      users        VFD-users      Non-VFD  users
----------------------------------------------------------------------------------------------------------------
1...................................               1      $(3.5)       $(2.4)              18               11
2...................................               2       (2.6)         7.2                6.6              4.2
3...................................               3         44           91                2.7              1.7
4...................................               4         50          123                3.5              2.2
5...................................               5         46          144                4.2              2.7
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

c. Rebuttable Presumption Payback
    As discussed in section III.H.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 consumer, manufacturer, 
nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) 
and 6316(a). The results of this analysis serve as the basis for DOE to 
evaluate 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 analytical results, DOE calculated a rebuttable presumption 
payback period for each TSL. Table V.24 shows the rebuttable 
presumption payback periods for the pump equipment classes.

[[Page 17869]]



                  Table V.24--Rebuttable Presumption Payback Periods for Pump Equipment Classes
----------------------------------------------------------------------------------------------------------------
                                                     Rebuttable presumption payback  (years)
        Equipment class         --------------------------------------------------------------------------------
                                      TSL 1            TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
ESCC.1800......................              3.4             2.2             2.6             3.1             3.9
ESCC.3600......................              1.4             1.0             1.7             1.8             1.9
ESFM.1800......................              2.4             2.8             2.8             3.1             3.4
ESFM.3600......................              1.2             0.8             0.9             1.1             1.2
IL.1800........................              2.3             2.8             3.9             5.4             6.0
IL.3600........................              1.3             1.9             2.1             2.7             3.2
VTS.3600.......................             11               4.2             1.8             2.3             2.7
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    As noted above, DOE performed an MIA to estimate the impact of 
energy conservation standards on manufacturers of pumps. The following 
section summarizes the expected impacts on manufacturers at each 
considered TSL. Chapter 12 of the NOPR TSD explains the analysis in 
further detail.
a. Industry Cash-Flow Analysis Results
    Table V.25 and Table V.26 depict the financial impacts (represented 
by changes in INPV) of energy standards on manufacturers of pumps, as 
well as the conversion costs that DOE expects manufacturers would incur 
for all equipment classes at each TSL. To evaluate the range of cash 
flow impacts on the CIP industry, DOE modeled two different mark-up 
scenarios using different assumptions that correspond to the range of 
anticipated market responses to energy conservation standards: (1) the 
flat markup scenario; and (2) the cost recovery markup scenario. Each 
of these scenarios is discussed immediately below.
    Under the flat markup scenario, DOE maintains the same markup in 
the base case and standards case. This results in no price change at a 
given efficiency level for the manufacturer's first consumer. Because 
this markup scenario assumes that manufacturers would not increase 
their pricing as a result of a standard even as they incur conversion 
costs, this markup scenario is the most negative and results in the 
most negative impacts on INPV.
    In the cost recovery markup scenario, manufacturer markups are set 
so that manufacturers recover their conversion costs over the analysis 
period. That cost recovery is enabled by an increase in mark-up, which 
results in higher sales prices for pumps even as manufacturer product 
costs stay the same. The cost recovery calculation assumes 
manufacturers raise prices on models where a redesign is necessitates 
by the standard. This cost recovery scenario results in more positive 
results than the flat markup scenario.
    The set of results below shows potential INPV impacts for pump 
manufacturers; Table V.25 reflects the lower bound of impacts (i.e., 
the flat markup scenario), and Table V.26 represents the upper bound 
(the cost recovery markup scenario).
    Each of the modeled scenarios results in a unique set of cash flows 
and corresponding industry values at each TSL. In the following 
discussion, the INPV results refer to the difference in industry value 
between the base case and each standards case that results from the sum 
of discounted cash flows from the base year 2014 through 2048, the end 
of the analysis period.
    To provide perspective on the short-run cash flow impact, DOE 
includes in the discussion of the results below a comparison of free 
cash flow between the base case and the standards case at each TSL in 
the year before new standards would take effect. This figure provides 
an understanding of the magnitude of the required conversion costs 
relative to the cash flow generated by the industry in the base case.

                                       Table V.25--Manufacturer Impact Analysis for Pumps--Flat Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                           Units             Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................  $M...................           121.4          111.6            81.9             22.4          (85.0)         (228.4)
Change in INPV...................  $M...................  ..............           (9.8)          (39.5)            (99)         (206.3)         (349.8)
                                   %....................  ..............           (8.0)          (32.5)          (81.6)         (170.0)         (288.2)
Total Conversion Costs...........  $M...................  ..............           19.9            78.4            174.3          335.0           547.7
Free Cash Flow (2018)............  $M...................            12.2            5.6           (16.1)          (58.7)         (130.1)         (224.4)
Free Cash Flow (2018)............  % Change.............  ..............          (54.3)         (232.5)         (582.0)        (1167.5)        (1942.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.


                                   Table V.26--Manufacturer Impact Analysis for Pumps--Cost Recovery Markup Scenario *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                           Units             Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.............................  $M...................           121.4          121.8           129.7            125.4          114.1            94.1
Change in INPV...................  $M...................  ..............            0.4             8.3              4.0           (7.2)          (27.3)
                                   %....................  ..............            0.3             6.9              3.3           (6.0)          (22.5)

[[Page 17870]]

 
Total Conversion Costs...........  $M...................  ..............           19.9            78.4            174.3          335.0           547.7
Free Cash Flow (2018)............  $M...................            12.2            5.6           (16.1)          (58.7)         (130.1)         (224.4)
Free Cash Flow (2018)............  % Change.............  ..............          (54.3)         (232.5)         (582.0)        (1167.5)        (1942.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.

    TSL 1 represents EL 1 for all equipment classes. At TSL 1, DOE 
estimates impacts on INPV for pump manufacturers to range from -8.0 
percent to 0.3 percent, or a change in INPV of -$9.8 million to $0.4 
million. At this potential standard level, industry free cash flow is 
estimated to decrease by approximately 54.3 percent to $5.6 million, 
compared to the base-case value of $12.2 million in the year before the 
compliance date (2019). The industry would need to either drop product 
lines or engage in redesign of approximately 10% of their models. DOE 
estimates that manufacturers would incur conversion costs totaling 
$19.9 million, driven by hydraulic redesigns.
    TSL 2 represents EL 2 across all equipment classes. At TSL 2, DOE 
estimates impacts on INPV for pump manufacturers to range from -32.5 
percent to 6.9 percent, or a change in INPV of -$39.5 million to $8.3 
million. At this potential standard level, industry free cash flow is 
estimated to decrease by approximately 232.5 percent to -$16.1 million, 
compared to the base-case value of $12.2 million in the year before the 
compliance date (2019). Conversion costs for an estimated 25% of model 
offerings, would be approximately $78.4 million for the industry. At 
TSL 2, the industry's annual free cash flow is estimated to drop below 
zero in 2018 and 2019, the years where conversion investments are the 
greatest. The negative free cash flow indicates that at least some 
manufacturers in the industry would need to access cash reserves or 
borrow money from capital markets to cover conversion costs.
    TSL 3 represents EL 3 for all equipment classes. At TSL 3, DOE 
estimates impacts on INPV for pump manufacturers to range from -81.6 
percent to 3.3 percent, or a change in INPV of -$99 million to $4 
million. At TSL 3, industry conversion costs for an estimated 40% of 
model offerings would be approximately $174.3 million. As conversion 
costs increase, free cash flow continues to drop in the years before 
the standard year. This increases the likelihood that manufacturers 
will need to seek outside capital to support their conversion efforts. 
Furthermore, as more models require redesign, technical resources for 
hydraulic redesign could become an industry-wide constraint. 
Participants in the CIP Working Group noted that the industry as a 
whole relies on a limited pool of hydraulic redesign engineers and 
consultants. These specialists can support only a limited number of 
redesigns per year. Industry representatives stated that TSL 3 could be 
an upper bound to the number of redesigns possible in the four years 
between announcement and effective year of the final rule.
    TSL 4 represents EL4 across all equipment classes. At TSL 4, DOE 
estimates impacts on INPV for pump manufacturers to range from -170 
percent to -6 percent, or a change in INPV of -$206.3 million to -$7.2 
million. At this potential standard level, industry free cash flow is 
estimated to decrease by approximately 1167.5 percent relative to the 
base-case value of $12.2 million in the year before the compliance date 
(2019). The total industry conversion costs for an estimated 55% of 
model offerings would be approximately $335 million. The 1167.5% drop 
in free cash flow in 2019 indicates that the conversion costs are a 
very large investment relative to typical industry operations. As noted 
above, at TSL 2 and TSL 3, manufacturers may need to access cash 
reserves or outside capital to finance conversion efforts. 
Additionally, the industry may not be able to convert all necessary 
models before the compliance date of the standard.
    TSL 5 represents max-tech across all equipment classes. At TSL 5, 
DOE estimates impacts on INPV for pump manufacturers to range from -
288.2 percent to -22.5 percent, or a change in INPV of -$349.8 million 
to -$27.3 million. At this potential standard level, industry free cash 
flow is estimated to decrease by approximately 1942.4 percent relative 
to the base-case value of $12.2 million in the year before the 
compliance date (2019). At max-tech, DOE estimates total industry 
conversion costs for an estimated 70% of model offerings, would be 
approximately $547.7 million. The negative impacts related to cash 
availability, need for outside capital, and technical resources 
constraints at TSLs 2, 3, and 4 would increase at TSL 5.
    DOE requests comment on the capital conversion costs and product 
conversion costs estimated for each TSL. This matter is identified as 
Issue 12 under ``Issues on Which DOE Seeks Comment'' in section VIII.E 
of this NOPR.
    In section VI, DOE proposes labeling requirements recommended by 
the CIP Working Group. DOE recognizes that such requirements may result 
in costs to manufacturers. Costs of updating marketing materials for 
redesigned pumps in each standards case were included in the conversion 
costs for the industry and are accounted for in the industry cash-flow 
analysis results and industry valuation figures presented in this 
section. However, DOE notes that costs of updating marketing materials 
for pumps that do not have to be redesigned to meet the standard are 
not considered in the industry valuation figures because these costs 
would be incurred by manufacturers in order to make representations of 
energy use (PEI) according to the proposed test procedure, as well as 
to include labeling requirements, regardless of whether DOE set an 
energy conservation standard or what TSL DOE selected. These costs are 
discussed in section VI.
b. Impacts on Direct Employment
    To quantitatively assess the impacts of energy conservation 
standards on direct employment in the pumps industry, DOE used the GRIM 
to estimate the domestic labor expenditures and number of employees in 
the base case and at each TSL from 2015 through 2049. DOE used 
statistical data from the U.S. Census Bureau's 2011 Annual Survey of 
Manufacturers

[[Page 17871]]

(ASM),\65\ the results of the engineering analysis, and interviews with 
manufacturers to determine the inputs necessary to calculate industry-
wide labor expenditures and domestic employment levels. Labor 
expenditures related to manufacturing of the product are a function of 
the labor intensity of the product, the sales volume, and an assumption 
that wages remain fixed in real terms over time. The total labor 
expenditures in each year are calculated by multiplying the MPCs by the 
labor percentage of MPCs. Based on feedback from manufacturers, DOE 
believes that 99% of the covered pumps are produced in the U.S. 
Therefore, 99% of the total labor expenditures contribute to domestic 
production employment.
---------------------------------------------------------------------------

    \65\ ``Annual Survey of Manufactures (ASM),'' U.S. Census Bureau 
(2011) (Available at: http://www.census.gov/manufacturing/asm/).
---------------------------------------------------------------------------

    The total domestic labor expenditures in the GRIM were then 
converted to domestic production employment levels by dividing 
production labor expenditures by the annual payment per production 
worker (production worker hours multiplied by the labor rate found in 
the U.S. Census Bureau's 2011 ASM). The estimates of production workers 
in this section cover workers, including line-supervisors directly 
involved in fabricating and assembling a product within the 
manufacturing facility. Workers performing services that are closely 
associated with production operations, such as materials handling tasks 
using forklifts, are also included as production labor. DOE's estimates 
only account for production workers who manufacture the specific 
products covered by this rulemaking. DOE estimates that in the absence 
of energy conservation standards, there would be 415 domestic 
production workers for covered pumps.
    In the standards case, DOE estimates an upper and lower bound to 
the potential changes in employment that result from the standard. 
Table V.27 shows the range of the impacts of potential energy 
conservation standards on U.S. production workers of pumps.

                                 Table V.27--Potential Changes in the Total Number of Pump Production Workers in 2020 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Trial standard level
                                  ----------------------------------------------------------------------------------------------------------------------
                                    Base case             1                    2                    3                    4                    5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Potential Changes in Domestic      ...........  (41) to 0...........  (104) to 0.........  (166) to 0.........  (228) to 0.........  (290) to 0.
 Production Workers in 2020
 (relative to a base case
 employment of 415).
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    Based on the engineering analysis, MPCs and labor expenditures do 
not vary with efficiency and increasing TSLs. Additionally, the 
shipments analysis models consistent shipments at all TSLs. As a 
result, the GRIM predicts no change in employment in the standards 
case. DOE considers this to be the upper bound for change in 
employment. For a lower bound, DOE assumes a loss of employment that is 
directly proportional to the portion of pumps being eliminated from the 
market. Additional detail can be found in chapter 12 of the TSD.
    DOE notes that the direct employment impacts discussed here are 
independent of the indirect employment impacts to the broader U.S. 
economy, which are documented in chapter 15 of the NOPR TSD.
    DOE requests comment on the potential impacts on manufacturer 
employment and the specific drivers of any expected change in 
production line employment. This matter is identified as Issue 13 under 
``Issues on Which DOE Seeks Comment'' in section VIII.E of this NOPR.
c. Impacts on Manufacturing Capacity
    Based on the engineering analysis, DOE concludes that higher 
efficiency pumps require similar production facilities, tooling, and 
labor as baseline efficiency pumps. Based on the engineering analysis 
and interviews with manufacturers, a new energy conservation standard 
is unlikely to create production capacity constraints.
    However, industry representatives, in interviews and in the CIP 
Working Group meetings, expressed concern about the industry's ability 
to complete the necessary number of hydraulic redesigns required to 
comply with a new standard. (EERE-2013-BT-NOC-0039-0109, pp. 280-283) 
In the industry, not all companies have the in-house capacity to 
redesign pumps. Many companies rely on outside consultants for a 
portion or all of their hydraulic design projects. Manufacturers were 
concerned that a new standard would create more demand for hydraulic 
design technical resources than are available in the industry.
    The number of pumps that require redesign is directly tied to the 
proposed standard level. The level proposed today is based on a level 
that the CIP Working Group considered feasible for the industry. DOE 
requests comments on the potential for production line capacity 
constraints and on the potential for technical resource constraints due 
to the proposed standard.
    DOE requests comments and data on capacity constraints at each 
TSL--including production capacity constraints, engineering resource 
constraints, and testing capacity constraints. In particular, DOE 
requests comment on whether the proposed compliance date allows for a 
sufficient conversion period to make the equipment design and facility 
updates necessary to meet a new standard. This matter is identified as 
Issue 14 under ``Issues on Which DOE Seeks Comment'' in section VIII.E 
of this NOPR.
d. Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be affected disproportionately. Using 
average cost assumptions developed for an industry cash-flow estimate 
is inadequate to

[[Page 17872]]

assess differential impacts among manufacturer subgroups.
    For the CIP industry, DOE identified and evaluated the impact of 
energy conservation standards on one subgroup--small manufacturers. The 
SBA defines a ``small business'' as having 500 employees or less for 
NAICS 333911, ``Pump and Pumping Equipment Manufacturing.'' Based on 
this definition, DOE identified 39 manufacturers in the CIP industry 
that qualify as small businesses. For a discussion of the impacts on 
the small manufacturer subgroup, see the regulatory flexibility 
analysis in section VI.B of this notice and chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of recent or impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and lead companies 
to abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    For the cumulative regulatory burden analysis, DOE looks at 
product-specific Federal regulations that could affect pumps 
manufacturers and with which compliance is required approximately three 
years before or after the 2020 compliance date of standard proposed in 
this notice. The Department was not able to identify any additional 
regulatory burdens that met these criteria.
    DOE requests comments the cumulative regulatory burden on 
manufacturers. Specifically, DOE seeks input on any product-specific 
Federal regulations with which compliance is required within three 
years of the proposed compliance date for any final pumps standards, as 
well as on recommendations on how DOE may be able to align varying 
regulations to mitigate cumulative burden. This matter is identified as 
Issue 15 under ``Issues on Which DOE Seeks Comment'' in section VIII.E 
of this NOPR.
3. National Impact Analysis
a. Significance of Energy Savings
    For each TSL, DOE projected energy savings for pumps purchased in 
the 30-year period that begins in the year of compliance with new 
standards (2020-2049). The savings are measured over the entire 
lifetime of equipment purchased in the 30-year period. DOE quantified 
the energy savings attributable to each TSL as the difference in energy 
consumption between each standards case and the base case described in 
section IV.H.2.
    Table V.28 presents the estimated primary energy savings for each 
considered TSL, and Table V.29 presents the estimated FFC energy 
savings. The approach is further described in section IV.H.1.

  Table V.28--Cumulative National Primary Energy Savings for Pump Trial Standard Levels for Units Sold in 2020-
                                                      2049
----------------------------------------------------------------------------------------------------------------
                                                           Trial standard level (quads)
         Equipment class         -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.......................           0.016            0.05            0.08            0.12            0.16
ESCC.3600.......................           0.016            0.07            0.11            0.17            0.26
ESFM.1800.......................           0.003            0.05            0.11            0.23            0.35
ESFM.3600.......................           0.002            0.02            0.03            0.05            0.07
IL.1800.........................           0.015            0.05            0.08            0.11            0.16
IL.3600.........................           0.003            0.01            0.02            0.02            0.03
VTS.3600........................           0.002            0.02            0.11            0.17            0.22
                                 -------------------------------------------------------------------------------
    Total--All Classes..........           0.056            0.27            0.54            0.87            1.26
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.


 Table V.29--Cumulative National Full-Fuel-Cycle Energy Savings for Pump Trial Standard Levels for Units Sold in
                                                    2020-2049
----------------------------------------------------------------------------------------------------------------
                                                           Trial standard level (quads)
         Equipment class         -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.......................           0.017            0.05            0.08            0.12            0.17
ESCC.3600.......................           0.017            0.08            0.12            0.18            0.28
ESFM.1800.......................           0.003            0.06            0.12            0.25            0.37
ESFM.3600.......................           0.002            0.02            0.03            0.05            0.07
IL.1800.........................           0.016            0.05            0.08            0.12            0.17
IL.3600.........................           0.003            0.01            0.02            0.02            0.03
VTS.3600........................           0.002            0.02            0.11            0.17            0.24
                                 -------------------------------------------------------------------------------
    Total--All Classes..........           0.059            0.28            0.56            0.91            1.32
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.


[[Page 17873]]

    Circular A-4 requires agencies to present analytical results, 
including separate schedules of the monetized benefits and costs that 
show the type and timing of benefits and costs.\66\ Circular A-4 also 
directs agencies to consider the variability of key elements underlying 
the estimates of benefits and costs. For this rulemaking, DOE undertook 
a sensitivity analysis using nine rather than 30 years of equipment 
shipments. The choice of a nine-year period is a proxy for the timeline 
in EPCA for the review of certain energy conservation standards and 
potential revision of and compliance with such revised standards.\67\ 
The review timeframe established in EPCA is generally not synchronized 
with the equipment lifetime, product manufacturing cycles, or other 
factors specific to pumps. Thus, such results are presented for 
informational purposes only and are not indicative of any change in 
DOE's analytical methodology. The NES results based on a nine-year 
analytical period are presented in Table V.30. The impacts are counted 
over the lifetime of equipment purchased in 2020-2028.
---------------------------------------------------------------------------

    \66\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \67\ EPCA requires DOE to review its standards at least once 
every six years, and requires, for certain products, a three-year 
period after any new standard is promulgated before compliance is 
required, except that in no case may any new standards be required 
within six years of the compliance date of the previous standards. 
(42 U.S.C. 6295(m) and 6313(a)(6)(C)) While adding a six-year review 
to the three-year compliance period adds up to nine years, DOE notes 
that it may undertake reviews at any time within the six-year period 
and that the three-year compliance date may yield to the six-year 
backstop. A nine-year analysis period may not be appropriate given 
the variability that occurs in the timing of standards reviews and 
the fact that for some consumer products, the compliance period is 
five years rather than three years.

  Table V.30--Cumulative National Primary Energy Savings for Pump Trial Standard Levels for Units Sold in 2020-
                                                      2028
----------------------------------------------------------------------------------------------------------------
                                                           Trial standard level (quads)
         Equipment class         -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
ESCC.1800.......................           0.004           0.013           0.020            0.03            0.04
ESCC.3600.......................           0.004           0.019           0.029            0.04            0.07
ESFM.1800.......................           0.001           0.014           0.030            0.06            0.09
ESFM.3600.......................           0.001           0.004           0.008            0.01            0.02
IL.1800.........................           0.004           0.012           0.020            0.03            0.04
IL.3600.........................           0.001           0.002           0.004            0.01            0.01
VTS.3600........................           0.001           0.006           0.028            0.04            0.06
                                 -------------------------------------------------------------------------------
    Total--All Classes..........           0.015           0.071           0.141            0.23            0.33
----------------------------------------------------------------------------------------------------------------
Note: Components may not sum to total due to rounding.

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
consumers that would result from the TSLs considered for pumps. In 
accordance with OMB's guidelines on regulatory analysis,\68\ DOE 
calculated NPV using both a seven-percent and a three-percent real 
discount rate. Table V.31 shows the consumer NPV results for each TSL 
considered for pumps. In each case, the impacts cover the lifetime of 
equipment purchased in 2020-2049.
---------------------------------------------------------------------------

    \68\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4).

                 Table V.31--Cumulative Net Present Value of Consumer Benefit for Pump Trial Standard Levels for Units Sold in 2020-2049
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Trial standard level  (billion 2013$ *)
                    Equipment class                       Discount rate --------------------------------------------------------------------------------
                                                               (%)              1                2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800..............................................               3           0.052             0.20            0.29            0.40            0.47
                                                                      7           0.018             0.07            0.11            0.14            0.15
ESCC.3600..............................................               3           0.069             0.34            0.46            0.68            1.06
                                                                      7           0.028             0.14            0.18            0.26            0.41
ESFM.1800..............................................               3           0.010             0.20            0.44            0.88            1.28
                                                                      7           0.003             0.06            0.14            0.27            0.39
ESFM.3600..............................................               3           0.009             0.08            0.14            0.20            0.30
                                                                      7           0.003             0.03            0.05            0.07            0.11
IL.1800................................................               3           0.063             0.18            0.25            0.28            0.34
                                                                      7           0.022             0.06            0.08            0.07            0.07
IL.3600................................................               3           0.011             0.04            0.06            0.08            0.11
                                                                      7           0.004             0.01            0.02            0.03            0.04
VTS.3600...............................................               3          (0.001)            0.07            0.49            0.71            0.90
                                                                      7          (0.002)            0.02            0.20            0.28            0.35
    Total--All Classes.................................               3           0.213             1.11            2.13            3.23            4.47
                                                                      7           0.077             0.41            0.77            1.13            1.51
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
Note: Components may not sum to total due to rounding.


[[Page 17874]]

    The NPV results based on the aforementioned nine-year analytical 
period are presented in Table V.32. The impacts are counted over the 
lifetime of equipment purchased in 2020-2028. As mentioned previously, 
this information is presented for informational purposes only and is 
not indicative of any change in DOE's analytical methodology or 
decision criteria.

                 Table V.32--Cumulative Net Present Value of Consumer Benefit for Pump Trial Standard Levels for Units Sold in 2020-2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Trial standard level  (billion 2013$ *)
                    Equipment class                       Discount rate --------------------------------------------------------------------------------
                                                               (%)              1                2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800..............................................               3           0.017             0.06            0.10            0.13            0.15
                                                                      7           0.008             0.03            0.05            0.06            0.07
ESCC.3600..............................................               3           0.023             0.11            0.15            0.22            0.35
                                                                      7           0.013             0.06            0.08            0.12            0.18
ESFM.1800..............................................               3           0.003             0.07            0.14            0.29            0.42
                                                                      7           0.002             0.03            0.06            0.12            0.18
ESFM.3600..............................................               3           0.003             0.03            0.05            0.07            0.10
                                                                      7           0.001             0.01            0.02            0.03            0.05
IL.1800................................................               3           0.021             0.06            0.08            0.09            0.10
                                                                      7           0.010             0.03            0.03            0.03            0.03
IL.3600................................................               3           0.004             0.01            0.02            0.03            0.04
                                                                      7           0.002             0.01            0.01            0.01            0.02
VTS.3600...............................................               3          (0.001)            0.02            0.16            0.23            0.30
                                                                      7          (0.001)            0.01            0.09            0.13            0.16
    Total--All Classes.................................               3           0.070             0.36            0.70            1.06            1.45
                                                                      7           0.035             0.18            0.35            0.51            0.68
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
Note: Components may not sum to total due to rounding.

    The results presented in this section reflect an assumption of no 
change in pump prices over the forecast period. In addition, DOE 
conducted sensitivity analyses using alternative price trends: One in 
which prices decline over time, and one in which prices increase. These 
price trends, and the associated NPV results, are described in appendix 
10B of the NOPR TSD.
c. Indirect Impacts on Employment
    DOE expects energy conservation standards for pumps to reduce 
energy costs for equipment owners, with the resulting net savings being 
redirected to other forms of economic activity. Those shifts in 
spending and economic activity could affect the demand for labor. As 
described in section IV.N, DOE used an input/output model of the U.S. 
economy to estimate indirect employment impacts of the TSLs that DOE 
considered in this rulemaking. DOE understands that there are 
uncertainties involved in projecting employment impacts, especially 
changes in the later years of the analysis. Therefore, DOE generated 
results for near-term time frames (2020-2024), where these 
uncertainties are reduced.
    The results suggest that these proposed standards would be likely 
to have negligible impact on the net demand for labor in the economy. 
The projected net change in jobs is so small that it would be 
imperceptible in national labor statistics and might be offset by 
other, unanticipated effects on employment. Chapter 16 of the NOPR TSD 
presents more detailed results about anticipated indirect employment 
impacts.
4. Impact on Utility or Performance of Equipment
    Any technology option expected to lessen the utility or performance 
of pumps was removed from consideration in the screening analysis. As a 
result, DOE considered only one design option in this NOPR, hydraulic 
redesign. This design option does not involve geometry changes 
affecting installation of the pump (i.e., the flanges that connect it 
to external piping)--hence, there is no utility difference that might 
affect use of the more-efficient pumps for replacement applications. 
Further, the design option would not reduce the acceptable performance 
envelope of the pump (e.g., the combinations of pressure and flow for 
which the pump can be operated, restrictions to less corrosive 
environments, restrictions on acceptable operating temperature range). 
The hydraulic redesign would affect only the required power input, 
making no change to pump utility or performance.
    DOE seeks comment on the impacts, if any, there would be on the 
level of utility and available features currently offered by 
manufacturers with respect to the pumps that would be regulated under 
this proposal. This matter is identified as Issue 16 under ``Issues on 
Which DOE Seeks Comment'' in section VIII.E of this NOPR.
5. Impact of Any Lessening of Competition
    DOE has also considered any lessening of competition that is likely 
to result from new standards. The Attorney General determines the 
impact, if any, of any lessening of competition likely to result from a 
proposed standard, and transmits such determination in writing to the 
Secretary, together with an analysis of the nature and extent of such 
impact. (42 U.S.C. 6313(a)(6)(B)(ii)(V) and 6316(a).)
    To assist the Attorney General in making such a determination, DOE 
will provide DOJ with copies of this notice and the TSD for review. DOE 
will consider DOJ's comments on the proposed rule in preparing the 
final rule, and DOE will publish and respond to DOJ's comments in that 
document.
6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of the equipment subject to 
this rule is likely to improve the security of the nation's energy 
system by reducing the overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system. 
Reductions in national electric generating capacity estimated for each

[[Page 17875]]

considered TSL are reported in chapter 15 of the NOPR TSD.
    Energy savings from new standards for the pump equipment classes 
covered in today's NOPR could also produce environmental benefits in 
the form of reduced emissions of air pollutants and greenhouse gases 
associated with electricity production. Table V.33 provides DOE's 
estimate of cumulative emissions reductions projected to result from 
the TSLs considered in this rulemaking. The table includes both power 
sector emissions and upstream emissions. The upstream emissions were 
calculated using the multipliers discussed in section IV.K. DOE reports 
annual CO<INF>2</INF>, NO<INF>X</INF>, and Hg emissions reductions for 
each TSL in chapter 13 of the NOPR TSD. As discussed in section IV.L, 
DOE did not include NO<INF>X</INF> emissions reduction from power 
plants in States subject to CAIR, because an energy conservation 
standard would not affect the overall level of NO<INF>X</INF> emissions 
in those States due to the emissions caps mandated by CSAPR.

                  Table V.33--Cumulative Emissions Reduction for Potential Standards for Pumps
----------------------------------------------------------------------------------------------------------------
                                                                        TSL
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             3.2              15              31              50              72
SO2 (thousand tons).............             2.6              13              25              40              58
NOX (thousand tons).............             2.5              12              23              38              55
Hg (tons).......................           0.008           0.039           0.077           0.124           0.180
CH4 (thousand tons).............            0.32            1.54            3.07            4.95            7.20
N2O (thousand tons).............            0.05            0.22            0.44            0.71            1.03
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            0.19            0.91            1.81            2.93            4.26
SO2 (thousand tons).............            0.03            0.16            0.32            0.51            0.74
NOX (thousand tons).............             2.7              13              26              42              61
Hg (tons).......................          0.0001          0.0004          0.0007          0.0011          0.0016
CH4 (thousand tons).............              16              76             151             244             354
N2O (thousand tons).............           0.002           0.008           0.016           0.025           0.036
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......             3.4              16              33              53              77
SO2 (thousand tons).............             2.7              13              25              41              59
NOX (thousand tons).............             5.2              25              49              80             116
Hg (tons).......................            0.01            0.04            0.08            0.13            0.18
CH4 (thousand tons).............              16              77             154             248             362
N2O (thousand tons).............            0.05            0.23            0.45            0.73            1.07
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this NOPR, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO<INF>2</INF> 
and NO<INF>X</INF> estimated for each of the TSLs considered for pumps. 
As discussed in section IV.L, for CO<INF>2</INF>, DOE used values for 
the SCC developed by an interagency process. The interagency group 
selected four sets of SCC values for use in regulatory analyses. Three 
sets are based on the average SCC from three integrated assessment 
models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The 
fourth set, 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. The four SCC values for CO<INF>2</INF> 
emissions reductions in 2015, expressed in 2013$, are $12.0/ton, $40.5/
ton, $62.4/ton, and $119/ton. The values for later years are higher due 
to increasing emissions-related costs as the magnitude of projected 
climate change increases.
    Table V.34 presents the global value of CO<INF>2</INF> emissions 
reductions at each TSL. DOE calculated domestic values as a range from 
7 percent to 23 percent of the global values, and these results are 
presented in chapter 14 of the NOPR TSD. See Section IV. L. for further 
details.

          Table V.34--Global Present Value of CO2 Emissions Reduction for Potential Standards for Pumps
----------------------------------------------------------------------------------------------------------------
                                                        SCC Scenario *  (million 2013$)
                             -----------------------------------------------------------------------------------
             TSL               5% Discount rate,    3% Discount rate,   2.5% Discount rate,   3% Discount rate,
                                    average              average              average          95th percentile
----------------------------------------------------------------------------------------------------------------
                                             Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...........................                   21                  100                  160                  310
2...........................                  100                  474                  757                 1468
3...........................                  199                  944                 1506                 2921
4...........................                  319                 1517                 2421                 4695
5...........................                  463                 2205                 3521                 6826
----------------------------------------------------------------------------------------------------------------

[[Page 17876]]

 
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...........................                  1.2                  5.8                  9.3                   18
2...........................                  5.8                   28                   44                   86
3...........................                   11                   55                   88                  170
4...........................                   18                   88                  141                  274
5...........................                   27                  129                  206                  398
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
1...........................                   22                  106                  169                  329
2...........................                  106                  502                  801                 1554
3...........................                  210                  999                 1594                 3092
4...........................                  337                 1605                 2563                 4969
5...........................                  490                 2334                 3726                 7224
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4 and $119
  per metric ton (2013$).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO<INF>2</INF> and other greenhouse gas (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 NOPR the most 
recent values and analyses resulting from the interagency review 
process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NO<INF>X</INF> emissions reductions 
anticipated to result from new standards for the pump equipment that is 
the subject of this NOPR. The dollar-per-ton values that DOE used are 
discussed in section IV.L. Table V.35 presents the present value of 
cumulative NO<INF>X</INF> emissions reductions for each TSL calculated 
using the average dollar-per-ton values and seven-percent and three-
percent discount rates.

   Table V.35--Present Value of NOX Emissions Reduction for Potential
                           Standards for Pumps
------------------------------------------------------------------------
                                                  Million 2013$
                                       ---------------------------------
                  TSL                     3% Discount      7% Discount
                                              rate             rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.....................................              3.1              1.4
2.....................................             15                6.4
3.....................................             29               13
4.....................................             47               20
5.....................................             68               29
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.....................................              3.3              1.4
2.....................................             16                6.4
3.....................................             31               13
4.....................................             50               20
5.....................................             72               30
------------------------------------------------------------------------
                             Total Emissions
------------------------------------------------------------------------
1.....................................              6.5              2.8
2.....................................             30               13
3.....................................             60               25
4.....................................             97               41
5.....................................            141               59
------------------------------------------------------------------------

    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 
V.36 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced CO<INF>2</INF> 
and NO<INF>X</INF> 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 a three-percent discount rate. 
The CO<INF>2</INF> values used in the columns of each table correspond 
to the four scenarios for the valuation of CO<INF>2</INF> emission 
reductions discussed above.

[[Page 17877]]



    Table V.36--Pump TSLs: Net Present Value of Consumer Savings Combined With Net Present Value of Monetized
                                 Benefits From CO2 and NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                         Consumer NPV at 7% discount rate added with: (billion 2013$)
                             -----------------------------------------------------------------------------------
                              SCC Value of $12.0/  SCC Value of $40.5/  SCC Value of $62.4/   SCC Value of $119/
             TSL              metric ton CO2* and  metric ton CO2* and  metric ton CO2* and  metric ton CO2* and
                                medium value for     medium value for     medium value for     medium value for
                                     NOX**                NOX**                NOX**                NOX**
----------------------------------------------------------------------------------------------------------------
1...........................                  0.2                  0.3                  0.4                  0.5
2...........................                  1.2                  1.6                  1.9                  2.7
3...........................                  2.4                  3.2                  3.8                  5.3
4...........................                  3.7                  4.9                  5.9                  8.3
5...........................                  5.1                  6.9                  8.3                   12
----------------------------------------------------------------------------------------------------------------
                                                 Consumer NPV at 7% discount rate added with:
                                                                (billion 2013$)
----------------------------------------------------------------------------------------------------------------
1...........................                  0.1                  0.2                  0.2                  0.4
2...........................                  0.5                  0.9                  1.2                  2.0
3...........................                  1.0                  1.8                  2.4                  3.9
4...........................                  1.5                  2.8                  3.7                  6.1
5...........................                  2.1                  3.9                  5.3                  8.8
----------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative values.
* These label values represent the global SCC in 2015, in 2013$. The present values have been calculated with
  scenario-consistent discount rates.
** Medium Value corresponds to $2,684 per ton of NOX emissions.

    Although adding the value of consumer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. consumer monetary savings that occur as a result of market 
transactions, while the value of CO<INF>2</INF> reductions is based on 
a global value. Second, the assessments of operating cost savings and 
the SCC are performed with different methods that use quite different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of equipment shipped in 2020-2049. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of 
CO<INF>2</INF> in each year. These impacts continue well beyond 2100.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 
6316(a).) In developing the proposed standard, DOE considered the term 
sheet of recommendations voted on by the CIP Working Group and approved 
by the ASRAC. (See EERE-2013-BT-NOC-0039-0092.) DOE has weighed the 
value of such negotiation in establishing the standards proposed in 
today's rule. DOE has encouraged the negotiation of proposed standard 
levels, in accordance with the FACA and the NRA, as a means for 
interested parties, representing diverse points of view, to analyze and 
recommend energy conservation standards to DOE. Such negotiations may 
often expedite the rulemaking process. In addition, standard levels 
recommended through a negotiation may increase the likelihood for 
regulatory compliance, while decreasing the risk of litigation.

C. Proposed Standards

    When considering standards, the new or amended energy conservation 
standard that DOE adopts for any type (or class) of covered equipment 
shall be designed to achieve the maximum improvement in energy 
efficiency that the Secretary of Energy determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 
6316(a).) In determining whether a standard is economically justified, 
the Secretary must determine whether the benefits of the standard 
exceed its burdens, considering, to the greatest extent practicable, 
the seven statutory factors discussed previously. (42 U.S.C. 
6295(o)(2)(B)(i) and 6316(a).) The new or amended standard must also 
``result in significant conservation of energy.'' (42 U.S.C. 
6295(o)(3)(B) and 6316(a).)
    For today's NOPR, DOE considered the impacts of new standards for 
pumps at each TSL, beginning with the maximum technologically feasible 
level, to determine whether that level was economically justified. 
Where the max-tech level was not justified, DOE then considered the 
next-most-efficient level and undertook the same evaluation until it 
reached the highest efficiency level that is both technologically 
feasible and economically justified and saves a significant amount of 
energy.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, tables in this section summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed herein. The efficiency levels contained in each TSL are 
described in section V.A. In addition to the quantitative results 
presented in the tables, DOE also considers other burdens and benefits 
that affect economic justification. These include the impacts on 
identifiable subgroups of consumers who may be disproportionately 
affected by a national standard, and impacts on employment. Section 
V.B.1.b presents the estimated impacts of each TSL for these subgroups. 
DOE discusses the impacts on direct employment in pump manufacturing in 
section V.B.2.b, and the indirect employment impacts in section 
V.B.3.c.
1. Benefits and Burdens of Trial Standard Levels Considered for Pumps
    Table V.37, Table V.38, and Table V.39 summarize the quantitative 
impacts estimated for each TSL for pumps. The national impacts are 
measured over the lifetime of pumps purchased in the 30-year period 
that begins in the year of compliance with new standards (2020-2049). 
The energy savings, emissions reductions, and value of emissions 
reductions refer to full-fuel-cycle results.

[[Page 17878]]



                                                              Table V.37--Summary of Analytical Results for Pumps: National Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Category                           TSL 1                           TSL 2                           TSL 3                           TSL 4                           TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
National FFC Energy Savings       0.059.........................  0.28..........................  0.56..........................  0.91..........................  1.32.
 (quads).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    NPV of Consumer Benefits
                                                                                         (2013$ billion)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate................  0.213.........................  1.11..........................  2.13..........................  3.23..........................  4.47.
7% discount rate................  0.077.........................  0.41..........................  0.77..........................  1.13..........................  1.51.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Cumulative FFC Emissions Reduction
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......  3.4...........................  16............................  33............................  53............................  77.
SO2 (thousand tons).............  2.7...........................  13............................  25............................  41............................  59.
NOX (thousand tons).............  5.2...........................  25............................  49............................  80............................  116.
Hg (tons).......................  0.01..........................  0.04..........................  0.08..........................  0.13..........................  0.18.
CH4 (thousand tons).............  16............................  77............................  154...........................  248...........................  362.
N2O (thousand tons).............  0.05..........................  0.23..........................  0.45..........................  0.73..........................  1.07.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Value of Emissions Reduction
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2013$ million)*............  22 to 329.....................  106 to 1554...................  210 to 3092...................  337 to 4969...................  490 to 7224.
NOX--3% discount rate (2013$      6.5...........................  30............................  60............................  97............................  141.
 million).
NOX--7% discount rate (2013$      2.8...........................  13............................  25............................  41............................  59.
 million).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
Note: Parentheses indicate negative values.


                                                 Table V.38--NPV of Consumer Benefits by Equipment Class
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Trial standard level  (billion 2013$ *)
                    Equipment class                       Discount rate --------------------------------------------------------------------------------
                                                               (%)              1                2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800..............................................               3           0.052             0.20            0.29            0.40            0.47
                                                                      7           0.018             0.07            0.11            0.14            0.15
ESCC.3600..............................................               3           0.069             0.34            0.46            0.68            1.06
                                                                      7           0.028             0.14            0.18            0.26            0.41
ESFM.1800..............................................               3           0.010             0.20            0.44            0.88            1.28
                                                                      7           0.003             0.06            0.14            0.27            0.39
ESFM.3600..............................................               3           0.009             0.08            0.14            0.20            0.30
                                                                      7           0.003             0.03            0.05            0.07            0.11
IL.1800................................................               3           0.063             0.18            0.25            0.28            0.34
                                                                      7           0.022             0.06            0.08            0.07            0.07
IL.3600................................................               3           0.011             0.04            0.06            0.08            0.11
                                                                      7           0.004             0.01            0.02            0.03            0.04
VTS.3600...............................................               3          (0.001)            0.07            0.49            0.71            0.90
                                                                      7          (0.002)            0.02            0.20            0.28            0.35
    Total--All Classes.................................               3           0.213             1.11            2.13            3.23            4.47
                                                                      7           0.077             0.41            0.77            1.13            1.51
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.
Note: Components may not sum to total due to rounding.


                                                     Table V.39--Summary of Analytical Results for Pumps: Manufacturer and Consumer Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                               TSL 1                           TSL 2                           TSL 3                           TSL 4                           TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Manufacturer Impacts
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV relative to a base   111.6 to 121.8................  81.9 to 129.7.................  22.4 to 125.3.................  (85.0) to 114.1...............  (228.4) to 94.1.
 case value of 121.4 (2013$
 millions).
Industry NPV (% change).........  (8.0) to 0.3..................  (32.5) to 6.9.................  (81.6) to 3.3.................  (170.0) to (6.0)..............  (288.2) to (22.5).
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Consumer Mean LCC Savings (2013$)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.......................  $43...........................  $164..........................  $240..........................  $324..........................  $362.

[[Page 17879]]

 
ESCC.3600.......................  $17...........................  $92...........................  $122..........................  $180..........................  $278.
ESFM.1800.......................  $8.0..........................  $173..........................  $372..........................  $735..........................  $1,062.
ESFM.3600.......................  $58...........................  $547..........................  $961..........................  $1,411........................  $2,078.
IL.1800.........................  $51...........................  $149..........................  $200..........................  $202..........................  $234.
IL.3600.........................  $46...........................  $139..........................  $241..........................  $288..........................  $377.
VTS.3600........................  ($2.4)........................  $7.2..........................  $91...........................  $123..........................  $144.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Consumer Simple PBP (years)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.......................  3.3...........................  2.2...........................  2.6...........................  3.1...........................  3.9.
ESCC.3600.......................  1.4...........................  1.0...........................  1.8...........................  1.9...........................  1.9.
ESFM.1800.......................  2.4...........................  2.8...........................  2.8...........................  3.1...........................  3.4.
ESFM.3600.......................  1.2...........................  0.8...........................  0.9...........................  1.1...........................  1.2.
IL.1800.........................  2.3...........................  2.8...........................  3.9...........................  5.4...........................  6.1.
IL.3600.........................  1.4...........................  1.9...........................  2.1...........................  2.7...........................  3.2.
VTS.3600........................  11............................  4.2...........................  1.7...........................  2.2...........................  2.7.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Percent Consumers with Net Cost (%)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ESCC.1800.......................  12............................  11............................  23............................  30............................  42.
ESCC.3600.......................  0.7...........................  1.8...........................  14............................  14............................  12.
ESFM.1800.......................  0.26..........................  6.5...........................  15............................  24............................  26.
ESFM.3600.......................  0.29..........................  1.9...........................  4.7...........................  7.0...........................  8.4.
IL.1800.........................  1.8...........................  6.9...........................  15............................  25............................  36.
IL.3600.........................  2.0...........................  13............................  11............................  14............................  20.
VTS.3600........................  1.4...........................  21............................  4.4...........................  8.5...........................  13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative values.

    First, DOE considered TSL 5, which would save an estimated total of 
1.32 quads of energy, an amount DOE considers significant. TSL 5 has an 
estimated NPV of consumer benefit of $1.51 billion using a 7-percent 
discount rate, and $4.47 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 5 are 77 million metric tons of 
CO<INF>2</INF>, 116 thousand tons of NO<INF>X</INF>, and 0.18 tons of 
Hg. The estimated monetary value of the CO<INF>2</INF> emissions 
reductions at TSL 5 ranges from $490 million to $7,224 million. At TSL 
5, the average LCC savings ranges from $144 to $2,078 depending on 
equipment class. The fraction of consumers with negative LCC benefits 
range from 8.4 percent to 42 percent depending on equipment class. At 
TSL 5, the projected change in INPV ranges from a decrease of $349.8 
million to a decrease of $27.3 million. At TSL 5, DOE recognizes the 
risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached TSL 5 could result in a net loss of up to 288.2 
percent in INPV for manufacturers.
    Accordingly, the Secretary tentatively concludes that, at TSL 5 for 
pumps, the benefits of energy savings, national net present value of 
consumer benefit, LCC savings, emission reductions, and the estimated 
monetary value of the CO<INF>2</INF> emissions reductions would be 
outweighed by the fraction of consumers with negative LCC benefits and 
the significant burden on the industry. Consequently, DOE has concluded 
that TSL 5 is not economically justified.
    Next, DOE considered TSL 4, which would save an estimated total of 
0.91 quads of energy, an amount DOE considers significant. TSL 4 has an 
estimated NPV of consumer benefit of $1.13 billion using a 7-percent 
discount rate, and $3.23 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 4 are 53 million metric tons of 
CO<INF>2</INF>, 80 thousand tons of NO<INF>X</INF>, and 0.13 tons of 
Hg. The estimated monetary value of the CO<INF>2</INF> emissions 
reductions at TSL 4 ranges from $337 million to $4,969 million. At TSL 
4, the average LCC savings ranges from $123 to $1,411 depending on 
equipment class. The fraction of consumers with negative LCC benefits 
range from 7.0 percent to 30 percent depending on equipment class. At 
TSL 4, the projected change in INPV ranges from a decrease of $206.3 
million to a decrease of $7.2 million. At TSL 4, DOE recognizes the 
risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached TSL 4 could result in a net loss of up to 170 
percent in INPV for manufacturers.
    Accordingly, the Secretary tentatively concludes that at TSL 4 for 
pumps, the benefits of energy savings, national net present value of 
consumer benefit, LCC savings, emission reductions, and the estimated 
monetary value of the CO<INF>2</INF> emissions reductions would be 
outweighed by the fraction of consumers with negative LCC benefits and 
the significant burden on the industry. Consequently, DOE has concluded 
that TSL 4 is not economically justified.
    Next, DOE considered TSL 3, which would save an estimated total of 
0.56 quads of energy, an amount DOE considers significant. TSL 3 has an 
estimated NPV of consumer benefit of $0.77 billion using a 7-percent 
discount rate, and $2.13 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 3 are 33 million metric tons of 
CO<INF>2</INF>, 49 thousand tons of NO<INF>X</INF>, and 0.08 tons of 
Hg. The estimated monetary value of the CO<INF>2</INF> emissions 
reductions at TSL 3 ranges from $210 million to $3,092 million. At TSL 
3, the average LCC savings are range from $91 to $961 depending on 
equipment class. The fraction of consumers with negative LCC benefits 
ranged from 4.4 percent to 23 percent depending on equipment class. At 
TSL 3, the projected change in INPV ranges from a decrease of $99 
million to an increase of $4 million. If the lower bound of the range 
of impacts is reached, TSL 3 could result in a net loss of up to 81.6 
percent in INPV for manufacturers.
    Accordingly, the Secretary tentatively concludes that at TSL 3 for 
pumps, the benefits of energy savings, national net

[[Page 17880]]

present value of consumer benefit, LCC savings, emission reductions, 
and the estimated monetary value of the CO<INF>2</INF> emissions 
reductions would be outweighed by the fraction of consumers with 
negative LCC benefits and the significant burden on the industry. 
Consequently, DOE has concluded that TSL 3 is not economically 
justified.
    Next, DOE considered TSL 2, which would save an estimated total of 
0.28 quads of energy, an amount DOE considers significant. TSL 2 has an 
estimated NPV of consumer benefit of $0.41 billion using a 7-percent 
discount rate, and $1.11 billion using a 3-percent discount rate. The 
cumulative emissions reductions at TSL 2 are 16 million metric tons of 
CO<INF>2</INF>, 25 thousand tons of NO<INF>X</INF>, and 0.04 tons of 
Hg. The estimated monetary value of the CO<INF>2</INF> emissions 
reductions at TSL 3 ranges from $106 million to $1,554 million. At TSL 
2, the average LCC savings range from $7.2 to $547 depending on 
equipment class. The fraction of consumers with negative LCC benefits 
range from 1.8 percent to 21 percent depending on equipment class. At 
TSL 2, the projected change in INPV ranges from a decrease of $39.5 
million to an increase of $8.3 million. If the lower bound of the range 
of impacts is reached, TSL 2 could result in a net loss of up to 32.5 
percent in INPV for manufacturers.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has tentatively concluded that at TSL 2 for pumps, the 
benefits of energy savings, positive NPV of consumer benefit, positive 
average consumer LCC savings, emission reductions, and the estimated 
monetary value of the emissions reductions would outweigh the fraction 
of consumers with negative LCC benefits and the potential reduction in 
INPV for manufacturers.
    In addition, the proposed standards are consistent with the 
recommendations voted on by the CIP Working Group and approved by the 
ASRAC. (See EERE-2013-BT-NOC-0039-0092.) DOE has encouraged the 
negotiation of proposed standard levels, in accordance with the FACA 
and the NRA, as a means for interested parties, representing diverse 
points of view, to analyze and recommend energy conservation standards 
to DOE. Such negotiations may often expedite the rulemaking process. In 
addition, standard levels recommended through a negotiation may 
increase the likelihood for regulatory compliance, while decreasing the 
risk of litigation.
    The Secretary of Energy has tentatively concluded that TSL 2 would 
save a significant amount of energy and is technologically feasible and 
economically justified. For the above reasons, DOE today proposes to 
adopt the energy conservation standards for pumps at TSL 2. Table V.40 
presents the proposed energy conservation standards for pumps.

      Table V.40--Proposed Energy Conservation Standards for Pumps
------------------------------------------------------------------------
                                                     Proposed
                  Equipment class                    standard   Proposed
                                                     level *    C-value
------------------------------------------------------------------------
ESCC.1800.CL......................................       1.00     128.47
ESCC.3600.CL......................................       1.00     130.42
ESCC.1800.VL......................................       1.00     128.47
ESCC.3600.VL......................................       1.00     130.42
ESFM.1800.CL......................................       1.00     128.85
ESFM.3600.CL......................................       1.00     130.99
ESFM.1800.VL......................................       1.00     128.85
ESFM.3600.VL......................................       1.00     130.99
IL.1800.CL........................................       1.00     129.30
IL.3600.CL........................................       1.00     133.84
IL.1800.VL........................................       1.00     129.30
IL.3600.VL........................................       1.00     133.84
RSV.1800.CL.......................................       1.00     129.63
RSV.3600.CL.......................................       1.00     133.20
RSV.1800.VL.......................................       1.00     129.63
RSV.3600.VL.......................................       1.00     133.20
VTS.1800.CL.......................................       1.00     134.13
VTS.3600.CL.......................................       1.00     134.13
VTS.1800.VL.......................................       1.00     134.13
VTS.3600.VL.......................................       1.00     134.13
------------------------------------------------------------------------
* A pump model is compliant if its PEI rating is less than or equal to
  the proposed standard.

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards
    The benefits and costs of today's proposed standards can also be 
expressed in terms of annualized values. The annualized monetary values 
are the sum of: (1) The annualized national economic value, expressed 
in 2013$, of the benefits from operating equipment that meets the 
proposed standards (consisting primarily of operating cost savings from 
using less energy, minus increases in equipment purchase costs, which 
is another way of representing consumer NPV), and (2) the monetary 
value of the benefits of emission reductions, including CO<INF>2</INF> 
emission reductions.\69\ The value of the CO<INF>2</INF> reductions 
(i.e., SCC), is calculated using a range of values per metric ton of 
CO<INF>2</INF> developed by a recent interagency process. See section 
IV.L.
---------------------------------------------------------------------------

    \69\ For the annualization methodology, see footnote 13.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO<INF>2</INF> reductions provides a useful perspective, two issues 
should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions, while the value of CO<INF>2</INF> reductions is 
based on a global value. Second, the assessments of operating cost 
savings and SCC are performed with different methods that use different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of equipment shipped in 2020-2049. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of 
CO<INF>2</INF> in each year. These impacts continue well beyond 2100.
    Table V.41 shows the annualized values for the proposed standards 
for pumps. The results under the primary estimate are as follows. Using 
a 7-percent discount rate for benefits and costs other than 
CO<INF>2</INF> reduction, for which DOE used a 3-percent discount rate 
along with the average SCC series that has a value of $40.5/t in 2015, 
the cost of the standards proposed in this document is $16.9 million 
per year in increased equipment costs, while the benefits are $60 
million per year in reduced equipment operating costs, $29 million in 
CO<INF>2</INF> reductions, and $1.3 million in reduced NO<INF>X</INF> 
emissions. In this case, the net benefit amounts to $73 million per 
year. Using a 3-percent discount rate for all benefits and costs and 
the average SCC series that has a value of $40.5/t in 2015, the cost of 
the standards proposed in this document is $17.5 million per year in 
increased equipment costs, while the benefits are $81 million per year 
in reduced operating costs, $29 million in CO<INF>2</INF> reductions, 
and $1.7 million in reduced NO<INF>X</INF> emissions. In this case, the 
net benefit amounts to $94 million per year.

[[Page 17881]]



                                    Table V.41--Annualized Benefits and Costs of Proposed Standards (TSL 2) for Pumps
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Million 2013$/year
                                                                       ---------------------------------------------------------------------------------
                                              Discount rate                                              Low net benefits          High net benefits
                                                                            Primary  estimate *             estimate *                 estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings...........  7..................................  60........................  54.......................  67
                                   3..................................  81........................  72.......................  93
CO2 Reduction Monetized Value      5..................................  8.........................  8........................  9
 ($12.0/t case) **.
CO2 Reduction Monetized Value      3..................................  29........................  27.......................  31
 ($40.5/t case) **.
CO2 Reduction Monetized Value      2.5................................  42........................  39.......................  46
 ($62.4/t case) **.
CO2 Reduction Monetized Value      3..................................  89........................  83.......................  97
 $119/t case) **.
NOX Reduction at $2,684/ton **...  7..................................  1.3.......................  1.3......................  1.4
                                   7 plus CO2 range...................  1.3.......................  1.6......................  1.9
Total Benefits [dagger]..........  7 plus CO2 range...................  69 to 150.................  63 to 138................  78 to 166
                                   7..................................  90........................  82.......................  100
                                   3 plus CO2 range...................  91 to 172.................  81 to 156................  104 to 192
                                   3..................................  112.......................  100......................  126
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental Equipment Costs......  7..................................  16.9......................  18.6.....................  17.2
                                   3..................................  17.5......................  19.5.....................  17.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Net Benefits/Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total[dagger]....................  7 plus CO2 range...................  53 to 133.................  44 to 119................  61 to 148
                                   7..................................  73........................  63.......................  83
                                   3 plus CO2 range...................  74 to 155.................  62 to 136................  86 to 174
                                   3..................................  94........................  80.......................  108
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with pumps shipped in 2020-2049. These results include benefits to consumers which
  accrue after 2049 from the products purchased in 2020-2049. The results account for the incremental variable and fixed costs incurred by manufacturers
  due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize
  projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental equipment costs
  reflect a constant rate in the Primary Estimate, an increase rate in the Low Benefits Estimate, and a decline rate in the High Benefits Estimate. The
  methods used to derive projected price trends are explained in section IV.F.2.a.
** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first three
  cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.5/t
  case). In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO2 values.

VI. Labeling and Certification Requirements

A. Labeling

    In the Framework Document, DOE noted that EPCA includes provisions 
for labeling (42 U.S.C. 6315). EPCA authorizes DOE to establish 
labeling requirements only if certain criteria are met. Specifically, 
DOE must determine that: (1) Labeling in accordance with section 6315 
is technologically and economically feasible with respect to any 
particular equipment class; (2) significant energy savings will likely 
result from such labeling; and (3) labeling in accordance with section 
6315 is likely to assist consumers in making purchasing decisions. (42 
U.S.C. 6315(h)).
    If these criteria are met, EPCA specifies certain aspects of 
equipment labeling that DOE must consider in any rulemaking 
establishing labeling requirements for covered equipment. At a minimum, 
such labels must include the energy efficiency of the affected 
equipment, as tested under the prescribed DOE test procedure. The 
labeling provisions may also consider the addition of other 
requirements, including: Directions for the display of the label; a 
requirement to display on the label additional information related to 
energy efficiency or energy consumption, which may include instructions 
for maintenance and repair of the covered equipment, as necessary to 
provide adequate information to purchasers; and requirements that 
printed matter displayed or distributed with the equipment at the point 
of sale also include the information required to be placed on the 
label. (42 U.S.C. 6315(b) and 42 U.S.C. 6315(c)).
    In response to the Framework document, HI and Grundfos supported 
labeling that would include the rated efficiency value of the pump. 
(HI, No. 25 at p. 11; Grundfos, No. 24 at p. 19). Grundfos noted that 
this would provide transparency to consumers to make better purchasing 
considerations and would not be expected to result in significant 
additional burden. Grundfos added that markings should not conflict 
with other information presently included on nameplates, that 
additional bossing on the pump castings should not be required, but 
that potentially Energy Guide-type labels could be placed on pump 
packaging prior to shipping. Grundfos also recommended harmonization 
with EU 547. (Grundfos, No. 24 at p. 19). HI noted that including 
efficiency on the label would allow the buyer or end-user to select the 
most efficient product available. (HI, No. 25 at p. 11). The Advocates 
also noted that development of a DOE test procedure for pumps including 
motors could facilitate a labeling scheme to encourage the greater use 
of pumps with VSDs across a wide horsepower range. (The Advocates, No. 
32 at p. 7).

[[Page 17882]]

    The CIP Working Group recommended labeling requirements in the term 
sheet. (See EERE-2013-BT-NOC-0039-0092, recommendation #12.) 
Specifically, the working group recommended that pumps be labeled based 
on the configuration in which they are sold. Table VI.1 shows the 
information that the CIP Working Group recommended be included on a 
pump nameplate. (See EERE-2013-BT-NOC-0039-0092, recommendation #12.)

          Table VI.1--Labeling Requirements for Pump Nameplate
------------------------------------------------------------------------
                                                     Bare pump + motor +
          Bare pump             Bare pump + motor         controls
------------------------------------------------------------------------
PEICL.......................  PEICL...............  PEICL.
Model number................  Model number........  Model number.
Impeller diameter for each    Impeller diameter     Impeller diameter
 unit.                         for each unit.        for each unit.
------------------------------------------------------------------------
Note: The impeller diameter referenced is the actual diameter of each
  unit as sold, not the full impeller diameter at which the pump is
  rated.

    DOE has reviewed the recommendations of the working group with 
respect to the three requirements in EPCA restricting the Secretary's 
authority to promulgate labeling rules. (42 U.S.C. 6315(h)). DOE 
considered applying these requirements to both the pump nameplate and 
marketing materials.
    First, DOE finds that the working group labeling recommendations 
are technologically and economically feasible with respect to each 
equipment class in this rulemaking. Pump manufacturers currently 
include nameplates on their pumps and it is technologically feasible 
for them to provide energy efficiency information on a nameplate as 
well without presenting a significant incremental burden. Furthermore, 
as the additional information proposed to be added to the nameplate is 
minimal and, in some cases, may already be included on the nameplate of 
some pump manufacturers, DOE believes that the size of the nameplate 
typically will not be required to increase and, thus, there will not be 
an incremental cost for adding additional information to pump 
nameplates.\70\ Costs of updating marketing materials for pumps that 
must be redesigned to meet the standard were included in the conversion 
costs for the industry and are accounted for in the industry cash-flow 
analysis results and industry valuation figures in section V.B.2. For 
pumps that do not need to be redesigned to meet the standard, DOE 
estimates that the costs of updating marketing materials to include the 
labeling requirements would be up to $3750 per pump model.\71\ In the 
absence of a standard, this would result in additional cost to the 
industry of approximately $13 million. DOE estimates that the 
investment could result in a loss of INPV compared to a base case with 
no labeling requirement of up to approximately 5%. For the proposed 
standard, the additional cost to industry for updating marketing 
materials for pumps that do not have to be redesigned would be 
approximately $10 million. DOE estimates that the investment could 
result in an additional loss of INPV compared to a base case with no 
labeling requirement of up to approximately 4% beyond that estimated 
from the proposed standard.\72\ Therefore, DOE has determined that 
establishing labeling requirements would be economically feasible.
---------------------------------------------------------------------------

    \70\ Manufacturers will likely deplete their stock of existing 
nameplates prior to the compliance date of any labeling 
requirements. Therefore, in order to meet the labeling requirements, 
they will be buying redesigned nameplates--likely at the same cost 
as the old ones--and then printing new information on them--likely 
at the same cost as previously.
    \71\ HI estimated the average cost for updating marketing 
(literature, data sheets, curves, pump selection tools, sales 
training, compliance documentation, etc.) for a hydraulic redesign 
to range from $32,000 for a 1-hp model to $27,000 for a 200-hp 
model. DOE assumed $30,000 on average. The marketing costs provided 
by HI were for developing new materials for redesigned pump models. 
For this exercise only literature and data sheets are relevant, 
which DOE estimated would represent half of the marketing costs. In 
addition, in this case, DOE is estimating the incremental cost for 
making a few additions to literature rather than complete design of 
new materials. DOE assumed these additions would cost only 25% or 
less of full material development.
    \72\ Approximately 3500 models are in the scope of this 
rulemaking. In the absence of the standard, none of these models 
would have to be redesigned and would thus incur $3750 each in costs 
for updating marketing materials. At TSL 2, 25% of pump models would 
have to be redesigned, and creating new marketing materials for 
these pumps is already accounted for in the MIA. The 75% of pump 
models that do not have to be redesigned would incur $3750 each.
---------------------------------------------------------------------------

    Second, DOE believes the labeling recommendations proposed by the 
working group will likely result in significant energy savings. The 
related energy conservation standards are expected to save 0.27 quads. 
Requiring labels that include the rated value subject to the standards 
will increase consumer awareness of the standards. As a result, 
requiring the labels may increase consumer demand for more efficient 
pumps, thus leading to additional savings beyond that calculated for 
the standards. In addition, the labels will make it easier for 
consumers to compare the expected performance of a bare pump to that of 
a pump with controls, thus increasing the likelihood that a consumer 
will select a pump with controls. Such purchasing decisions will result 
in additional energy savings beyond that of the standard by potentially 
increasing the market share of pumps sold with controls and therefore 
using less power during operating hours.
    Third, DOE finds that the recommended working group labeling 
requirements are likely to assist consumers in making purchasing 
decisions. By including the rated metric on the nameplate and marketing 
materials, consumers will have the information needed to compare 
performance between pump models, with the assurance that the ratings 
were calculated according to a DOE-specified test procedure. As stated 
previously, the labeling recommendations will assist consumers in 
making purchasing decisions between bare pumps and pumps with controls, 
by allowing them to fairly accurately estimate the potential energy 
savings from using controls in a variable load situation. As noted 
previously, Grundfos and HI both suggested in comments that labels 
would assist consumers in making purchasing decisions. (Grundfos, No. 
24 at p. 19; HI, No. 25 at p. 11). This was also a primary reason the 
recommendation was made by the working group.
    DOE also notes that the recommended working group labeling 
recommendations meet the EPCA requirement that labels, at a minimum, 
include the energy efficiency of the equipment to which the rulemaking 
applies, as tested under the prescribed DOE test procedure. (42 U.S.C. 
6315(b)). In this case, that information is PEI<INF>CL</INF> or 
PEI<INF>VL</INF>, depending on pump configuration. Therefore, DOE is 
proposing to adopt the labeling requirements recommended by the CIP 
Working Group, as shown in Table VI.1. Additionally, DOE proposes that 
these same labeling requirements be applied

[[Page 17883]]

to marketing materials in addition to the pump nameplate. See 42 U.S.C. 
6315(c)(3).
    DOE is tentatively proposing the following requirements for display 
of information: All orientation, spacing, type sizes, type faces, and 
line widths to display this required information shall be the same as 
or similar to the display of the other performance data on the pump's 
permanent nameplate. The PEI<INF>CL</INF> or PEI<INF>VL</INF>, as 
appropriate to a given pump model, shall be identified in the form 
``PEI<INF>CL</INF> ___'' or ``PEI<INF>VL</INF> ___.'' The model number 
shall be in one of the following forms: ``Model ____'' or ``Model 
number ____'' or ``Model No. ____.'' The unit's impeller diameter shall 
be in the form ``Imp. Dia. ____(in.).'' DOE seeks input on these 
proposed requirements. This is identified as Issue 17 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
    DOE is aware that when pump manufacturers sell a bare pump to a 
distributor, the distributor may trim the impeller prior to selling the 
pump to a customer. Therefore, DOE requests comment on the feasibility 
of including the impeller diameter for each unit on the nameplate. 
Specifically, when shipping bare pumps to distributors, would it be 
more appropriate for this field to be left blank and filled in by the 
distributor? This is identified as Issue 18 in section VIII.E, ``Issues 
on Which DOE Seeks Comment.''

B. Certification Requirements

1. Certification Report Requirements
    Since pumps are a distinct type of covered equipment under EPCA and 
would have entirely separate reporting requirements from other types of 
covered equipment, DOE proposes to include the reporting requirements 
in a new section 429.59 within subpart B of 10 CFR part 429. This 
section would also include sampling requirements, which are discussed 
in the test procedure NOPR. Consistent with other types of covered 
products and equipment, the proposed section (10 CFR 429.59) would 
specify that the general certification report requirements contained in 
10 CFR 429.12 apply to pumps. Proposed additional requirements 
established in 10 CFR 429.59 would require manufacturers to supply 
certain additional information to DOE in certification reports for 
pumps to demonstrate compliance with any energy conservation standards 
established as a result of this rulemaking.
    The CIP Working Group recommended that the following data be 
included in the certification reports:
    <bullet> Manufacturer name;
    <bullet> Model number(s);
    <bullet> Equipment class;
    <bullet> PEI<INF>CL</INF> or PEI<INF>VL</INF> as applicable;
    <bullet> BEP flow rate and head;
    <bullet> Rated speed;
    <bullet> Number of stages tested;
    <bullet> Full impeller diameter (in.);
    <bullet> Whether the PEI<INF>CL</INF> or PEI<INF>VL</INF> is 
calculated or tested; and
    <bullet> Input power to the pump at each load point i (Pini).
    (See EERE-2013-BT-NOC-0039-0092, recommendation No. 13.)
    DOE has reviewed the working group recommendations and made some 
modifications and additions. DOE is proposing that the following 
recommended items be required in certification reports without 
modifications:
    <bullet> Manufacturer name;
    <bullet> Model number(s);
    <bullet> Equipment class;
    <bullet> PEI<INF>CL</INF> or PEI<INF>VL</INF> as applicable;
    <bullet> Number of stages tested;
    <bullet> Full impeller diameter (in.); and
    <bullet> Whether the PEI<INF>CL</INF> or PEI<INF>VL</INF> is 
calculated or tested.
    DOE is proposing that the following recommended items be required 
in certification reports with modifications for clarity relating to 
units and operating conditions:
    <bullet> BEP flow rate in gallons per minute (gpm) and head in feet 
when operating at nominal speed;
    <bullet> Rated (tested) speed in revolutions per minute (rpm) at 
the BEP of the pump; and
    <bullet> Driver power input at each required load point i (Pini), 
corrected to nominal speed, in horsepower (hp).
    DOE is proposing that the following additional items be required in 
certification reports to assist with verification:
    <bullet> Nominal speed for certification in revolutions per minute 
(rpm)--
    [cir] Required to verify equipment class as well as calculations 
for parameters that must be corrected to nominal speed;
    <bullet> The configuration in which the pump is being rated (i.e., 
bare pump, a pump sold with a motor, or a pump sold with a motor and 
continuous or non-continuous controls)--
    [cir] Necessary for DOE to determine appropriate test procedure 
method to follow when verifying ratings; and
    <bullet> For pumps sold with electric motors regulated by DOE's 
energy conservation standards for electric motors at Sec.  431.25 other 
single-phase induction motors (with or without controls): Motor 
horsepower (hp) and nominal motor efficiency, in percent (%)--
    [cir] Necessary for DOE to complete calculations in test procedure 
when verifying ratings.
    Finally, DOE is proposing that PER<INF>CL</INF> or 
PER<INF>VL</INF>, as applicable, and pump efficiency at BEP be required 
in certification reports in order to provide additional performance 
information to assist with future regulatory efforts or utility 
programs related to pumps.
    DOE requests comment on modifications or additions to the proposed 
reporting requirements for certification of pumps. DOE requests comment 
on whether pump efficiency at BEP should be required to be included in 
the certification reports. This is identified as Issue 19 in section 
VIII.E, ``Issues on Which DOE Seeks Comment.''
2. Definition of Manufacturer
    In 10 CFR part 431, regarding the energy efficiency program for 
certain commercial and industrial equipment, manufacturer is defined in 
section 431.2 as ``any person who manufactures industrial equipment, 
including any manufacturer of a commercial packaged boiler.'' In 
addition, manufacture means ``to manufacture, produce, assemble, or 
import.''
    In response to the Framework Document, the CA IOUs and the 
Advocates suggested that DOE define ``manufacturer'' more broadly such 
that distributors who package pumps with motors for sale would be 
subject to the standards. (CA IOUs, No. 26 at p. 3; The Advocates, No. 
32 at pp. 6-7.) The Advocates added that it would support OEMs being 
subject to standards, but would not support contractors or installers 
to be considered ``manufacturers.'' (Id.)
    Earthjustice noted that based on the definitions in EPCA, if a 
standard applies to pump/motor combinations, connecting or packaging a 
motor and pump would ordinarily count as manufacturing the combined 
product. (Earthjustice, No. 30 at p. 2.) It also added that contractors 
or installers would not be covered. (Id.)
    On the other hand, AHRI recommended that if DOE establishes a 
regulatory regime that includes pump packages with VSDs, that pump 
manufacturers manage compliance of the extended product and that 
separately sold VFDs remain outside of DOE's authority. (AHRI, No. 28 
at p. 2.)
    The CIP Working Group also discussed the definition of manufacturer 
on several occasions. (See EERE-2013-BT-NOC-0039-0014, pp. 32-33, pp. 
39-57, and pp. 79-82; EERE-2013-BT-NOC-0039-0015, pp. 134, 203-223; 
EERE-2013-BT-NOC-0039-0062, pp.

[[Page 17884]]

316-327; and EERE-2013-BT-NOC-0039-0106, pp. 174-176)
    DOE has reviewed the comments and notes that it has already 
proposed a definition that would apply when determining which entity 
constitutes the pump manufacturer in a separate rulemaking. DOE refers 
readers to its proposed test procedure for pumps. Today's proposal 
would, however, detail the requirements that a pump manufacturer would 
need to meet when certifying a given pump as compliant with any energy 
conservation standards that DOE may adopt. These provisions, which 
would be part of 10 CFR part 429, would detail the general and product-
specific information relating to each basic model of pump that a 
manufacturer must submit to the Department as part of the certification 
and compliance report.

C. Enforcement Provisions

    DOE has reviewed the enforcement provisions specified in subpart C 
of 10 CFR part 429 and is proposing that they are appropriate and 
sufficient for pumps. DOE is proposing a single modification to specify 
that Sec.  429.110(e)(ii) on enforcement testing would apply to pumps 
as well as the already listed equipment.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735, Oct. 4, 1993, requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that today's standards address are as follows:
    (1) The cost of gathering relevant information and difficulties in 
analyzing it leads some consumers to miss opportunities to make cost-
effective investments in energy efficiency.
    (2) In some cases the benefits of more efficient equipment are not 
realized due to misaligned incentives between purchasers and users. An 
example of such a case is when the equipment purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of pumps that are not captured by the users of such 
equipment. These benefits include externalities related to public 
health, environmental protection, and national security that are not 
reflected in energy prices, such as reduced emissions of air pollutants 
and greenhouse gases that impact human health and global warming.
    In addition, DOE has determined that today's regulatory action is 
an ``economically significant regulatory action'' under Executive Order 
12866. DOE presented to the Office of Information and Regulatory 
Affairs (OIRA), which is part of OMB, a copy of the draft rule for 
review along with other documents prepared for this rulemaking, 
including a regulatory impact analysis (RIA). These documents are part 
of the rulemaking docket. The assessments prepared pursuant to 
Executive Order 12866 can be found in the technical support document 
for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. (76 FR 3281, Jan. 21, 2011.) EO 
13563 is supplemental to and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
Executive Order 12866. To the extent permitted by law, agencies are 
required by Executive Order 13563 to: (1) Propose or adopt a regulation 
only upon a reasoned determination that its benefits justify its costs 
(recognizing that some benefits and costs are difficult to quantify); 
(2) tailor regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, taking into account, 
among other things, and to the extent practicable, the costs of 
cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, OIRA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that today's NOPR is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601, et seq.) requires 
preparation of a regulatory flexibility analysis (RFA) 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://energy.gov/gc/office-general-counsel). DOE 
has prepared the following IRFA for the products that are the subject 
of this rulemaking.
    For manufacturers of pumps, the Small Business Administration (SBA) 
has set a size threshold, which defines those entities classified as 
``small businesses'' for the purposes of the statute. DOE used the 
SBA's small business size standards to determine whether any small 
entities would be subject to the requirements of the rule. 65 FR 30836, 
30848, May 15, 2000, as amended at 65 FR 53533, 53544, Sept. 5, 2000, 
and codified at 13 CFR part 121. The size standards are listed by North 
American Industry Classification System (NAICS) code and industry 
description and are available at http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/small-business-size-standards. Manufacturing of pumps is classified under NAICS 
333911, ``Pump and Pumping Equipment Manufacturing.'' The SBA sets a 
threshold of 500 employees or less for an entity to be considered as a 
small business for this category.
1. Description and Estimated Number of Small Entities Regulated
    To estimate the number of small business manufacturers of equipment 
covered by this rulemaking, DOE

[[Page 17885]]

conducted a market survey using available public information to 
identify potential small manufacturers. DOE's research involved 
industry trade association membership directories (including HI), 
industry conference exhibitor lists, individual company and buyer guide 
Web sites, and market research tools (e.g., Hoovers reports) to create 
a list of companies that manufacture products covered by this 
rulemaking. DOE presented its list to manufacturers in MIA interviews 
and asked industry representatives if they were aware of any other 
small manufacturers during manufacturer interviews and at DOE public 
meetings. DOE reviewed publicly-available data and contacted select 
companies on its list, as necessary, to determine whether they met the 
SBA's definition of a small business manufacturer of pumps that would 
be regulated by the proposed standards. DOE screened out companies that 
do not offer products covered by this rulemaking, do not meet the 
definition of a ``small business,'' or are foreign-owned and operated.
    DOE identified 86 manufacturers of covered pump products sold in 
the U.S. Thirty- eight of these manufacturers met the 500-employee 
threshold defined by the SBA to qualify as a small business, but only 
25 were domestic companies. DOE notes that manufacturers interviewed 
stated that there are potentially a large number of small pumps 
manufacturers that serve small regional markets. These unidentified 
small manufacturers are not members of HI and typically have a limited 
marketing presence. The interviewed manufacturers and CIP Working Group 
participants were not able to name these smaller players. Based on this 
information, it is possible that DOE's list of 25 small domestic 
players may not include all small U.S. manufacturers in the industry. 
DOE requests comment on the number and names of small manufacturers 
producing covered equipment.
    Before issuing this NOPR, DOE interviewed two small business 
manufacturers of pumps. DOE also obtained qualitative information about 
small business impacts while interviewing large manufacturers. 
Specifically, DOE discussed with large manufacturers the extent to 
which new standards might require small businesses to acquire new 
equipment or cause manufacturing process changes that could destabilize 
their business. Responses given by larger manufacturers supported and 
informed DOE's description and estimate of compliance requirements, 
which are presented in section VII.B.2. In general, DOE found very 
little information in the public domain about the role of small 
manufacturers in this industry.
    Today's proposed standards reflect the recommendation of the CIP 
Working Group, which consisted of 16 members, including one small 
manufacturer. DOE selected the 16 members of the working group after 
issuing a notice of intent to establish a CIP Working Group (78 FR 
44036) and receiving 19 nominations for membership. DOE notes that the 
three nominated parties who were not selected for the working group did 
not represent small businesses. Prior to the formation of the CIP 
Working Group, DOE issued an RFI (76 FR 34192), a Framework Document 
(78 FR 7304), and held a public meeting on February 20, 2013, to 
discuss the Framework Document in detail--all of which publicly laid 
out DOE's efforts to set out standards for pumps. The leading industry 
trade association, HI, was engaged in each of these stages and helped 
spread awareness of the rulemaking process to all of its members, which 
includes both small and large manufacturers.\73\
---------------------------------------------------------------------------

    \73\ HI membership includes 48 manufacturers of product within 
the scope of this rulemaking, of which 10 are small domestic 
manufacturers.
---------------------------------------------------------------------------

    DOE requests additional information on the number of small 
businesses in the industry, the names of those small businesses, and 
their role in the market. This matter is identified as Issue 20 under 
``Issues on Which DOE Seeks Comment'' in section VIII.E of this NOPR.
    DOE made key assumptions about the market share and product 
offerings of small manufacturers in its analysis. Specifically, DOE 
estimated that small manufacturers accounted for approximately 36% of 
the total industry model offerings.
    DOE requests data on the market share of small manufacturers and on 
the number of model offerings from small manufacturers. This matter is 
identified as Issue 21 under ``Issues on Which DOE Seeks Comment'' in 
section VIII.E of this NOPR.
2. Description and Estimate of Compliance Requirements
    At TSL 2, the level proposed in today's notice, DOE estimates total 
conversion costs of $0.8 million for an average small manufacturer, 
compared to total conversion costs of $1.4 million for an average large 
manufacturer. DOE notes that it estimates a lower total conversion cost 
for small manufacturers, because of the previous assumption that small 
manufacturers offer fewer models than their larger competitors, which 
means small manufacturers would likely have fewer product models to 
redesign. DOE's conversion cost estimates were based on industry data 
collected by HI (see section IV.C.5 for more information on the 
derivation of industry conversion costs). DOE applied the same per-
model product conversion costs for both large and small manufacturers. 
DOE requests comment on the difference in the per-model redesign costs 
between small and large manufacturers. Table VI.1 below shows the 
relative impacts of conversion costs on small manufacturers relative to 
large manufacturers.
    DOE requests data on the cost of hydraulic redesigns for a small 
manufacturer. This matter is identified as Issue 22 under ``Issues on 
Which DOE Seeks Comment'' in section VIII.E of this NOPR.

                                Table VII.1--Impacts of Conversion Costs on a Small Manufacturer at the Proposed Standard
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Capital conversion cost
                                                         as a percentage of    Product conversion cost   Total conversion cost    Total conversion cost
                                                           annual capital         as a percentage of       as a percentage of       as a percentage of
                                                            expenditures          annual R&D expense         annual revenue            annual EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average Large Manufacturer..........................                      303                     1579                       32                      582
Average Small Manufacturer..........................                      374                     1013                       25                      464
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 17886]]

    The total conversion costs are approximately 25% of revenue and 
464% of earnings before interest and tax (EBIT) for a small 
manufacturer. For large manufacturers, the total conversion costs are 
approximately 32% of revenue and 582% of EBIT. These initial findings 
indicate that small manufacturers face conversion costs that are 
proportionate relative to larger competitors.
    However, as noted in section V.B.2.a, the GRIM free cash flow 
results in 2019 indicated that some manufacturers may need to access 
the capital markets in order to fund conversion costs directly related 
to the proposed standard. Given that small manufacturers have greater 
difficulty securing outside capital \74\ and that the necessary 
conversion costs are not insignificant to the size of a small business, 
it is possible the small manufacturers will be forced to retire a 
greater portion of product models than large competitors. Also, smaller 
companies often have a higher cost of borrowing due to higher risk on 
the part of investors, largely attributed to lower cash flows and lower 
per unit profitability. In these cases, small manufacturers may observe 
higher costs of debt than larger manufacturers.
---------------------------------------------------------------------------

    \74\ Simon, Ruth, and Angus Loten, ``Small-Business Lending Is 
Slow to Recover,'' Wall Street Journal, August 14, 2014. Accessed 
August 2014, available at http://online.wsj.com/articles/small-business-lending-is-slow-to-recover-1408329562.
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    Though conversion costs are similar in magnitude for small and 
large manufacturers, small manufacturers may not have the same 
resources to make the required conversions. For example, some small 
pump manufacturers may not have the technical expertise to perform 
hydraulic redesigns in-house. These small manufacturers would need to 
hire outside consultants to support their re-design efforts. This could 
be a disadvantage relative to companies that have internal resources 
and personnel for the redesign process.
    DOE requests data on the cost of capital for small manufacturers to 
better quantify how small manufacturers might be disadvantaged relative 
to large competitors. DOE also invites comment on DOE's calculations in 
Table VII.1, which show that the relative impact of conversion costs on 
the average small business, as estimated as a percentage of annual 
research and development expenses and total revenue, would be less than 
the impact felt by average large manufacturer. This matter is 
identified as Issue 23 under ``Issues on Which DOE Seeks Comment'' in 
section VIII.E of this NOPR.
    DOE requests comment and data on the impact of the proposed 
standard on small business manufacturers. This matter is identified as 
Issue 24 under ``Issues on Which DOE Seeks Comment'' in section VIII.E 
of this NOPR.
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is unaware of any rules or regulations that duplicate, overlap, 
or conflict with the rule being considered today.
4. Significant Alternatives to the Rule
    The primary alternatives to the proposed rule are the other TSLs 
besides the one being considered today, TSL 2. DOE explicitly 
considered the role of manufacturers, including small manufacturers, in 
its selection of TSL 2 rather than TSLs 3, 4, or 5. With respect to TSL 
5, DOE estimated that while there would be significant consumer 
benefits stemming from the projected energy savings of 1.32 quads 
(ranging from $1.51 billion using a 7% discount rate to $4.47 using a 
3% discount rate) along with emissions reductions, the overall impacts 
would yield over a 288 percent drop in INPV, which would create 
negative LCC benefits and a significant burden on the industry that 
outweighed the potential benefits at TSL 5. Similarly, with respect to 
TSL 4, DOE projected that in spite of the 0.91 quads of energy savings 
(and accompanying consumer benefits ranging from $1.13 billion using a 
7-percent discount rate to $3.23 billion using a 3-percent discount 
rate) along with emission reduction benefits, the potential negative 
impacts on industry--estimated to be as much as a 170 percent drop in 
INPV--were sufficient to weigh against the adoption of this TSL. 
Finally, with respect to TSL 3, DOE concluded that the estimated 0.56 
quads of energy savings (and accompanying consumer benefits ranging 
from $0.77 billion using a 7-percent discount rate to $2.13 billion 
using a 3-percent discount rate) along with emission reduction 
benefits, the potential negative impacts on industry--a nearly 82 
percent drop in INPV--weighed against the adopting this TSL. (Chapter 
12 of the NOPR TSD contains additional information about the impact of 
this rulemaking on manufacturers.) Accordingly, DOE is not adopting any 
of these alternatives and, instead, is proposing the standards set 
forth in this rulemaking. (See chapter 17 of the NOPR TSD for further 
detail on the policy alternatives DOE considered.)
    In addition to the other TSLs being considered, chapter 17 of the 
NOPR TSD and section V.B.7 include reports on a regulatory impact 
analysis (RIA). For the pumps that would be affected by this 
rulemaking, the RIA discusses the following policy alternatives: (1) 
Consumer rebates; (2) consumer tax credits; (3) manufacturer tax 
credits; (4) voluntary energy efficiency targets; and (5) bulk 
government purchases. While these alternatives may mitigate to some 
varying extent the economic impacts on small entities compared to the 
standards, DOE determined that the energy savings of these alternatives 
are significantly smaller than those that would be expected to result 
from adoption of the proposed standard levels (ranging from 
approximately 0.2 percent to 78 percent of the primary energy savings 
from the proposed standards).
    DOE notes that if a manufacturer finds that meeting the standard 
for pumps would cause special hardship, inequity, or unfair 
distribution of burdens, the manufacturer may petition the Office of 
Hearings and Appeals (OHA) for exception relief or exemption from the 
standard pursuant to OHA's authority under section 504 of the DOE 
Organization Act (42 U.S.C. 7194), as implemented at subpart B of 10 
CFR part 1003. OHA has the authority to grant such relief on a case-by-
case basis if it determines that a manufacturer has demonstrated that 
meeting the standard would cause hardship, inequity, or unfair 
distribution of burdens.
    DOE seeks comment and, in particular, data on the impacts of this 
rulemaking on small businesses. (See Issue 24 under ``Issues on Which 
DOE Seeks Comment'' in section VIII.E. of this NOPR.)

C. Review Under the Paperwork Reduction Act

    In the event that DOE adopts its proposed standards, pump 
manufacturers would need to certify to DOE that their products comply 
with any applicable energy conservation standards. In certifying 
compliance, manufacturers would need to test their products according 
to the applicable DOE test procedures for pumps that DOE may adopt to 
measure the energy efficiency of this equipment, including any 
amendments adopted for those test procedures. DOE has established 
regulations for the certification and recordkeeping requirements for 
all covered consumer products and commercial equipment, including 
pumps. 76 FR 12422, March 7, 2011. The collection-of-information 
requirement for the certification and recordkeeping is subject to 
review and approval by OMB under the Paperwork Reduction Act (PRA). 
This requirement has been approved by OMB under OMB

[[Page 17887]]

control number 1910-1400. Public reporting burden for the certification 
is estimated to 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.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that the proposed rule fits within the category of 
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets 
the requirements for application of a CX. See 10 CFR part 1021, App. B, 
B5.1(b); 1021.410(b) and App. B, B(1)-(5). The proposed rule fits 
within the category of actions, because it is a rulemaking that 
establishes energy conservation standards for consumer products or 
industrial equipment, and for which none of the exceptions identified 
in CX B5.1(b) apply. Therefore, DOE has made a CX determination for 
this rulemaking, and DOE does not need to prepare an Environmental 
Assessment or Environmental Impact Statement for this proposed rule. 
DOE's CX determination for this proposed rule is available at http://cxnepa.energy.gov/.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255, Aug. 10, 1999, 
imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. EPCA governs and 
prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of today's proposed 
rule. States can petition DOE for exemption from such preemption to the 
extent and, based on criteria, set forth in EPCA. (42 U.S.C. 6297.) No 
further action is required by Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; and (3) 
provide a clear legal standard for affected conduct rather than a 
general standard and promote simplification and burden reduction. 61 FR 
4729, Feb. 7, 1996. 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 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 has 
determined that, to the extent permitted by law, this proposed rule 
meets the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b).) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect small governments. On March 18, 1997, 
DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy 
statement is also available at http://energy.gov/gc/office-general-counsel.
    Although this proposed rule does not contain a Federal 
intergovernmental mandate, it may require expenditures of $100 million 
or more on the private sector. Specifically, the proposed rule will 
likely result in a final rule that could require expenditures of $100 
million or more. Such expenditures may include: (1) Investment in 
research and development and in capital expenditures by pump 
manufacturers in the years between the final rule and the compliance 
date for the new standards, and (2) incremental additional expenditures 
by consumers to purchase higher-efficiency pumps, starting on the 
compliance date for the applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the proposed rule. 2 U.S.C. 1532(c). The content 
requirements of section 202(b) of UMRA relevant to a private sector 
mandate substantially overlap the economic analysis requirements that 
apply under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of the NOPR and the ``Regulatory 
Impact Analysis'' section of the TSD for this proposed rule respond to 
those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. 2 U.S.C. 1535(a). DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the proposed rule, unless DOE publishes 
an explanation for doing

[[Page 17888]]

otherwise, or the selection of such an alternative is inconsistent with 
law. As authorized by 42 U.S.C. 6311(1)(A), this proposed rule would 
establish energy conservation standards that are designed to achieve 
the maximum improvement in energy efficiency for pumps that DOE has 
determined to be both technologically feasible and economically 
justified. A full discussion of the alternatives considered by DOE is 
presented in the ``Regulatory Impact Analysis'' section of the TSD for 
this proposed rule.

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

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This proposed rule would not have any impact on the autonomy or 
integrity of the family as an institution. Accordingly, DOE has 
concluded that it is not necessary to prepare a Family Policymaking 
Assessment.

I. Review Under Executive Order 12630

    DOE has determined, under Executive Order 12630, ``Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights,'' 53 FR 8859, Mar. 18, 1988, that this proposed regulation 
would not result in any takings that might require compensation under 
the Fifth Amendment to the U.S. Constitution.

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

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for Federal agencies to 
review most disseminations of information to the public under 
guidelines established by each agency pursuant to general guidelines 
issued by OMB. OMB's guidelines were published at 67 FR 8452, Feb. 22, 
2002, and DOE's guidelines were published at 67 FR 62446, Oct. 7, 2002. 
DOE has reviewed today's NOPR 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 
OIRA at OMB, a Statement of Energy Effects for any proposed significant 
energy action. A ``significant energy action'' is defined as any action 
by an agency that promulgates or is expected to lead to promulgation of 
a final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any proposed significant energy action, 
the agency must give a detailed statement of any adverse effects on 
energy supply, distribution, or use should the proposal be implemented, 
and of reasonable alternatives to the action and their expected 
benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that this regulatory action, which 
sets forth energy conservation standards for pumps, is not a 
significant energy action, because the proposed standards are not 
likely to have a significant adverse effect on the supply, 
distribution, or use of energy, nor has it been designated as such by 
the Administrator at OIRA. Accordingly, DOE has not prepared a 
Statement of Energy Effects on the proposed rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664, Jan. 14, 
2005. The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as scientific information the 
agency reasonably can determine will have, or does have, a clear and 
substantial impact on important public policies or private sector 
decisions. 70 FR 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses, and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report,'' dated February 2007, has been 
disseminated and is available at the following Web site: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

VIII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this notice. If 
you plan to attend the public meeting, please notify Ms. Brenda Edwards 
at (202) 586-2945 or <a href="/cdn-cgi/l/email-protection#2c6e5e4942484d0269485b4d5e485f6c494902484349024b435a"><span class="__cf_email__" data-cfemail="4705352229232669022330263523340722226923282269202831">[email protected]</span></a>.
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures. Any foreign national 
wishing to participate in the meeting should advise DOE as soon as 
possible by contacting Ms. Edwards to initiate the necessary 
procedures. Please also note that those wishing to bring laptops into 
the Forrestal Building will be required to obtain a property pass. 
Visitors should avoid bringing laptops, or allow an extra 45 minutes.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding ID 
requirements for individuals wishing to enter Federal buildings from 
specific states and U.S. territories. Driver's licenses from the 
following states or territory will not be accepted for building entry 
and one of the alternate forms of ID listed below will be required. DHS 
has determined that regular driver's licenses (and ID cards) from the 
following jurisdictions are not acceptable for entry into DOE 
facilities: Alaska, American Samoa, Arizona, Louisiana, Maine, 
Massachusetts, Minnesota, New York, Oklahoma, and Washington. 
Acceptable alternate forms of Photo-ID include: U.S. Passport or 
Passport Card; an Enhanced Driver's License or Enhanced ID-Card issued 
by the states of Minnesota, New York or Washington (Enhanced licenses 
issued by these states are clearly marked Enhanced or Enhanced Driver's 
License); a military ID or other Federal government issued Photo-ID 
card.
    In addition, participants may attend the public meeting via 
webinar. Webinar registration information,

[[Page 17889]]

participant instructions, and information about the capabilities 
available to webinar participants will be published on DOE's Web site. 
Participants are responsible for ensuring their systems are compatible 
with the webinar software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address shown in the ADDRESSES section at the beginning 
of this NOPR. The request and advance copy of statements must be 
received at least one week before the public meeting and may be 
emailed, hand-delivered, or sent by mail. DOE prefers to receive 
requests and advance copies via email. Please include a telephone 
number to enable DOE staff to make follow-up contact, if needed.

C. Conduct of the Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA (42 U.S.C. 
6306). A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. After the public meeting, interested parties may 
submit further comments on the proceedings as well as on any aspect of 
the rulemaking until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this rulemaking. Each participant will be allowed 
to make a general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will allow, as time 
permits, other participants to comment briefly on any general 
statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this NOPR. In addition, any person may buy a copy of the transcript 
from the transcribing reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this NOPR.
    Submitting comments via regulations.gov. The regulations.gov Web 
page will require you to provide your name and contact information. 
Your contact information will be viewable to DOE Building Technologies 
staff only. Your contact information will not be publicly viewable 
except for your first and last names, organization name (if any), and 
submitter representative name (if any). If your comment is not 
processed properly because of technical difficulties, DOE will use this 
information to contact you. If DOE cannot read your comment due to 
technical difficulties and cannot contact you for clarification, DOE 
may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to regulations.gov information for which disclosure 
is restricted by statute, such as trade secrets and commercial or 
financial information (hereinafter referred to as Confidential Business 
Information (CBI)). Comments submitted through regulations.gov cannot 
be claimed as CBI. Comments received through the Web site will waive 
any CBI claims for the information submitted. For information on 
submitting CBI, see the Confidential Business Information section 
below.
    DOE processes submissions made through regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery, or mail also 
will be posted to regulations.gov. If you do not want your personal 
contact information to be publicly viewable, do not include it in your 
comment or any accompanying documents. Instead, provide your contact 
information in a cover letter. Include your first and last names, email 
address, telephone number, and optional mailing address. The cover 
letter will not be publicly viewable as long as it does not include any 
comments.
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible. It is 
not necessary to submit printed copies. No facsimiles (faxes) will be 
accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, are written in English, and are free of any defects or 
viruses. Documents should not contain special characters or any form of 
encryption and, if possible, they should carry the electronic signature 
of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF, or as one form letter with a list of supporters' names 
compiled into one or more PDFs. This reduces comment processing and 
posting time.
    Confidential Business Information. According to 10 CFR 1004.11, any 
person submitting information that he

[[Page 17890]]

or she believes to be confidential and exempt by law from public 
disclosure should submit via email, postal mail, or hand delivery/
courier two well-marked copies: one copy of the document marked 
confidential including all the information believed to be confidential, 
and one copy of the document marked non-confidential with the 
information believed to be confidential deleted. Submit these documents 
via email or on a CD, if feasible. DOE will make its own determination 
about the confidential status of the information and treat it according 
to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, as received and without change, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. Whether all RSV models sold in the United States are based on a 
global platform.
    2. Whether there are any pump models that would pass the proposed 
standard at a nominal speed of 3600 but fail at a nominal speed of 1800 
if the same C-values were used for each equipment class.
    3. Whether the market distribution channels include all appropriate 
intermediate steps, and the estimated market share of each channel.
    4. Information and data on average annual operating hours for the 
pump types and applications in the scope of this rulemaking.
    5. Information and data on typical load profiles for the pump types 
and applications in the scope of this rulemaking.
    6. The percent of pumps in scope operated by each fuel type other 
than electricity (e.g., diesel, gasoline, liquid propane gas, or 
natural gas) and the efficiency or losses of each type of non-electric 
driver, including transmission losses if any, that would allow DOE to 
estimate the fuel use and savings of pumps sold with non-electric 
drivers.
    7. The most appropriate trend to use for real (inflation-adjust) 
pump prices.
    8. Whether any of the efficiency levels considered in this NOPR 
might lead to an increase in installation costs, and if so, data 
regarding the magnitude of the increased cost for each relevant 
efficiency level.
    9. DOE seeks comment on whether new standards would be likely to 
affect shipments.
    10. The penetration rate of VFDs relative to the scope of this 
rulemaking, the average power reduction from use of a VFD, the 
``effectiveness rate'' of a VFD, the percent of shipments with trimmed 
impellers, and the average percent impeller trim.
    11. Whether a rebound effect should be included in the 
determination of annual energy savings and, if so, data to assist in 
calculation of the rebound effect.
    12. DOE requests comment on the capital conversion costs and 
product conversion costs estimated for each TSL.
    13. DOE requests comment on the potential impacts on manufacturer 
employment and the specific drivers of any expected change in 
production line employment.
    14. DOE requests comments and data on capacity constraints at each 
TSL--including production capacity constraints, engineering resource 
constraints, and testing capacity constraints. In particular, DOE 
requests comment on whether the proposed compliance date allows for a 
sufficient conversion period to make the equipment design and facility 
updates necessary to meet a new standard.
    15. DOE requests comments the cumulative regulatory burden on 
manufacturers. Specifically, DOE seeks input on any product-specific 
Federal regulations that go into effect within three years of the 
proposed effective date and recommendations on how DOE may be able to 
align varying regulations in order to mitigate cumulative burden.
    16. DOE seeks comment on the impacts, if any, there would be on the 
level of utility and available features currently offered by 
manufacturers with respect to the pumps that would be regulated under 
this proposal.
    17. DOE seeks input on the requirements for display of required 
information on labels.
    18. DOE seeks comment on the feasibility of including the impeller 
diameter for each unit on the nameplate. Specifically, when shipping 
bare pumps to distributors, would it be more appropriate for this field 
to be left blank and filled in by the distributor?
    19. DOE requests comment on modifications or additions to the 
proposed reporting requirements for certification of pumps. DOE 
requests comment on whether pump efficiency at BEP should be required 
to be included in the certification reports.
    20. DOE requests additional information on the number of small 
businesses in the industry, the names of those small businesses, and 
their role in the market.
    21. DOE requests data on the market share of small manufacturers 
and on the number of model offerings from small manufacturers.
    22. DOE requests data on the cost of hydraulic redesigns for a 
small manufacturer.

DOE requests data on the cost of capital for small manufacturers to 
better quantify how small manufacturers might be disadvantaged 
relative to large competitors. DOE also invites comment on DOE's 
calculations in Table VII.1, which show that the relative impact of 
conversion costs on the average small business, as estimated as a 
percentage of annual research and development expenses and total 
revenue, would be less than the impact felt by average large 
manufacturer.

    23. DOE requests comment and data on the impact of the proposed 
standard on small business manufacturers.

IX. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 429

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Imports, Intergovernmental relations, 
small businesses.

10 CFR Part 431

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


[[Page 17891]]


    Issued in Washington, DC, on March 17, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE proposes to amend 
parts 429 and 431 of chapter II, subchapter D, of title 10 of the Code 
of Federal Regulations, as set forth below:

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER 
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

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

0
2. Section 429.12(b)(13) is revised to read as follows:


Sec.  429.12  General requirements applicable to certification reports.

* * * * *
    (b) * * *
    (13) Product specific information listed in Sec. Sec.  429.14 
through 429.59 of this chapter.
* * * * *
0
3. Section 429.59 as proposed to be added in the April 1, 2015, issue 
of the Federal Register, is amended by adding paragraph (b) to read as 
follows:


Sec.  429.59  Pumps.

* * * * *
    (b) Certification reports.
    (1) The requirements of Sec.  429.12 are applicable to pumps; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report shall 
include the following public product-specific information:
    (i) For bare pumps, pumps sold with drivers other than electric 
motors, and pumps sold with single-phase electric motors: Manufacturer 
name; model number(s); equipment class from the table in Sec.  
431.465(b) of this chapter; PEI<INF>CL</INF>; PER<INF>CL</INF>; the 
rated (tested) speed of rotation in revolutions per minute (rpm) at the 
best efficiency point (BEP) of the pump; the nominal speed of rotation 
in revolutions per minute (rpm); pump total head in feet (ft.) at BEP 
and nominal speed; volume per unit time (flow rate) in gallons per 
minute (gpm) at BEP and nominal speed; calculated driver power input at 
each load point i (Pini), corrected to nominal speed, in horsepower 
(hp); pump efficiency at BEP in percent (%); full impeller diameter in 
inches (in.); the pump configuration (i.e., bare pump); for RSV and VTS 
pumps, the number of stages tested; and for VTS pumps, the bowl 
diameter in inches (in.).
    (ii) For pumps sold with electric motors not equipped with 
continuous or non-continuous controls: Manufacturer name; model 
number(s); equipment class from the table in Sec.  431.465(b) of this 
chapter; PEI<INF>CL</INF>; PER<INF>CL</INF>; the rated (tested) speed 
of rotation in revolutions per minute (rpm) at the best efficiency 
point (BEP) of the pump; the nominal speed of rotation in revolutions 
per minute (rpm); pump total head in feet (ft.) at BEP and nominal 
speed; volume per unit time (flow rate) in gallons per minute (gpm) at 
BEP and nominal speed; driver power input at each load point i (Pini), 
corrected to nominal speed, in horsepower (hp); pump efficiency at BEP 
in percent (%); full impeller diameter in inches (in.); whether the 
PEI<INF>CL</INF> is calculated or tested; the pump configuration (i.e., 
pump sold with an electric motor); for RSV and VTS pumps, number of 
stages tested; for VTS pumps, the bowl diameter in inches (in.); and 
for pumps sold with electric motors regulated by DOE's energy 
conservation standards for electric motors at Sec.  431.25 of this 
chapter other single-phase induction motors, the nominal motor 
efficiency in percent (%) and the motor horsepower (hp) for the motor 
with which the pump is being rated
    (iii) For pumps sold with electric motors, other than single-phase 
induction motors, and continuous or non-continuous controls: 
Manufacturer name; model number(s); equipment class from the table in 
Sec.  431.465(b) of this chapter; PEI<INF>VL</INF>; PER<INF>VL</INF>; 
the rated (tested) speed of rotation in revolutions per minute (rpm) at 
the best efficiency point (BEP) of the pump; the nominal speed of 
rotation for certification in revolutions per minute (rpm); pump total 
head in feet (ft.) at BEP and nominal speed; volume per unit time (flow 
rate) in gallons per minute (gpm) at BEP and nominal speed; driver 
power input (measured as the input power to the driver and controls) at 
each load point i (Pini), corrected to nominal speed, in horsepower 
(hp); pump efficiency at BEP in percent (%); full impeller diameter in 
inches (in.); whether the PEI<INF>VL</INF> is calculated or tested; the 
pump configuration (i.e., pump sold with a motor and continuous or non-
continuous controls); for RSV and VTS pumps, the number of stages 
tested; for VTS pumps, the bowl diameter in inches (in.); and for pumps 
sold with electric motors regulated by DOE's energy conservation 
standards for electric motors at Sec.  431.25 of this chapter, the 
nominal motor efficiency in percent (%) and the motor horsepower (hp) 
for the motor with which the pump is being rated.
0
4. Revise Sec.  429.110(e)(1)(ii) introductory text to read as follows:


Sec.  429.110  Enforcement testing.

* * * * *
    (e) * * *
    (1) * * *
    (ii) For automatic commercial ice makers; commercial refrigerators, 
freezers, and refrigerator-freezers; refrigerated bottled or canned 
vending machines; commercial HVAC and WH equipment; and pumps, DOE will 
use an initial sample size of not more than four units and follow the 
sampling plans in appendix B of this subpart (Sampling Plan for 
Enforcement Testing of Covered Equipment and Certain Low-Volume Covered 
Products). If fewer than four units of a basic model are available for 
testing when the manufacturer receives the notice, then:
* * * * *

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

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

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

0
6. Section 431.465 is added to read as follows:


Sec.  431.465  Pumps energy conservation standards and their compliance 
dates.

    (a) For the purposes of paragraph (b) of this section, 
``PEI<INF>CL</INF>'' means the constant load pump energy index and 
``PEI<INF>VL</INF>'' means the variable load pump energy index, both as 
determined in accordance with the test procedure in Sec.  431.464. For 
the purposes of paragraph (c) of this section, ``BEP'' means the best 
efficiency point as determined in accordance with the test procedure in 
Sec.  431.464.
    (b) Each pump that is manufactured starting on [DATE 4 YEARS AFTER 
PUBLICATION OF FINAL RULE] and that:
    (1) Is in one of the equipment classes listed in the table in this 
section;
    (2) Meets the definition of a clean water pump in Sec.  431.462; 
and
    (3) Conforms to the characteristics listed in paragraph (c) of this 
section must have a PEI<INF>CL</INF> or PEI<INF>VL</INF> rating of not 
more than 1.00 using the appropriate C-value in the table in this 
section:

------------------------------------------------------------------------
                                                     Maximum    C-Value
                Equipment class \1\                  PEI \2\      \3\
------------------------------------------------------------------------
ESCC.1800.CL......................................       1.00     128.47
ESCC.3600.CL......................................       1.00     130.42
ESCC.1800.VL......................................       1.00     128.47

[[Page 17892]]

 
ESCC.3600.VL......................................       1.00     130.42
ESFM.1800.CL......................................       1.00     128.85
ESFM.3600.CL......................................       1.00     130.99
ESFM.1800.VL......................................       1.00     128.85
ESFM.3600.VL......................................       1.00     130.99
IL.1800.CL........................................       1.00     129.30
IL.3600.CL........................................       1.00     133.84
IL.1800.VL........................................       1.00     129.30
IL.3600.VL........................................       1.00     133.84
RSV.1800.CL.......................................       1.00     129.63
RSV.3600.CL.......................................       1.00     133.20
RSV.1800.VL.......................................       1.00     129.63
RSV.3600.VL.......................................       1.00     133.20
VTS.1800.CL.......................................       1.00     134.13
VTS.3600.CL.......................................       1.00     134.13
VTS.1800.VL.......................................       1.00     134.13
VTS.3600.VL.......................................       1.00     134.13
------------------------------------------------------------------------
\1\ Equipment class designations consist of a combination (in sequential
  order separated by periods) of: (1) an equipment family (ESCC = end
  suction close-coupled, ESFM = end suction frame mounted, IL = in-line,
  RSV = radially split, multi-stage, vertical, in-line, diffuser casing,
  VTS = vertical turbine submersible); (2) nominal speed of rotation
  (1800 = 1800 rpm, 3600 = 3600 rpm); and (3) an operating mode (CL =
  constant load, VL = variable load). Determination of the operating
  mode is determined using the test procedure in appendix A to subpart Y
  of part 431.
\2\ For equipment classes ending in .CL, the relevant PEI is PEICL. For
  equipment classes ending in .VL, the relevant PEI is PEIVL.
\3\ The C-values shown in this table must be used in the equation for
  PERSTD when calculating PEICL or PEIVL, as described in section II.B
  of appendix A to subpart Y of part 431.

    (c) The energy conservation standards in paragraph (b) of this 
section apply only to pumps with the following characteristics:
    (1) Shaft power of at least 1 hp but no greater than 200 hp at the 
best efficiency point (BEP) at full impeller diameter for the number of 
stages required for testing (see appendix A to subpart Y of part 431);
    (2) Flow rate of 25 gpm or greater at BEP at full impeller 
diameter;
    (3) Maximum head of 459 feet at BEP at full impeller diameter;
    (4) Design temperature range from -10 to 120 [deg]C;
    (5) Designed to operate with either:
    (i) A 2- or 4-pole induction motor; or
    (ii) A non-induction motor with a speed of rotation operating range 
that includes speeds of rotation between 2,880 and 4,320 revolutions 
per minute and/or 1,440 and 2,160 revolutions per minute; and
    (6) For VTS pumps, a 6-inch or smaller bowl diameter.
    (7) Except that the energy efficiency standards in paragraph (b) of 
this section do not apply to the following pumps:
    (i) Fire pumps.
    (ii) Self-priming pumps.
    (iii) Prime-assist pumps.
    (iv) Sealless pumps.
    (v) Pumps designed to be used in a nuclear facility subject to 10 
CFR part 50, ``Domestic Licensing of Production and Utilization 
Facilities.''
    (vi) Pumps meeting the design and construction requirements set 
forth in Military Specification MIL-P-17639F, ``Pumps, Centrifugal, 
Miscellaneous Service, Naval Shipboard Use'' (as amended).
0
7. Section 431.466 is added to read as follows:


Sec.  431.466  Pumps labeling requirements.

    (a) Pump nameplate--(1) Required information. The permanent 
nameplate of a pump for which standards are prescribed in Sec.  431.465 
must be marked clearly with the following information:
    (i) For bare pumps and pumps sold with electric motors but not 
continuous or non-continuous controls, the rated pump energy index--
constant load (PEI<INF>CL</INF>) as determined pursuant to Sec.  
431.464, and for pumps sold with motors and continuous or non-
continuous controls, the rated pump energy index--variable load 
(PEI<INF>VL</INF>) as determined pursuant to Sec.  431.464;
    (ii) The model number; and
    (iii) The unit's actual impeller diameter, as distributed in 
commerce.
    (2) Display of required information. All orientation, spacing, type 
sizes, type faces, and line widths to display this required information 
shall be the same as or similar to the display of the other performance 
data on the pump's permanent nameplate. The PEI<INF>CL</INF> or 
PEI<INF>VL,</INF> as appropriate to a given pump model, shall be 
identified in the form ``PEI<INF>CL</INF> __'' or ``PEI<INF>VL</INF> 
__.'' The model number shall be in one of the following forms: ``Model 
__'' or ``Model number __'' or ``Model No. __.'' The unit's impeller 
diameter shall be in the form ``Imp. Dia. __ (in.).''
    (b) Disclosure of efficiency information in marketing materials. 
(1) The same information that must appear on a pump's permanent 
nameplate pursuant to paragraph (a)(1) of this section, shall also be 
prominently displayed:
    (i) On each page of a catalog that lists the pump; and
    (ii) In other materials used to market the pump.
    (2) [Reserved]

[FR Doc. 2015-06947 Filed 4-1-15; 8:45 am]
 BILLING CODE 6450-01-P


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