[Federal Register Volume 74, Number 53 (Friday, March 20, 2009)]
[Proposed Rules]
[Pages 12000-12049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-5818]



[[Page 11999]]

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Part II





Department of Energy





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10 CFR Part 431



Energy Conservation Program for Certain Industrial Equipment: Energy 
Conservation Standards and Test Procedures for Commercial Heating, Air-
Conditioning, and Water-Heating Equipment; Proposed Rule

Federal Register / Vol. 74, No. 53 / Friday, March 20, 2009 / 
Proposed Rules

[[Page 12000]]


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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket No. EERE-2008-BT-STD-0013]
RIN 1904-AB83


Energy Conservation Program for Certain Industrial Equipment: 
Energy Conservation Standards and Test Procedures for Commercial 
Heating, Air-Conditioning, and Water-Heating Equipment

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

ACTION: Notice of proposed rulemaking and public meeting.

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SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, directs the U.S. Department of Energy (DOE) to establish 
energy conservation standards for certain commercial and industrial 
equipment, including commercial heating, air-conditioning, and water-
heating equipment. Of particular relevance here, the statute also 
requires that each time the corresponding industry standard--the 
American Society of Heating, Refrigerating and Air-Conditioning 
Engineers, Inc. (ASHRAE)/Illuminating Engineering Society of North 
America (IESNA) Standard 90.1--is amended, DOE must assess whether 
there is a need to update the uniform national energy conservation 
standards for the same equipment covered under EPCA. ASHRAE officially 
released an amended version of this industry standard (ASHRAE Standard 
90.1-2007) on January 10, 2008, thereby triggering DOE's related 
obligations under EPCA. Specifically, pursuant to EPCA, DOE assessed 
whether the revised ASHRAE efficiency levels are more stringent than 
the existing Federal energy conservation standards; and for those 
equipment classes for which ASHRAE set more-stringent efficiency levels 
(i.e., commercial packaged boilers), analyzed the economic and energy 
savings potential of amended national energy conservation standards (at 
both the new ASHRAE Standard 90.1 levels and more-stringent efficiency 
levels).
    DOE has tentatively concluded that the statutory criteria have been 
met for commercial packaged boilers and water-cooled and evaporatively-
cooled commercial package air conditioners and heat pumps with a 
cooling capacity at or above 240,000 Btu/h and less than 760,000 Btu/h, 
thereby justifying consideration of national energy conservation 
standards set at the revised levels in ASHRAE Standard 90.1-2007.
    Furthermore, DOE has tentatively concluded that clear and 
convincing evidence does not exist, as would justify more-stringent 
standard levels than the efficiency levels in ASHRAE Standard 90.1-2007 
for commercial packaged boilers. DOE has also tentatively concluded 
that there are no water-cooled and evaporatively-cooled commercial 
package air conditioners and heat pumps with a cooling capacity at or 
above 240,000 Btu/h and less than 760,000 Btu/h being currently 
manufactured, and therefore, it is not possible to assess the economic 
and energy savings potential for adopting efficiency levels at or above 
the ASHRAE Standard 90.1-2007 efficiency levels for such equipment. 
Accordingly, in this notice, DOE is proposing to amend the energy 
conservation standards for commercial packaged boilers and to adopt a 
new energy conservation standard for water-cooled and evaporatively-
cooled commercial package air conditioners and heat pumps with a 
cooling capacity at or above 240,000 Btu/h and less than 760,000 Btu/h 
at the efficiency levels specified by ASHRAE Standard 90.1-2007. DOE is 
also proposing related amendments to its test procedures for commercial 
packaged boilers. In addition, DOE is announcing a public meeting to 
receive comment on its proposal and related issues.

DATES: DOE will hold a public meeting on April 7, 2009, from 9 a.m. to 
4 p.m., in Washington, DC. DOE must receive requests to speak at the 
public meeting before 4 p.m., March 24, 2009. DOE must receive a signed 
original and an electronic copy of statements to be made at the public 
meeting before 4 p.m., March 31, 2009.
    DOE will accept comments, data, and information regarding the 
notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than June 3, 2009. See section VII, ``Public 
Participation,'' of this NOPR 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. Please note that foreign nationals visiting DOE 
Headquarters are subject to advance security screening procedures. If 
you are a foreign national and wish to participate in the public 
meeting, please inform DOE as soon as possible by contacting Ms. Brenda 
Edwards at (202) 586-2945 so that the necessary procedures can be 
completed.
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards and Test Procedures for ASHRAE Standard 90.1 
Products, and provide the docket number EERE-2008-BT-STD-0013 and/or 
Regulatory Information Number (RIN) 1904-AB83. Comments may be 
submitted using any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#2d6c7e657f6c6872141d031c725f584148404c4644434a6d484803494248034a425b"><span class="__cf_email__" data-cfemail="8acbd9c2d8cbcfd5b3baa4bbd5f8ffe6efe7ebe1e3e4edcaefefa4eee5efa4ede5fc">[email protected]</span></a>. Include the 
docket number EERE-2008-BT-STD-0013 and/or RIN 1904-AB83 in the subject 
line of the message.
    <bullet> Postal Mail: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, Mailstop EE-2J, 1000 
Independence Avenue, SW., Washington, DC 20585-0121. Please submit one 
signed paper original.
    <bullet> Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department 
of Energy, Building Technologies Program, 950 L'Enfant Plaza, 6th 
Floor, Washington, DC 20024. Telephone: (202) 586-2945. Please submit 
one signed paper original.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VII, ``Public 
Participation,'' of this document.
    Docket: For access to the docket to read background documents or 
comments received, visit the U.S. Department of Energy, Resource Room 
of the Building Technologies Program, 950 L'Enfant Plaza, SW., 6th 
Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., 
Monday through Friday, except Federal holidays. Please call Ms. Brenda 
Edwards at the above telephone number for additional information 
regarding visiting the Resource Room.

FOR FURTHER INFORMATION CONTACT: Mr. Mohammed Khan, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue, SW., 
Washington, DC 20585-0121. Telephone: (202) 586-7892. E-mail: 
<a href="/cdn-cgi/l/email-protection#8cc1e3e4ede1e1e9e8a2c7e4ede2cce9e9a2e8e3e9a2ebe3fa"><span class="__cf_email__" data-cfemail="9ed3f1f6fff3f3fbfab0d5f6fff0defbfbb0faf1fbb0f9f1e8">[email protected]</span></a>.
    Mr. Eric Stas, U.S. Department of Energy, Office of the General 
Counsel, Mailstop GC-72, Forrestal Building, 1000 Independence Avenue, 
SW., Washington, DC 20585-0121. Telephone: (202) 586-9507. E-mail: 
<a href="/cdn-cgi/l/email-protection#90d5e2f9f3bec3e4f1e3d0f8e1bef4fff5bef7ffe6"><span class="__cf_email__" data-cfemail="2366514a400d70574250634b520d474c460d444c55">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of Proposed Rule
II. Introduction
    A. Authority

[[Page 12001]]

    B. Background
    1. ASHRAE Standard 90.1-2007
    2. Notice of Data Availability and Request for Public Comment
III. General Discussion of Comments Regarding the ASHRAE Process and 
DOE's Interpretation of EPCA's Requirements With Respect to ASHRAE 
Equipment
    A. The ASHRAE Process
    B. The Definition of Amendment With Respect to the Efficiency 
Levels in an ASHRAE Standard
    C. Different Types of Changes in ASHRAE Standard 90.1-2007
    D. DOE's Review of ASHRAE Equipment Independent of the ASHRAE 
Standards Process
    E. Equipment Classes With a Two-Tier Efficiency Level Specified 
in ASHRAE Standard 90.1-2007
IV. General Discussion of the Changes in ASHRAE Standard 90.1-2007 
and Determination of Scope for Further Rulemaking Analyses
    A. Commercial Warm Air Furnaces
    1. Gas-Fired Commercial Warm Air Furnaces
    2. Oil-Fired Commercial Warm Air Furnaces
    B. Commercial Package Air-Conditioning and Heating Equipment
    1. Three-Phase Through-the-Wall Air-Cooled Air Conditioners and 
Heat Pumps
    2. Three-Phase, Small-Duct, High-Velocity Air-Cooled Air 
Conditioners and Heat Pumps
    3. Commercial Package Air-Cooled Air Conditioners With a Cooling 
Capacity at or Above 760,000 Btu per Hour
    4. Water-Cooled and Evaporatively-Cooled Commercial Package Air 
Conditioners and Heat Pumps With a Cooling Capacity at or Above 
135,000 Btu/h and Less Than 240,000 Btu/h
    5. Water-Cooled and Evaporatively-Cooled Commercial Package Air 
Conditioners and Heat Pumps With a Cooling Capacity at or Above 
240,000 Btu/h and Below 760,000 Btu/h
    C. Commercial Packaged Boilers
    1. Efficiency Metric Description (Combustion Efficiency and 
Thermal Efficiency)
    2. Analysis of Energy Efficiency Levels in ASHRAE Standard 90.1-
1999
    3. Analysis of Energy Efficiency Levels in ASHRAE Standard 90.1-
2007
    4. Preliminary Conclusions From Market Analysis for Commercial 
Packaged Boilers
    a. Accuracy of Thermal Efficiency Ratings
    b. Benefits of the Thermal Efficiency Metric
    c. Overall Energy Savings
    5. Conclusions Regarding the Efficiency Levels in ASHRAE 
Standard 90.1-2007 for Commercial Packaged Boilers
V. Methodology and Discussion of Comments for Commercial Packaged 
Boilers
    A. Test Procedures
    B. Market Assessment
    1. Definitions of Commercial Packaged Boilers
    2. Equipment Classes
    3. Review of Current Market for Commercial Packaged Boilers
    a. Trade Association Information
    b. Manufacturer Information
    c. Shipments Information
    C. Engineering Analysis
    1. Approach
    2. Representative Input Capacities
    3. Baseline Equipment
    4. Identification of Efficiency Levels for Analysis
    a. Small Gas-Fired Hot Water Commercial Packaged Boiler 
Efficiency Levels
    b. Small Gas-Fired Steam All Except Natural Draft Commercial 
Packaged Boiler Efficiency Levels
    c. Small Gas-Fired Steam Natural Draft Water Commercial Packaged 
Boiler Efficiency Levels
    d. Small Oil-Fired Hot Water Commercial Packaged Boiler 
Efficiency Levels
    e. Small Oil-Fired Steam Commercial Packaged Boiler Efficiency 
Levels
    f. Large Gas-Fired Hot Water Commercial Packaged Boiler 
Efficiency Levels
    g. Large Gas-Fired Steam, All Except Natural Draft Commercial 
Packaged Boiler Efficiency Levels
    h. Large Gas-Fired Steam Natural Draft Commercial Packaged 
Boiler Efficiency Levels
    i. Large Oil-Fired Hot Water Commercial Packaged Boiler 
Efficiency Levels
    j. Large Oil-Fired Steam Commercial Packaged Boiler Efficiency 
Levels
    5. Oil-Fired Commercial Packaged Boilers
    6. Dual Output Boilers
    7. Engineering Analysis Results
    D. Markups to Determine Equipment Price
    E. Energy Use Characterization
    F. Life-Cycle Cost and Payback Period Analyses
    1. Approach
    2. Life-Cycle Cost Inputs
    a. Equipment Prices
    b. Installation Costs
    c. Annual Energy Use
    d. Fuel Prices
    e. Maintenance Costs
    f. Repair Costs
    g. Equipment Lifetime
    h. Discount Rate
    3. Payback Period
    G. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    1. Approach
    2. Shipments Analysis
    3. Base-Case and Standards-Case Forecasted Distribution of 
Efficiencies
    H. Other Issues
    1. Effective Date of the Proposed Amended Energy Conservation 
Standards
VI. Analytical Results
    A. Efficiency Levels Analyzed
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Commercial Customers
    a. Life-Cycle Cost and Payback Period
    2. National Impact Analysis
    a. Amount and Significance of Energy Savings
    b. Net Present Value
    C. Proposed Standards for Commercial Packaged Boilers
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866
    B. Review Under the National Environmental Policy Act
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under the Unfunded Mandates Reform Act of 1995
    F. Review Under the Treasury and General Government 
Appropriations Act, 1999
    G. Review Under Executive Order 13132
    H. Review Under Executive Order 12988
    I. Review Under the Treasury and General Government 
Appropriations Act, 2001
    J. Review Under Executive Order 13211
    K. Review Under Executive Order 12630
    L. Review Under Section 32 of the Federal Energy Administration 
Act of 1974
    M. Review Under the Information Quality Bulletin for Peer Review
VIII. Public Participation
    A. Attendance at Public Meeting
    B. Procedure for Submitting Requests to Speak
    C. Conduct of Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
IX. Approval of the Office of the Secretary

I. Summary of Proposed Rule

    The Energy Policy and Conservation Act (EPCA) (42 U.S.C. 6291 et 
seq.), as amended, requires DOE to consider amending the existing 
Federal energy conservation standard for each type of equipment listed 
(generally, commercial water heaters, commercial packaged boilers, 
commercial air conditioning and heating equipment, and packaged 
terminal air conditioners and heat pumps), each time ASHRAE Standard 
90.1, Energy Standard for Buildings Except Low-Rise Residential 
Buildings, is amended with respect to such equipment. (42 U.S.C. 
6313(a)(6)(A)) For each type of equipment, EPCA directs that if ASHRAE 
Standard 90.1 is amended,\1\ DOE must adopt amended energy conservation 
standards at the new efficiency level in ASHRAE Standard 90.1, unless 
clear and convincing evidence supports a determination that adoption of 
a more-stringent efficiency level as a national

[[Page 12002]]

standard would produce significant additional energy savings and be 
technologically feasible and economically justified. (42 U.S.C. 
6313(a)(6)(A)(ii)) If DOE decides to adopt as a national standard the 
efficiency levels specified in the amended ASHRAE Standard 90.1, DOE 
must establish such standard not later than 18 months after publication 
of the amended industry standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) If 
DOE determines that a more-stringent standard is appropriate, DOE must 
establish an amended standard not later than 30 months after 
publication of the revised ASHRAE Standard 90.1. (42 U.S.C. 
6313(a)(6)(B))
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    \1\ Although EPCA does not explicitly define the term 
``amended'' in the context of ASHRAE Standard 90.1, DOE provided its 
interpretation of what would constitute an ``amended standard'' in a 
final rule published in the Federal Register on March 7, 2007 
(hereafter referred to as the March 2007 final rule). 72 FR 10038. 
In that rule, DOE stated that the statutory trigger requiring DOE to 
adopt uniform national standards based on ASHRAE action is for 
ASHRAE to change a standard for any of the equipment listed in EPCA 
section 342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by increasing 
the energy efficiency level for that equipment type. Id. at 10042. 
In other words, if the revised ASHRAE Standard 90.1 leaves the 
standard level unchanged or lowers the standard, as compared to the 
level specified by the national standard adopted pursuant to EPCA, 
DOE does not have the authority to conduct a rulemaking to consider 
a higher standard for that equipment pursuant to 42 U.S.C. 
6313(a)(6)(A).
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    This NOPR sets forth DOE's determination of scope for consideration 
of amended energy conservation standards with respect to certain 
heating, ventilating, air-conditioning, and water-heating equipment 
addressed in ASHRAE Standard 90.1-2007. Such inquiry is necessary to 
ascertain whether the revised ASHRAE efficiency levels have become more 
stringent, thereby ensuring that any new amended national standard 
would not result in ``backsliding'' which is prohibited under 42 U.S.C. 
6295(o)(1) and 42 U.S.C. 6316(a). For those equipment classes for which 
ASHRAE set more-stringent efficiency levels (i.e., commercial packaged 
boilers), DOE analyzed the economic and energy savings potential of 
amended national energy conservation standards (at both the new ASHRAE 
Standard 90.1 efficiency levels and more-stringent efficiency levels). 
DOE also found that ASHRAE set a more-stringent efficiency level for 
water-cooled and evaporatively-cooled commercial package air 
conditioners and heat pumps with a cooling capacity at or above 240,000 
Btu/h and less than 760,000 Btu/h. However, DOE did not analyze the 
economic and energy savings potential of amended national energy 
conservation standards because there is no equipment currently being 
manufactured in this equipment class.
    In light of the above, DOE has tentatively concluded that for ten 
classes of commercial packaged boilers: (1) The revised efficiency 
levels in ASHRAE 90.1-2007 \2\ are more stringent than current national 
standards; and (2) their adoption as national standards would result in 
significant energy savings. DOE has also tentatively concluded that 
there is not clear and convincing evidence as would justify adoption of 
more-stringent efficiency levels for this equipment.
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    \2\ To obtain a copy of ASHRAE Standard 90.1-2007, visit http://www.ashrae.org/technology/page/548 or contact the ASHRAE 
publications department by e-mail at <a href="/cdn-cgi/l/email-protection#7c130e18190e0f3c1d0f140e1d1952130e1b"><span class="__cf_email__" data-cfemail="cca3bea8a9bebf8cadbfa4beada9e2a3beab">[email protected]</span></a> or by 
telephone at (800) 527-4723.
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    Thus, in accordance with these criteria discussed in this notice, 
DOE is proposing to amend the energy conservation standards for ten 
equipment classes of commercial packaged boilers and to adopt a new 
energy conservation standard for water-cooled and evaporatively-cooled 
commercial package air conditioners and heat pumps with a cooling 
capacity at or above 240,000 Btu/h and less than 760,000 Btu/h by 
adopting the efficiency levels specified by ASHRAE Standard 90.1-2007. 
The proposed standards for commercial packaged boilers would apply to 
the ten equipment classes of commercial packaged boilers manufactured 
on or after the date two years after the effective date specified in 
ASHRAE Standard 90.1-2007. (42 U.S.C. 6313(a)(6)(D)(i)) The proposed 
standards for water-cooled and evaporatively-cooled commercial package 
air conditioners and heat pumps with a cooling capacity at or above 
240,000 Btu/h and less than 760,000 Btu/h would apply to such equipment 
manufactured on or after the date three years after the effective date 
specified in ASHRAE Standard 90.1-2007. (42 U.S.C. 6313(a)(6)(D)(ii))
    In addition, DOE is proposing amendments to its test procedures for 
commercial packaged boilers, which manufacturers are required to use to 
certify compliance with energy conservation standards mandated under 
EPCA. Specifically, these amendments would update the citations and 
references to the most recent version of the industry standards already 
referenced in DOE's test procedures. In addition, these amendments 
would specify a definition and methodology to test the thermal 
efficiency of these boilers, which is the metric DOE is proposing for 
eight of the ten equipment classes of commercial packaged boilers to 
conform with the new energy efficiency metric adopted in ASHRAE 
Standard 90.1-2007. Lastly, these amendments would make a small number 
of technical modifications to DOE's existing test procedure for 
commercial packaged boilers.

II. Introduction

A. Authority

    Title III of EPCA, Public Law 94-163, as amended, sets forth a 
variety of provisions concerning energy efficiency. Part A-1 \3\ of 
Title III created the energy conservation program for certain 
industrial equipment. (42 U.S.C. 6311-6317) In general, this program 
addresses the energy efficiency of certain types of commercial and 
industrial equipment. Part A-1 specifically includes definitions (42 
U.S.C. 6311), energy conservation standards (42 U.S.C. 6313), test 
procedures (42 U.S.C. 6314), labelling provisions (42 U.S.C. 6315), and 
the authority to require information and reports from manufacturers (42 
U.S.C. 6316).
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    \3\ This part was originally titled Part C; however, it was 
redesignated Part A-1 after Part C of Title III of EPCA was repealed 
by Public Law 109-58.
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    EPCA contains mandatory energy conservation standards for 
commercial heating, air-conditioning, and water-heating equipment. (42 
U.S.C. 6313(a)) Specifically, the statute sets standards for small, 
large, and very large commercial package air-conditioning and heating 
equipment, packaged terminal air conditioners (PTACs) and packaged 
terminal heat pumps (PTHPs), warm air furnaces, packaged boilers, 
storage water heaters, and unfired hot water storage tanks. Id. In 
doing so, EPCA established Federal energy conservation standards that 
generally correspond to the levels in ASHRAE Standard 90.1, as in 
effect on October 24, 1992 (i.e., ASHRAE Standard 90.1-1989), for each 
type of covered equipment listed in 42 U.S.C. 6313(a).
    In acknowledgement of technological changes that yield energy 
efficiency benefits, Congress further directed DOE through EPCA to 
consider amending the existing Federal energy conservation standard for 
each type of equipment listed, each time ASHRAE Standard 90.1 is 
amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) For 
each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is 
amended, DOE must adopt amended standards at the new efficiency level 
in ASHRAE Standard 90.1, unless clear and convincing evidence supports 
a determination that adoption of a more stringent level would produce 
significant additional energy savings and be technologically feasible 
and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)) If DOE 
decides to adopt as a national standard the efficiency levels specified 
in the amended ASHRAE Standard 90.1, DOE must establish such standard 
not later than 18 months after publication of the amended industry 
standard. (42 U.S.C. 6313(a)(6)(A)(ii)(I)) However, if DOE determines 
that a more-stringent standard is justified under 42 U.S.C. 
6313(a)(6)(A)(ii)(II), then it must

[[Page 12003]]

establish such more-stringent standard not later than 30 months after 
publication of the amended ASHRAE Standard 90.1. (42 U.S.C. 
6313(a)(6)(B))
    ASHRAE officially released and made public on January 10, 2008, 
ASHRAE Standard 90.1-2007. This action triggered DOE's obligations 
under 42 U.S.C. 6313(a)(6), as outlined above.
    Pertinent to any rulemaking in response to an ASHRAE revision of 
Standard 90.1, it is noted that EPCA contains what is commonly known as 
an ``anti-backsliding'' provision, which mandates that the Secretary 
shall not prescribe any amended standard that either increases the 
maximum allowable energy use or decreases the minimum required energy 
efficiency of covered equipment. (42 U.S.C. 6295(o)(1); 42 U.S.C. 
6316(a)) It is a fundamental principle in EPCA's statutory scheme that 
DOE cannot weaken standards from those that have been published as a 
final rule. See Natural Resources Defense Council v. Abraham, 355 F.3d 
179 (2d Cir. 2004).
    When considering the possibility of a more-stringent standard, 
DOE's more typical rulemaking requirements under EPCA apply (i.e., a 
determination of technological feasibility, economic justification, and 
significant energy savings). For example, EPCA provides that in 
deciding whether such a standard is economically justified, DOE must 
determine, after receiving comments on the proposed standard, whether 
the benefits of the standard exceed its burdens by considering, to the 
greatest extent practicable, the following seven factors:
    1. The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    2. The savings in operating costs throughout the estimated average 
life of the product in the type (or class) compared to any increase in 
the price of, or in the initial charges for, or maintenance expenses of 
the products which are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy savings likely to result 
directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the products 
likely to result from the imposition of the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    6. The need for national energy conservation; and
    7. Other factors the Secretary considers relevant. (42 U.S.C. 
6295(o)(2)(B)(i)-(ii); 42 U.S.C. 6316(a))
    Additionally, the Secretary may not prescribe an amended standard 
if interested persons have established by a preponderance of the 
evidence that the amended standard is ``likely to result in the 
unavailability in the United States of any product type (or class)'' 
with performance characteristics, features, sizes, capacities, and 
volumes that are substantially the same as those generally available in 
the United States at the time of the Secretary's finding. (42 U.S.C. 
6295(o)(4); 42 U.S.C. 6316(a))
    Federal energy conservation requirements for commercial equipment 
generally supersede State laws or regulations concerning energy 
conservation testing, labeling, and standards. (42 U.S.C. 6316 (a) and 
(b)) However, DOE can grant waivers of preemption for particular State 
laws or regulations, in accordance with the procedures and other 
provisions of section 327(d) of EPCA. (42 U.S.C. 6297(d) and 
6316(b)(2)(D))
    When considering more stringent standards for the ASHRAE equipment 
under consideration here, EPCA states that there is 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 level is less than three times the value of the 
first-year energy (and as applicable water) savings resulting from the 
standard, as calculated under the applicable DOE test procedure. (42 
U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(a)) Generally, DOE's LCC 
and PBP analyses generate values that calculate the payback period for 
consumers of potential energy conservation standards, which includes, 
but is not limited to, the three-year payback period contemplated under 
the rebuttable presumption test discussed above. 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 42 U.S.C. 
6316(a). The results of this analysis serve as the basis for DOE to 
definitively evaluate the economic justification for a potential 
standard level (thereby supporting or rebutting the results of any 
preliminary determination of economic justification).

B. Background

1. ASHRAE Standard 90.1-2007
    On January 9, 2008, ASHRAE's Board of Directors gave final approval 
to ASHRAE Standard 90.1-2007, which ASHRAE released on January 10, 
2008. The ASHRAE standard addresses efficiency levels for many types of 
commercial heating, ventilating, air-conditioning (HVAC), and water-
heating equipment covered by EPCA. ASHRAE Standard 90.1-2007 revised 
the efficiency levels for certain commercial equipment, but for the 
remaining equipment, ASHRAE left in place the preexisting efficiency 
levels (i.e., the efficiency levels specified in ASHRAE Standard 90.1-
1999 \4\).
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    \4\ DOE reviewed and adopted some of the efficiency levels in 
ASHRAE Standard 90.1-1999 in a Final Rule published on January 12, 
2001. 66 FR 3336.
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    Table II.1 below shows the existing Federal energy conservation 
standards and the efficiency levels specified in ASHRAE Standard 90.1-
2007 for equipment where ASHRAE modified its requirements. DOE is 
addressing this equipment in today's notice. In section IV of today's 
NOPR, DOE assesses these equipment types to determine whether the 
amendments in ASHRAE Standard 90.1-2007 constitute increased energy 
conservation levels, as would necessitate further analysis. This step 
was necessary because DOE found that while ASHRAE had made changes in 
ASHRAE Standard 90.1-2007, it was not immediately apparent whether such 
revisions to the ASHRAE Standard 90.1 level would make the equipment 
more or less efficient, as compared to the existing Federal energy 
conservation standards. For example, when setting a standard using a 
different efficiency metric (as is the case for several types of 
commercial packaged boiler equipment), ASHRAE Standard 90.1-2007 
changes the standard level from that specified in EPCA, but it is not 
immediately clear whether a standard level will make equipment more or 
less efficient. Therefore, DOE is undertaking this additional threshold 
analysis in order to thoroughly evaluate the amendments in ASHRAE 
Standard 90.1-2007 in a manner consistent with its statutory mandate.

[[Page 12004]]



 Table II.1--Federal Energy Conservation Standards and Energy Efficiency Levels in ASHRAE Standard 90.1-2007 for
                                     Specific Types of Commercial Equipment*
----------------------------------------------------------------------------------------------------------------
                                                                                ASHRAE standard 90.1-2007
                                           Federal energy conservation -----------------------------------------
         ASHRAE equipment class                     standards                                         Effective
                                                                          Energy efficiency levels       date
----------------------------------------------------------------------------------------------------------------
                                          Commercial Warm Air Furnaces
----------------------------------------------------------------------------------------------------------------
Gas-Fired Commercial Warm Air Furnace...  Et = 80%....................  Ec = 80% Interrupted or        1/10/2008
                                                                         intermittent ignition          [Dagger]
                                                                         device, jacket losses not
                                                                         exceeding 0.75% of input
                                                                         rating, power vent, or
                                                                         flue damper**.
Oil-Fired Commercial Warm Air Furnace...  Et =81%.....................  Et = 81% Interrupted or            1/10/
                                                                         intermittent ignition       2008[Dagger
                                                                         device, jacket losses not             ]
                                                                         exceeding 0.75% of input
                                                                         rating, power vent, or
                                                                         flue damper**.
----------------------------------------------------------------------------------------------------------------
                            Commercial Package Air-Conditioning and Heating Equipment
----------------------------------------------------------------------------------------------------------------
Through-the-Wall Air Conditioners.......  13.0 SEER***................  12.0 SEER..................    1/23/2010
                                          (Effective as of 06/19/08)..
Through-the-Wall Air-Cooled Heat Pumps..  13.0 SEER...................  12.0 SEER..................    1/23/2010
                                          (Effective as of 06/19/08)..  7.4 HSPF[dagger]...........
Small Duct, High Velocity, Air-Cooled     13.0 SEER...................  10.0 SEER..................    1/10/2008
 Air Conditioners.                        (Effective as of 06/19/08)..
Small Duct, High-Velocity, Air-Cooled     13.0 SEER...................  10.0 SEER..................    1/10/2008
 Heat Pumps.                              (Effective as of 06/19/08)..  6.8 HSPF...................
Packaged Air-Cooled Air Conditioners      None........................  9.7                             1/1/2010
 with Cooling Capacity >=760,000 Btu/                                    EER[dagger][dagger][dagger
 h[dagger][dagger] and with No Heating                                   ].
 or with Electric Resistance Heating.
Packaged Air-Cooled Air Conditioners      None........................  9.5 EER....................     1/1/2010
 with Cooling Capacity >=760,000 Btu/h
 and with Heating That is Other Than
 Electric Resistance Heating.
Water-Cooled and Evaporatively-Cooled     11.0 EER....................  11.0 EER...................        1/10/
 Air Conditioner with Cooling Capacity                                                               2008[Dagger
 >=135,000 and <240,000 Btu/h, and with                                                                        ]
 No Heating or with Electric Resistance
 Heating.
Water-Cooled and Evaporatively Cooled     11.0 EER....................  10.8 EER...................        1/10/
 Air Conditioner with Cooling Capacity                                                               2008[Dagger
 >=135,000 and <240,000 Btu/h, and with                                                                        ]
 Heating That is Other Than Electric
 Resistance Heating.
Water-Cooled and Evaporatively Cooled     None........................  11.0 EER...................        1/10/
 Air Conditioner with Cooling Capacity                                                               2008[Dagger
 >=240,000 Btu/h and with No Heating or                                                                        ]
 with Electric Resistance Heating.
Water-Cooled and Evaporatively Cooled     None........................  10.8 EER...................        1/10/
 Air Conditioner with Cooling Capacity                                                               2008[Dagger
 >=240,000 Btu/h and with Heating That                                                                         ]
 is Other Than Electric Resistance
 Heating.
----------------------------------------------------------------------------------------------------------------
                                           Commercial Packaged Boilers
----------------------------------------------------------------------------------------------------------------
Small Gas-Fired, Hot Water, Commercial    EC = 80%....................  ET = 80%...................     3/2/2010
 Packaged Boilers.
Small Gas-Fired, Steam, All Except        EC = 80%....................  ET = 79%...................     3/2/2010
 Natural Draft Commercial Packaged
 Boilers.
Small Gas-Fired, Steam, Natural Draft,    EC = 80%....................  ET = 77%...................     3/2/2010
 Commercial Packaged Boilers.                                           ET = 79%...................     3/2/2020
Small Oil-Fired, Hot Water, Commercial    EC = 83%....................  ET = 82%...................     3/2/2010
 Packaged Boilers.
Small Oil-Fired, Steam, Commercial        EC = 83%....................  ET = 81%...................     3/2/2010
 Packaged Boilers.
Large Gas-Fired, Hot Water, Commercial    EC = 80%....................  EC = 82%...................     3/2/2010
 Packaged Boilers.
Large Gas-Fired, Steam, All Except        EC = 80%....................  ET = 79%...................     3/2/2010
 Natural Draft, Boilers.
Large Gas-Fired, Steam, Natural Draft,    EC = 80%....................  ET = 77%...................     3/2/2010
 Commercial Packaged Boilers.                                           ET = 79%...................     3/2/2020
Large Oil-Fired, Hot Water, Commercial    EC = 83%....................  EC = 84%...................     3/2/2010
 Packaged Boilers.

[[Page 12005]]

 
Large Oil-Fired, Steam, Commercial        EC = 83%....................  ET = 81%...................    3/2/2010
 Packaged Boilers.
----------------------------------------------------------------------------------------------------------------
*All equipment classes included in this table are equipment where there is a perceived difference between the
  current Federal standard levels and the efficiency levels specified by ASHRAE Standard 90.1-2007. Although, in
  some cases, the efficiency levels in this table may appear to be equal or lower than the Federal energy
  conservation standards, DOE further reviewed the efficiency levels in ASHRAE Standard 90.1-2007 and presented
  its findings in section III.
** A vent damper is an acceptable alternative to a flue damper for those furnaces that draw combustion air from
  conditioned space.
*** Seasonal energy efficiency ratio
[dagger] Heating seasonal performance factor
[dagger][dagger] British thermal units per hour (Btu/h)
[dagger][dagger][dagger] Energy efficiency ratio
[Dagger]For the purposes of this NOPR, the date shown in this column is the date of publication of ASHRAE
  Standard 90.1-2007 (Jan. 10, 2008) for equipment where the ASHRAE Standard 90.1-2007 initially appears to be
  different from the Federal energy conservation standards and where no effective date was specified by ASHRAE
  Standard 90.1-2007.

2. Notice of Data Availability and Request for Public Comment
    On July 16, 2008, DOE published a notice of data availability (July 
2008 NODA) and request for public comment in the Federal Register as a 
preliminary step pursuant to EPCA's requirements for DOE to consider 
amended energy conservation standards for certain types of commercial 
equipment covered by ASHRAE Standard 90.1. 73 FR 40770 (July 16, 2008). 
Specifically, the July 2008 NODA presented for public comment DOE's 
analysis of the potential energy savings estimates for amended national 
energy conservation standards for types of commercial equipment based 
on: (1) The modified efficiency levels contained within ASHRAE Standard 
90.1-2007; and (2) more-stringent efficiency levels. Id. at 40772. DOE 
has described these analyses and preliminary conclusions and sought 
input from interested parties, including the submission of data and 
other relevant information. Id.
    In addition, DOE presented a discussion in the July 2008 NODA of 
the changes found in ASHRAE Standard 90.1-2007. Id. at 40776-86. 
Lastly, the July 2008 NODA includes an initial description of DOE's 
evaluation of each ASHRAE equipment type to determine which energy 
conservation standards, if any, have been set pursuant to EPCA, in 
order for DOE to determine whether the amendments in ASHRAE Standard 
90.1-2007 have increased efficiency levels. For those types of 
equipment in ASHRAE Standard 90.1 for which ASHRAE increased efficiency 
levels, DOE subjected that equipment to the potential energy savings 
analysis discussed above and presented the results in the July 2008 
NODA for public comment. 73 FR 40770, 40776-86 (July 16, 2008).
    As a result of the preliminary determination of scope set forth in 
the July 2008 NODA, DOE found the only equipment type for which ASHRAE 
increased the efficiency levels and equipment was available on the 
market were commercial packaged boilers, generally. 73 FR 40770, 40776-
86 (July 16, 2008). DOE presented its methodology, data, and results 
for the preliminary energy savings analysis developed for most of the 
commercial packaged boiler equipment classes in the July 2008 NODA for 
public comment. 73 FR 40770, 40786-91 (July 16, 2008).

III. General Discussion of Comments Regarding the ASHRAE Process and 
DOE's Interpretation of EPCA's Requirements With Respect to ASHRAE 
Equipment

    In response to its request for comment on the July 2008 NODA, DOE 
received six comments from manufacturers, trade associations, and 
energy efficiency advocates. The issues raised in these comments, along 
with DOE's responses, are set forth below.

A. The ASHRAE Process

    In response to the preliminary determination of scope and analyses 
set forth in the July 2008 NODA, DOE received several comments 
regarding the ASHRAE process for considering revised efficiency levels 
for certain commercial heating, ventilating, air-conditioning, and 
water heater equipment, including commercial packaged boilers.
    Edison Electric Institute (EEI) stated its belief that DOE should 
make proposals for increased efficiency to ASHRAE and not perform a 
separate rulemaking on commercial packaged boilers. EEI asserted this 
would streamline DOE's efforts and provide opportunities to increase 
equipment efficiency through the ASHRAE consensus process. (EEI, No. 2 
at p. 2) \5\
---------------------------------------------------------------------------

    \5\ ``EEI, No. 2 at p. 2'' refers to (1) a statement that was 
submitted by the Edison Electric Institute and is recorded in the 
Resource Room of the Building Technologies Program in the docket 
under ``Energy Conservation Program for Certain Industrial 
Equipment: Energy Conservation Standards for Commercial Heating, 
Air-Conditioning, and Water-Heating Equipment,'' Docket Number EERE-
2008-BT-STD-0013, as comment number 2; and (2) a passage that 
appears on page 2 of that statement.
---------------------------------------------------------------------------

    The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) 
asserted that the efficiency levels for commercial packaged boilers in 
ASHRAE Standard 90.1-2007 are the product of a consensus agreement 
between AHRI boiler manufacturer members, ACEEE, and several other 
organizations. AHRI stated its belief these efficiency levels reflect 
the collective experience of the manufacturers and the knowledge of the 
relationship between combustion efficiency and thermal efficiency for 
their models that comes from practical experience of transforming 
design concepts to models coming off the production line. Further, AHRI 
asserted DOE should accept the efficiency levels in ASHRAE Standard 
90.1-2007 as negotiated standards that can be processed through an 
expedited rulemaking. (AHRI, No. 3 at p. 4)
    The American Council for an Energy-Efficient Economy (ACEEE), the 
Appliance Standards Awareness Project (ASAP), the Alliance to Save 
Energy (ASE), the California Energy Commission (CEC), the Natural 
Resources Defense Council (NRDC), the Northeast Energy Efficiency 
Partnerships (NEEP), and the Northwest Power and Conservation Council 
(NPCC) submitted a joint comment in response to the July 2008 NODA

[[Page 12006]]

(hereafter referred to as the Advocates Comment). (The Advocates 
Comment, No. 4 at p. 2) The Advocates Comment stated its support for 
the adoption of the efficiency levels in ASHRAE Standard 90.1-2007 for 
commercial boilers, except for any specific equipment class for which 
further DOE analysis shows that adoption of the ASHRAE efficiency 
levels would violate the anti-backsliding clause. The Advocates Comment 
pointed out that the efficiency levels in ASHRAE Standard 90.1-2007 for 
commercial packaged boilers are the result of a 2006 agreement between 
several efficiency advocacy groups and the trade association for 
commercial packaged boilers. (The Advocates Comment, No. 4 at p. 2)
    Lastly, AHRI, ACEEE, ASAP, ASE, and NRDC submitted a joint letter 
to the Assistant Secretary (hereafter referred to as the Joint Letter) 
urging DOE to adopt as Federal minimum energy conservation standards 
the efficiency levels contained in ASHRAE Standard 90.1-2007 for 
commercial packaged boilers. (The Joint Letter, No. 5 at p. 1) The 
Joint Letter asserted that the commercial boiler efficiency levels are 
more stringent than the corresponding requirements in the previous 
version of the ASHRAE Standard.\6\ In addition, the Joint Letter 
pointed out that the efficiency levels in ASHRAE Standard 90.1-2007 for 
commercial packaged boilers are the result of a consensus 
recommendation. Finally, the Joint Letter stated its belief that given 
the origin of these efficiency levels in the consensus process (both 
with the negotiated agreement and the ASHRAE process) and their 
significant potential energy savings, DOE should give these 
recommendations deference and move to adopt them as a final rule as 
expeditiously as possible. (The Joint Letter, No. 5 at p. 2)
---------------------------------------------------------------------------

    \6\ DOE reviewed the previous efficiency levels for commercial 
packaged boilers, which were incorporated into ASHRAE Standard 90.1-
1999, in a notice of document availability published on March 13, 
2006. 71 FR 12634, 12639 (March 13, 2006). At that time, DOE 
determined it could not adopt the efficiency levels in ASHRAE 
Standard 90.1-1999 for small commercial packaged boilers due to 
backsliding concerns. 71 FR 12634, 12639-41 (March 13, 2006). In 
addition, DOE determined it did not have the authority to consider 
amended energy conservation standards for large commercial packaged 
boilers because ASHRAE did not change the existing energy 
conservation standard levels in ASHRAE Standard 90.1-1999. 71 FR 
12634, 12641-42 (March 13, 2006).
---------------------------------------------------------------------------

    While DOE acknowledges that certain efficiency levels in ASHRAE 
Standard 90.1-2007 are the result of consensus standards, including 
those for commercial packaged boilers, EPCA specifies DOE's obligations 
to review the amendments when ASHRAE issues revised standards. 
Specifically, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE 
must adopt amended energy conservation standards at the new efficiency 
level in ASHRAE Standard 90.1, unless clear and convincing evidence 
supports a determination that adoption of a more stringent level as a 
national standard would produce significant additional energy savings 
and be technologically feasible and economically justified. (42 U.S.C. 
6313(a)(6)(A)(ii)) In order to determine if more-stringent efficiency 
levels would meet EPCA's criteria, DOE must review the efficiency 
levels in ASHRAE Standard 90.1-2007 and more-stringent efficiency 
levels for their energy savings and economic potentials irrespective of 
whether the efficiency levels were once part of a consensus standard. 
Contrary to what some commenters seem to suggest, DOE may not delegate 
its standard-setting authority either directly or indirectly to ASHRAE 
or any other party.

B. The Definition of Amendment With Respect to the Efficiency Levels in 
an ASHRAE Standard

    DOE stated in the July 2008 NODA that EPCA does not explicitly 
define the term ``amended'' in the context of ASHRAE Standard 90.1, but 
the July 2008 NODA pointed out that DOE provided its interpretation of 
what would constitute an ``amended standard'' in a final rule published 
in the Federal Register on March 7, 2007 (72 FR 10038). 73 FR 40770, 
40771 (July 16, 2008). In that final rule, DOE stated that the 
statutory trigger requiring DOE to adopt uniform national standards 
based on ASHRAE action is for ASHRAE to change a standard for any of 
the equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C. 
6313(a)(6)(A)(i)) by increasing the energy efficiency level for that 
equipment type. 72 FR 10038, 10042 (March 7, 2007). In other words, if 
the revised ASHRAE Standard 90.1 leaves the standard level unchanged or 
lowers the standard, as compared to the level specified by the national 
standard adopted pursuant to EPCA, DOE does not have the authority to 
conduct a rulemaking to consider a higher standard for that equipment 
pursuant to 42 U.S.C. 6313(a)(6)(A). 73 FR 40770, 40771 (July 16, 
2008).
    In response to DOE's interpretation of the definition of 
``amendment,'' the Advocates Comment argued that DOE has applied an 
unlawfully narrow definition to the word ``amendment.'' (The Advocates 
Comment, No. 4 at pp. 2-3) Instead, the Advocates Comment asserts that 
EPCA requires DOE to consider changes to the Federal minimum energy 
conservation standards for covered products ``[i]f ASHRAE/IES Standard 
90.1 is amended * * *'' (The Advocates Comment, No. 4 at pp. 2-3 
(referring to 42 U.S.C. 6313(a)(6)(A)(i)) (emphasis in original)). In 
other words, the Advocates Comment suggests that DOE has very broad 
authority to consider amended standards for any and all ASHRAE 
equipment, once ASHRAE acts to revise any of the levels in Standard 
90.1. The Advocates Comment asserts that Congress's use of the neutral 
terms ``amended'' and ``amendment'' imposes no threshold requirement 
that before DOE can analyze the energy saving potential of revised 
Federal energy conservation standards it must first determine that the 
amended ASHRAE standard is more stringent than the prior Federal energy 
conservation standard. The Advocates Comment stated its belief that 
DOE's very limited definition of ``amendment'' is inconsistent with the 
plain language of EPCA. (The Advocates Comment, No. 4 at p. 3)
    DOE does not agree with the Advocates Comment's assertions. DOE 
maintains its position that the statutory trigger requiring DOE to 
adopt uniform national standards based on ASHRAE action is for ASHRAE 
to change a standard for any of the equipment listed in EPCA section 
342(a)(6)(A)(i) (42 U.S.C. 6313(a)(6)(A)(i)) by increasing the energy 
efficiency level for that equipment type. As described in the March 
2007 final rule, the intent of section 342, generally, is for DOE to 
maintain uniform national standards consistent with those set in ASHRAE 
Standard 90.1. 72 FR 10038, 10042 (March 7, 2007). Given this intent, 
if ASHRAE has not amended a standard for a product subject to section 
342, there is no change, which would require action by DOE to consider 
amending the uniform national standard to maintain consistency with 
ASHRAE Standard 90.1. Id. If ASHRAE considered amending the standards 
for a given equipment type but ultimately chose not to do so, the 
statutory trigger for DOE to adopt ASHRAE's amended standards did not 
occur with respect to this equipment. Id. The statutory language 
specifically links ASHRAE's action in amending standards for specific 
equipment to DOE's action for those same equipment. Id.

C. Different Types of Changes in ASHRAE Standard 90.1-2007

    The Advocates Comment asserted that ASHRAE Standard 90.1-2007 
includes at least three different types of amendments, which must 
trigger DOE

[[Page 12007]]

review of the existing Federal energy conservation standards, 
including: (1) A change in the efficiency performance metric; (2) an 
addition of a new prescriptive or performance requirement; and (3) a 
possible decrease to the efficiency standard. (The Advocates Comment, 
No. 4 at p. 4-5) The Advocates Comment further asserted that DOE cannot 
reject the consideration of amendments which change the performance 
metric or which add new prescriptive or performance requirements on top 
of existing Federal requirements. The Advocates Comment further stated 
that even DOE's definition of ``amendment'' compels consideration of 
amendments which add energy-saving requirements since these 
requirements ``increase'' the level of energy efficiency for a given 
equipment type. If DOE decides it cannot adopt multiple efficiency 
requirements (an interpretation the Advocates Comment believes is 
contrary to EPCA), the Advocates Comment argued that these requirements 
still trigger DOE review. (The Advocates Comment, No. 4 at p. 4-5)
    When reviewing the changes in ASHRAE Standard 90.1-2007, DOE stated 
in the July 2008 NODA that for each class of commercial equipment for 
which ASHRAE modified the existing standard, DOE would assess whether 
the change made would increase energy efficiency and, therefore, 
require further DOE analysis and consideration. 73 FR 40770, 40775 
(July 16, 2008). DOE initially completed a comprehensive analysis of 
the products covered under both EPCA and ASHRAE Standard 90.1-2007 to 
determine which product types require further analysis. The July 2008 
NODA contains a description of DOE's initial evaluation of each ASHRAE 
equipment type for which energy conservation standards have been set 
pursuant to EPCA, in order for DOE to determine whether the amendments 
in ASHRAE Standard 90.1-2007 have resulted in increased efficiency 
levels. 73 FR 40770, 40773-40786 (July 16, 2008).
    DOE does not agree with the Advocates Comment's assertion that DOE 
is required to review changes in ASHRAE Standard 90.1-2007, which do 
not increase the efficiency level when compared to the current Federal 
energy conservation standards for a given piece of equipment. Further 
as DOE has previously explained, since EPCA does not explicitly define 
the term ``amended'' in the context of ASHRAE Standard 90.1, DOE 
provided its interpretation of what would constitute an ``amended 
standard'' in a final rule published in the Federal Register on March 
7, 2007. 72 FR 10038. In that rule, DOE stated that the statutory 
trigger requiring DOE to adopt uniform national standards based on 
ASHRAE action is for ASHRAE to change a standard for any of the 
equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C. 
6313(a)(6)(A)(i)) by increasing the energy efficiency level for that 
equipment type. Id. at 10042. Even though DOE realizes that these 
prescriptive requirements could save additional energy in addition to 
the energy-efficiency level, DOE does not believe adding a prescriptive 
requirement alone without increasing the efficiency level triggers DOE 
review. In addition, if ASHRAE adds a prescriptive requirement for 
equipment where an efficiency level is already specified, DOE does not 
believe it has the authority to address a dual descriptor for a single 
equipment type (see section IV.A.1 below for additional explanation). 
In light of the above, DOE maintains its position set out in the July 
2008 NODA. If the revised ASHRAE Standard 90.1 leaves the standard 
level unchanged (even if ASHRAE adds prescriptive requirements) or 
lowers the standard, as compared to the level specified by the national 
standard adopted pursuant to EPCA, DOE does not have the authority to 
conduct a rulemaking to consider a higher standard for that equipment 
pursuant to 42 U.S.C. 6313(a)(6)(A). 73 FR 40770, 40771 (July 16, 
2008).

D. DOE's Review of ASHRAE Equipment Independent of the ASHRAE Standards 
Process

    The Advocates Comment pointed to language in EPCA (at 42 U.S.C. 
6313(a)(6)(C)) that it believes triggers DOE review to determine the 
need to amend the energy conservation standard for a given piece of 
equipment, including a six-year timeframe elapsing since the last final 
rule ``establishing or amending a standard'' for that product. (The 
Advocates Comment, No. 4 at p. 5) The Advocates Comment also stated 
that the same provision of EPCA further provides that if DOE determines 
that the statutory criteria have not been met for amending the energy 
conservation standard for a product, DOE must conduct the same review 
process within the next three years. (The Advocates Comment, No. 4 at 
p. 5) The Advocates Comment stated its belief that the timeline (three 
or six years) has elapsed for several equipment categories, including: 
(1) Central water-source and evaporatively-cooled AC products; (2) 
warm-air furnaces; (3) gas and oil storage water heaters; (4) gas and 
oil instantaneous water heaters; (4) tankless oil-fired instantaneous 
water heaters and unfired hot water storage tanks; (5) electric water 
heaters; (6) tankless gas-fired instantaneous water heaters; and (7) 
commercial packaged boilers. (The Advocates Comment, No. 4 at p. 5-6)
    In response, DOE acknowledges that section 305(b) of the Energy 
Independence and Security Act of 2007 (EISA 2007), Pub. L. 110-140, 
amended Section 342(a)(6) of EPCA to create an additional requirement 
that directs DOE to assess whether there is a need to update the 
Federal energy conservation standards for certain commercial equipment 
(i.e., ASHRAE equipment) after a certain amount of time has elapsed. 
Specifically, EPCA, as amended, states that ``the Secretary must 
publish either a notice of determination that standards for a product 
do not need to be amended, or a notice of proposed rulemaking including 
new proposed standards within 6 years after the issuance of any final 
rule establishing or amending a standard.'' (42 U.S.C. 
6313(a)(6)(C)(i)) In addition, if the Secretary chooses to publish a 
notice of determination that the standards for a product do not need to 
be amended, a new determination must be issued within 3 years of the 
previous determination. (42 U.S.C. 6313(a)(6)(C)(iii)(II)) These 
requirements are applicable to small commercial package air 
conditioning and heating equipment, large commercial package air 
conditioning and heating equipment, very large commercial package air 
conditioning and heating equipment, packaged terminal air conditioners, 
packaged terminal heat pumps, warm-air furnaces, packaged boilers, 
storage water heaters, instantaneous water heaters, and unfired hot 
water storage tanks. (42 U.S.C. 6313(a)(6)(A)(i))
    DOE believes that the commenters have misconstrued the amendments 
in section 305(b) of EISA 2007 by suggesting that the relevant 
provisions should be applied retroactively, rather than prospectively. 
DOE does not believe it was Congress's intention to apply these 
requirements retroactively, so that DOE would immediately be in 
violation of its legal obligations upon passage of the statute, thereby 
failing from its inception. DOE does not believe that the 
interpretation in the Advocates Comment is reasonable, nor does DOE 
agree with the assertion that DOE is late and should initiate an 
immediate review of certain commercial equipment cited by the 
commenters above.

[[Page 12008]]

E. Equipment Classes With a Two-Tier Efficiency Level Specified in 
ASHRAE Standard 90.1-2007

    For commercial packaged boilers, ASHRAE Standard 90.1-2007 further 
divides the existing equipment classes (i.e., gas-fired and oil-fired) 
into 10 different divisions. For two of the ten equipment classes 
specified in ASHRAE Standard 90.1-2007, ASHRAE specifies a two-tier 
efficiency level, with one efficiency level effective in 2010 and 
another more-stringent efficiency level effective in 2020. The two 
equipment classes where ASHRAE Standard 90.1-2007 specifies a two-tier 
efficiency levels are small gas-fired steam natural draft and large 
gas-fired steam natural draft commercial packaged boilers. In 
determining whether the efficiency levels in ASHRAE Standard 90.1-2007 
violated EPCA's anti-backsliding clause, DOE examined only the 
efficiency levels with a 2010 effective date. However, DOE considers 
the two-tier efficiency levels to be a ``package'' set of potential 
amended energy conservation standards. DOE does not intend to adopt one 
efficiency level without adopting the latter efficiency level. 
Accordingly, in its economic and energy savings analysis DOE analyzes 
these two equipment classes as if both the 2010 and 2020 levels will be 
adopted on their respective effective dates.

IV. General Discussion of the Changes in ASHRAE Standard 90.1-2007 and 
Determination of Scope for Further Rulemaking Analyses

    As discussed above, before beginning an analysis of economic 
impacts and energy savings that would result from adopting the 
efficiency levels specified by ASHRAE Standard 90.1-2007 or more-
stringent efficiency levels, DOE first sought to determine whether or 
not the ASHRAE Standard 90.1-2007 efficiency levels actually 
represented an increase in efficiency above the current Federal 
standard levels. This section discusses each equipment class where the 
ASHRAE Standard 90.1-2007 efficiency level differs from the current 
Federal standard level, along with DOE's preliminary conclusion as to 
the action DOE would take with respect to that equipment.

A. Commercial Warm Air Furnaces

    Under EPCA, a ``warm air furnace'' is defined as ``a self-contained 
oil-or gas-fired furnace designed to supply heated air through ducts to 
spaces that require it and includes combination warm-air furnace/
electric air-conditioning units but does not include unit heaters and 
duct furnaces.'' (42 U.S.C. 6311(11)(A)) In its regulations, DOE 
defines a ``commercial warm air furnace'' as a ``warm-air furnace that 
is industrial equipment, and that has a capacity (rated maximum input) 
of 225,000 Btu [British thermal units] per hour or more.'' 10 CFR 
431.72. The amendments in ASHRAE Standard 90.1-2007 changed the 
efficiency metric for gas-fired commercial warm air furnaces and added 
design requirements for both gas-fired and oil-fired commercial warm 
air furnaces, thereby triggering DOE to further review ASHRAE's changes 
as presented below.
1. Gas-Fired Commercial Warm Air Furnaces
    Gas-fired commercial warm air furnaces are fueled by either natural 
gas or propane. The Federal energy conservation standard for commercial 
gas-fired warm air furnaces corresponds to the efficiency level in 
ASHRAE Standard 90.1-1999, which specifies that for equipment with a 
capacity of 225,000 Btu per hour (h) or more, the thermal efficiency at 
the maximum rated capacity (rated maximum input) must be no less than 
80 percent. 10 CFR 431.77(a). The Federal energy conservation standard 
for gas-fired commercial warm air furnaces applies to equipment 
manufactured on or after January 1, 1994. 10 CFR 431.77.
    ASHRAE changed the efficiency levels for gas-fired commercial warm 
air furnaces by changing the metric from a thermal efficiency 
descriptor to a combustion efficiency descriptor and adding three 
design requirements. Specifically, the efficiency levels in ASHRAE 
Standard 90.1-2007 specify a minimum combustion efficiency of 80 
percent. ASHRAE Standard 90.1-2007 also specifies the following design 
requirements for commercial gas-fired warm air furnaces: The gas-fired 
commercial warm air furnace must use an interrupted or intermittent 
ignition device, have jacket losses no greater than 0.75 percent of the 
input rating, and use a power vent or flue damper.
    To evaluate the change in efficiency level (if any) specified by 
the amended ASHRAE standard, DOE reviewed the change of metric for gas-
fired commercial warm air furnaces. In general, the energy efficiency 
of a product is a function of the relationship between the product's 
output of services and its energy input. A furnace's output is largely 
the energy content of its output (i.e., warm air delivered to the 
building). A furnace's energy losses consist of energy that escapes 
through its flue (commonly referred to as ``flue losses''), and of 
energy that escapes into the area surrounding the furnace (commonly 
referred to as ``jacket losses'').
    In a final rule published in the Federal Register on October 21, 
2004 (the October 2004 final rule), DOE incorporated definitions for 
commercial warm air furnaces and its efficiency descriptor, energy 
efficiency test procedures, and energy conservation standards. 69 FR 
61916 (Oct. 21, 2004). In the October 2004 final rule, DOE pointed out 
that EPCA specifies the energy conservation standard levels for 
commercial warm air furnaces in terms of thermal efficiency (42 U.S.C. 
6313(a)(4)(A)-(B); 10 CFR 431.77), but provides no definition for this 
term. Id. DOE proposed to interpret this term in the context of 
commercial warm air furnaces to mean combustion efficiency (i.e., 100 
percent minus percent flue loss). Id. Given the use of the thermal 
efficiency term in EPCA and its continued use as the efficiency 
descriptor for furnaces in ANSI Standard Z21.47, ``Gas-Fired Central 
Furnaces'' (DOE's test procedure for this equipment), DOE stated that 
it would be confusing to use the term ``combustion efficiency'' in the 
final rule. Accordingly, DOE defined the term ``thermal efficiency'' to 
mean 100 percent minus the percent flue loss in the October 2004 final 
rule for gas-fired commercial warm air furnaces. Id.
    DOE presented an initial review of the ASHRAE efficiency levels for 
warm-air furnaces in the July 2008 NODA. DOE stated that upon reviewing 
the efficiency levels and methodology specified in ASHRAE Standard 
90.1-2007, DOE believed that despite changing the name of the energy 
efficiency descriptor from ``thermal efficiency'' to ``combustion 
efficiency,'' ASHRAE did not intend to change the efficiency metric for 
gas-fired commercial warm air furnaces. 73 FR 40770, 40776 (July 16, 
2008). When ASHRAE specified a newer version of the test procedure for 
manufacturers' use with gas-fired commercial air furnaces (i.e., ANSI 
Standard Z21.47-2001), the calculation of thermal efficiency did not 
change from the previous version. Therefore, despite that change in the 
name of the energy efficiency descriptor, the terms are synonymous in 
the present context because the calculation of that value has not 
changed (i.e., 100 percent minus the percent flue loss). DOE sees no 
plausible reason why ASHRAE would have chosen to incorporate a 
different metric than that used in the ANSI Standard Z21.47-2001 test 
procedure. Consequently, because the amendments for this type of 
equipment set out in ASHRAE Standard 90.1-2007 do not

[[Page 12009]]

appear to have substantively changed the efficiency level, DOE 
tentatively decided to leave the existing Federal energy conservation 
standards in place for gas-fired commercial warm air furnaces; these 
standards specify a thermal efficiency of 80 percent using the 
definition of ``thermal efficiency'' established by DOE in the October 
2004 final rule and presented in subpart D to 10 CFR part 431. 73 FR 
40770, 40776 (July 16, 2008).
    In response to the preliminary review set forth in the July 2008 
NODA, the Advocates Comment noted that ASHRAE added additional energy 
saving requirements, including a standard limiting jacket losses, a 
prescriptive requirement for intermittent or interrupted ignition 
devices, and a requirement for power venting or flue dampers in ASHRAE 
Standard 90.1-2007 for commercial gas-fired warm air furnaces. (The 
Advocates Comment, No. 4 at p. 6) The Advocates Comment further stated 
that the addition of these requirements triggers DOE review, which must 
lead to either adoption of the new ASHRAE standards or more-stringent 
standards. (The Advocates Comment, No. 4 at p. 6) The Advocates Comment 
also asserted that ASHRAE recognized that combustion efficiency is an 
inadequate efficiency descriptor and added these additional efficiency 
requirements to capture off cycle losses, which can waste significant 
amounts of energy. (The Advocates Comment, No. 4 at p. 6) Even though 
the comments concluded DOE has asserted in other rulemakings that it 
lacks the authority to apply more than one efficiency metric to a given 
product, the commenters believe DOE's viewpoint is contrary to the 
language and purposes of EPCA. (The Advocates Comment, No. 4 at p. 7) 
Further, the Advocates Comment stated that because ASHRAE has adopted a 
performance standard and multiple design requirements, DOE must read 
the statute as permitting DOE sufficient authority to harmonize Federal 
and ASHRAE requirements. Lastly, the comments point out that some of 
the multi-part standards (e.g., those for commercial storage 
instantaneous water heaters and commercial heat pumps) are based on 
equivalent multi-part requirements in ASHRAE 90.1. (The Advocates 
Comment, No. 4 at p. 6-7)
    DOE has determined that the design requirements in ASHRAE Standard 
90.1-2007 for gas-fired commercial warm air furnaces are beyond the 
scope of its legal authority. EPCA authorizes the Secretary to amend 
the energy conservation standards for specified equipment. (42 U.S.C. 
6313(a)(6)) Section 340(18) of EPCA defines the term ``energy 
conservation standard'' as:
    ``(A) a performance standard that prescribes a minimum level of 
energy efficiency or a maximum quantity of energy use for a product; or
    (B) a design requirement for a product.''

(42 U.S.C. 6311(18))
    The language of EPCA authorizes DOE to establish a performance 
standard or a single design standard. As such, a standard that 
establishes both a performance standard and a design requirement is 
beyond the scope of DOE's legal authority, as would be a standard that 
included more than one design requirement. In this case, ASHRAE 
Standard 90.1-2007 recommends three design requirements, which goes 
beyond EPCA's limit of one design requirement for the specified covered 
equipment.
    Therefore, DOE has not changed its preliminary review set forth in 
the July 2008 NODA. Because the amendments for this type of equipment 
set out in ASHRAE Standard 90.1-2007 do not appear to have changed the 
efficiency level, DOE is leaving the existing Federal energy 
conservation standards in place for gas-fired commercial warm air 
furnaces; these standards specify a thermal efficiency of 80 percent 
using the definition of ``thermal efficiency'' established by DOE in 
the October 2004 final rule and presented in subpart D to 10 CFR part 
431. 73 FR 40770, 40776 (July 16, 2008). DOE is not conducting any 
further analysis on gas-fired commercial warm air furnaces.
2. Oil-Fired Commercial Warm Air Furnaces
    The Federal energy conservation standard for commercial oil-fired 
warm air furnaces corresponds to the efficiency level in ASHRAE 
Standard 90.1-1999, which specifies that for equipment with a capacity 
of 225,000 [British thermal units per hour] (Btu/h) or more, the 
thermal efficiency at the maximum rated capacity (rated maximum input) 
must be no less than 81 percent. 10 CFR 431.77(b). The Federal energy 
conservation standard for oil-fired commercial warm air furnaces 
applies to equipment manufactured on or after January 1, 1994. 10 CFR 
431.77.
    The efficiency level in ASHRAE Standard 90.1-2007 specifies a 
minimum thermal efficiency of 81 percent. ASHRAE did not change the 
efficiency levels for oil-fired commercial warm air furnaces, but 
ASHRAE added three design requirements. ASHRAE Standard 90.1-2007 now 
specifies that commercial, oil-fired, warm air furnaces must use an 
interrupted or intermittent ignition device, have jacket losses no 
greater than 0.75 percent of the input rating, and use a power vent or 
flue damper.
    DOE published a final rule in the Federal Register on March 7, 
2007, which states that the statutory trigger that requires DOE to 
adopt uniform national standards based on ASHRAE action is for ASHRAE 
to change a standard by increasing the energy efficiency of the 
equipment listed in EPCA section 342(a)(6)(A)(i) (42 U.S.C. 
6313(a)(6)(A)(i)). 72 FR 10038, 10042.
    In practice, 42 U.S.C. 6313 generally allows ASHRAE Standard 90.1 
to set energy efficiency levels for equipment as a model building code 
and directs DOE to use these efficiency levels as the basis for 
maintaining consistent, uniform national energy conservation standards 
for the same equipment, provided all other applicable statutory 
requirements are met. DOE stated in the July 2008 NODA that if ASHRAE 
has not changed an efficiency level for a class of equipment subject to 
42 U.S.C. 6313, DOE does not have authority to consider amending the 
uniform national standard at the time of publication of the amended 
ASHRAE Standard 90.1. 73 FR 40770, 40777 (July 16, 2008). DOE also 
pointed out that although ASHRAE added design requirements in ASHRAE 
Standard 90.1-2007, it did not change the efficiency levels for oil-
fired commercial warm air furnaces. Id. Therefore, DOE tentatively 
concluded that it does not have authority to amend the uniform national 
standard for this equipment. Id.
    In response to the preliminary review of oil-fired commercial warm 
air furnaces set forth in the July 2008 NODA, the Advocates Comment 
made the same assertion regarding the three design requirements added 
by ASHRAE as it did for gas-fired commercial warm air furnaces above. 
(The Advocates Comment, No. 4 at p. 7)
    DOE does not have any reason to treat oil-fired commercial warm air 
furnaces any differently than gas-fired commercial warm air furnaces. 
The language of EPCA authorizes DOE to establish a performance standard 
or a single design standard. As such, DOE is concluding a standard for 
oil-fired commercial warm air furnaces that establishes both a 
performance standard and a design requirement is beyond the scope of 
DOE's legal authority, as it did with gas-fired commercial warm air 
furnaces.
    Therefore, DOE has not changed its preliminary review set forth in 
the July 2008 NODA. Because the amendments for this equipment type set 
out in

[[Page 12010]]

ASHRAE Standard 90.1-2007 did not change the efficiency level for oil-
fired commercial warm air furnaces, DOE is leaving the existing Federal 
energy conservation standards in place for this equipment; these 
standards specify a thermal efficiency of 81 percent. Accordingly, DOE 
is not conducting any further analysis on oil-fired commercial warm air 
furnaces.

B. Commercial Package Air-Conditioning and Heating Equipment

    EPCA, as amended, defines ``commercial package air-conditioning and 
heating equipment'' as ``air-cooled, water-cooled, evaporatively 
cooled, or water source (not including ground water source) 
electrically operated, unitary central air conditioners and central 
air-conditioning heat pumps for commercial application.'' (42 U.S.C. 
6311(8)(A); 10 CFR 431.92) EPCA also defines ``small,'' ``large,'' and 
``very large commercial package air-conditioning and heating 
equipment'' based on the equipment's rated cooling capacity. (42 U.S.C. 
6311(8)(B)-(D); 10 CFR 431.92) Specifically, the term ``small 
commercial package air-conditioning and heating equipment'' means 
``commercial package air-conditioning and heating equipment that is 
rated below 135,000 Btu per hour (cooling capacity).'' (42 U.S.C. 
6311(8)(B); 10 CFR 431.92) The term ``large commercial package air-
conditioning and heating equipment'' means ``commercial package air-
conditioning and heating equipment that is rated: (i) At or above 
135,000 Btu per hour and (ii) below 240,000 Btu per hour (cooling 
capacity).'' (42 U.S.C. 6311(8)(C); 10 CFR 431.92) The term ``very 
large commercial package air-conditioning and heating equipment'' means 
``commercial package air-conditioning and heating equipment that is 
rated: (i) at or above 240,000 Btu per hour; and (ii) below 760,000 Btu 
per hour (cooling capacity).'' (42 U.S.C. 6311(8)(D); 10 CFR 431.92)
    The amendments in ASHRAE Standard 90.1-2007 include: (1) 
Identifying separate efficiency levels for three-phase through-the-wall 
air-cooled air conditioners and heat pumps and three-phase, small-duct, 
high-velocity air-cooled air conditioners and heat pumps; (2) adding 
equipment classes corresponding efficiency levels for commercial 
package air-cooled air conditioners with a cooling capacity at or above 
760,000 Btu/h and water-cooled and evaporatively-cooled commercial 
package air conditioners and heat pumps with a cooling capacity at or 
above 240,000 Btu/h; and (3) changing the efficiency levels for water-
cooled and evaporatively-cooled commercial package air conditioners and 
heat pumps with a cooling capacity at or above 135,000 Btu/h and less 
than 240,000 Btu/h, thereby triggering DOE to further review ASHRAE's 
changes as presented below.
1. Three-Phase Through-the-Wall Air-Cooled Air Conditioners and Heat 
Pumps
    ASHRAE Standard 90.1-2007 identifies efficiency levels for three-
phase through-the-wall air-cooled air conditioners and heat pumps, 
single-package and split systems, with a cooling capacity of no greater 
than 30,000 Btu/h. The efficiency levels specified by ASHRAE Standard 
90.1-2007 include a seasonal energy efficiency ratio of 12.0 for 
cooling mode and a heating seasonal performance factor of 7.4 for 
equipment manufactured on or after January 23, 2010.\7\ ASHRAE aligned 
these efficiency levels and its corresponding effective dates with the 
efficiency levels established in EPCA for single-phase residential 
versions of the same products.
---------------------------------------------------------------------------

    \7\ ASHRAE provides the same requirement for single-phase and 
three-phase through-the-wall air-cooled air conditioners and heat 
pumps used in covered commercial buildings, but points out that 
single-phase products are regulated as residential products under 10 
CFR 430.32(c)(2).
---------------------------------------------------------------------------

    Neither EPCA nor DOE has established a specific definition for 
commercial ``through-the-wall air-cooled air conditioners and heat 
pumps.'' Residential through-the-wall air-cooled air conditioners and 
heat pumps are consumer products covered as ``central air 
conditioners'' under EPCA, as amended, which are defined at 42 U.S.C. 
6291(21) and 10 CFR 430.2. Residential through-the-wall air-cooled air 
conditioners and heat pumps are by definition single-phase products 
(Id.), whereas the commercial through-the-wall air-cooled air 
conditioners and heat pumps mentioned in ASHRAE Standard 90.1-2007 are 
three-phase products. In DOE's regulations, a residential ``[t]hrough-
the-wall air conditioner and heat pump'' means ``a central air 
conditioner or heat pump that is designed to be installed totally or 
partially within a fixed-size opening in an exterior wall * * *'' 10 
CFR 430.2. Furthermore to be covered, this equipment (1) must be 
manufactured before January 23, 2010; (2) must not be weatherized; (3) 
must be clearly and permanently marked for installation only through an 
exterior wall; (4) have a rated cooling capacity no greater than 30,000 
Btu/h; (5) exchange all of its outdoor air across a single surface of 
the equipment cabinet; and (6) have a combined outdoor air exchange 
area of less than 800 square inches (split systems) or less than 1,210 
square inches (single packaged systems) as measured on the surface 
described in paragraph (5) of this definition. Id.
    In terms of equipment construction, commercial and residential 
through-the-wall air-cooled air conditioners and heat pumps use the 
same components in the same configurations to provide space cooling and 
heating. Commercial versions of through-the-wall air-cooled air 
conditioners and heat pumps are essentially the same as residential 
versions, except that they are powered using three-phase electric 
power.
    EPCA does not separate three-phase through-the-wall air-cooled air 
conditioners and heat pumps from other types of small commercial 
package air-conditioning and heating equipment in its definitions. 
Therefore, EPCA's definition of ``small commercial package air-
conditioning and heating equipment'' would include three-phase through-
the-wall air-cooled air conditioners and heat pumps. Although EPCA does 
not use the term ``three-phase through-the-wall air-cooled air 
conditioners and heat pumps,'' the three-phase versions of this 
equipment, regardless of cooling capacity, fall within the definition 
of ``small commercial package air-conditioning and heating equipment.'' 
(42 U.S.C. 6311(8)(A)-(B)) There is no language in EPCA to indicate 
that three-phase through-the-wall air-cooled air conditioners and heat 
pumps are a separate class of covered equipment.
    The Federal energy conservation standards for three-phase 
commercial package air conditioners and heat pumps less than 65,000 
Btu/h were established by EISA 2007 for such products manufactured on 
or after June 19, 2008. Specifically, section 314(b)(4)(C) of EISA 2007 
amended section 342(a)(7) of EPCA (42 U.S.C. 6313(a)(7)) by adding new 
provisions for three-phase commercial package air conditioners with a 
cooling capacity of less than 65,000 Btu/h. (42 U.S.C. 6313(a)(7)(D)) 
These provisions in EISA 2007 mandate SEERs for cooling mode and HSPFs 
for heating mode of air-cooled three-phase electric central air 
conditioners and central air-conditioning heat pumps with a cooling 
capacity of less than 65,000 Btu/h.\8\

[[Page 12011]]

Three-phase through-the-wall air-cooled air conditioners and heat pumps 
are a smaller subset of three-phase commercial package air conditioners 
with a cooling capacity of less than 65,000 Btu/h, and were not 
explicitly excluded from the standards in section 314(b)(4)(C) of EISA 
2007. DOE noted in the July 2008 NODA that since EISA 2007 set these 
standards, DOE must follow them, and they are more stringent than the 
levels contained in ASHRAE Standard 90.1-2007 for three-phase through-
the-wall air-cooled air conditioners and heat pumps. 73 FR 40770, 40778 
(July 16, 2008). Accordingly, DOE affirmed that the EISA 2007 
efficiency levels for small commercial package air-conditioning and 
heating equipment less than 65,000 Btu/h, as set forth at 42 U.S.C. 
6313(a)(7)(D), apply to three-phase through-the-wall air-cooled air 
conditioners and heat pumps with a cooling capacity no greater than 
30,000 Btu/h. Id.
---------------------------------------------------------------------------

    \8\ Section 314(b)(4)(C) of EISA 2007 specifies for ``equipment 
manufactured on or after the later of January 1, 2008, or the date 
that is 180 days after the date of enactment of the Energy 
Independence and Security Act of 2007--
    (i) the minimum seasonal energy efficiency ratio of air-cooled 
3-phase electric central air conditioners and central air-
conditioning heat pumps less than 65,000 Btu per hour (cooling 
capacity), split systems, shall be 13.0;
    (ii) the minimum seasonal energy efficiency ratio of air-cooled 
3-phase electric central air conditioners and central air-
conditioning heat pumps less than 65,000 Btu per hour (cooling 
capacity), single package, shall be 13.0;
    (iii) the minimum heating seasonal performance factor of air-
cooled 3-phase electric central air-conditioning heat pumps less 
than 65,000 Btu per hour (cooling capacity), split systems, shall be 
7.7; and
    (iv) the minimum heating seasonal performance factor of air-
cooled 3-phase electric central air-conditioning heat pumps less 
than 65,000 Btu per hour (cooling capacity), single package, shall 
be 7.7.'' (42 U.S.C. 6313(a)(7)(D)).
---------------------------------------------------------------------------

    In response to the preliminary conclusions set forth in the July 
2008 NODA, AHRI stated that the minimum energy efficiency standards for 
small commercial package air conditioning and heating equipment less 
than 65,000 Btu/h specified in ASHRAE Standard 90.1-2007 were initially 
amended by addendum f to ASHRAE/IES 90.1-2004 in 2005, well before 
Congress enacted EISA 2007. (AHRI, No. 3 at pp. 1-2) AHRI further 
commented ``[t]he intent behind addendum f was to harmonize the minimum 
energy efficiency standards, product classes and effective dates for 
the three-phase products covered by ASHRAE Standard 90.1 with the 
respective efficiency standards, product classes and effective dates 
established under EPCA for single-phase residential products.'' Id. 
AHRI further noted that it believes the intent of Congress was very 
clear in EISA 2007 (i.e., to harmonize the standard for three-phase 
commercial products with cooling capacities less than 65,000 Btu/h with 
that of the single-phase residential products of the same capacity). 
Further, AHRI commented that Congress never intended to require a 
minimum 13 SEER/7.7 HSPF standards for three-phase, through-the-wall, 
air-cooled air conditioners and heat pumps; DOE itself found it 
impossible to meet that efficiency level during the last rulemaking on 
central air conditioners and heat pumps. (AHRI, No. 3 at pp. 1-2)
    AHRI also stated its belief that DOE has the authority to establish 
a separate product class for three-phase, through-the-wall, air-cooled 
air conditioners and heat pumps. (AHRI, No. 2 at p. 2) AHRI pointed out 
that prior to the last rulemaking on residential central air 
conditioners (i.e., single-phase, air-cooled air conditioners and heat 
pumps), EPCA did not specifically address through-the-wall products. 
AHRI asserted it was DOE that established the product class when it 
determined that through-the-wall products had unique space-constraint 
challenges that warranted a lower minimum efficiency standard than 
conventional systems. (AHRI, No. 3 at p. 2) AHRI commented that DOE can 
and should do the same for commercial three-phase versions of these 
products. AHRI also stated that DOE can adopt the proposed ASHRAE 90.1-
2007 efficiency levels for three-phase through-the-wall air-cooled air 
conditioners and heat pumps because the efficiency levels were 
developed and justified by DOE through a lengthy rulemaking process 
(i.e., the 2001 rulemaking on central air conditioners and heat pumps 
\9\). Lastly, AHRI pointed out that due to space-constraint issues, 
three-phase through-the-wall air-cooled air conditioners and heat pumps 
cannot meet the 13 SEER/7.7 standard established by EISA 2007. AHRI 
stated that manufacturers of three-phase commercial through-the-wall 
products would have no choice but to file for a waiver if the ASHRAE 
Standard 90.1-2007 efficiency levels were not adopted by DOE for this 
equipment class. (AHRI, No. 3 at p. 2)
---------------------------------------------------------------------------

    \9\ DOE published a final rule amending the energy conservation 
standards for residential central air conditioners and heat pumps on 
January 22, 2001. 66 FR 7170 (Jan. 22, 2001).
---------------------------------------------------------------------------

    DOE does not agree with AHRI's assertions regarding three-phase 
through-the-wall air-cooled air conditioners and heat pumps. 
Specifically, while ASHRAE may have been trying to harmonize the 
definitions, equipment classes, and energy conservation standards for 
equipment classes of similar types with their residential counterparts, 
the energy conservation standards specified by EISA 2007 supersede the 
efficiency levels in ASHRAE Standard 90.1-2007. EISA 2007 did not 
explicitly exclude three-phase through-the-wall air-cooled air 
conditioners and heat pumps from its regulations for the larger class 
of small commercial package air conditioning and heating equipment.
    As to AHRI's assertion regarding establishing a separate equipment 
class for these subsets of equipment, DOE agrees with AHRI that DOE has 
the authority to adopt a separate equipment class for this equipment 
when initially established by ASHRAE Standard 90.1-2007. However, DOE 
does not have the authority to adopt a less stringent efficiency level 
for a separate equipment class, including three-phase through-the-wall 
air-cooled air conditioners and heat pumps in contravention of the 
prescriptive standard levels set by EISA 2007. Effectively, the 
efficiency levels in ASHRAE Standard 90.1-2007 are less stringent than 
the energy conservation standards specified by EISA 2007 for three-
phase, through-the-wall, air-cooled air conditioners and heat pumps. As 
DOE stated in the July 2008 NODA, DOE is affirming in today's notice 
that the EISA 2007 efficiency levels set forth in 42 U.S.C. 
6313(a)(7)(D) for small commercial package air-conditioning and heating 
equipment less than 65,000 Btu/h apply to three-phase through-the-wall 
air-cooled air conditioners and heat pumps with a cooling capacity no 
greater than 30,000 Btu/h. 73 FR 40770, 40778 (July 16, 2008). DOE does 
not have authority to grant exception relief from the prescriptive 
standard levels set by EISA 2007 for three-phase commercial through-
the-wall air conditioners and heat pumps, nor can it provide a waiver 
from the test procedure as a means of avoiding this statutory 
requirement.
2. Three-Phase, Small-Duct, High-Velocity Air-Cooled Air Conditioners 
and Heat Pumps
    ASHRAE Standard 90.1-2007 identifies efficiency levels for three-
phase small-duct, high-velocity (SDHV) air-cooled air conditioners and 
heat pumps, both single-package and split systems, with a cooling 
capacity less than 65,000 Btu/h.\10\ The efficiency levels specified by 
ASHRAE Standard 90.1-2007 include a SEER of 10.0 for cooling mode and a 
HSPF of 6.8 for

[[Page 12012]]

equipment. ASHRAE aligned these efficiency levels and the corresponding 
effective dates with the efficiency levels established in EPCA for 
single-phase residential versions of the same products.\11\
---------------------------------------------------------------------------

    \10\ ASHRAE Standard 90.1-2007 includes efficiency levels for 
three-phase and single-phase SDHV air-cooled air conditioners and 
heat pumps used in commercial buildings. ASHRAE Standard 90.1-2007 
also includes a footnote to these provisions, which indicates that 
the single-phase versions of this equipment are regulated as 
residential products under 10 CFR 430.32(c)(2).
    \11\ DOE notes that the residential versions of SDHV are subject 
to an exception issued by DOE's Office of Hearing and Appeals (OHA). 
On October 14, 2004, OHA granted an exception to SpacePak and Unico, 
Inc., authorizing them to manufacture SDHV systems (as defined in 10 
CFR 430.2) with a SEER of no less than 11.0 and a heating seasonal 
performance factor (HSPF) of 6.8. The exception relief will remain 
in effect until DOE modifies the general energy efficiency standard 
for central air conditioners and establishes a different standard 
for SDHV systems that complies with EPCA. However, this exception 
only applies to the residential single-phase SDHV systems and would, 
therefore, exclude three-phase SDHV equipment. (DOE's Office of 
Hearing and Appeals, Decision and Order: Applications for Exception 
(Oct. 14, 2004) (Available at: http://www.oha.doe.gov/cases/ee/tee0010.pdf.))
---------------------------------------------------------------------------

    Just as with three-phase through-the-wall air-cooled air 
conditioners and heat pumps, neither EPCA nor DOE has established a 
specific definition for commercial ``three-phase SDHV air conditioners 
and heat pumps.'' In its regulations, DOE defines a residential ``SDHV 
air-cooled air conditioner or heat pump'' as ``a heating and cooling 
product that contains a blower and indoor coil combination that: (1) Is 
designed for and produces at least 1.2 inches of external static 
pressure when operated at the certified air volume rate of 220-350 CFM 
[cubic feet per minute] per rated ton of cooling; and (2) When applied 
in the field, uses high-velocity room outlets generally greater than 
1,000 fpm [feet per minute] which have less than 6.0 square inches of 
free area.'' 10 CFR 430.2.
    In terms of equipment construction, commercial and residential SDHV 
air conditioners and heat pumps utilize the same components in the same 
configurations to provide space cooling and heating. Commercial 
versions of SDHV systems are essentially the same as residential 
versions powered with single-phase electric power, except that they are 
powered using three-phase electric power.
    EPCA does not separate three-phase SDHV air conditioners and heat 
pumps from other types of small commercial package air-conditioning and 
heating equipment in its definitions. Therefore, EPCA's definition of 
``small commercial package air-conditioning and heating equipment'' 
would include three-phase SDHV air conditioners and heat pumps. 
Although EPCA does not use the term ``three-phase SDHV air conditioners 
and heat pumps,'' the three-phase versions of this equipment, 
regardless of cooling capacity, fall within the definition of ``small 
commercial package air-conditioning and heating equipment.'' (42 U.S.C. 
6311(8)(A)-(B)) There is no language in EPCA to indicate that three-
phase SDHV air conditioners and heat pumps are a separate type of 
covered equipment.
    The Federal energy conservation standards for three-phase, 
commercial package air conditioners and heat pumps less than 65,000 
Btu/h were established by EISA 2007 for products manufactured on or 
after June 19, 2008. Specifically, section 314(b)(4)(C) of EISA 2007 
amended section 342(a) of EPCA (42 U.S.C. 6313(a)) by adding new 
provisions for three-phase commercial package air conditioners with a 
cooling capacity of less than 65,000 Btu/h. (42 U.S.C. 6313(a)(7)(D)) 
As mentioned previously, this provision in EISA 2007 mandates seasonal 
energy efficiency ratios for cooling mode and heating seasonal 
performance factors for heating mode of air-cooled three-phase electric 
central air conditioners and central air-conditioning heat pumps with a 
cooling capacity of less than 65,000 Btu/h. (42 U.S.C. 6313(a)(7)(D)) 
Three-phase SDHV air conditioners and heat pumps are a smaller subset 
of three-phase commercial package air conditioners with a cooling 
capacity of less than 65,000 Btu/h and were not explicitly excluded 
from the standards in section 314(b)(4)(C) of EISA 2007. Because EISA 
2007 set such standards, and because they are more stringent than the 
levels contained in ASHRAE Standard 90.1-2007 for those products, DOE 
must continue to implement the EISA 2007 standards and will not 
consider amended standard levels based on ASHRAE's action.
    Thus, manufacturers of three-phase SDHV equipment must follow the 
energy conservation standards in EISA 2007. DOE affirms that the EISA 
2007 efficiency levels for three-phase small commercial package air-
conditioning and heating equipment less than 65,000 Btu/h apply to 
three-phase SDHV air-cooled air conditioners and heat pumps with a 
cooling capacity less than 65,000 Btu/h. Accordingly, DOE is not 
conducting any further analysis on three-phase SDHV equipment. DOE 
notes that it does not have authority to grant exception relief from 
the prescriptive standard levels set by EISA 2007 for three-phase SDHV 
air-cooled air conditioners and heat pumps, nor can it provide a waiver 
from the test procedure as a means of avoiding this statutory 
requirement.
3. Commercial Package Air-Cooled Air Conditioners With a Cooling 
Capacity at or Above 760,000 Btu per Hour
    EPCA specifies energy conservation standards for small (cooling 
capacities at or above 65,000 and less than 135,000 Btu/h), large 
(cooling capacities at or above 135,000 and less than 240,000 Btu/h), 
and very large (cooling capacities at or above 240,000 and less than 
760,000 Btu/h) commercial package air-cooled air conditioners. (42 
U.S.C. 6313(a)(1)-(2), (7)-(9); 10 CFR 431.97) However, there are no 
Federal energy conservation standards for commercial package air-cooled 
air conditioners with a cooling capacity at or above 760,000 Btu/h. In 
contrast, ASHRAE Standard 90.1-2007 sets the energy efficiency levels 
for commercial package air-cooled air conditioners with a cooling 
capacity at or above 760,000 Btu/h at 9.7 EER for equipment with 
electric resistance heating, and 9.5 EER for equipment with any other 
type of heating or without heating. The efficiency level in ASHRAE 
Standard 90.1-2007 applies to equipment manufactured on or after 
January 1, 2010.
    Units with capacities at or above 760,000 Btu/h fall outside the 
definitions of the small, large, and very large commercial package air-
cooled air conditioner equipment classes established in EPCA. (42 
U.S.C. 6311(8)(A)-(D); 10 CFR 431.92) Therefore, DOE has concluded that 
it does not have the authority to review the efficiency level for that 
equipment. Accordingly, DOE is not conducting any further analysis on 
commercial package air-cooled air conditioners with a cooling capacity 
at or above 760,000 Btu/h.
4. Water-Cooled and Evaporatively-Cooled Commercial Package Air 
Conditioners and Heat Pumps With a Cooling Capacity at or Above 135,000 
Btu/h and Less Than 240,000 Btu/h
    The Federal energy conservation standard for water-cooled and 
evaporatively-cooled commercial package air conditioners and heat pumps 
with a cooling capacity at or above 135,000 Btu/h and less than 240,000 
Btu/h requires an EER no less than 11.0 for equipment manufactured on 
or after October 29, 2004. 10 CFR 431.97, Table 1.
    ASHRAE Standard 90.1-2007 includes the same efficiency level for 
water-cooled and evaporatively-cooled commercial package air 
conditioners and heat pumps with a cooling capacity at or above 135,000 
Btu/h and less than 240,000 Btu/h that use electric

[[Page 12013]]

resistance heating (i.e., an EER no less than 11.0). However, ASHRAE 
Standard 90.1-2007 specifies a different efficiency level for water-
cooled and evaporatively-cooled commercial package air conditioners and 
heat pumps with a cooling capacity at or above 135,000 Btu/h and less 
than 240,000 Btu/h that use any type of heating other than electric 
resistance (i.e., an EER no less than 10.8).
    DOE reviewed a final rule published on January 12, 2001 (hereafter 
referred to as the January 2001 final rule) which considered ASHRAE 
Standard 90.1-1999 to determine the efficiency levels applicable to 
water-cooled and evaporatively-cooled commercial package air 
conditioners and heat pumps with a cooling capacity at or above 135,000 
Btu/h and less than 240,000 Btu/h. 66 FR 3336, 3340 (Jan. 12, 2001). 
DOE adopted the efficiency levels specified by ASHRAE Standard 90.1-
1999 for water-cooled and evaporatively-cooled commercial package air 
conditioners and heat pumps with a cooling capacity at or above 135,000 
Btu/h and less than 240,000 Btu/h in the January 2001 final rule. Id. 
at 33340. The January 2001 final rule did not establish different 
efficiency levels for different types of supplemental heating systems 
associated with this equipment. Id. All large water-cooled and 
evaporatively-cooled commercial package air conditioners and heat pumps 
were subject to the same efficiency level of 11.0 EER regardless of 
heating type. ASHRAE Standard 90.1-1999 did establish different 
efficiency levels applicable to water-cooled and evaporatively-cooled 
commercial package air conditioners and heat pumps with a cooling 
capacity at or above 135,000 Btu/h and less than 240,000 Btu/h for 
different types of supplemental heating systems.
    DOE has concluded that the ASHRAE Standard 90.1-2007 efficiency 
levels for water-cooled and evaporatively-cooled commercial package air 
conditioners and heat pumps with a cooling capacity at or above 135,000 
Btu/h and less than 240,000 Btu/h that utilize electric resistance 
heating or no heating would maintain the efficiency level in the 
current Federal energy conservation standard. ASHRAE Standard 90.1-2007 
would effectively lower the efficiency levels (i.e., EER) required by 
EPCA and allow increased energy consumption for equipment that utilize 
any type of heating other than electric resistance. Not only has ASHRAE 
Standard 90.1-2007 not increased the efficiency levels for water-cooled 
and evaporatively-cooled commercial package air conditioners and heat 
pumps with a cooling capacity at or above 135,000 Btu/h and less than 
240,000 Btu/h, but it could result in backsliding for those products 
that utilize any type of heating other than electric resistance. 
Accordingly, DOE is not conducting any further analysis on water-cooled 
and evaporatively-cooled commercial package air conditioners and heat 
pumps with a capacity at or above 135,000 Btu/h and less than 240,000 
Btu/h.
5. Water-Cooled and Evaporatively-Cooled Commercial Package Air 
Conditioners and Heat Pumps With a Cooling Capacity at or Above 240,000 
Btu/h and Below 760,000 Btu/h
    Under EPCA, ``commercial package air-conditioning and heating 
equipment'' means ``air-cooled, water-cooled, evaporatively cooled, or 
water source (not including ground water source) electrically operated, 
unitary central air conditioners and central air-conditioning heat 
pumps for commercial application.'' (42 U.S.C. 6311(8)(A); 10 CFR 
431.92) EPCA goes on to define ``very large commercial package air-
conditioning and heating equipment'' as commercial package air-
conditioning and heating equipment that is rated at or above 240,000 
Btu per hour and below 760,000 Btu per hour (cooling capacity). (42 
U.S.C. 6311(8)(D); 10 CFR 431.92) Although water-cooled and 
evaporatively-cooled commercial package air conditioners and heat pumps 
with a cooling capacity at or above 240,000 Btu/h and less than 760,000 
Btu/h fall within the definition of very large commercial package air-
conditioning and heating equipment, EPCA does not specify Federal 
energy conservation standards for this equipment class. (EPCA set 
standards for air-cooled systems only, under 42 U.S.C. 6313(a)(7)-(9).) 
ASHRAE added this new equipment class to ASHRAE Standard 90.1-2007, 
setting efficiency levels at 11.0 EER for equipment with electric 
resistance heating or without heating, and at 10.8 EER for equipment 
with all other types of heating. Under EPCA, DOE must either adopt the 
efficiency level specified in ASHRAE Standard 90.1-2007 for this new 
class of equipment, or consider a more stringent level that would 
result in significant additional energy savings and is technologically 
feasible and economically justified. (42 U.S.C. 6313(a)(6))
    For the July 2008 NODA, DOE reviewed the market for water-cooled 
and evaporatively-cooled commercial package air conditioners and heat 
pumps and found that manufacturers offer few models. 73 FR 40770, 
40779-80 (July 16, 2008). For this study, DOE surveyed the AHRI 
Directory of Certified Product Performance, but did not identify any 
equipment on the market with a cooling capacity at or above 240,000 
Btu/h. Id. DOE stated in the July 2008 NODA that there are no energy 
savings associated with this class because there is no equipment being 
manufactured in this class, and therefore, it is not possible to assess 
the potential for additional energy savings beyond the levels 
anticipated in ASHRAE Standard 90.1-2007. Id. Thus, DOE did not perform 
a potential energy-savings analysis on this equipment type. DOE 
specifically sought comment from interested parties on the market and 
energy savings potential for this equipment type in the July 2008 NODA. 
73 FR 40770, 40780 and 40791 (July 16, 2008).
    In response to the March 2008 NODA, DOE did not receive any 
comments on the market for water-cooled and evaporatively-cooled 
commercial package air conditioners and heat pumps with a cooling 
capacity at or above 240,000 Btu/h. In absence of a market for water-
cooled and evaporatively-cooled equipment in the given capacity range, 
DOE cannot perform an economic and energy savings analysis.
    However, DOE is proposing to adopt the ASHRAE Standard 90.1-2007 
efficiency levels for water-cooled and evaporatively-cooled commercial 
package air conditioners and heat pumps with a cooling capacity at or 
above 240,000 Btu/h and less than 760,000 Btu/h as required by EPCA. 
(42 U.S.C. 6313(a)(6)(A)(ii)) Even though ASHRAE specified efficiency 
levels for water-cooled and evaporatively-cooled commercial package air 
conditioners and heat pumps with a cooling capacity at or above 240,000 
Btu/h, DOE is specifying an upper bound to the cooling capacity since 
DOE's authority under the very large commercial package air-
conditioning and heating equipment definition only covers equipment 
with cooling capacities less than 760,000 Btu/h. (42 U.S.C. 
6311(8)(D)(ii)) DOE is proposing to add subsection (d) to 10 CFR Part 
431.97, which will specify the proposed standards and effective dates 
for this equipment. These standards would be applicable to any water-
cooled and evaporatively-cooled commercial package air conditioner or 
heat pump with a cooling capacity at or above 240,000 Btu/h and less 
than 760,000 Btu/h manufactured on or after the effective date, which 
is three years after the effective date specified in ASHRAE

[[Page 12014]]

Standard 90.1-2007. (42 U.S.C. 6313(a)(6)(D)(ii)) Since ASHRAE Standard 
90.1-2007 does not explicitly set an effective date for this equipment, 
DOE is interpreting the effective date of amended standards to be three 
years from the publication of ASHRAE Standard 90.1-2007 (i.e., January 
10, 2011).

C. Commercial Packaged Boilers

    EPCA defines a ``packaged boiler'' as ``a boiler that is shipped 
complete with heating equipment, mechanical draft equipment, and 
automatic controls; usually shipped in one or more sections.'' (42 
U.S.C. 6311(11)(B)) In its regulations, DOE further refined the 
``packaged boiler'' definition to exclude a boiler that is custom 
designed and field constructed. 10 CFR 431.102. Additionally, if the 
boiler is shipped in more than one section, the sections may be 
produced by more than one manufacturer, and may be originated or 
shipped at different times and from more than one location. Id. In the 
marketplace, there are various different types of commercial packaged 
boilers, which can be distinguished based on the input capacity size 
(i.e., small or large), fuel type (i.e., oil or gas), output (i.e., hot 
water or steam), and draft type (i.e., natural draft or other).
    However, the current Federal energy conservation standards separate 
commercial packaged boilers only by the type of fuel used by the 
boiler, creating two equipment classes: (1) Gas-fired, and (2) oil-
fired. (42 U.S.C. 6313(a)(4)(C)-(D); 10 CFR 431.87) As set forth below, 
EPCA specified minimum Federal standards for commercial packaged 
boilers manufactured on or after January 1, 1994. Id. The minimum 
combustion efficiency at the maximum rated capacity of a gas-fired 
packaged boiler with capacity of 300,000 Btu/h (300 kBtu/h) or more 
must be 80 percent. (42 U.S.C. 6313(a)(4)(C); 10 CFR 431.87(a)) The 
minimum combustion efficiency at the maximum rated capacity of an oil-
fired packaged boiler with capacity of 300,000 Btu/h or more must be 83 
percent. (42 U.S.C. 6313 (a)(4)(D); 10 CFR 431.87(b))
    In contrast, ASHRAE has adopted a different approach when 
considering commercial packaged boilers, as described below. ASHRAE 
Standard 90.1-2007 further divided these two equipment classes into the 
following ten classes:
    <bullet> Small gas-fired hot water boilers;
    <bullet> Small gas-fired steam, all except natural draft boilers;
    <bullet> Small gas-fired steam, natural draft boilers;
    <bullet> Small oil-fired hot water boilers;
    <bullet> Small oil-fired steam boilers;
    <bullet> Large gas-fired hot water boilers;
    <bullet> Large gas-fired steam, all except natural draft boilers;
    <bullet> Large gas-fired steam, natural draft boilers;
    <bullet> Large oil-fired hot water boilers; and
    <bullet> Large oil-fired steam boilers.
    Table IV.1 shows the ten equipment classes and efficiency levels 
established by ASHRAE.

         Table IV.1--ASHRAE Standard 90.1-2007 Energy Efficiency Levels for Commercial Packaged Boilers
----------------------------------------------------------------------------------------------------------------
                                                                             ASHRAE standard    ASHRAE standard
                                                           Size category        90.1-2007          90.1-2007
                     Equipment type                        (Input kBtu/h)    (effective 3/2/    (effective 3/2/
                                                                                  2010)*             2020)*
----------------------------------------------------------------------------------------------------------------
Small Gas-fired Hot Water..............................          300-2,500           ET = 80%           ET = 80%
Small Gas-fired Steam All Except Natural Draft.........          300-2,500           ET = 79%           ET = 79%
Small Gas-fired Steam Natural Draft....................          300-2,500           ET = 77%           ET = 79%
Small Oil-fired Hot Water..............................          300-2,500           ET = 82%           ET = 82%
Small Oil-fired Steam..................................          300-2,500           ET = 81%           ET = 81%
Large Gas-fired Hot Water..............................             >2,500           EC = 82%           EC = 82%
Large Gas-fired Steam All Except Natural Draft.........             >2,500           ET = 79%           ET = 79%
Large Gas-fired Steam Natural Draft....................             >2,500           ET = 77%           ET = 79%
Large Oil-fired Hot Water..............................             >2,500           EC = 84%           EC = 84%
Large Oil-fired Steam..................................             >2,500           ET = 81%          ET = 81%
----------------------------------------------------------------------------------------------------------------
*EC = combustion efficiency; ET = thermal efficiency.

    Of particular relevance here, ASHRAE changed the metric for 
determining energy efficiency for five equipment classes of small 
commercial packaged boilers and three equipment classes of large 
commercial packaged boilers in ASHRAE Standard 90.1-2007. Whereas the 
Federal energy conservation standards for these eight equipment classes 
are expressed in terms of combustion efficiency (42 U.S.C. 6313(a)(4)), 
the efficiency levels in ASHRAE Standard 90.1-2007 are expressed in 
terms of thermal efficiency. ASHRAE initially attempted to transition 
small commercial boilers from an energy conservation standard using the 
combustion efficiency metric to a standard using the thermal efficiency 
metric the last time the efficiency levels for commercial packaged 
boilers in ASHRAE Standard 90.1 were revised, in 1999 (i.e., ASHRAE 
Standard 90.1-1999). However, DOE was unable to accept those efficiency 
levels due to EPCA's anti-backsliding clause, which resulted in DOE 
leaving the existing standard levels in place in terms of combustion 
efficiency, as explained below. 72 FR 10038, 10043 (March 7, 2007). The 
sections below detail the following: (1) The differences between the 
thermal and combustion efficiency metrics; (2) the analysis done for 
DOE's review of small commercial packaged boiler efficiency levels in 
ASHRAE Standard 90.1-1999; (3) the market analysis developed for DOE's 
current review of the efficiency levels in ASHRAE Standard 90.1-2007; 
(4) the preliminary conclusions regarding the market analysis; and (5) 
DOE's conclusions regarding the efficiency levels contained in ASHRAE 
Standard 90.1-2007 for commercial packaged boilers.
1. Efficiency Metric Description (Combustion Efficiency and Thermal 
Efficiency)
    In general, the energy efficiency of a product is a function of the 
relationship between the product's output of services and its energy 
input. A boiler's output of services is measured largely by the energy 
content of its output (steam or hot water). Consequently, its 
efficiency is understood to be the ratio between its energy output and 
its energy input, with the energy output being calculated as the energy 
input minus the energy lost in producing the output. A boiler's energy 
losses consist of energy that escapes through its flue (commonly 
referred to as ``flue losses''), and of energy that escapes into the 
area

[[Page 12015]]

surrounding the boiler (commonly referred to as jacket losses). 
However, the combustion efficiency descriptor used for commercial 
packaged boilers in EPCA only accounts for flue losses, and is defined 
as ``100 percent minus percent flue loss.'' (42 U.S.C. 6313(a)(4)(C)-
(D); 10 CFR 431.82) The thermal efficiency descriptor used in ASHRAE 
Standard 90.1-2007 accounts for jacket losses as well as flue losses, 
and can be considered combustion efficiency minus jacket loss. Because 
all boilers will have at least some jacket losses (even if small) and 
because thermal efficiency takes these losses into account, the thermal 
efficiency for a particular boiler, as measured under the same set of 
conditions, must necessarily be lower than its combustion efficiency.
    While the above-described relationship exists between combustion 
and thermal efficiencies, there is no direct mathematical correlation 
between these two measures of efficiency. The factors that contribute 
to jacket loss (e.g., the boiler's design and materials) have little or 
no direct bearing on combustion efficiency. The lack of correlation 
between combustion efficiency and thermal efficiency causes 
difficulties in comparing an energy conservation standard that is based 
on thermal efficiency to an energy conservation standard based on 
combustion efficiency. However, when DOE last evaluated the change in 
efficiency metric for commercial packaged boilers in response to ASHRAE 
Standard 90.1-1999, it developed a methodology to determine 
quantitatively whether backsliding could occur, as explained in section 
IV.C.2 below. DOE uses the methodology developed for determining 
backsliding in DOE's review of ASHRAE Standard 90.1-1999, along with 
the consideration of several other factors (described in detail in the 
sections below) to evaluate the appropriateness of the efficiency 
levels for commercial packaged boilers specified by ASHRAE Standard 
90.1-2007.
2. Analysis of Energy Efficiency Levels in ASHRAE Standard 90.1-1999
    Prior to publishing ASHRAE Standard 90.1-2007, the last time ASHRAE 
revised the efficiency levels for commercial packaged boilers in ASHRAE 
Standard 90.1 occurred in 1999 (ASHRAE Standard 90.1-1999). DOE 
reviewed the efficiency levels in ASHRAE Standard 90.1-1999 for small 
commercial packaged boilers and issued a Notice of Data Availability 
(NODA) in March 2006 (here after referred to the March 2006 NODA) to 
present its findings. 71 FR 12634 (March 13, 2006). In the March 2006 
NODA, DOE examined whether the thermal efficiencies for small gas-fired 
and small oil-fired commercial packaged boilers specified in ASHRAE 
Standard 90.1-1999 would result in a decrease in the required 
efficiency for particular piece of equipment compared to the Federal 
energy conservation standard established by EPCA. Id.
    For the 2006 analysis, DOE examined the average thermal efficiency 
of small commercial packaged boiler models that were minimally 
compliant with the Federal standard. Id. DOE defined ``minimally 
compliant'' as being within one percent of the minimum combustion 
efficiency set by EPCA. 71 FR 12634, 12684 (March 13, 2006). DOE 
specifically examined the minimally complying boilers because the anti-
backsliding clause in EPCA mandates that DOE not prescribe a standard 
that ``decreases the minimum required energy efficiency.'' (42 U.S.C. 
6316(a); 42 U.S.C. 6295(o)(1)) \12\ DOE determined that it would be 
appropriate to examine the boilers currently at the minimum required 
combustion efficiency established in EPCA to determine whether the 
potential adoption of the thermal efficiency levels in ASHRAE Standard 
90.1, as Federal minimums, would allow for a decrease in the efficiency 
of those models.
---------------------------------------------------------------------------

    \12\ At the time, a different anti-backsliding clause was in 
effect for commercial boilers, although it contained language 
identical to that quoted here in the text (previously, 42 U.S.C. 
6313(a)(6)(B)(ii) prior to the enactment of EISA 2007).
---------------------------------------------------------------------------

    DOE calculated the average thermal efficiency of the boilers 
classified as minimally compliant and compared it to the thermal 
efficiency specified in ASHRAE Standard 90.1-1999. DOE found that the 
thermal efficiency levels for small commercial packaged boilers 
specified in ASHRAE Standard 90.1-1999 were significantly lower (i.e., 
1.8 percent lower for small gas-fired boilers and 3.1 percent lower for 
small oil-fired boilers) than the average thermal efficiency of the 
minimally complying models on the market. 71 FR 12634, 12640 (March 13, 
2006). DOE stated in the March 2006 NODA that this analysis did not 
establish directly that the small boiler efficiency levels in Standard 
90.1-1999 were lower than those in EPCA because EPCA's combustion 
efficiency standards for this equipment set maximum amounts of flue 
losses, but do not regulate jacket losses. Id. Thermal efficiency is a 
function of both flue losses (i.e., combustion efficiency) and jacket 
losses. 71 FR 12634, 12640 (March 13, 2006). Since these two losses can 
be independent of one another, in theory, a small boiler could meet or 
exceed EPCA's applicable combustion efficiency standard, but have 
sufficiently large jacket losses that cause it to have a thermal 
efficiency lower than the efficiency levels specified in ASHRAE 
Standard 90.1-1999. Id. Thus, DOE stated that adoption of ASHRAE 
Standard 90.1-1999 thermal efficiency levels would not have directly 
decreased the minimum combustion efficiencies required in EPCA for 
small boilers. Id. However, the adoption of the ASHRAE Standard 90.1-
1999 thermal efficiency levels for small boilers would have had the 
effect of lowering minimum combustion efficiency levels required by 
EPCA. Id.
    DOE outlined its basis for rejecting the efficiency levels for 
small commercial boilers specified by ASHRAE Standard 90.1-1999 in the 
March 2006 NODA. The basis for DOE's decision was as follows:

    The thermal efficiency of a small commercial boiler is a 
function of (1) the manufacturer's compliance with the applicable 
EPCA combustion efficiency standard and (2) decisions it makes 
independent of EPCA concerning the boiler's design, materials, and 
other features that affect jacket losses. Although EPCA does not 
regulate jacket losses, for both small gas-fired and oil-fired 
commercial packaged boilers with relatively low combustion 
efficiencies, manufacturers restricted jacket losses to levels that 
kept thermal efficiencies, within an average of 2.6 percentage 
points below their combustion efficiencies. [DOE] does not believe 
its adoption of Standard 90.1-1999's thermal efficiency levels for 
small commercial boilers would result in manufacturers' increasing 
the amount of jacket losses for this equipment. No reason is readily 
apparent as to why manufacturers would alter their current practices 
to make equipment that has greater jacket losses, even if mandatory 
thermal efficiency levels were set below the levels that equipment 
was currently achieving. However, setting thermal efficiency 
standards at levels lower than the thermal efficiencies of existing 
equipment could potentially result in equipment with lower 
combustion efficiencies. This allows for the possibility of 
equipment having lower efficiencies than permitted by EPCA, meaning 
that the current Federal minimum (required) efficiency would be 
decreased.
    For these reasons, it appears to [DOE] that EPCA precludes it 
from prescribing as amended Federal energy conservation standards 
the ASHRAE Standard 90.1-1999 thermal efficiency levels (one for 
gas-fired and the other for oil-fired equipment) for small 
commercial packaged boilers because each would decrease the minimum 
required efficiency of the equipment. (42 U.S.C. 6313(a)(6)(B)(ii))

71 FR 12634; 12641 (March 13, 2006).

[[Page 12016]]

3. Analysis of Energy Efficiency Levels in ASHRAE Standard 90.1-2007
    For its current analysis of the efficiency levels for commercial 
packaged boilers in ASHRAE Standard 90.1-2007, DOE based the 
preliminary market assessment and potential energy savings analysis 
performed for the July 2008 NODA solely on the information provided by 
the January 2008 edition of the I=B=R Ratings for Boilers, Baseboard 
Radiation, Finned Tube (Commercial) Radiation and Indirect-Fired Water 
Heaters\13\ (referred to hereafter as the January 2008 I=B=R 
Directory).
---------------------------------------------------------------------------

    \13\ The Hydronics Institute division of the Air Conditioning, 
Heating, and Refrigerating Institute, I=B=R Ratings for Boilers, 
Baseboard Radiation, Finned Tube (Commercial) Radiation, and 
Indirect-Fired Water Heaters (Jan. 2008). Available at: http://
www.gamanet.org/gama/inforesources.nsf/vAttachmentLaunch/
E9E5FC7199EBB1BE85256FA100838435/$FILE/01-08_CBR.pdf.
---------------------------------------------------------------------------

    Regarding the preliminary analysis performed in the July 2008 NODA, 
AHRI stated its belief that the January 2008 I=B=R Directory is 
incomplete because participation in the certification program and 
listing in the directory is voluntary and some manufacturers do not 
participate. (AHRI, No. 3 at p.3) Burnham Hydronics made a similar 
assertion, pointing out that Bryan Steam's (another Burnham Holdings 
subsidiary) boilers are not listed in the January 2008 I=B=R Directory 
(Burnham Hydronics, No. FDMS DRAFT 0003 at pp. 1-2).
    In response to these comments and in an effort to enhance its 
analysis, DOE made further efforts to identify commercial boiler 
manufacturers along with commercial boiler equipment produced by these 
manufacturers that are not included in the January 2008 I=B=R 
Directory. DOE examined the Canadian Standards Association-
International (CSA-International) certified product listings and the 
South Coast Air Quality Management District (SCAQMD) list of certified 
boiler equipment. For the CSA-International product listings, DOE only 
identified those manufacturers that certified their equipment to U.S. 
standards. From these two product listings, DOE went to each 
manufacturer's Web site and verified that they produced equipment that 
meets the definition of commercial packaged boilers. From this review, 
DOE identified 16 additional commercial boiler manufacturers, as listed 
in section V.B.3.b. DOE also identified manufacturers with other model 
offerings not included in the January 2008 I=B=R Directory. When DOE 
found equipment that fit the definition of ``commercial packaged 
boiler'' and found efficiency ratings reported for that equipment in 
manufacturer literature, DOE included the equipment in its database of 
commercial boiler equipment used for this analysis (hereafter referred 
to as DOE's commercial boiler database).
    However, for today's analysis of commercial packaged boilers, DOE 
did not use all of the models in the January 2008 I=B=R Directory or in 
its own database. DOE filtered out any boiler models that did not 
contain all of the information needed for DOE's analysis or that 
appeared to have erroneous efficiency ratings before analyzing 
commercial packaged boiler data for its market analysis. DOE divided 
the boilers into the equipment classes in which they would be 
classified to apply ASHRAE Standard 90.1-2007. Then, for the eight 
equipment classes where ASHRAE Standard 90.1-2007 specifies an 
efficiency level in thermal efficiency, DOE filtered out boilers that 
did not contain a thermal efficiency rating. DOE did not filter out 
models without a thermal efficiency rating for the two equipment 
classes where ASHRAE Standard 90.1-2007 specifies an efficiency level 
in combustion efficiency. Next, for all equipment classes, DOE 
eliminated any boilers where both thermal and combustion efficiency 
were provided, but the thermal efficiency was higher than the 
combustion efficiency. DOE eliminated those boilers because it is 
physically impossible for a boiler to have a thermal efficiency that is 
higher than its combustion efficiency, which led DOE to conclude that 
the efficiency ratings for those boilers may be inaccurate.\14\ See 
chapter 2 of the NOPR Technical Support Document (TSD)\15\ for other 
market data regarding DOE's commercial packaged boiler database of 
equipment.
---------------------------------------------------------------------------

    \14\ These anomalous ratings are likely due to Hydronics 
Institute's (HI) de-rating procedures, manufacturers' interpolation 
of results, varying test chambers and instrument calibration among 
manufacturers, or submittal of erroneous ratings.
    \15\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/ashrae_products_docs_meeting.html.
---------------------------------------------------------------------------

    To review the commercial packaged boiler efficiency levels 
specified in ASHRAE Standard 90.1-2007, DOE first developed a 
quantitative analysis similar to that conducted for the March 2006 NODA 
for the commercial boiler equipment classes specified in ASHRAE 
Standard 90.1-2007. DOE analyzed the available market data to estimate 
the percentage of the market held by each equipment class. DOE also 
examined the percentage of models available on the market below the 
efficiency levels in ASHRAE Standard 90.1-2007, the average efficiency 
of models currently available on the market, and the range of 
efficiencies currently on the market for each equipment class. In 
addition, for each equipment class with an efficiency metric change, 
DOE separated out the models that minimally comply with the existing 
EPCA standard levels (i.e., models with 80 <= E<INF>C</INF> < 81 for 
gas-fired boilers and 83 <= E<INF>C</INF> < 84 for oil-fired boilers), 
and then calculated the average thermal efficiency of those models for 
each equipment class based on the thermal efficiencies in DOE's 
database of market data. Table IV.2 shows the results of DOE's 
quantitative market analysis for the eight equipment classes where 
ASHRAE Standard 90.1-2007 specifies a thermal efficiency level, as well 
as for the two equipment classes where ASHRAE Standard 90.1-2007 
specifies a combustion efficiency level.

                                 Table IV.2--Results of DOE's Commercial Packaged Boiler Quantitative Market Analysis *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           Percentage of
                                                                              ASHRAE          Average        Range of      market below
                                                              Current     standard 90.1-      thermal         thermal         ASHRAE          Average
             Equipment class              Market share**  federal energy       2007        efficiency of   efficiencies   standard 90.1-   efficiency of
                                                           conservation     efficiency       minimally     of minimally        2007          equipment
                                                             standard          level         complying       complying      efficiency         class
                                                                                              boilers         boilers          level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small Gas-fired Hot Water...............           24.2%          80% EC          80% ET        78.3% ET     77.0%-80.0%            8.9%        84.9% ET
Small Gas-fired Steam All Except Natural            8.2%          80% EC          79% ET        79.6% ET     79.3%-79.9%            9.0%        80.5% ET
 Draft..................................

[[Page 12017]]

 
Small Gas-fired Steam Natural Draft.....           12.6%          80% EC   77% ET (2010)        76.7% ET     75.4%-78.6%    26.5% (2010)        77.4% ET
                                                                           79% ET (2020)                                    77.6% (2020)
Small Oil-fired Hot Water...............            6.8%          83% EC          82% ET        80.7% ET     79.2%-81.8%           29.3%        83.8% ET
Small Oil-fired Steam...................           11.4%          83% EC          81% ET        81.6% ET     79.7%-83.6%           17.5%        82.2% ET
Large Gas-fired Hot Water...............            3.9%          80% EC          82% EC  ..............  ..............           17.0%        83.6% EC
Large Gas-fired Steam All Except Natural            7.1%          80% EC          79% ET        79.4% ET     78.8%-79.9%           17.7%        80.6% ET
 Draft..................................
Large Gas-fired Steam Natural Draft.....            9.1%          80% EC   77% ET (2010)        78.1% ET     75.4%-79.4%     3.3% (2010)        78.9% ET
                                                                           79% ET (2020)                                    57.7% (2020)
Large Oil-fired Hot Water...............            1.9%          83% EC          84% EC  ..............  ..............              0%        86.5% EC
Large Oil-fired Steam...................           15.0%          83% EC          81% ET        81.9% ET     81.1%-83.5%              0%        82.8% ET
--------------------------------------------------------------------------------------------------------------------------------------------------------
* EC is combustion efficiency and ET is thermal efficiency.
** DOE calculated the percentage of boilers in each equipment class based on the number of models it analyzed for that equipment class divided by the
  total number of models it analyzed in all equipment classes. These totals were taken after all filters and modifications to DOE's commercial packaged
  boiler database, described in section 3, were applied.

4. Preliminary Conclusions From Market Analysis for Commercial Packaged 
Boilers
    Based solely on the quantitative analysis, DOE found that the 
average thermal efficiency of the minimally compliant equipment was 
higher than the efficiency level specified by ASHRAE Standard 90.1-2007 
for five of the commercial packaged boiler equipment classes, as shown 
in Table IV.2. This indicates that it would be theoretically possible 
for backsliding to occur for those equipment classes. As explained 
below, several interested parties commented on DOE's method for 
determining backsliding in response to the preliminary analysis 
presented in the July 2008 NODA. However, when DOE also evaluated a 
number of other considerations (including accuracy of the thermal 
efficiency ratings), it tentatively concluded that backsliding is 
unlikely to occur for any of the classes in question. This topic is 
discussed in further detail below.
    Burnham Hydronics stated that DOE could not use the least efficient 
boiler on the market as the de facto standard for determining whether a 
standard is backsliding. (Burnham Hydronics, No. FDMS DRAFT 0003 at p. 
2) Burnham Hydronics asserted that ``DOE's legal framework defines 
backsliding in terms of `maximum allowable energy use,' not `maximum 
energy actually used by an individual product on the market at a 
particular moment in time.' '' (Burnham Hydronics, No. FDMS DRAFT 0003 
at p. 2) To determine that an efficiency level is backsliding, Burnham 
Hydronics stated that DOE must ``prove that a less efficient boiler 
could not be built under the current [F]ederal standards [than could be 
built if the efficiency levels in ASHRAE Standard 90.1-2007 were 
adopted as Federal energy conservation standards].'' (Burnham 
Hydronics, No. FDMS DRAFT 0003 at pp. 2)
    In response, DOE does not agree with Burnham's assertion that to 
determine backsliding DOE must prove that a less efficient boiler could 
not be built under the Federal standards than could be built if the 
efficiency levels in ASHRAE Standard 90.1-2007 were adopted as Federal 
energy conservation standards. EPCA's anti-backsliding clause states, 
``[t]he Secretary may not prescribe any amended standard which 
increases the maximum allowable energy use * * * or decreases the 
minimum required energy efficiency of a covered product.'' (42 U.S.C. 
6295(o)(1); 42 U.S.C. 6316(a)) Because the Federal standard levels for 
commercial packaged boilers are specified in terms of an energy 
efficiency requirement rather than an allowable energy use requirement, 
DOE believes that the applicable part of EPCA's anti-backsliding clause 
here is the requirement that the Secretary may not prescribe any 
amended standard that ``decreases the minimum required efficiency'' of 
this equipment. DOE believes that to determine backsliding it must 
prove that the efficiency levels in ASHRAE Standard 90.1-2007 would 
allow for the construction of equipment with lower combustion 
efficiencies than the current Federal standards require, thereby 
decreasing the minimum required energy efficiency. Therefore, to 
determine backsliding, DOE examined whether the thermal efficiency 
levels in ASHRAE Standard 90.1-2007 would effectively result in a 
decrease in the required combustion efficiencies currently specified in 
EPCA (i.e., 80 percent combustion efficiency for gas-fired equipment 
and 83 percent combustion efficiency for oil-fired equipment).
    Further, Federal standards currently do not regulate the thermal 
efficiency or the jacket losses of commercial packaged boilers. 
Consequently, although it is not practical, a boiler could 
theoretically be constructed with 100 percent jacket losses under the 
Federal standards, resulting in an infinite amount of energy use. If 
DOE were to examine ``the maximum allowable energy use,'' as Burnham 
suggests, then any thermal efficiency level would not constitute 
backsliding because there are no existing Federal energy conservation 
standards regulating the jacket losses. Therefore, DOE has investigated 
the potential for backsliding with respect to the energy efficiency of 
the equipment rather than the allowable energy use (as noted above).
    DOE does note, however, that models currently being manufactured 
with the highest jacket losses (i.e., the models

[[Page 12018]]

with the lowest thermal efficiencies) represent the practical limit to 
the amount of jacket losses that occur in commercial boilers. DOE also 
notes that there is equipment manufactured with thermal efficiencies 
lower than the thermal efficiency levels specified by ASHRAE Standard 
90.1-2007, which would create the need for manufacturers to discontinue 
or redesign certain models to meet the efficiency levels in ASHRAE 
Standard 90.1-2007 if those levels are adopted as Federal minimums. 
Because certain models manufactured under the current Federal standards 
would be discontinued or replaced with higher-efficiency models if the 
ASHRAE Standard 90.1-2007 levels were adopted as Federal minimums, DOE 
recognizes that the ASHRAE Standard 90.1-2007 efficiency levels 
represent an increase in efficiency and a decrease in energy use when 
compared to the EPCA levels.
    AHRI stated that the criterion to determine backsliding (where a 
specific minimum thermal efficiency requirement is considered less 
stringent if it might theoretically allow a model to have a combustion 
efficiency lower than the current minimum combustion efficiency 
requirement) is overly stringent because there is no direct 
mathematical correlation between combustion and thermal efficiency. 
(AHRI, No. 3 at p. 2)
    DOE considered both Burnham Hydronics' and AHRI's comments when 
determining whether the efficiency levels for commercial packaged 
boilers are in violation of EPCA's anti-backsliding clause. DOE 
considered the difference between the average thermal efficiency of 
minimally-complying models and the efficiency levels specified in 
ASHRAE Standard 90.1-2007. DOE used the average thermal efficiency 
because DOE found there was a range of thermal efficiencies that 
correspond to the minimally-complying models. DOE found that the 
difference is very small (between 0.4 and 0.9 percent) for those 
equipment classes where it is believed that backsliding could 
potentially occur. Therefore, there are several other important issues 
to consider in determining whether the efficiency levels specified in 
ASHRAE Standard 90.1-2007 are, in fact, backsliding. DOE also 
considered the uncertainty of the reported thermal efficiency ratings, 
the benefit of switching to an energy conservation standard using a 
thermal efficiency metric, and the overall energy savings that could 
result from adopting the ASHRAE Standard 90.1-2007 efficiency levels 
for commercial packaged boilers. Each of these considerations is 
discussed below.
a. Accuracy of Thermal Efficiency Ratings
    The Federal energy conservation standards for commercial packaged 
boilers are expressed only using the combustion efficiency metric. 10 
CFR 431.86. Although the industry standard incorporated by reference in 
the applicable DOE test procedure also contains a test for thermal 
efficiency, DOE's test procedures only specify that manufacturers need 
to conduct the combustion efficiency test for determining the energy 
efficiency of commercial packaged boilers. Id. Consequently, all 
manufacturers test for combustion efficiency, but only some of the 
manufacturers test for thermal efficiency. Of the manufacturers that 
report results for thermal efficiency, only some actually test for 
thermal efficiency, while the others estimate it. The method of 
estimation can vary from one manufacturer to another and is not 
described in manufacturer literature. The fact that a requirement to 
test and rate the thermal efficiency of commercial packaged boilers in 
accordance with an approved DOE test procedure does not exist brings 
into question the validity of the reported values for thermal 
efficiency. The reported thermal efficiency ratings are the basis for 
the vast majority of DOE's quantitative analysis for this equipment. 
Since DOE has no way of determining which thermal efficiency ratings 
are the result of actual testing and which are simply manufacturer 
estimates, DOE cannot be absolutely certain of the accuracy and 
validity of the thermal efficiency ratings used in its analyses. In 
fact, when performing an analysis of its data, DOE had to exclude 
nearly one-fifth of the ratings because they appeared to be 
erroneous.\16\ However, with the exclusion of the models with erroneous 
ratings and the uncertainties in accuracy of the considered ratings, 
DOE believes that it has adequately controlled for the potential 
sources of error and that the 2008 I=B=R Directory and manufacturer 
catalogs represent the best available sources of information that could 
be used for the analyses that DOE must conduct in this rulemaking.
---------------------------------------------------------------------------

    \16\ These boiler models list a thermal efficiency rating 
greater than its combustion efficiency rating, which is physically 
impossible. These anomalous ratings are likely due to Hydronics 
Institute's (HI's) de-rating procedures, manufacturers' 
interpolation of results, variances in test chambers and instrument 
calibration among manufacturers, or submittal of erroneous ratings.
---------------------------------------------------------------------------

    As mentioned previously, AHRI stated that DOE's analysis relied too 
heavily on the information presented in the 2008 I=B=R Directory. AHRI 
stated that the directory is incomplete because participation in the 
certification program and listing in the directory is voluntary and 
some manufacturers do not participate. Because the program does not 
require a manufacturer to list all the models that come within the 
scope of the program, AHRI asserted that the commercial boiler listings 
are incomplete, and stated that it can be assumed manufacturers do not 
list their least-efficient offerings. Further, AHRI stated that due to 
anomalous combustion and thermal listings caused by a variety of 
testing issues, the values from the tests cannot be used definitively 
to evaluate the true relationship between combustion and thermal 
efficiency for a specific listing. (AHRI, No. 3 at pp. 3-4)
    Burnham Hydronics also stated that the I=B=R Directory is 
unsuitable for use as the basis for DOE's analysis. Burnham Hydronics 
stated that the I=B=R Directory does not consistently represent the 
relationship between thermal and combustion efficiency. (Burnham 
Hydronics, No. FDMS DRAFT 0003 at pp. 1-2)
    DOE agrees with the comments made by AHRI and Burnham Hydronics, 
and recognizes the inconsistent relationship between combustion and 
thermal efficiencies listed in the January 2008 I=B=R Directory. 
However, because no other widely-recognized source for commercial 
packaged boiler ratings exists, DOE relied on the January 2008 I=B=R 
Directory and manufacturers' catalogs as its primary sources for its 
analysis. Whenever possible, DOE checked the efficiency ratings in the 
January 2008 I=B=R Directory against manufacturers' literature for 
consistency. Also, although manufacturers are not required to test for 
thermal efficiency and report it to the I=B=R Directory, DOE believes 
the majority of the ratings in the I=B=R Directory are valid. DOE 
believes the I=B=R Directory, with the addition of boiler models from 
manufacturers that are not included from the directory, provides a good 
proxy of what the thermal efficiency ratings would be if all commercial 
boiler models were tested and rated according to the Hydronics 
Institute (HI) BTS-2000 test procedure for thermal efficiency (i.e., 
the industry standard incorporated by reference in the DOE test 
procedure for these products).
    Once DOE has determined the efficiency levels in ASHRAE Standard 
90.1-2007 for commercial packaged boilers represent, on average, an 
increase in energy efficiency when

[[Page 12019]]

compared to the Federal energy conservation standards for this 
equipment, DOE will further consider amended energy conservation 
standards at the ASHRAE Standard 90.1-2007 efficiency levels as 
presented in section V. The limited confidence in the thermal 
efficiency data being reported for commercial packaged boilers and the 
lack of a mathematical conversion between thermal and combustion 
efficiency (explained in section IV.A.1) become an issue when deciding 
whether efficiency levels in ASHRAE Standard 90.1-2007 are comparable 
to Federal energy conservation standards, which would be based solely 
on the average thermal efficiency of minimally-complying equipment. In 
addition, even if all commercial packaged boilers were tested for 
thermal efficiency, there would be some margin of error inherent to the 
testing and measurement of thermal efficiency. For these reasons, DOE 
believes the difference between the listed thermal efficiencies of the 
minimally-complying models and the efficiency levels in ASHRAE Standard 
90.1-2007 is within the margin of error of this analysis. (See chapter 
2 of the NOPR TSD for more details about thermal efficiency of 
minimally-complying models.)
    This identified problem would be mitigated if DOE migrates to a 
thermal efficiency metric, because DOE would amend its test procedure 
to require manufacturers to verify their equipment's thermal efficiency 
ratings through testing in accordance with a DOE-mandated test 
procedure. A Federal energy conservation standard based on thermal 
efficiency, rather than combustion efficiency, would also require 
manufacturers to rate the thermal efficiency of their equipment, 
thereby resolving the issue of uncertainty in the reporting of the 
thermal efficiency metric.
b. Benefits of the Thermal Efficiency Metric
    In the March 2006 NODA, DOE stated that the thermal efficiency 
metric provides a preferred method for measuring the efficiency of 
commercial boilers because it is more inclusive and better reflects the 
total energy losses of the equipment, as compared to the combustion 
efficiency metric prescribed by EPCA. 71 FR 12634, 12641 (March 13, 
2006). In addition, the thermal efficiency metric is more consistent 
with EPCA's definition of ``energy efficiency'' \17\ for commercial 
equipment. Id. Interested parties agree that thermal efficiency is 
superior to combustion efficiency as a metric for rating boilers 
because it is a more complete measure of efficiency. (AHRI, No. 3 at p. 
3) Although DOE preferred the thermal efficiency approach expressed in 
ASHRAE Standard 90.1-1999, DOE was prevented from adopting those 
standard levels due to the backsliding concerns discussed above. ASHRAE 
Standard 90.1-2007, for the reasons discussed below, has largely 
resolved such concerns. Not adopting the efficiency levels in ASHRAE 
Standard 90.1-2007 for several of the equipment classes would prevent 
the efficiency metric change (from combustion efficiency to thermal 
efficiency) that DOE has recognized in the past and continues to 
recognize as beneficial in the regulation of commercial packaged 
boilers.
---------------------------------------------------------------------------

    \17\ For commercial equipment, ``[t]he term `energy efficiency' 
means the ratio of the useful output of services from an article of 
industrial equipment to the energy use by such article, determined 
in accordance with test procedures under section 6314 of [title 42 
of the United States Code].'' (42 U.S.C. 6311(3))
---------------------------------------------------------------------------

    In a written comment to DOE, AHRI stated that there are several key 
aspects that support rating commercial boilers using the thermal 
efficiency metric. These key factors include: (1) Thermal efficiency 
provides more useful information since it indicates the energy being 
put into the water; (2) in many cases the specified minimum thermal 
efficiency will require models to have a combustion efficiency higher 
than the current minimum combustion efficiency, and the current 
combustion efficiency requirements allow models to have significantly 
lower thermal efficiency values; and (3) even if the thermal efficiency 
is two or three points less than the corresponding combustion 
efficiency, it is still more stringent than a combustion efficiency 
standard because it focuses on energy transferred rather than energy 
not lost through the flue. (AHRI, No. 3 at p. 2)
    DOE agrees with AHRI that the thermal efficiency metric does 
provide key benefits over the current combustion efficiency metric for 
commercial packaged boilers used in EPCA. As stated in the March 2006 
NODA, the thermal efficiency metric provides a preferred method for 
measuring the efficiency of commercial boilers because it is more 
inclusive and better reflects the total energy losses in the equipment 
than the combustion efficiency metric prescribed by EPCA. 71 FR 12634, 
12641 (March 13, 2006). In addition, because ASHRAE Standard 90.1 has 
switched to a thermal efficiency metric for certain commercial packaged 
boiler equipment classes, a one-time conversion in the DOE efficiency 
metric will be required at some point. Once the issue of differing 
efficiency metrics is resolved, DOE will again be able to make direct 
comparisons with future versions of ASHRAE Standard 90.1.
c. Overall Energy Savings
    As a further consideration, the efficiency levels specified in 
ASHRAE Standard 90.1-2007, taken together, when compared to the Federal 
energy conservation standards, would result in increased energy savings 
to the Nation. Conversely, a decision by DOE not to adopt the 
efficiency levels in ASHRAE Standard 90.1-2007 for the equipment 
classes where it believes backsliding could possibly occur would result 
in a loss of potential energy savings by not adopting the thermal 
efficiency levels provided in ASHRAE Standard 90.1-2007 for those five 
equipment classes (See chapter 7 of the NOPR TSD for details on the 
potential energy savings). Although not controlling on the issue of 
determining backsliding, it does carry some weight in terms of how DOE 
acts in resolving the uncertainties associated with conversions and 
calculations between the two different metrics.
5. Conclusions Regarding the Efficiency Levels in ASHRAE Standard 90.1-
2007 for Commercial Packaged Boilers
    When considering if adopting ASHRAE Standard 90.1-2007's efficiency 
levels would violate EPCA's anti-backsliding provision, DOE considered 
the uncertainty in the reporting of the thermal efficiency metric, the 
benefits of rating the efficiency of commercial packaged boilers with a 
thermal efficiency metric, and the overall energy savings that would 
result from the adoption of ASHRAE Standard 90.1-2007. When viewed 
comprehensively, DOE has tentatively concluded that these 
considerations justify analyzing and proposing adoption of the 
efficiency levels in ASHRAE Standard 90.1-2007 as Federal energy 
conservation standards (see section V for a discussion of the 
commercial packaged boiler analysis methodology and section VI for the 
analytical results of the commercial packaged boiler analysis). 
Although the average thermal efficiency of minimally-compliant \18\ 
models on the market is slightly higher than the levels specified in 
ASHRAE Standard 90.1-2007 for 5 of the 10 equipment classes, the 
difference

[[Page 12020]]

between the two values are small, which is within the margin of error 
of the analysis.\19\ The current situation is unlike the boiler 
analysis conducted for the March 2006 NODA, which reviewed the 
commercial packaged boiler efficiency levels in ASHRAE Standard 90.1-
1999 and found the differences between the ASHRAE Standard 90.1-1999 
efficiency levels and the average thermal efficiency of minimally-
compliant models to be relatively large (i.e., significantly greater 
than a percentage point).
---------------------------------------------------------------------------

    \18\ It is noted here that in the selection of ``minimally 
compliant'' boilers, DOE included boilers whose combustion 
efficiency was up to 0.9 percentage point above the EPCA minimum 
level.
    \19\ DOE believes the small differences between the two 
efficiency metrics attributing to the margin of error could arise 
from a number of factors including manufacturing tolerances, testing 
tolerances, and equipment design differences.
---------------------------------------------------------------------------

    Therefore, based upon this analysis of the efficiency levels in 
ASHRAE Standard 90.1-2007, DOE has tentatively concluded that the 
qualitative considerations outweigh the slight differences revealed by 
the quantitative analysis of the ASHRAE Standard 90.1-2007 efficiency 
levels for the five equipment classes at issue. In light of the 
foregoing, DOE has determined that the efficiency levels for all ten 
equipment classes identified in ASHRAE Standard 90.1-2007 represent an 
increase in efficiency for commercial packaged boilers as compared to 
the current Federal energy conservation standards. Consequently, DOE 
performed a market analysis, economic analysis, and energy savings 
analysis for all of the identified commercial packaged boiler equipment 
classes to consider energy conservation standards at the ASHRAE 
Standard 90.1-2007 efficiency levels, as well as levels more stringent 
than those found in ASHRAE Standard 90.1-2007, in accordance with EPCA. 
(42 U.S.C. 6313 (a)(6)(A)(ii)(II))

V. Methodology and Discussion of Comments for Commercial Packaged 
Boilers

    This section addresses the analyses DOE has performed for this 
rulemaking with respect to commercial packaged boilers. A separate 
subsection addresses each analysis. DOE used a spreadsheet to calculate 
the life-cycle cost (LCC) and payback periods (PBPs) of potential 
amended energy conservation standards. DOE used another spreadsheet to 
provide shipments forecasts and then calculate national energy savings 
and net present value impacts of potential amended energy conservation 
standards.
    This section also proposes amendments to the DOE test procedure for 
commercial packaged boilers to require testing in terms of thermal 
efficiency, consistent with the amended efficiency levels in ASHRAE 
Standard 90.1-2007. In addition, DOE is proposing to remove certain 
outdated provisions from the test procedure (e.g., references to an 
alternate test procedure that has been phased out).

A. Test Procedures

    Section 343(a) of EPCA requires the Secretary to amend the test 
procedures for packaged boilers to the latest version generally 
accepted by industry or the rating procedures developed or recognized 
by the Air-Conditioning and Refrigeration Institute (ARI) \20\ or by 
ASHRAE, as referenced by ASHRAE/IES Standard 90.1, unless the Secretary 
determines by clear and convincing evidence that the latest version of 
the industry test procedure does not meet the requirements for test 
procedures described in paragraphs (2) and (3) of section 343(a). (42 
U.S.C. 6314(a)(4)(B)) DOE published a final rule on October 21, 2004 
that amended its test procedure for commercial packaged boilers to 
incorporate by reference the industry test procedure for commercial 
packaged boilers, the Hydronics Institute (HI) division of the Gas 
Appliance Manufacturer's Association (GAMA) Boiler Testing Standard 
BTS-2000, ``Method to Determine the Efficiency of Commercial Space 
Heating Boilers'' (HI BTS-2000). 69 FR 61949. This rulemaking responded 
to ASHRAE's action in ASHRAE Standard 90.1-1999 to revise the test 
procedures for certain commercial equipment, including commercial 
packaged boilers.
---------------------------------------------------------------------------

    \20\ The Air-Conditioning and Refrigeration Institute (ARI) and 
the Gas Appliance Manufacturers Association (GAMA) announced on 
December 17, 2007, that their members voted to approve the merger of 
the two trade associations to represent the interests of cooling, 
heating, and commercial refrigeration equipment manufacturers. The 
merged association became AHRI on January 1, 2008.
---------------------------------------------------------------------------

    In 2007, AHRI made several changes to BTS-2000 and reaffirmed BTS-
2000 (Rev06.07) as the testing standard for commercial boilers. The 
changes include updating the numbering of the subsections and a change 
to the tolerance of the inlet temperature for condensing boilers (from 
<plus-minus>5 [deg]F to <plus-minus>10 [deg]F). DOE compared the two 
versions and found that the only changes were to the inlet temperature 
tolerances and there were no other changes to the testing method. 
Furthermore, DOE believes the changes to the test tolerances do not 
significantly affect the measure of energy efficiency. Therefore, DOE 
is proposing to update the uniform test procedure for commercial 
packaged boilers to incorporate by reference the version of HI BTS-2000 
(Rev06.07) that AHRI reaffirmed in 2007.
    In the October 2004 test procedure final rule for commercial 
packaged boilers, DOE also incorporated by reference the American 
Society of Mechanical Engineers (ASME) Power Test Codes for Steam 
Generating Units, ASME PTC 4.1-1964, reaffirmed 1991 (including 1968 
and 1969 addenda) (ASME PTC 4.1) as an alternate test method for rating 
the efficiency of steel commercial packaged boilers only. 69 FR 61956 
(Oct. 21, 2004). DOE provided ASME PTC 4.1, with modifications, as an 
alternate test procedure for steel commercial packaged boilers because 
many manufacturers of steel boilers were unfamiliar with HI BTS-2000 
and its predecessor, HI-1989, and typically tested their boilers using 
the ASME PTC 4.1 test procedure. Id at 61951. DOE designated a 
transition period for manufacturers to convert from using the ASME PTC 
4.1 test procedure to the HI BTS-2000 test procedure. Id. This would 
allow manufacturers of steel boilers an opportunity to become familiar 
with HI BTS-2000 and ensure that their equipment would be able to 
comply with EPCA standards using that procedure. Id. at 61956. DOE 
stated that it would allow the use of ASME PTC 4.1 as an alternate test 
procedure for two years after the publication of the October 2004 final 
rule. Id. The transition period ended on October 23, 2006, and now all 
commercial boilers are required to be tested using the HI BTS-2000 test 
procedure. 10 CFR 431.86
    Because DOE no longer accepts the ASME PTC 4.1 as a method for 
testing steel commercial packaged boilers, DOE is proposing to remove 
item (b)(2) of 10 CFR 431.85, which listed ASME PTC 4.1 as a material 
incorporated by reference. Further, DOE proposes to delete item (d) of 
10 CFR 431.86, which describes use of ASME PTC 4.1 as an alternative 
test method for commercial packaged boilers. Finally, in item (c) of 10 
CFR 431.86, DOE proposes to remove the sentence instructing 
manufacturers to follow either the provisions in (c) or (d) of that 
part for steel commercial packaged boilers because part (d) will be 
removed. Manufacturers are required to use the provisions in part (c) 
for all commercial packaged boilers. Eliminating the references to ASME 
PTC 4.1 in the CFR does not introduce any changes to the test procedure 
for this equipment; it simply removes obsolete references. 
Manufacturers are still required to test all steel boilers using the 
method that references the HI BTS-2000 test procedure, as they have 
been since October 23, 2006.

[[Page 12021]]

    Currently, the uniform test method for the measurement of energy 
efficiency of commercial packaged boilers requires that only the 
combustion efficiency be tested and calculated in accordance with the 
HI BTS-2000. 10 CFR 431.86(c)(1)(ii). In this notice, DOE is proposing 
to adopt as Federal energy conservation standards several thermal 
efficiency levels described in ASHRAE Standard 90.1-2007. For this 
reason, DOE intends to amend the definitions in 10 CFR 431.82 to 
incorporate the definition of ``thermal efficiency'' as written in 
section 3.0 of the HI BTS-2000 (Rev06.07) test procedure. Thus, DOE is 
proposing to add the definition of ``thermal efficiency'' to 10 CFR 
431.82 as follows: ``Thermal efficiency for a commercial packaged 
boiler is determined using test procedures prescribed under Sec.  
431.86 and is the ratio of the heat absorbed by the water or the water 
and steam to the higher heating value in the fuel burned.''
    In addition to adding the definition of ``thermal efficiency'' to 
its regulations, DOE is proposing to amend the definition of 
``combustion efficiency'' to remove the statement describing it as 
``the efficiency descriptor for packaged boilers.'' DOE is proposing 
this change because after the effective date of the final rule amending 
the energy conservation standards for commercial packaged boilers to 
include efficiency levels based on those specified in ASHRAE Standard 
90.1-2007 (i.e., March 2, 2012), combustion efficiency would no longer 
be the efficiency descriptor for all commercial packaged boiler 
equipment classes. Thus, DOE proposes to amend the definition of 
``combustion efficiency'' in 10 CFR 431.82 to read: ``Combustion 
efficiency for a commercial packaged boiler is determined using the 
test procedures prescribed under Sec.  431.86 and equals to 100 percent 
minus percent flue loss (percent flue loss is based on input fuel 
energy).'' DOE is seeking input from interested parties about its 
proposed definitions for ``thermal efficiency'' and ``combustion 
efficiency.'' This is identified as Issue 1 under ``Issues on Which DOE 
Seeks Comment'' in section VIII.E of today's NOPR.
    In addition, DOE is proposing to modify 10 CFR 431.86 (Uniform test 
method for measurement of energy efficiency of commercial packaged 
boilers) to include requirements for the measurement of thermal 
efficiency for those commercial packaged boiler classes where the 
thermal efficiency metric is being proposed in today's notice. In 10 
CFR 431.86(a), Scope, DOE is proposing to modify the scope to state 
that in addition to procedures for measuring combustion efficiency of 
commercial packaged boilers, that section also contains procedures for 
measuring the thermal efficiency of commercial packaged boilers. Under 
10 CFR 431.86(c), ``Test Method for Commercial Packaged Boilers--
General,'' DOE is proposing to update several items. DOE proposes to 
amend subparagraph (c)(1)(ii), the test setup requirements, to require 
manufacturers to perform the thermal efficiency test in section 5.1 
(thermal efficiency test) of the HI BTS-2000 (Rev06.07) for the 
following eight commercial packaged boiler equipment classes, if the 
ASHRAE Standard 90.1-2007 efficiency levels go into effect as Federal 
energy conservation standards, as proposed:
    <bullet> Small gas-fired hot water;
    <bullet> Small gas-fired steam all except natural draft;
    <bullet> Small gas-fired steam natural draft;
    <bullet> Small oil-fired hot water;
    <bullet> Small oil-fired steam;
    <bullet> Large gas-fired steam all except natural draft;
    <bullet> Large gas-fired steam, natural draft;
    <bullet> Large oil-fired steam.
    DOE proposes to direct manufacturers rating their commercial 
packaged boilers before March 2, 2012 (the effective date of a final 
rule for amended energy conservation standards) to use the test setup 
requirements in section 5.2 (Combustion Efficiency Test) of the HI BTS-
2000 (Rev06.07) for all commercial packaged boiler equipment classes in 
accordance with the Federal energy conservation standards in 10 CFR 
431.86. 69 FR 61961 (Oct. 21, 2004). DOE is proposing that 
manufacturers use the revised version of the test procedure (i.e., HI 
BTS-2000 (Rev06.07) effective thirty days from the publication of the 
final rule in the Federal Register to represent their model's energy 
efficiency and compliance with the current Federal energy conservation 
standards. DOE is also proposing to revise the requirement to conduct 
the combustion efficiency test to specify that beginning on March 2, 
2012 (the effective date if DOE were to adopt the ASHRAE Standard 90.1-
2007 efficiency levels as Federal energy conservation standards) the 
combustion efficiency test will only be required for large gas-fired 
hot water and large oil-fired hot water boilers.
    In 10 CFR 431.86(c)(1)(iv), ``Test Conditions,'' DOE proposes to 
add a requirement to use the test conditions from section 8.0 of HI 
BTS-2000 (Rev06.07) for testing the thermal efficiency, in addition to 
the combustion efficiency (which is already provided, along with 
certain exclusions). DOE proposes to update the exclusions for the 
combustion efficiency test conditions to exclude only section 8.6.2 to 
reflect the changes made to HI BTS-2000 (Rev06.07) when it was 
reaffirmed in 2007. In addition, DOE proposes to delete 10 CFR 
431.86(c)(1)(iv)(A). DOE is proposing to eliminate 10 CFR 
431.86(c)(1)(iv)(A) from the test procedure, because in the HI BTS-2000 
(Rev06.07) (reaffirmed 2007), the test procedures for condensing 
boilers were amended to be identical to those listed in 10 CFR 
431.86(c)(1)(iv)(A). Therefore, paragraph (c)(1)(iv)(A) and any 
provisions referring to it are no longer necessary. Eliminating this 
paragraph and replacing it with a reference to the applicable HI BTS-
2000 (Rev06.07) section (section 8.5.2 for test conditions and section 
9.1.2.1.4 for test procedures) would not introduce any changes to the 
test procedure because the requirements in HI BTS-2000 (Rev06.07) are 
now the same as the requirements that had been set forth in 10 CFR 
431.86(c)(1)(iv)(A).
    In 10 CFR 431.86(c)(2), ``Test Measurements,'' DOE is proposing to 
include an additional provision to measure thermal efficiency according 
to sections 9.1 and 10.1 of the HI BTS-2000 (Rev06.07) for the 
commercial packaged boiler equipment classes in cases where the Federal 
standard would be specified in thermal efficiency. DOE is proposing 
that manufacturers should continue to measure the combustion efficiency 
of equipment in those eight equipment classes until proposed amended 
energy conservation standards based on the ASHRAE Standard 90.1-2007 
efficiency levels would become effective on March 2, 2012. At such 
time, manufacturers would be expected to begin measuring the thermal 
efficiency for the applicable equipment classes. Also, DOE proposes to 
update the instructions for measuring combustion efficiency in the Test 
Measurements section to specify that combustion efficiency only needs 
to be measured for the two equipment classes where the Federal standard 
will be specified in combustion efficiency (i.e., large gas-fired hot 
water and large oil-fired hot water commercial packaged boilers) after 
the effective date of a final rule for amended national standards.
    DOE also proposes to update the instructions for measuring 
combustion efficiency in 10 CFR 431.86(c)(2). DOE proposes to remove 
the provision in 10 CFR 431.86(c)(2) that excludes section 9.1.2.1.4 of 
HI-BTS 2000 and replaces it with the requirements in 10 CFR 
431.86(c)(1)(iv)(A) for condensing boiler tests. DOE is proposing to 
allow for the use of section 9.1.2.1.4 because in HI BTS-2000 
(Rev06.07), the requirements

[[Page 12022]]

in that section were modified to be the same as those in 10 CFR 
431.86(c)(1)(iv)(A). Such modification would not introduce any 
substantive changes to the test procedure because the requirements in 
HI BTS-2000 are now the same as the requirements in 10 CFR 
431.86(c)(1)(iv)(A).
    Under 10 CFR 431.86(c)(2)(iii), ``Test Measurements for a Boiler 
Capable of Supplying Either Steam or Water,'' DOE is proposing to 
update the provision that allows manufacturers to measure and rate the 
combustion efficiency of these boilers only as steam boilers. DOE 
proposes to change that provision to require the testing and 
measurement of thermal efficiency in addition to combustion efficiency 
for any boiler capable of producing steam and hot water that is being 
tested only as a steam boiler for equipment manufactured on and after 
March 2, 2012. Prior to that date, DOE proposes to instruct 
manufacturers to continue testing only for combustion efficiency of 
those boilers being tested in steam mode only. DOE must require 
manufacturers to test for both the combustion and thermal efficiencies 
in steam mode for units capable of producing both steam and hot water 
because, due to the new efficiency levels specified in ASHRAE Standard 
90.1-2007, the boilers would be required to meet an efficiency level 
using both metrics under any amended energy conservation standard based 
upon ASHRAE Standard 90.1-2007. In other words, DOE is proposing to 
allow manufacturers to test dual output boilers (i.e., those capable of 
producing both steam and hot water) in only steam mode. However, DOE is 
modifying its existing provisions to require manufacturers to conduct 
both the combustion efficiency and the thermal efficiency test for 
these dual output boilers. This will ensure that a dual output boiler 
is meeting the thermal efficiency requirement when operated in steam 
mode and the combustion efficiency requirement when operated in hot 
water mode, because achieving compliance in steam mode is generally 
more challenging. Thus, a boiler that complies with the standard in 
steam mode would be presumed to meet the standard in hot water mode. In 
essence, manufacturers will be required to rate dual output boilers 
using both the thermal and combustion efficiency metrics. DOE points 
out that the only other alternative for testing dual output boilers 
would be for manufacturers to separately run the combustion efficiency 
test in hot water mode and the thermal efficiency test in steam mode on 
or after March 2, 2012. Because DOE believes running two independent 
tests on the same boiler could be burdensome and that testing only in 
steam mode would suffice for compliance purposes, DOE is proposing to 
allow manufacturers to only test in steam mode for both metrics to 
mitigate this additional testing burden to manufacturers.
    In addition to allowing boilers capable of producing both steam and 
hot water to be tested only in steam mode, the test procedure at 10 CFR 
431.86(c)(2)(iii) also allows boilers capable of producing steam and 
hot water to be tested and rated in both steam mode and hot water mode 
separately. DOE proposes to amend 10 CFR 431.86(c)(2)(iii) of the test 
procedure to specify that when testing a large gas-fired or oil-fired 
boiler in hot water mode on or after March 2, 2012, combustion 
efficiency must be tested for and rated; however, for large gas- or 
oil-fired boilers in steam mode or for any other boiler equipment 
class, the thermal efficiency must be tested and rated.
    Finally, DOE proposes to amend 10 CFR 431.86(c), ``Test Method for 
Commercial Packaged Boilers--General,'' by adding a provision to 
calculate the thermal efficiency using the calculation procedure 
described in section 11.1 of HI BTS-2000. DOE proposes to note in this 
provision that thermal efficiency should be calculated only for the 
eight equipment classes of commercial packaged boilers for which DOE is 
proposing to adopt a Federal energy conservation standard using a 
thermal efficiency metric. In addition, DOE proposes to specify this 
should only be done on or after March 2, 2012, the anticipated 
effective date of the corresponding amended energy conservation 
standards for this equipment.
    In addition, DOE proposes to modify the ``Calculation of Combustion 
Efficiency'' under 10 CFR 431.86(c)(3) to specify that on or after 
March 2, 2012, combustion efficiency only needs to be calculated when 
rating commercial packaged boiler equipment classes with a Federal 
energy conservation standard specified in combustion efficiency (i.e., 
large gas-fired hot water and large oil-fired hot water commercial 
packaged boilers).
    See the regulatory text at the end of today's notice for all the 
changes made to the definitions, reference materials, effective dates, 
and the uniform test procedure for commercial packaged boilers in 10 
CFR 431.86.

B. Market Assessment

    When beginning a review of the ASHRAE Standard 90.1-2007 efficiency 
levels, DOE developed information that provides an overall picture of 
the market for the equipment concerned, including the purpose of the 
equipment, the industry structure, and market characteristics. This 
activity includes both quantitative and qualitative assessments based 
primarily on publicly-available information. The subjects addressed in 
the market assessment for this rulemaking include equipment classes, 
manufacturers, quantities, and types of equipment sold and offered for 
sale. The key findings of DOE's market assessment are summarized below. 
For additional detail, see chapter 2 of the NOPR TSD.
1. Definitions of Commercial Packaged Boilers
    EPCA defines a ``packaged boiler'' as ``a boiler that is shipped 
complete with heating equipment, mechanical draft equipment, and 
automatic controls; usually shipped in one or more sections.'' (42 
U.S.C. 6311(11)(B)) In its regulations at 10 CFR 431.102, DOE further 
refined the ``packaged boiler'' definition to exclude a boiler that is 
custom designed and field constructed. Additionally, 10 CFR 431.102 
provides that if the boiler is shipped in more than one section, the 
sections may be produced by more than one manufacturer, and may be 
originated or shipped at different times and from more than one 
location. In its regulations in 10 CFR 431.82, DOE also defines a 
``commercial packaged boiler'' as a type of packaged low pressure 
boiler that is industrial equipment with a capacity, (rated maximum 
input) of 300,000 BTU per hour (Btu/h) or more which, to any 
significant extent, is distributed in commerce: (1) For heating or 
space conditioning applications in buildings; or (2) For service water 
heating in buildings but does not meet the definition of 'hot water 
supply boiler' in [part 431]. 10 CFR 431.82.
2. Equipment Classes
    Federal energy conservation standards currently separate commercial 
packaged boilers only by the type of fuel used by the boiler, creating 
two equipment classes: (1) Gas-fired, and (2) oil-fired. (42 U.S.C. 
6313(a)(4)(C)-(D); 10 CFR 431.87) However, commercial packaged boilers 
can be distinguished by several factors, which include the input 
capacity size (i.e., small or large), fuel type (i.e., oil or gas), 
output (i.e., hot water or steam), and draft type (i.e., natural draft 
or other). ASHRAE

[[Page 12023]]

Standard 90.1-2007 further divided the two equipment classes designated 
in EPCA into the following ten classes:
    <bullet> Small gas-fired hot water boilers;
    <bullet> Small gas-fired steam, all except natural draft;
    <bullet> Small gas-fired steam, natural draft boilers;
    <bullet> Small oil-fired hot water boilers;
    <bullet> Small oil-fired steam boilers;
    <bullet> Large gas-fired hot water boilers;
    <bullet> Large gas-fired steam all except natural draft boilers;
    <bullet> Large gas-fired steam natural draft boilers;
    <bullet> Large oil-fired hot water boilers; and
    <bullet> Large oil-fired steam boilers.
    In general, DOE divides equipment classes by the type of energy 
used or by capacity or other performance-related features that affect 
efficiency. Different energy conservation standards may apply to 
different equipment classes. (42 U.S.C. 6295(q)) In the context of the 
present rulemaking, DOE believes input capacity size (i.e., small or 
large), fuel type (i.e., oil or gas), output (i.e., hot water or 
steam), and draft type (i.e., natural draft or other) are all 
performance-related features that affect commercial packaged boiler 
efficiency. By examining the market data, DOE found commercial packaged 
boilers in a wide range of efficiencies depending on their design and 
features. Consequently, DOE is proposing the ten equipment classes in 
ASHRAE Standard 90.1-2007 to differentiate between types of commercial 
packaged boilers.
3. Review of Current Market for Commercial Packaged Boilers
    In order to obtain the information needed for the market assessment 
for this rulemaking, DOE consulted a variety of sources, including 
trade associations, manufacturers, and shipments data (i.e., the 
quantities and types of equipment sold and offered for sale). The 
information DOE gathered serves as resource material throughout the 
rulemaking. Chapter 2 of the NOPR TSD provides additional detail on the 
market assessment.
a. Trade Association Information
    AHRI, formerly GAMA (and sometimes referred to as such in this 
notice), is the trade association representing commercial packaged 
boiler manufacturers. AHRI develops and publishes technical standards 
for residential and commercial equipment using rating criteria and 
procedures for measuring and certifying equipment performance. The DOE 
test procedure is an AHRI standard. The HI division of AHRI has 
developed the Boiler Testing Standard (BTS) 2000 ``Method to Determine 
the Efficiency of Commercial Space Heating Boilers,'' as discussed in 
section IV.A above. The DOE test procedure incorporates by reference 
this AHRI standard.\21\
---------------------------------------------------------------------------

    \21\ DOE has incorporated by reference HI BTS-2000 as the DOE 
test procedure at 10 CFR 431.85.
---------------------------------------------------------------------------

    The Institute of Boiler and Radiator Manufacturers (I=B=R), a 
division of the HI, developed a certification program that the majority 
of the manufacturers in the commercial packaged boiler industry use to 
certify their equipment. Through the certification program, AHRI 
determines if the equipment conforms to HI BTS-2000. Once AHRI has 
determined that the equipment has met all the requirements under the HI 
BTS-2000 standards and certification program, it is added to the I=B=R 
Directory. DOE used I=B=R's certification data, as summarized by the 
January 2008 I=B=R Directory, in the engineering analysis.
    Another trade association representing the interests of commercial 
boiler manufacturers is the American Boiler Manufacturers Association 
(ABMA). ABMA represents manufacturers serving a number of markets. One 
of these markets is boilers intended for use in commercial systems. 
ABMA's Web site \22\ describes ``light commercial'' systems as having 
Btu input capacities of 400,000 to 12.5 MMBH and applications that 
include ``hydronic hot water heating boilers, low-pressure steam 
boilers * * * for heating * * * applications.'' Because such boilers 
meet the definition of commercial packaged boilers covered by this 
rulemaking, ABMA is a trade association that could represent commercial 
packaged boiler manufacturers covered by this rulemaking.
---------------------------------------------------------------------------

    \22\ For more information on ABMA's commercial systems group, 
visit http://www.abma.com/commercialSystems.html.
---------------------------------------------------------------------------

b. Manufacturer Information
    DOE initially identified manufacturers of commercial packaged 
boilers by reviewing AHRI's January 2008 I=B=R Directory of commercial 
packaged boilers and equipment literature. Table V.1 shows the 26 
separate commercial packaged boiler manufacturers identified in the 
January 2008 I=B=R Directory. Several of these manufacturers share the 
same parent company, which is shown in parentheses next to the 
individual brand name.

   Table V.1--Commercial Packaged Boiler Manufacturers Represented in
               AHRI's January 2008 I=B=R Ratings Directory
 
A.O. Smith Water Products Co.------------New Yorker Boiler Co., Inc.----
                                          (Burnham Holdings, Inc.)
AERCO International, Inc                 P B Heat, LLC.
BIASI, S.p.A. c/o QHT, Inc               Pennco (ECR International,
                                          Inc.).
Bosch Thermotechnology Corp              Raypak, Inc.
Burnham Commercial (Burnham Holdings,    RBI Water Heaters (Mestek,
 Inc.)                                    Inc.).
Burnham Hydronics (Burnham Holdings,     Slant/Fin Corporation.
 Inc.)
Columbia Boiler Company of Pottstown     Smith Cast Iron Boilers.
Crown Boiler Co. (Burnham Holdings,      Thermal Solutions Products, LLC
 Inc.)                                    (Burnham Holdings, Inc.).
De Dietrich                              Thermo-Dynamics Boiler Co.
Dunkirk Boilers (ECR International,      Triangle Tube.
 Inc.)
Heat Transfer Products Inc               Utica Boilers (ECR
                                          International, Inc.).
LAARS Heating Systems Company            Viessmann Manufacturing
                                          Company, Inc.
Lochinvar Corporation                    Weil-McLain.
------------------------------------------------------------------------

    While several of the manufacturers listed in Table V.1 specialize 
in residential boiler equipment, all offer at least some equipment with 
capacities that classify them as commercial boilers. DOE also 
identified 20 additional manufacturers of commercial packaged boiler 
equipment from ABMA's member listings, and from searching the

[[Page 12024]]

SCAQMD certification directory and the CSA-International product 
listings. The additional manufacturers DOE identified through these 
methods were: AESYS Technologies, Inc.; Ajax Boiler, Inc.; Bryan Steam, 
LLC; Cleaver-Brooks, Inc.; Easco Boiler Corporation; Johnston Boiler 
Company; Miura; Sellers Engineering; Superior Boiler Works, Inc.; Vapor 
Power International; Fulton Boiler; Parker Boiler; Patterson-Kelley 
Company (division of Harsco); Triad Boiler Systems; CAMUS Hydronics, 
Ltd.; Gasmaster Industries; General Boiler Co., Inc.; Hurst Boiler and 
Welding Co., Inc.; Lattner Boiler Company; and Unilux Advanced 
Manufacturing, LLC. Each commercial boiler manufacturer generally 
specializes in a specific type of commercial boiler construction. For 
example, manufacturers such as Weil-McLain, Smith Cast Iron, and 
Burnham Commercial specialize in cast iron boilers; manufacturers such 
as Raypak and Lochinvar tend to manufacture a higher number of copper-
tube boilers.
c. Shipments Information
    DOE obtained data on estimated annual shipments for commercial 
packaged boilers from AHRI, which totaled approximately 36,000 units in 
2007. DOE notes that these estimated total shipments likely 
underestimates the actual total shipments of the commercial packaged 
boiler market because the data only include information provided 
through AHRI. Some manufacturers have not have provided information to 
AHRI regarding their shipments. However, DOE believes the fraction of 
shipments not included in this total would be small. Further details 
regarding the shipments estimates and forecasts can be found in section 
V.G., National Impact Analysis, below.

C. Engineering Analysis

    The engineering analysis establishes the relationship between the 
cost and efficiency of a piece of equipment DOE is evaluating for 
potential amended energy conservation standards. This relationship 
serves as the basis for cost-benefit calculations for individual 
consumers and the Nation. The engineering analysis identifies 
representative baseline equipment, which is the starting point for 
analyzing the possibility for energy efficiency improvements. A 
baseline piece of equipment here refers to a model having features and 
technologies typically found in equipment currently offered for sale. 
The baseline model in each equipment class represents the typical 
characteristics of equipment in that class and, for equipment already 
subject to energy conservation standards, usually is a model that just 
meets the current Federal standard. After identifying the baseline 
models, DOE estimates the costs to the customer through an analysis of 
contractor costs and markups. ``Markups'' are the multipliers DOE uses 
to determine the costs to the customer based on contractor cost.
    DOE typically structures its engineering analysis around one of 
three methodologies: (1) The design-option approach, which calculates 
the incremental costs of adding specific design options to a baseline 
model; (2) the efficiency-level approach, which calculates the relative 
costs of achieving increases in energy efficiency levels without regard 
to the particular design options used to achieve such increases; and/or 
(3) the reverse-engineering or cost-assessment approach, which involves 
a ``bottom-up'' manufacturing cost assessment based on a detailed bill 
of materials derived from tear-downs of the product being analyzed.
1. Approach
    For this analysis, DOE used an efficiency-level approach to 
evaluate the cost of commercial packaged boilers at the baseline 
efficiency level, as well as efficiency levels above the baseline. DOE 
used the efficiency level approach because of the wide variety of 
designs available of the market and because the efficiency level 
approach does not examine a specific design in order to reach each of 
the efficiency levels. The efficiency levels that DOE considered in the 
engineering analysis were representative of commercial packaged boilers 
currently being produced by manufacturers at the time the engineering 
analysis was developed. DOE relied primarily on data collected through 
discussions with mechanical contractors or equipment distributors of 
commercial boiler equipment to develop its cost-efficiency relationship 
for commercial packaged boilers. (See chapter 3 of the NOPR TSD for 
further detail.)
2. Representative Input Capacities
    For commercial packaged boilers, each energy efficiency level is 
expressed as either a thermal efficiency or combustion efficiency, 
which covers the full output capacity range. For each ``small'' 
equipment class analyzed, DOE collected contractor cost data for three 
representative rated output capacities of small commercial packaged 
boilers: 400, 800, and 1,500 kBtu/h. DOE then normalized the contractor 
costs by capacity for each small commercial packaged boiler equipment 
class. DOE used all the normalized contractor costs on a per kBtu/h 
basis to create a single cost-efficiency curve with 800 kBtu/h as the 
representative capacity. DOE chose 800 kBtu/h because it is the median 
of the three representative capacities and because a large number of 
shipments correspond to this capacity.
    For each ``large'' equipment class analyzed, DOE used a similar 
approach, in which it collected cost data and created a cost-efficiency 
curve for one representative output capacity, 3,000 kBtu/h. (See 
chapter 3 of the NOPR TSD for additional details.)
3. Baseline Equipment
    DOE selected baseline efficiency levels as reference points for 
each equipment class, against which it measured changes resulting from 
potential amended energy conservation standards. DOE defined the 
baseline efficiency levels in the engineering analysis and the LCC and 
PBP analyses as reference points to compare the technology, energy 
savings, and cost of equipment with higher energy efficiency levels. 
Typically, units at the baseline efficiency level just meet Federal 
energy conservation standards and provide basic consumer utility. 
However, DOE is not able to consider efficiency levels lower than those 
specified in ASHRAE Standard 90.1-2007 for commercial packaged boilers. 
Therefore, the baseline efficiency levels DOE identified for this 
analysis were the efficiency levels specified for each commercial 
packaged boiler equipment class in ASHRAE Standard 90.1-2007. Table V.2 
lists the ASHRAE Standard 90.1-2007 efficiency levels for each 
commercial packaged boiler equipment class.

  Table V.2--Baseline Efficiency Levels for Commercial Packaged Boilers
------------------------------------------------------------------------
                                                                ASHRAE
                                                               standard
                                                              90.1-2007
                      Equipment class                         efficiency
                                                                level
                                                              (percent)
------------------------------------------------------------------------
Small Gas-Fired Hot Water..................................        80 ET
Small Gas-Fired Steam All Except Natural Draft.............        79 ET
Small Gas-Fired Steam Natural Draft........................        77 ET
Small Oil-Fired Hot Water..................................        82 ET
Small Oil-Fired Steam......................................        81 ET
Large Gas-Fired Hot Water..................................        82 EC
Large Gas-Fired Steam, All Except Natural Draft............        79 ET
Large Gas-Fired Steam Natural Draft........................        77 ET
Large Oil-Fired Hot Water..................................        84 EC
Large Oil-Fired Steam......................................        81 ET
------------------------------------------------------------------------


[[Page 12025]]

4. Identification of Efficiency Levels for Analysis
    In the engineering analysis, DOE established energy efficiency 
levels for each equipment class that reflect the current commercial 
packaged boiler market. DOE reviewed the commercial packaged boiler 
market to determine what types of equipment are available to consumers. 
DOE examined all of the manufacturers' product offerings to identify 
the energy efficiencies that correspond to efficiency levels with 
models already widely available on the market. DOE used these energy 
efficiencies to develop the efficiency levels of the engineering 
analysis. For this NOPR, DOE used an efficiency level approach, which 
allows DOE to estimate the costs and benefits associated with a 
particular efficiency level rather than a particular design. Table V.3 
through Table V.12 show the efficiency levels analyzed for each 
equipment class.
a. Small Gas-Fired Hot Water Commercial Packaged Boiler Efficiency 
Levels
    For small gas-fired hot water commercial packaged boilers, DOE 
selected four efficiency levels to analyze above the baseline 
efficiency level. Table V.3 shows the efficiency levels DOE selected. 
DOE examined these efficiency levels for the representative output 
capacity (i.e., 800 kBtu/h) for analysis purposes. However, DOE notes 
these efficiency levels can be found at numerous other capacities 
within the range of covered capacities.

     Table V.3--Small Gas-Fired Hot Water Commercial Packaged Boiler
                            Efficiency Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           80
Efficiency Level 1.........................................           82
Efficiency Level 2.........................................           84
Efficiency Level 3.........................................           86
Efficiency Level 4 (Condensing)............................           92
------------------------------------------------------------------------

b. Small Gas-Fired Steam All Except Natural Draft Commercial Packaged 
Boiler Efficiency Levels
    For small gas-fired steam all except natural draft commercial 
packaged boilers, DOE selected four efficiency levels to analyze above 
the baseline efficiency level. Table V.4 shows the efficiency levels 
DOE selected. DOE examined these efficiency levels for the 800 kBtu/h 
representative output capacity for analysis purposes. However, DOE 
notes these efficiency levels can be found at numerous other capacities 
within the range of covered capacities.

  Table V.4--Small Gas-Fired Steam, All Except Natural Draft Commercial
                    Packaged Boiler Efficiency Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           79
Efficiency Level 1.........................................           80
Efficiency Level 2.........................................           81
Efficiency Level 3.........................................           82
Efficiency Level 4.........................................           83
------------------------------------------------------------------------

c. Small Gas-Fired Steam Natural Draft Water Commercial Packaged Boiler 
Efficiency Levels
    For small gas-fired steam natural draft commercial packaged 
boilers, DOE selected three efficiency levels to analyze above the 
baseline efficiency level. Table V.5 shows the efficiency levels DOE 
selected. DOE examined these efficiency levels for the 800 kBtu/h 
representative output capacity for analysis purposes. However, DOE 
notes these efficiency levels can be found at numerous other capacities 
within the range of covered capacities.

   Table V.5--Small Gas-Fired Steam Natural Draft Commercial Packaged
                        Boiler Efficiency Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           77
Efficiency Level 1.........................................           78
Efficiency Level 2.........................................           79
Efficiency Level 3.........................................           80
------------------------------------------------------------------------

d. Small Oil-Fired Hot Water Commercial Packaged Boiler Efficiency 
Levels
    For small oil-fired hot water commercial packaged boilers, DOE 
selected three efficiency levels to analyze above the baseline 
efficiency level. Table V.6 shows the efficiency levels DOE selected. 
DOE examined these efficiency levels for the 800 kBtu/h representative 
output capacity for analysis purposes. However, DOE notes these 
efficiency levels can be found at numerous other capacities within the 
range of covered capacities.

     Table V.6--Small Oil-Fired Hot Water Commercial Packaged Boiler
                            Efficiency Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           82
Efficiency Level 1.........................................           84
Efficiency Level 2.........................................           86
Efficiency Level 3.........................................           88
------------------------------------------------------------------------

e. Small Oil-Fired Steam Commercial Packaged Boiler Efficiency Levels
    For small oil-fired steam commercial packaged boilers DOE selected 
three efficiency levels to analyze above the baseline efficiency level. 
Table V.7 shows the efficiency levels DOE selected. DOE examined these 
efficiency levels for the 800 kBtu/h representative output capacity for 
analysis purposes. However, DOE notes these efficiency levels can be 
found at numerous other capacities within the range of covered 
capacities.

 Table V.7--Small Oil-Fired Steam Commercial Packaged Boiler Efficiency
                                 Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           81
Efficiency Level 1.........................................           82
Efficiency Level 2.........................................           83
Efficiency Level 3.........................................           85
------------------------------------------------------------------------

f. Large Gas-Fired Hot Water Commercial Packaged Boiler Efficiency 
Levels
    For large gas-fired hot water commercial packaged boilers, DOE 
selected four efficiency levels to analyze above the baseline 
efficiency level. Table V.8 shows the efficiency levels DOE selected. 
DOE examined these efficiency levels for the 3,000 kBtu/h 
representative output capacity for analysis purposes. However, DOE 
notes these efficiency levels can be found at numerous other capacities 
within the range of covered capacities.

[[Page 12026]]



     Table V.8--Large Gas-Fired Hot Water Commercial Packaged Boiler
                            Efficiency Levels
------------------------------------------------------------------------
                                                              Combustion
                                                              efficiency
                                                             (EC) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           82
Efficiency Level 1.........................................           83
Efficiency Level 2.........................................           84
Efficiency Level 3.........................................           85
Efficiency Level 4 (Condensing)............................           95
------------------------------------------------------------------------

g. Large Gas-Fired Steam, All Except Natural Draft Commercial Packaged 
Boiler Efficiency Levels
    For large gas-fired steam, all except natural draft commercial 
packaged boilers, DOE selected four efficiency levels to analyze above 
the baseline efficiency level. Table V.9 shows the efficiency levels 
selected by DOE. DOE examined these efficiency levels for the 3,000 
kBtu/h representative output capacity for analysis purposes. However, 
DOE notes these efficiency levels can be found at numerous other 
capacities within the range of covered capacities.

  Table V.9--Large Gas-Fired Steam, All Except Natural Draft Commercial
                    Packaged Boiler Efficiency Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           79
Efficiency Level 1.........................................           80
Efficiency Level 2.........................................           81
Efficiency Level 3.........................................           82
Efficiency Level 4.........................................           83
------------------------------------------------------------------------

h. Large Gas-Fired Steam Natural Draft Commercial Packaged Boiler 
Efficiency Levels
    For large gas-fired steam natural draft commercial packaged 
boilers, DOE selected four efficiency levels to analyze above the 
baseline efficiency level. Table V.10 shows the efficiency levels DOE 
selected. DOE examined these efficiency levels for the 3,000 kBtu/h 
representative output capacity for analysis purposes. However, DOE 
notes these efficiency levels can be found at numerous other capacities 
within the range of covered capacities.

   Table V.10--Large Gas-Fired Steam Natural Draft Commercial Packaged
                        Boiler Efficiency Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           77
Efficiency Level 1.........................................           78
Efficiency Level 2.........................................           79
Efficiency Level 3.........................................           80
Efficiency Level 4.........................................           81
------------------------------------------------------------------------

i. Large Oil-Fired Hot Water Commercial Packaged Boiler Efficiency 
Levels
    For large oil-fired hot water commercial packaged boilers, DOE 
selected three efficiency levels to analyze above the baseline 
efficiency level. Table V.11 shows the efficiency levels DOE selected. 
DOE examined these efficiency levels for the 3,000 kBtu/h 
representative output capacity for analysis purposes. However, DOE 
notes these efficiency levels can be found at numerous other capacities 
within the range of covered capacities.

    Table V.11--Large Oil-Fired Hot Water Commercial Packaged Boiler
                            Efficiency Levels
------------------------------------------------------------------------
                                                              Combustion
                                                              efficiency
                                                             (EC) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           84
Efficiency Level 1.........................................           86
Efficiency Level 2.........................................           87
Efficiency Level 3.........................................           88
------------------------------------------------------------------------

j. Large Oil-Fired Steam Commercial Packaged Boiler Efficiency Levels
    For large oil-fired steam commercial packaged boilers, DOE selected 
four efficiency levels to analyze above the baseline efficiency level. 
Table V.12 shows the efficiency levels DOE selected. DOE examined these 
efficiency levels for the 3,000 kBtu/h representative output capacity 
for analysis purposes. However, DOE notes these efficiency levels can 
be found at numerous other capacities within the range of covered 
capacities.

 Table V.12--Large Oil-Fired Steam Commercial Packaged Boiler Efficiency
                                 Levels
------------------------------------------------------------------------
                                                               Thermal
                                                              efficiency
                                                             (ET) levels
                      Efficiency level                           for
                                                               analysis
                                                              (percent)
------------------------------------------------------------------------
Baseline Efficiency........................................           81
Efficiency Level 1.........................................           82
Efficiency Level 2.........................................           83
Efficiency Level 3.........................................           84
Efficiency Level 4.........................................           86
------------------------------------------------------------------------

5. Oil-Fired Commercial Packaged Boilers
    DOE estimated that oil-fired commercial packaged boilers are, on 
average, 3 percent more efficient than gas-fired boilers of identical 
construction. Because the construction of oil-fired and gas-fired 
boilers is basically the same, with the exception of some differences 
in controls, DOE assumed the incremental cost for increasing the 
efficiency of both types of boilers would be the same. The difference 
in the cost of controls would make no difference in the incremental 
cost of equipment because the same additional cost for controls would 
be applied across the range of oil-fired commercial boiler 
efficiencies. Once the cost-efficiency curves were normalized, the cost 
of the controls was subtracted. For these reasons, DOE estimated the 
incremental cost-efficiency curves for oil-fired equipment by shifting 
the cost-efficiency curves for each gas-fired equipment class by 3 
percent (e.g., DOE shifted the small gas-fired hot water curve 3 
percent higher in efficiency to obtain the small oil-fired hot water 
curve).
    For the steam curves, where gas-fired equipment is divided into 
natural draft and all except natural draft curves, DOE used the all 
except natural draft curves to develop the cost-efficiency curves for 
oil-fired steam boilers. This is because the majority of oil-fired 
steam boilers in DOE's database are categorized as all except natural 
draft.
6. Dual Output Boilers
    Dual output boilers are boilers capable of producing either hot 
water or steam as the boiler's output of services. DOE analyzed dual 
output boilers by classifying them as steam only boilers. DOE did this 
because the current test procedure for commercial packaged boilers 
instructs manufacturers to test boilers capable of producing both steam 
and hot water either only in steam mode or in both steam mode and hot 
water mode. 10 CFR 431.86(c)(2)(iii)(A).

[[Page 12027]]

Further, the test procedure states that if a manufacturer chooses to 
test a boiler in both steam mode and hot water mode, the boiler must be 
rated for efficiency in each mode as two separate listings in the I=B=R 
Directory. 10 CFR 431.86(c)(2)(iii)(B). Therefore, DOE assumed the 
efficiency ratings for dual output boilers were representative of the 
efficiency of the boiler tested in steam mode only. DOE seeks comment 
from interested parties regarding the efficiency of dual output boilers 
in both steam mode and hot water mode. Specifically, DOE is interested 
in receiving data or comments, which would allow DOE to convert the 
steam ratings in the I=B=R Directory and manufacturers' catalogs to hot 
water ratings. This is identified as Issue 2 under ``Issues on Which 
DOE Seeks Comment'' in section VIII.E of today's NOPR.
7. Engineering Analysis Results
    The result of the engineering analysis is a set of cost-efficiency 
curves. Creating the cost-efficiency curves involved three steps: (1) 
Plotting the contractor cost versus efficiency; (2) aggregating the 
cost data by manufacturer; and (3) using an exponential regression 
analysis to fit a curve that best defines the aggregated data. DOE 
refers to the contractor cost--provided directly from mechanical 
contractors or equipment distributors--as the ``absolute cost.'' DOE 
correlated the absolute cost as a function of each commercial packaged 
boiler's rated efficiency. Most manufacturers publish the rated thermal 
and/or combustion efficiencies of their commercial packaged boilers 
according to AHRI specifications. DOE only presents the incremental 
costs of increasing the efficiency of a commercial packaged boiler in 
the NOPR TSD to avoid the possibility of revealing sensitive 
information about individual manufacturers' equipment. Different 
manufacturers might have substantially different absolute costs for 
their equipment at the same efficiency level due to design 
modifications and manufacturing practices.
    To determine the relationship of incremental cost versus efficiency 
for each of the representative capacities in each equipment class, DOE 
aggregated the absolute cost data. After aggregating the data, DOE fit 
an exponential curve to the data at each representative capacity for 
each equipment class and normalized the data. That is, DOE adjusted the 
costs of every manufacturer's equipment so that the cost of its 
equipment was zero at the baseline ASHRAE Standard 90.1-2007 efficiency 
levels (Table V.2). The normalized exponential cost curves from the 
aggregated data establish cost-efficiency curves for each equipment 
class that represent the average incremental cost of increasing 
efficiency above the ASHRAE Standard 90.1-2007 levels.
    The curves do not represent any single manufacturer, and they do 
not describe any variance among manufacturers. The curves simply 
represent, on average, the industry's cost to increase equipment 
efficiency. It should be noted that in this analysis, several types of 
boiler construction are aggregated into single equipment classes, and 
the cost-efficiency curves represent only an average boiler and not any 
individual boiler with any specific design characteristics. For 
example, small gas hot water boilers are commonly manufactured as 
copper tube boilers or as cast iron sectional boilers. The difference 
in the two materials and the construction of these boilers results in a 
wide range of prices and efficiencies for this boiler equipment class. 
DOE attempted in its analysis to determine what the average cost-
efficiency relationship would look like across the range of boiler 
types included in each equipment class. The results show that the cost-
efficiency relationships for each of the ten equipment classes are 
nonlinear. As efficiency increases, manufacturing becomes more 
difficult and more costly for manufacturers. Chapter 3 of the NOPR TSD 
provides additional information about the engineering analysis, as well 
as the complete set of cost-efficiency results.

D. Markups To Determine Equipment Price

    DOE understands that the price of commercial boilers depends on the 
distribution channel the customer uses to purchase the equipment. 
Typical distribution channels for commercial HVAC equipment include 
manufacturers' national accounts, wholesalers, mechanical contractors, 
and/or general contractors. DOE developed costs for mechanical 
contractors directly in the engineering analysis and estimated cost to 
customers using a markup chain beginning with the mechanical contractor 
cost. DOE did not develop an estimate for manufacturer selling prices 
in the engineering analysis and consequently, did not develop an 
estimate of markups for national account distribution channels with 
sales directly from manufacturers to customers. Because of the 
complexity of installation and based on few shipments to mercantile/
retail building types, DOE estimated most sales of commercial packaged 
boilers involved mechanical contractors. Consequently, DOE did not 
develop separate markups for costs through a national account 
distribution chain or directly from wholesalers.
    DOE developed supply chain markups in the form of multipliers that 
represent increases above the mechanical contractor cost. DOE applied 
these markups (or multipliers) to the mechanical contractor costs it 
developed from the engineering analysis. DOE then added sales taxes and 
installation costs to arrive at the final installed equipment prices 
for baseline and higher-efficiency equipment. See chapter 5 of the NOPR 
TSD for additional details on markups. DOE identified two separate 
distribution channels for commercial boilers to describe how the 
equipment passes from the mechanical contractor to the customer (Table 
V.13).

*COM022*Table V.13--Distribution Channels for Commercial Packaged Boiler
                                Equipment
------------------------------------------------------------------------
         Channel 1 (replacements)           Channel 2 (new construction)
------------------------------------------------------------------------
Mechanical Contractor.....................  Mechanical Contractor.
                                            General Contractor.
Customer..................................  Customer.
------------------------------------------------------------------------

    DOE assumed that general contractors would be involved in new 
construction involving installation of commercial boilers. DOE assumed 
that replacement of existing boilers would not involve general 
contractors.
    DOE estimated percentages for both the new construction and 
replacement markets based on data developed for the shipment's model 
and based on growth in new construction and replacement of existing 
stock as shown in Table V.14. Based on these results, DOE assumes that 
approximately 33 percent of commercial boilers purchased will be 
installed in new construction, and the remaining 67 percent will 
replace existing commercial boilers.

[[Page 12028]]



   Table V.14--Percentage of Commercial Packaged Boiler Market Shares
                Passing Through Each Distribution Channel
------------------------------------------------------------------------
                                         Channel 1 (%)    Channel 2 (%)
------------------------------------------------------------------------
Replacement Market....................              100                0
New Construction Market...............                0              100
------------------------------------------------------------------------

    For each step in the distribution channels presented above, DOE 
estimated a baseline markup and an incremental markup. DOE defined a 
baseline markup as a multiplier that converts the mechanical contractor 
cost of equipment with baseline efficiency to the customer purchase 
price for the equipment at the same baseline efficiency level. An 
incremental markup is defined as the multiplier to convert the 
incremental increase in mechanical contractor cost of higher-efficiency 
equipment to the customer purchase price for the same equipment. Both 
baseline and incremental markups only depend on the particular 
distribution channel and are independent of the boiler efficiency 
levels.
    DOE developed the markups for each distribution channel based on 
available financial data. DOE based the mechanical contractor markups 
on data from the Air Conditioning Contractors of America (ACCA) \23\ 
and on the 2002 U.S. Census Bureau financial data \24\ for the 
plumbing, heating, and air conditioning industry. DOE derived the 
general contractor markups from U.S. Census Bureau financial data for 
the commercial and institutional building construction sector.
---------------------------------------------------------------------------

    \23\ Air Conditioning Contractors of America. Financial Analysis 
for the HVACR Contracting Industry, 2005. Available at: http://www.acca.org.
    \24\ The 2002 U.S. Census Bureau financial data for the 
plumbing, heating, and air conditioning industry is the latest 
version data set and was issued in December 2004. Available at: 
http://www.census.gov/prod/ec02/ec0223i236220.pdf.
---------------------------------------------------------------------------

    The overall markup is the product of all the markups (baseline or 
incremental) for the different steps within a distribution channel plus 
sales tax. DOE calculated sales taxes based on 2008 State-by-State 
sales tax data reported by the Sales Tax Clearinghouse. Because both 
contractor costs and sales tax vary by State, DOE developed 
distributions of markups within each distribution channel by State. 
Because the State-by-State distribution of boiler unit sales varies by 
building type, the National distribution of the markups varies among 
business types. Chapter 5 of the NOPR TSD provides additional detail on 
markups.

E. Energy Use Characterization

    DOE used the building energy use characterization analysis to 
assess the energy savings potential of commercial boilers at different 
efficiency levels. This analysis estimates the energy use of commercial 
boilers at specified efficiency levels by using previously calculated 
Full Load Equivalent Operating Hour (FLEOH) metrics by building type 
and by climate across the United States. FLEOHs are effectively the 
number of hours that a system would have to run at full capacity to 
serve a total load equal to the annual load on the equipment. Boiler 
FLEOHs are calculated as the annual heating load divided by the 
equipment capacity. The FLEOH values used for the boiler analysis were 
based on simulations documented for the ``Screening Analysis for EPACT-
Covered Commercial [Heating, Ventilating and Air-Conditioning] HVAC and 
Water-Heating Equipment'' \25\ (hereafter, 2000 Screening Analysis) (66 
FR 3336 (Jan. 12, 2001)) and used 7 different building types and 11 
different U.S. climates.
---------------------------------------------------------------------------

    \25\ U.S. Department of Energy, Office of Energy Efficiency and 
Renewable Energy, ``Energy Conservation Program for Consumer 
Products: Screening Analysis for EPACT-Covered Commercial HVAC and 
Water-Heating Equipment Screening Analysis'' (April 2000).
---------------------------------------------------------------------------

    For each equipment class, DOE estimated the energy use of a given 
piece of equipment by multiplying the characteristic equipment output 
capacity by the FLEOH appropriate to each combination of representative 
building type and climate location. The product is effectively the 
total annual heat output from the boiler. The input energy is then 
determined by dividing the annual heat output by the thermal efficiency 
of the equipment at each efficiency level. The thermal efficiency is 
used here for all equipment classes since it defines the relationship 
between energy input and useful output of a commercial packaged boiler. 
For the two classes where a thermal efficiency metric was not specified 
by ASHRAE Standard 90.1-2007, an estimate of the thermal efficiency of 
equipment just meeting the combustion efficiency requirements specified 
by ASHRAE Standard 90.1-2007 was developed based on DOE's market 
analysis. DOE adjusted the unit energy use for each nominal equipment 
efficiency level DOE considered.
    In addition for condensing hot water boilers, it is recognized that 
the thermal efficiency of a commercial packaged boiler in actual use 
depends on the return water conditions. In turn, the return water 
conditions are dependent upon the hydronic system design and control. 
For DOE's analysis, the rated thermal efficiencies for fully condensing 
equipment were further adjusted to reflect return water conditioners 
based on installation in existing buildings with conventional hydronic 
heating coils. DOE's estimates allow for the supply water temperature 
to reset sufficiently to meet the estimated heating coil loads during 
the year. See chapter 4 of the TSD for further details.
    DOE estimated the national energy impacts of higher efficiency 
equipment by: (1) Mapping climate locations onto regions; and (2) 
estimating the fraction of each year's national equipment shipments (by 
product category) within market segments, as defined by a 
representative building type within a particular region of the United 
States. Seven representative building types were used, including: 
Assembly, Education, Food Service, Lodging, Office, Retail, and 
Warehouse buildings, as were used in the 2000 Screening Analysis. 
Because detailed statistical information related to where and in what 
types of buildings the equipment is currently being installed is 
generally unavailable, DOE developed an allocation process. The 
estimated allocation of national shipments to market segments was based 
on information from the 2003 Commercial Buildings Energy Consumption 
Survey (CBECS) \26\ related to floor space and relative fraction of 
floor space reporting use of boilers for each market segment.
---------------------------------------------------------------------------

    \26\ Energy Information Administration (2003). Available at: 
http://www.eia.doe.gov/emeu/cbecs/contents/html (2003).
---------------------------------------------------------------------------

    DOE developed the energy use estimates for the seven key commercial 
building types in 11 geographic regions. Seven of these regions 
correspond directly to U.S. Census divisions. The Pacific and Mountain 
Census divisions were subdivided individually into northern and 
southern regions to

[[Page 12029]]

account for north-south climate variation within those Census 
divisions, as discussed in the 2000 Screening Analysis. The LCC and 
national energy savings (NES) analyses use the annual energy 
consumption of commercial boilers in each equipment class analyzed. As 
expected, annual energy use of commercial boilers decreased as the 
efficiency level increased from the baseline efficiency level to the 
highest efficiency level analyzed. Chapter 4 of the NOPR TSD provides 
additional details on the energy use characterization analysis.

F. Life-Cycle Cost and Payback Period Analyses

    DOE conducted the LCC and PBP analyses to estimate the economic 
impacts of potential standards on individual customers of commercial 
packaged boilers. DOE first analyzed these impacts for commercial 
packaged boilers by calculating the change in customers' LCCs likely to 
result from higher efficiency levels compared with the baseline 
efficiency levels. The LCC calculation considers total installed cost 
(contractor 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 customers as if each would purchase a new commercial boiler 
unit in the year the standard takes effect. Since DOE is considering 
both the efficiency levels in ASHRAE Standard 90.1-2007 and more-
stringent efficiency levels, an amended energy conservation standard 
becomes effective on different dates depending upon the efficiency 
level and equipment class. The statutory lead times for DOE adopting of 
the ASHRAE Standard 90.1-2007 efficiency levels and more-stringent 
efficiency levels are different. (See section V.H.1 below for 
additional explanation of the effective dates.) However, from the 
customer's viewpoint, there is only a single boiler purchase date in 
determining the LCC benefits to the customer from purchase of a boiler 
at more-stringent efficiency levels. To account for this, DOE presumes 
that the purchase year for the LCC calculation is 2014, the earliest 
year in which DOE can establish an amended energy conservation level at 
an efficiency level more stringent than the ASHRAE efficiency level. To 
compute LCCs, DOE discounted future operating costs to the time of 
purchase and summed them over the lifetime of the equipment.
    Second, 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 customer to recover the incremental increase in 
the purchase price of more-efficient equipment through lower operating 
costs. The PBP is the change in purchase price divided by the change in 
annual operating cost that results from the standard. DOE expresses 
this period in years. Similar to the LCC, the PBP is based on the total 
installed cost and the 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 conducted the LCC and PBP analyses using a commercially-
available spreadsheet model. This spreadsheet accounts for variability 
in energy use, installation costs and maintenance costs, and energy 
costs, and uses weighting factors to account for distributions of 
shipments to different building types and States to generate national 
LCC savings by efficiency level. The results of DOE's LCC and PBP 
analyses are summarized in section VI below and described in detail in 
chapter 5 of the NOPR TSD.
1. Approach
    Recognizing that each business that uses commercial packaged boiler 
equipment is unique, DOE analyzed variability and uncertainty by 
performing the LCC and PBP calculations assuming a one-to-one 
correspondence between business types and market segments 
(characterized as building types) for customers located in seven types 
of commercial buildings. DOE developed financial data appropriate for 
the customers in each building type. Each type of building has typical 
customers who have different costs of financing because of the nature 
of the business. DOE derived the financing costs based on data from the 
Damodaran Online site.\27\
---------------------------------------------------------------------------

    \27\ Damodaran Online. Leonard N. Stern School of Business, New 
York University (Jan. 2006). Available at: http://www.stern.nyu.edu/adamodar/New_Home_Page/data.html.
---------------------------------------------------------------------------

    The LCC analysis used the estimated annual energy use for each 
commercial packaged boiler unit described in section V.E. Because 
energy use of commercial packaged boilers is sensitive to climate, it 
varies by State. Aside from energy use, other important factors 
influencing the LCC and PBP analyses are energy prices, installation 
costs, equipment distribution markups, and sales tax. At the national 
level, the LCC spreadsheets explicitly modeled both the uncertainty and 
the variability in the model's inputs, using probability distributions 
based on the shipment of commercial packaged boiler equipment to 
different States.
    As mentioned above, DOE generated LCC and PBP results by building 
type and State and used developed weighting factors to generate 
national average LCC savings and PBP for each efficiency level. As 
there is a unique LCC and PBP for each calculated value at the building 
type and State level, the outcomes of the analysis can also be 
expressed as probability distributions with a range of LCC and PBP 
results. A distinct advantage of this type of approach is that DOE can 
identify the percentage of customers achieving LCC savings or attaining 
certain PBP values due to an increased efficiency level, in addition to 
the average LCC savings or average PBP for that efficiency level.
 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 V.15 summarizes the inputs and key 
assumptions DOE used to calculate the customer economic impacts of all 
energy efficiency levels analyzed in this rulemaking. A more detailed 
discussion of the inputs follows.

               Table V.15--Summary of Inputs and Key Assumptions Used in the LCC and PBP Analyses
----------------------------------------------------------------------------------------------------------------
                        Inputs                                                Description
----------------------------------------------------------------------------------------------------------------
                                            Affecting Installed Costs
----------------------------------------------------------------------------------------------------------------
Equipment Price......................................  Equipment price was derived by multiplying contractor
                                                        cost (from the engineering analysis) by mechanical and
                                                        general contractor markups as needed plus sales tax from
                                                        the markups analysis.

[[Page 12030]]

 
Installation Cost....................................  Installation cost includes installation labor, installer
                                                        overhead, and any miscellaneous materials and parts,
                                                        derived from RS Means CostWorks 2007.\28\ DOE added
                                                        additional costs to reflect the installation of near
                                                        condensing and condensing boilers at efficiency levels
                                                        more stringent than ASHRAE Standard 90.1-2007 efficiency
                                                        levels. These costs include control modifications,
                                                        stainless steel flues, and condensate pumps and piping
                                                        to remove condensate.
----------------------------------------------------------------------------------------------------------------
                                            Affecting Operating Costs
----------------------------------------------------------------------------------------------------------------
Annual Energy Use....................................  DOE derived annual energy use using FLEOH data for
                                                        commercial boilers combined with thermal efficiency
                                                        estimates for each boiler efficiency level analyzed. DOE
                                                        did not incorporate differences in annual electricity
                                                        use by efficiency level. DOE used State-by-State
                                                        weighting factors to estimate the national energy
                                                        consumption by efficiency level.
Fuel Prices..........................................  DOE developed average commercial natural gas and fuel oil
                                                        prices for each State using EIA's State Energy Database
                                                        Data for 2006 for natural gas and oil price data.\29\
                                                        DOE used AEO2008 energy price forecasts to project oil
                                                        and natural gas prices into the future.
Maintenance Cost.....................................  DOE estimated annual maintenance costs for commercial
                                                        boilers based on MARS 8 Facility Cost Forecast System
                                                        Database \30\ for commercial boilers. Annual maintenance
                                                        cost did not vary as a function of efficiency.
Repair Cost..........................................  DOE estimated the annualized repair cost for baseline
                                                        efficiency commercial boilers based on cost data from
                                                        MARS 8 Facility Cost Forecast System Database for
                                                        commercial boilers. DOE assumed that repair costs would
                                                        vary in direct proportion with the MSP at higher
                                                        efficiency levels because it generally costs more to
                                                        replace components that are more efficient.
----------------------------------------------------------------------------------------------------------------
                            Affecting Present Value of Annual Operating Cost Savings
----------------------------------------------------------------------------------------------------------------
Equipment Lifetime...................................  DOE estimated equipment lifetime assuming a 30-year
                                                        lifespan for all commercial boilers based on data
                                                        published by ASHRAE.
Discount Rate........................................  Mean real discount rates for all buildings range from 2.3
                                                        percent for education buildings to 5.9 percent for
                                                        retail building owners.
Analysis Start Year..................................  Start year for LCC is 2014, which is four years after the
                                                        publication of the final rule for amended energy
                                                        conservation standards higher than ASHRAE.
----------------------------------------------------------------------------------------------------------------
                                           Analyzed Efficiency Levels
----------------------------------------------------------------------------------------------------------------
Analyzed Efficiency Levels...........................  DOE analyzed the baseline efficiency levels (ASHRAE
                                                        Standard 90.1-2007) and up to four higher efficiency
                                                        levels for all ten equipment classes. See the
                                                        engineering analysis for additional details.
----------------------------------------------------------------------------------------------------------------

a. Equipment Prices
    The price of a commercial boiler reflects the application of 
distribution channel markups (mechanical and general contractor 
markups) and sales tax to the mechanical contractor cost established in 
the engineering analysis. As described in section V.C, DOE determined 
mechanical contractor costs for ten commercial boilers defined by a 
single representative equipment capacity (output capacity) for each of 
ten equipment classes. For each equipment class, the engineering 
analysis provided contractor costs for the baseline equipment and up to 
four higher equipment efficiencies.
---------------------------------------------------------------------------

    \28\ RS Means CostWorks 2007, R.S. Means Company, Inc. 2007. 
Kingston, Massachusetts (2007). Available at: http://www.meanscostworks.com/.
    \29\ Natural Gas Price and Expenditure Estimates by Sector, EIA, 
2006. Available at: http://www.eia.doe.gov/emeu/states/sep_fuel/html/fuel_pr_ng.html. 2006 Distillate Fuel Price and Expenditure 
Estimates by Sector, EIA, 2006. Available at: http://www.eia.doe.gov/emeu/states/hf.jsp?incfile=sep_fuel/html/fuel_pr_df.html
    \30\ MARS 8 Facility Cost Forecast System Database, Whitestone 
Research, 2008. Washington, DC. Available at: http://www.whitestoneresearch.com/mars/index.htm.
---------------------------------------------------------------------------

    The markup is the percentage increase in price as the commercial 
packaged boiler equipment passes through the distribution channel. As 
explained in section V.D, distribution chain markups are based on two 
truncated distribution channels, starting with a mechanical contractor 
cost for each efficiency level, based on whether the equipment is being 
purchased for the new construction market or to replace existing 
equipment.
b. Installation Costs
    DOE derived national average installation costs for commercial 
boilers from data provided in RS Means CostWorks 2007 (RS Means) for 
commercial boiler equipment with efficiencies at or below the ASHRAE 
Standard 90.1-2007 efficiency levels.\31\ RS Means provides estimates 
for installation costs for hot water and steam boilers by equipment 
capacity and fuel type, as well as cost indices that reflect the 
variation in installation costs for 295 cities in the United States. 
The RS Means data identifies several cities in all 50 States and the 
District of Columbia. DOE incorporated location-based cost indices into 
the analysis to capture variation in installation cost, depending on 
the location of the customer.
---------------------------------------------------------------------------

    \31\ RS Means CostWorks 2007, R.S. Means Company, Inc. 2007. 
Kingston, Massachusetts (2007). Available at: http://www.meanscostworks.com/.
---------------------------------------------------------------------------

    For more-stringent efficiency levels, DOE estimated the cost for 
stainless steel venting at more-stringent efficiency levels based on an 
assumed 35-foot flue length and applied the entire materials cost to 
commercial packaged boilers going into the replacement market. In 
addition, DOE assumed additional costs for control modifications for 
higher-efficiency boilers and for condensate removal for near 
condensing and condensing boilers. DOE recognized, however, that 
installation costs could potentially be higher with higher efficiency 
commercial packaged boilers due primarily to venting concerns with 
existing flues and chimney cases in the replacement market. DOE did not 
have data to calibrate the extent to which additional cost should 
apply. This is identified as Issue 3 under ``Issues on Which DOE Seeks 
Comment'' in section VIII.E of today's NOPR.

[[Page 12031]]

c. Annual Energy Use
    DOE estimated the annual natural gas or fuel oil energy consumed by 
each class of commercial boiler, by efficiency level, based on the 
energy use characterization described in section V.E. DOE aggregated 
the average annual energy use per unit at the State level by applying a 
regional building-type weighting factor to establish the relative 
building type shipments for each of 11 geographic regions composed of 
select States, and then a population-weighting factor for each State 
within the geographic regions.
    DOE adjusted the condensing efficiency levels identified in the 
engineering analysis for small and large gas-fired hot water commercial 
packaged boilers to more accurately reflect actual field efficiencies. 
In both cases, DOE degraded the thermal efficiencies to 88 percent. DOE 
assumed that commercial packaged boilers serve a standard fan coil or 
air handler delivery system and that the load of the system varies 
linearly with the outdoor temperature from a balance point of 50 
degrees Fahrenheit. Chapter 4 of the NOPR TSD describes the annual 
energy use calculations.
    In determining the reduction in energy consumption of commercial 
packaged boiler equipment due to increased efficiency, DOE did not take 
into account a rebound effect. The rebound effect occurs when a piece 
of equipment, after it is made more efficient, is used more 
intensively, and therefore the expected energy savings from the 
efficiency improvement do not fully materialize. For the commercial 
boilers that are the subject of this rulemaking, DOE has no basis for 
concluding that a rebound effect would occur and has not taken the 
rebound effect into account in the energy use characterization.
d. Fuel Prices
    Fuel prices are needed to convert the gas or oil energy savings 
from higher-efficiency equipment into energy cost savings. Because of 
the variation in annual fuel consumption savings and equipment costs 
across the country, it is important to consider regional differences in 
electricity prices. DOE used average effective commercial natural gas 
and commercial fuel oil prices at the State level from Energy 
Information Administration (EIA) data for 2006 and 2007. Where 2006 
data were used, EIA fuel escalation factors from the 2008 Annual Energy 
Outlook (AEO2008) were used to escalate prices to 2007 average fuel 
price estimates. This approach captured a wide range of commercial fuel 
prices across the United States. Furthermore, different kinds of 
businesses typically use electricity in different amounts at different 
times of the day, week, and year, and therefore face different 
effective prices. To make this adjustment, DOE used EIA's 2003 CBECS 
\32\ data set to identify the average prices the seven building types 
paid and compared them with the average prices all commercial customers 
paid.\33\ DOE used the ratios of prices paid by the seven types of 
businesses to the national average commercial prices seen in the 2003 
CBECS as multipliers to adjust the average commercial 2007 State price 
data.
---------------------------------------------------------------------------

    \32\ EIA's Commercial Buildings Energy Consumption Survey, 
Energy Information Agency. Public use microdata available at: http://www.eia.doe.gov/emeu/cbecs/cbecs2003/public_use_2003/cbecs_pudata2003.html.
    \33\ EIA's 2003 CBECS is the most recent version of the data 
set.
---------------------------------------------------------------------------

    DOE weighted the prices each building type paid in each State by 
the estimated sales of commercial boilers to each building type to 
obtain a weighted-average national electricity and national average 
fuel oil price for 2007. The State/building type weights reflect the 
probabilities that a given boiler unit shipped will operate with a 
given fuel price. The effective prices (2007$) range from approximately 
$4.75 per million Btu to approximately $27.98 per million Btu for 
natural gas, and from approximately $14.83 per million Btu to 
approximately $17.56 cents per million Btu for commercial fuel oil. 
(See chapter 5 of the NOPR TSD.)
    The natural gas and fuel price trends provide the relative change 
in fuel costs for future years to 2042. DOE applied the AEO2008 
reference case as the default scenario and extrapolated the trend in 
values from 2020 to 2030 of the forecast to establish prices in 2030 to 
2042. This method of extrapolation is in line with methods the EIA uses 
to forecast fuel prices for the Federal Energy Management Program. DOE 
provides a sensitivity analysis of the LCC savings and PBP results to 
different fuel price scenarios using both the AEO2008 high-price and 
low-price forecasts in chapter 5 of the NOPR TSD.
e. Maintenance Costs
    Maintenance costs are the costs to the customer of maintaining 
equipment operation. Maintenance costs include services such as 
cleaning heat-exchanger coils and changing air filters. DOE estimated 
annual routine maintenance costs for commercial boiler equipment as 
$1.445/kbtu-hr output capacity per year for boilers with output 
capacities of nominally 800 kBtu/h, and as $0.945/kbtu-hr output 
capacity per year for boilers with output capacities of 3000 kBtu/h, 
reported in the MARS 8 Facility Cost Forecast System database. Because 
data were not available to indicate how maintenance costs vary with 
equipment efficiency, DOE decided to use preventive maintenance costs 
that remain constant as equipment efficiency increases.
f. Repair Costs
    The repair cost is the cost to the customer of replacing or 
repairing components that have failed in the commercial boiler. DOE 
estimated the annualized repair cost for baseline efficiency commercial 
boilers as $443/yr for boilers with output capacities of nominally 800 
kBtu/h, and as $820/yr for boilers with output capacities of 3000 kBtu/
h, based on costs for component repair documented in MARS 8 Facility 
Cost Forecast System database. DOE determined that repair costs would 
increase in direct proportion with increases in equipment prices. 
Because the price of boilers increases with efficiency, the cost for 
component repair will also increase as the efficiency of equipment 
increases.
g. Equipment Lifetime
    DOE defines equipment lifetime as the age when a commercial boiler 
is retired from service. DOE reviewed available literature and 
consulted with manufacturers to establish typical equipment lifetimes. 
The literature and experts consulted offered a wide range of typical 
equipment lifetimes. DOE used a 30-year lifetime for commercial boilers 
in the 2000 Screening Analysis based on data from ASHRAE's 1995 
Handbook of HVAC Applications.\34\ DOE continued to use this estimate 
for the LCC analysis. Chapter 5 of the NOPR TSD contains a discussion 
of equipment lifetime.
---------------------------------------------------------------------------

    \34\ ASHRAE Handbook: 1995 Heating, Ventilating, and Air-
Conditioning Applications, ASHRAE, 1995. Available for purchase at: 
http://www.ashrae.org/publications/page/1287.
---------------------------------------------------------------------------

h. Discount Rate
    The discount rate is the rate at which future expenditures are 
discounted to establish their present value. DOE estimated the discount 
rate by estimating the cost of capital for purchasers of commercial 
boilers. Most purchasers use both debt and equity capital to fund 
investments. Therefore, for most purchasers, the discount rate is the 
weighted-average cost of debt and equity financing, or the weighted-
average cost of capital (WACC), less the expected inflation.

[[Page 12032]]

    To estimate the WACC of commercial boiler purchasers, DOE used a 
sample of over 2000 companies grouped to be representative of operators 
of each of five of seven commercial building types (food service, 
lodging, office, retail, and warehouse) and drawn from a database of 
7,369 U.S. companies presented on the Damodaran Online website.\35\ 
This database includes most of the publicly-traded companies in the 
United States. For public assembly and education buildings, DOE 
estimated the cost of capital based on composite tax exempt bond rates. 
When one or more of the variables needed to estimate the discount rate 
was missing or could not be obtained, DOE discarded the firm from the 
analysis. The WACC approach for determining discount rates accounts for 
the current tax status of individual firms on an overall corporate 
basis. DOE did not evaluate the marginal effects of increased costs, 
and thus depreciation due to more expensive equipment, on the overall 
tax status.
---------------------------------------------------------------------------

    \35\ Damodaran financial data used for determining cost of 
capital available at: http://pages.stern.nyu.edu/~adamodar/ for 
commercial businesses. Data for determining financing for public 
buildings available at: http://finance.yahoo.com/bonds/composite_bond_rates.
---------------------------------------------------------------------------

    DOE used the final sample of companies to represent purchasers of 
commercial boilers. For each company in the sample, DOE derived the 
cost of debt, percent debt financing, and systematic company risk from 
information on the Damodaran Online Web site. Damodaran estimated the 
cost of debt financing from the long-term government bond rate (4.39 
percent) and the standard deviation of the stock price. DOE then 
determined the weighted average values for the cost of debt, range of 
values, and standard deviation of WACC for each category of the sample 
companies. Deducting expected inflation from the cost of capital 
provided estimates of real discount rate by ownership category. Based 
on this database, DOE calculated the weighted average after-tax 
discount rate for commercial boiler purchases, adjusted for inflation, 
in each of the seven building types used in the analysis. Chapter 5 of 
the NOPR TSD contains the detailed calculations on the discount rate.
3. Payback Period
    DOE also determined the economic impact of potential amended energy 
conservation standards on customers by calculating the PBP of more-
stringent efficiency levels relative to a baseline efficiency level. 
The PBP measures the amount of time it takes the commercial customer 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 building 
type and State, weighted on the probability of shipment to each market. 
Because the 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. Chapter 
5 of the NOPR TSD provides additional details about the PBP.

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

    The national impacts analysis evaluates the impact of a proposed 
energy conservation standard from a national perspective rather than 
from the customer perspective represented by the LCC. This analysis 
assesses the net present value (NPV) (future amounts discounted to the 
present) and the NES of total commercial customer costs and savings, 
which are expected to result from amended standards at specific 
efficiency levels. For each efficiency level analyzed, DOE calculated 
the NPV and NES for adopting more-stringent standards than the 
efficiency levels specified in ASHRAE Standard 90.1-2007. The NES 
refers to cumulative energy savings from 2012 through 2042. DOE 
calculated new energy savings in each year relative to a base case, 
defined as DOE adoption of the efficiency levels specified by ASHRAE 
Standard 90.1-2007. The NPV refers to cumulative monetary savings. 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. Cumulative savings are the sum of the annual NPV 
over the specified period. DOE accounted for operating cost savings 
until 2085, when 95 percent of all the equipment installed in 2042 
should be retired.
1. Approach
    Over time, equipment that is more efficient in the standards case 
gradually replaces less-efficient equipment. This affects the 
calculation of both the NES and NPV, which 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, including changes in 
shipments and retirement rates in response to changes in equipment 
costs due to amended energy conservation standards. Both calculations 
start by using the shipments estimate and the quantity of units in 
service derived from the shipments model.
    With regard to estimating the NES, because more-efficient boilers 
gradually replace less-efficient ones, the energy per unit of capacity 
used by the boilers in service gradually decreases in the standards 
case relative to the base case. DOE calculated the NES by subtracting 
energy use under a standards-case scenario from energy use in a base 
case scenario.
    Unit energy savings for each equipment class are the weighted-
average values calculated in the LCC spreadsheet. To estimate the total 
energy savings for each efficiency level, DOE first calculated the 
national site energy consumption (i.e., the energy directly consumed by 
the units of equipment in operation) for each class of commercial 
packaged boilers for each year of the analysis period. The NES and NPV 
analysis periods began with the earliest expected effective date of 
amended Federal energy conservation standards (i.e., 2012) based on DOE 
adoption of the baseline ASHRAE 90.1-2007 efficiency levels. For the 
analysis of DOE adoption of more-stringent efficiency levels, the 
earliest effective date is 2014, four years after DOE would likely 
issue a final rule requiring such standards. Second, DOE determined the 
annual site energy savings, consisting of the difference in site energy 
consumption between the base case and the standards case for each class 
of boiler. Third, DOE converted the annual site energy savings into the 
annual amount of energy saved at the source of gas generation (the 
source energy), using a site-to-source conversion factor. Finally, DOE 
summed the annual source energy savings from 2012 to 2042 to calculate 
the total NES for that period. DOE performed these calculations for 
each efficiency level considered for commercial packaged boilers in 
this rulemaking.
    DOE considered whether a rebound effect is applicable in its NES 
analysis. A rebound effect occurs when an increase in equipment 
efficiency leads to an increased demand for its service. EIA in its 
national energy modeling system (NEMS) model assumes a certain 
elasticity factor to account for an increased demand for service due to 
the increase in cooling (or heating) efficiency.\36\ EIA refers to this 
as an efficiency rebound.\37\ For the

[[Page 12033]]

commercial heating equipment market, there are two ways that a rebound 
effect could occur: (1) Increased use of the heating equipment within 
the commercial buildings they are installed in; and (2) additional 
instances of heating a commercial building where it was not being 
heated before.
---------------------------------------------------------------------------

    \36\ DOE used the NEMS version consistent with AEO2008. An 
overview of the NEMS model and documentation is found at http://www.eia.doe.gov/oiaf/aeo/overview/index.html.
    \37\ EIA, Assumptions to the Annual Energy Outlook 2007 (2007). 
Available at: http://www.eia.doe.gov/oiaf/aeo/assumption/index.html.
---------------------------------------------------------------------------

    The first instance does not occur often because commercial 
buildings are generally heated to the thermal comfort temperatures 
desired in these buildings during the occupied periods. DOE also does 
not believe that increases in the efficiency of commercial boilers 
would result in significant increases in operating hours during which 
heating might be utilized in buildings.
    With regard to the second instance, commercial boilers are unlikely 
to be installed in previously unheated building spaces, because 
commercial packaged boilers are not primarily found in warehouse 
buildings. Furthermore, relatively little unheated commercial building 
space exists outside of warehouse buildings. For warehouse buildings 
generally, other heating equipment types tend to be utilized today and 
will likely continued to be used in the future, because of lower first 
costs with direct heating equipment such as furnaces and unit heaters 
as well as the use of high temperature radiant heaters for human 
comfort in some warehouses. Therefore, DOE did not assume a rebound 
effect in the present NOPR analysis. DOE seeks input from interested 
parties on whether there will be a rebound effect for improvements in 
the efficiency of commercial packaged boilers. If interested parties 
believe a rebound effect will occur, DOE is interested in receiving 
data quantifying the effects as well as input regarding how should DOE 
quantify this in its analysis. This is identified as Issue 4 under 
``Issues on Which DOE Seeks Comment'' in section VIII.E of today's 
NOPR.
    To estimate NPV, DOE calculated the net impact as the difference 
between total operating cost savings (including electricity, repair, 
and maintenance cost savings) and increases in total installed costs 
(including customer prices and installation cost). DOE calculated the 
NPV of each 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 in 
order to obtain the net equipment cost increase resulting from the 
higher standard level. Second, DOE determined the difference between 
the base-case operating costs and the standard-level operating costs in 
order 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 in order to 
obtain the net savings (or expense) for each year. DOE then discounted 
the annual net savings (or expenses) to 2008 for boilers bought on or 
after 2012 and summed the discounted values to provide the NPV of an 
efficiency level. An NPV greater than zero shows net savings (i.e., the 
efficiency level would reduce customer expenditures relative to the 
base case in present value terms). An NPV that is less than zero 
indicates that the efficiency level would result in a net increase in 
customer expenditures in present value terms.
    To make the analysis more transparent to all interested parties, 
DOE used a commercially-available spreadsheet model to calculate the 
energy savings and the national economic costs and savings from amended 
standards. Chapter 7 of the NOPR TSD helps explain the models and how 
to use them. Interested parties can review DOE's analyses by changing 
various input quantities within the spreadsheet.
    Unlike the LCC analysis, the NES spreadsheet does not use 
distributions for inputs or outputs, but relies on national average 
first costs and energy costs developed from the LCC spreadsheet. DOE 
examined sensitivities by applying different scenarios. DOE used the 
NES spreadsheet to perform calculations of energy savings and NPV using 
the annual energy consumption and total installed cost data from the 
LCC analysis. DOE forecasted the energy savings, energy cost savings, 
equipment costs, and NPV of benefits for equipment sold in each boiler 
equipment class from 2012 through 2042. The forecasts provided annual 
and cumulative values for all four output parameters described above.
2. Shipments Analysis
    Equipment shipments are an important element in the estimate of the 
future impact of a standard. DOE developed shipments projections under 
a base case and each of the standards cases using a shipments model. 
DOE used the standards-case shipments projection and, in turn, the 
standards-case equipment stock to determine the NES. The shipments 
portion of the spreadsheet model forecasts boiler shipments from 2012 
to 2042. Chapter 6 of the NOPR TSD provides details of the shipment 
projections.
    DOE developed shipments forecasts by accounting for (1) the growth 
in the stock of commercial buildings which use boilers; (2) equipment 
retirements; and (3) equipment lifetimes.
    The shipments model assumes that in each year, each existing boiler 
either ages by one year or breaks down, and that equipment that breaks 
down is replaced. In addition, new equipment can be shipped into new 
commercial building floor space, and old equipment can be removed 
through demolitions. DOE's shipments model is based on current 
shipments for commercial packaged boilers based on data provided by 
AHRI, as described above, as well as on an existing boiler survival 
function consistent with a 30-year equipment life. Shipments are 
separated into two groups: (1) Shipments to new construction; and (2) 
shipments for replacements. Total commercial boiler shipment data for 
2007 from AHRI was first disaggregated into these two groups using the 
relative floor space between new construction and existing stock (as 
determined in the NEMS model for 2007) and assuming the same saturation 
rate for boiler usage between new and existing buildings. DOE then 
disaggregated total boiler shipments into shipments by equipment class, 
based on the relative fraction of models for each equipment class 
reflected in DOE's market database. This data allowed DOE to allocate 
sales of equipment to the different equipment classes. Annual shipments 
to new construction grew in proportion to the annual construction put 
in place as forecast by the NEMS model. Shipments for replacements in 
each year are based on a replacement model, which tracks the quantity 
and types of boilers that must be replaced in the building stock based 
on the boiler survival function. Chapter 2 of the NOPR TSD summarizes 
the total shipments data and the market database.
    Table V.16 shows the forecasted shipments for the different 
equipment classes of commercial boilers for selected years from 2012 to 
2042 for the base case. As equipment purchase price increases with 
efficiency, DOE recognizes that higher first costs can result in a drop 
in shipments. However, DOE had no basis for estimating the elasticity 
of shipments for commercial packaged boilers as a function of either 
first costs or operating costs. Therefore, DOE presumed that total 
shipments do not change with higher standard levels. Table V.16 also 
shows the cumulative shipments for boilers from 2012 to 2042. Chapter 6 
of the NOPR TSD provides additional details on the shipments forecasts, 
including the standards case forecast.

[[Page 12034]]



                                             Table V.16--Base-Case Shipments Forecast for Commercial Boilers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Thousands of units shipped by year and equipment class
                                                   -----------------------------------------------------------------------------------------------------
                     Equipment                                                                                                               Cumulative
                                                       2012       2015       2020       2025       2030       2035       2040       2042      shipments
                                                                                                                                             (2012-2042)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Small gas-fired hot water.........................      6,853      7,112      7,494      7,922      8,848     10,343     12,239     12,984        73,795
Small gas-fired steam all except natural draft....      2,322      2,410      2,539      2,684      2,998      3,505      4,147      4,399        25,005
Small gas-fired steam natural draft...............      3,568      3,703      3,902      4,125      4,607      5,385      6,372      6,760        38,422
Small oil-fired hot water.........................      1,926      1,999      2,106      2,226      2,486      2,906      3,439      3,648        20,736
Small oil-fired steam.............................      3,228      3,350      3,530      3,732      4,168      4,872      5,765      6,116        34,763
Large gas-fired hot water.........................      1,104      1,146      1,208      1,277      1,426      1,667      1,972       2092        11,893
Large gas-fired steam all except natural draft....      2,011      2,087      2,199      2,324      2,596      3,034      3,591      3,809        21,651
Large gas-fired steam natural draft...............      2,577      2,674      2,818      2,979      3,327      3,889      4,602      4,882        27,750
Large oil-fired hot water.........................        538        558        588        622        695        812        961      1,019         5,794
Large oil-fired steam.............................      4,248      4,408      4,645      4,910      5,485      6,411      7,586      8,048        45,741
                                                   -----------------------------------------------------------------------------------------------------
    Total.........................................     28,376     29,449     31,030     32,801     36,637     42,824     50,675     53,758       305,550
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Base-Case and Standards-Case Forecasted Distribution of Efficiencies
    The annual energy consumption of a commercial boiler unit is 
inversely related to the thermal efficiency of the unit. Thus, DOE 
forecasted shipment-weighted average equipment thermal efficiencies 
that, in turn, enabled a determination of the shipment-weighted annual 
energy consumption values for the base case and each efficiency level 
analyzed. DOE determined shipment-weighted average efficiency trends 
for commercial boilers equipment by first converting the 2008 equipment 
shipments by equipment class into market shares by equipment class. DOE 
then reviewed DOE's market database to determine the distribution of 
efficiency levels for commercially-available models within each 
equipment class. DOE bundled the efficiency levels into ``efficiency 
ranges'' and determined the percentage of models within each range. DOE 
applied the percentages of models within each efficiency range to the 
total unit shipments for a given equipment class to estimate the 
distribution of shipments within the base case. To determine the 
percentage of models in each efficiency range, DOE considered models 
greater than or equal to the lower bound of the efficiency range and 
models with efficiencies less than the upper bound of the efficiency 
range. For example, for the thermal efficiency range of 79-80 percent, 
DOE considered models with thermal efficiency levels from 79.0 to 79.9 
to be within this range. Then, from those market shares and projections 
of shipments by equipment class, DOE extrapolated future equipment 
efficiency trends both for a base-case scenario and standards-case 
scenarios. The difference in equipment efficiency between the base case 
and standards cases was the basis for determining the reduction in per-
unit annual energy consumption that could result from amended 
standards.
    For the base case, DOE assumed that, absent amended standards, 
forecasted market shares would remain frozen at the 2012 efficiency 
levels until the end of the forecast period (30 years after the 
effective date, or 2042). This prediction could cause DOE to 
overestimate the savings associated with the higher efficiency levels 
discussed in this notice because historical data indicated boiler 
efficiencies or relative efficiency class preferences may change 
voluntarily over time. Therefore, DOE seeks comment on this assumption 
and the potential significance of any overestimation of savings. In 
particular, DOE requests data that would allow it to better 
characterize the likely increases in packaged boiler efficiencies that 
would occur over the 30-year analysis period absent adoption of either 
the ASHRAE 90.1-2007 efficiency levels or higher efficiency levels 
considered in this rule. This is identified as Issue 5 under ``Issues 
on Which DOE Seeks Comment'' in section VIII.E of today's NOPR.
    For each efficiency level analyzed, DOE used a ``roll-up'' scenario 
to establish the market shares by efficiency level for the year that 
standards become effective (i.e., 2014 if DOE adopts more-stringent 
efficiency levels than those in ASHRAE Standard 90.1-2007). DOE 
collected information that suggests the efficiencies of equipment in 
the base case that did not meet the standard level under consideration 
would roll up to meet the standard level. This information also 
suggests that equipment efficiencies in the base case that were above 
the standard level under consideration would not be affected.
    DOE seeks input on its basis for the NES-forecasted base-case 
distribution of efficiencies and its prediction of how amended energy 
conservation standards affect the distribution of efficiencies in the 
standards case. This is identified as Issue 6 under ``Issues on Which 
DOE Seeks Comment'' in section VIII.E of today's NOPR.
4. National Energy Savings and Net Present Value
    The commercial boiler equipment stock is the total number of 
commercial boilers in each equipment class purchased or shipped from 
previous years that have survived until the point at which stock is 
taken. The NES spreadsheet,\38\ through use of the shipments model, 
keeps track of the total number of commercial boilers shipped each 
year. For purposes of the NES and NPV analyses, DOE assumes that 
retirements follow a Weibull \39\ distribution with a 30-year mean 
lifetime. Retired units are replaced until 2042. For units shipped in 
2042, any units still remaining at the end of 2085 are retired.
---------------------------------------------------------------------------

    \38\ The NES spreadsheet can be found on the DOE's ASHRAE 
Products Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/ashrae_products_docs_meeting.html.
    \39\ The Weibull distribution is a continuous probability 
distribution used to understand the failure and durability of 
equipment. It is popular because it is extremely flexible and can 
accurately model various types of failure processes. A two-parameter 
version of the Weibull was used and is described in chapter 7 of the 
TSD.

---------------------------------------------------------------------------

[[Page 12035]]

    The national annual energy consumption is the product of the annual 
unit energy consumption and the number of boiler units of each vintage 
in the stock. This approach accounts for differences in unit energy 
consumption from year to year. In determining national annual energy 
consumption, DOE first calculated the annual energy consumption at the 
site (i.e., million Btus of fuel consumed by commercial boilers) and 
multiplied that by a conversion factor to account for distribution 
losses.
    To discount future impacts, DOE follows Office of Management and 
Budget (OMB) guidance in using discount rates of 7 percent and 3 
percent in evaluating the impacts of regulations. In selecting the 
discount rate corresponding to a public investment, OMB directs 
agencies to use ``the real Treasury borrowing rate on marketable 
securities of comparable maturity to the period of analysis.'' \40\ The 
7-percent rate is an estimate of the average before-tax rate of return 
on private capital in the United States economy, and reflects the 
returns to real estate and small business capital as well as corporate 
capital. DOE used this discount rate to approximate the opportunity 
cost of capital in the private sector, because recent OMB analysis has 
found the average rate of return on capital to be near this rate. DOE 
also used the 3-percent discount rate to capture the potential effects 
of standards on private customers' consumption (e.g., reduced 
purchasing of equipment due to higher prices and purchase of reduced 
amounts of energy). This rate represents the rate at which society 
discounts future consumption flows to their present value. This rate 
can be approximated by the real rate of return on long-term government 
debt (e.g., yield on 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 last 30 years. Table V.17 summarizes the inputs to the 
NES spreadsheet model along with a brief description of the data 
sources. The results of DOE's NES and NPV analysis are summarized in 
section VI.B.2 below and described in detail in chapter 7 of the NOPR 
TSD.
---------------------------------------------------------------------------

    \40\ OMB Circular No. A-94, ``Guidelines and Discount Rates for 
Benefit-Cost Analysis of Federal Programs'' (Oct. 29, 1992) section 
8.c.1.

             Table V.17--Summary of NES and NPV Model Inputs
------------------------------------------------------------------------
            Inputs                            Description
------------------------------------------------------------------------
Shipments....................  Annual shipments from shipments model
                                (see chapter 6 of the NOPR TSD).
Effective Date of Standard...  2014 for adoption of a more-stringent
                                efficiency level than those specified by
                                ASHRAE Standard 90.1-2007. 2012 for
                                adoption of the efficiency levels
                                specified by ASHRAE Standard 90.1-2007.
Base Case Efficiencies.......  Distribution of base-case shipments by
                                efficiency level.
Standard Case Efficiencies...  Distribution of shipments by efficiency
                                level for each standards case. Standards-
                                case annual shipment-weighted market
                                shares remain the same as in the base
                                case and each standard level for all
                                efficiencies above the efficiency level
                                being analyzed. All other shipments are
                                at the efficiency level.
Annual Energy Use per Unit...  Annual national weighted-average values
                                are a function of efficiency level. (See
                                chapter 4 of the NOPR TSD.)
Total Installed Cost per Unit  Annual weighted-average values are a
                                function of efficiency level. (See
                                chapter 5 of the NOPR TSD.)
Repair Cost per Unit.........  Annual weighted-average values increase
                                with manufacturer's cost level. (See
                                chapter 5 of the NOPR TSD.)
Maintenance Cost per Unit....  See chapter 5 of the NOPR TSD.
Escalation of Fuel Prices....  AEO2008 forecasts (to 2030) and
                                extrapolation for beyond 2030. (See
                                chapter 5 of the NOPR TSD.)
Site-Source Conversion.......  Based on average annual site-to-source
                                conversion factor for natural gas from
                                AEO2008.
Discount Rate................  3 percent and 7 percent real.
Present Year.................  Future costs are discounted to 2008.
------------------------------------------------------------------------

H. Other Issues

1. Effective Date of the Proposed Amended Energy Conservation Standards
    Generally, covered equipment to which a new or amended energy 
conservation standard applies must comply with the standard if such 
equipment is manufactured or imported on or after a specified date. In 
today's NOPR, DOE is evaluating whether more-stringent efficiency 
levels than those in ASHRAE Standard 90.1-2007 would be economically 
justified and result in a significant amount of energy savings. If DOE 
were to propose a rule prescribing energy conservation standards at the 
efficiency levels contained in ASHRAE Standard 90.1-2007, EPCA states 
that any such standards shall become effective ``on or after a date 
which is two years after the effective date of the applicable minimum 
energy efficiency requirement in the amended ASHRAE/IES standard * * 
*''. (42 U.S.C. 6313(a)(6)(D)) DOE has applied this two-year 
implementation period to determine the effective date of any energy 
conservation standard equal to the efficiency levels specified by 
ASHRAE Standard 90.1-2007 proposed by this rulemaking. Thus, if DOE 
decides to adopt one of the efficiency levels in ASHRAE Standard 90.1-
2007 for the equipment classes where a two-tier standard is set-forth, 
the effective date of the rulemaking would be dependent upon the 
effective date specified in ASHRAE Standard 90.1-2007. For example, in 
certain cases, the effective date in ASHRAE Standard 90.1-2007 is March 
2, 2010 for the initial efficiency level (which would require an 
effective date of 2012), but the effective date is March 2, 2020 for 
the second tier efficiency level (which would require an effective date 
of 2022).
    If DOE were to propose a rule prescribing energy conservation 
standards higher than the efficiency levels contained in ASHRAE 
Standard 90.1-2007, EPCA states that any such standards ``shall become 
effective for products manufactured on or after a date which is four 
years after the date such rule is published in the Federal

[[Page 12036]]

Register.'' (42 U.S.C. 6313(a)(6)(D)) DOE has applied this 4-year 
implementation period to determine the effective date of any energy 
conservation standard higher than the efficiency levels specified by 
ASHRAE Standard 90.1-2007 that might be prescribed in a future 
rulemaking. Thus, for products for which DOE might adopt a level more 
stringent than the ASHRAE efficiency levels, the rule would apply to 
products manufactured on or after July 2014, which is four years from 
the date of publication of the final rule.\41\
---------------------------------------------------------------------------

    \41\ Since ASHRAE published ASHRAE Standard 90.1-2007 on January 
10, 2008, EPCA requires that DOE publish a final rule adopting more-
stringent standards than those in ASHRAE Standard 90.1-2007 within 
30 months of ASHRAE action (i.e., by July 2010). Thus, four years 
from July 2010 would be July 2014, which would be the anticipated 
effective date for DOE adoption of more-stringent standards.
---------------------------------------------------------------------------

    Table V.18 presents the anticipated effective dates of an amended 
energy conservation standard for each equipment class for which DOE 
developed a potential energy savings analysis.

Table V.18--Anticipated Effective Date of an Amended Energy Conservation
    Standard for Each Equipment Class of Commercial Packaged Boilers
------------------------------------------------------------------------
                                                           Anticipated
                                         Anticipated     effective date
                                       effective date     for adopting
                                      for adopting the   more-stringent
           Equipment class               efficiency        efficiency
                                      levels in ASHRAE     levels than
                                       standard 90.1-    those in ASHRAE
                                            2007         standard 90.1-
                                                              2007
------------------------------------------------------------------------
Small Gas-Fired Hot Water Commercial              2012              2014
 Packaged Boilers...................
Small Gas-Fired Steam, All Except                 2012              2014
 Natural Draft Commercial Packaged
 Boilers............................
Small Gas-Fired Steam Natural Draft       2012 or 2022              2014
 Commercial Packaged Boilers........
Small Oil-Fired Hot Water Commercial              2012              2014
 Packaged Boilers...................
Small Oil-Fired Steam Commercial                  2012              2014
 Packaged Boilers...................
Large Gas-Fired Hot Water Commercial              2012              2014
 Packaged Boilers...................
Large Gas-Fired Steam, All Except         2012 or 2022              2014
 Natural Draft Commercial Packaged
 Boilers............................
Large Gas-Fired Steam Natural Draft               2012              2014
 Commercial Packaged Boilers........
Large Oil-Fired Hot Water Commercial              2012              2014
 Packaged Boilers...................
------------------------------------------------------------------------

VI. Analytical Results

A. Efficiency Levels Analyzed

    Table VI.1 presents the baseline efficiency level and the 
efficiency levels analyzed for each equipment class of commercial 
packaged boilers subject to today's proposed rule. The baseline 
efficiency levels correspond to the efficiency levels specified by 
ASHRAE Standard 90.1-2007. The efficiency levels above the baseline 
represent efficiency levels above those specified in ASHRAE Standard 
90.1-2007 where equipment is currently available on the market.

                                     Table VI.1--Efficiency Levels Analyzed
----------------------------------------------------------------------------------------------------------------
                                                                Representative capacity     Efficiency levels
                        Equipment class                                  kBtu/h             analyzed (percent)
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water.....................................                      800          Baseline--80 ET
                                                                                                           82 ET
                                                                .......................                    84 ET
                                                                .......................                    86 ET
                                                                .......................        Condensing--92 ET
Small gas-fired steam all except natural draft................                      800          Baseline--79 ET
                                                                                                           80 ET
                                                                .......................                    81 ET
                                                                .......................                    82 ET
                                                                .......................                    83 ET
Small gas-fired steam natural draft...........................                      800          Baseline--77 ET
                                                                                                           78 ET
                                                                .......................                    79 ET
                                                                .......................                    80 ET
Small oil-fired hot water.....................................                      800          Baseline--82 ET
                                                                                                           84 ET
                                                                .......................                    86 ET
                                                                .......................                    88 ET
Small oil-fired steam.........................................                      800          Baseline--81 ET
                                                                                                           82 ET
                                                                .......................                    83 ET
                                                                .......................                    85 ET
Large gas-fired hot water.....................................                    3,000          Baseline--82 EC
                                                                                                           83 EC
                                                                .......................                    84 EC
                                                                .......................                    85 EC
                                                                .......................        Condensing--95 EC

[[Page 12037]]

 
Large gas-fired steam all except natural draft................                    3,000          Baseline--79 ET
                                                                                                           80 ET
                                                                .......................                    81 ET
                                                                .......................                    82 ET
                                                                .......................                    83 ET
Large gas-fired steam natural draft...........................                    3,000          Baseline--77 ET
                                                                                                           78 ET
                                                                .......................                    79 ET
                                                                .......................                    80 ET
                                                                .......................                    81 ET
Large oil-fired hot water.....................................                    3,000          Baseline--84 EC
                                                                                                           86 EC
                                                                .......................                    87 EC
                                                                .......................                    88 EC
Large oil-fired steam.........................................                    3,000          Baseline--81 ET
                                                                                                           82 ET
                                                                .......................                    83 ET
                                                                .......................                    84 ET
                                                                .......................                    86 ET
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Customers
a. Life-Cycle Cost and Payback Period
    To evaluate the economic impact of the efficiency levels on 
commercial customers, DOE conducted an LCC analysis for each efficiency 
level. More efficient commercial packaged boilers would affect these 
customers in two ways: (1) Annual operating expense would decrease; and 
(2) purchase price would increase. Inputs used for calculating the LCC 
include total installed costs (i.e., equipment price plus installation 
costs), operating expenses (i.e., annual energy savings, energy prices, 
energy price trends, repair costs, and maintenance costs), equipment 
lifetime, and discount rates.
    The output of the LCC model is a mean LCC savings for each 
equipment class, relative to the baseline commercial packaged boiler 
efficiency level. The LCC analysis also provides information on the 
percentage of customers that are negatively affected by an increase in 
the minimum efficiency standard.
    DOE performed a PBP analysis as part of the LCC analysis. The PBP 
is the number of years it would take for the customer to recover the 
increased costs of higher-efficiency equipment as a result of energy 
savings based on the operating cost savings. The PBP is an economic 
benefit-cost measure that uses benefits and costs without discounting. 
Chapter 5 of the NOPR TSD provides detailed information on the LCC and 
PBP analyses.
    DOE's LCC and PBP analyses provided five key outputs for each 
efficiency level above the baseline (i.e., efficiency levels more 
stringent than those in ASHRAE Standard 90.1-2007), reported in Table 
VI.2 through Table VI.11. The first three outputs are the proportion of 
commercial boiler purchases where the purchase of a commercial packaged 
boiler that is compliant with the amended energy conservation standard 
creates a net LCC increase, no impact, or a net LCC savings for the 
customer. The fourth output is the average net LCC savings from 
standard-compliant equipment. The fifth output is the average PBP for 
the customer investment in standard-compliant equipment.

    Table VI.2--Summary LCC and PBP Results for Small Gas-Fired Hot Water Boilers, 800 kBtu/h Output Capacity
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
                    Small gas-fired hot water                    -----------------------------------------------
                                                                       1           2           3           4
----------------------------------------------------------------------------------------------------------------
Thermal Efficiency (ET).........................................         82%         84%         86%         92%
Equipment with Net LCC Increase (%).............................          11          26          47          66
Equipment with No Change in LCC (%).............................          77          48          25          18
Equipment with Net LCC Savings (%)..............................          12          27          28          17
Mean LCC Savings ($)............................................        $860      $2,007      ($319)    ($6,649)
Mean PBP (years)................................................        26.8        30.7        42.5        56.5
Increase in Total Installed Cost ($)............................      $3,754      $5,936      $9,486    $14,642
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative LCC savings.


[[Page 12038]]


  Table VI.3--Summary LCC and PBP Results for Small Gas-Fired Steam All Except Natural Draft, 800 kBtu/h Output
                                                    Capacity
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
         Small gas-fired steam all except natural draft          -----------------------------------------------
                                                                       1           2           3           4
----------------------------------------------------------------------------------------------------------------
Thermal Efficiency (ET).........................................         80%         81%         82%         83%
Equipment with Net LCC Increase (%).............................          30          60          73          75
Equipment with No Change in LCC (%).............................          64          19          10           7
Equipment with Net LCC Savings (%)..............................           6          21          17          18
Mean LCC Savings ($)............................................    ($1,530)    ($1,545)    ($3,521)    ($4,163)
Mean Payback Period (years).....................................        44.1        42.8        51.2        50.7
Increase in Total Installed Cost ($)............................      $3,592      $5,350      $8,103    $10,109
----------------------------------------------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative savings.


    Table VI.4--Summary LCC and PBP Results for Small Gas-Fired Steam
            Natural Draft Boilers, 800 kBtu/h Output Capacity
------------------------------------------------------------------------
                                                 Efficiency level
  Small gas-fired steam natural draft   --------------------------------
                                             1          2          3
------------------------------------------------------------------------
Thermal Efficiency (ET)................        78%        79%        80%
Equipment with Net LCC Increase (%)....         49         39         51
Equipment with No Change in LCC (%)....         32         22          3
Equipment with Net LCC Savings (%).....         19         38         46
Mean LCC Savings ($)...................     ($712)       $789     $1,103
Mean PBP (years).......................       33.5       26.6       28.9
Increase in Total Installed Cost ($)...     $3,261     $4,321    $5,972
------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative savings.


  Table VI.5--Summary LCC and PBP Results for Small Oil-Fired Hot Water
                   Boilers, 800 kBtu/h Output Capacity
------------------------------------------------------------------------
                                                 Efficiency level
       Small oil-fired hot water        --------------------------------
                                             1          2          3
------------------------------------------------------------------------
Thermal Efficiency (ET)................        84%        86%        88%
Equipment with Net LCC Increase (%)....         20         25         37
Equipment with No Change in LCC (%)....         39         27          7
Equipment with Net LCC Savings (%).....         41         48         56
Mean LCC Savings ($)...................     $2,441     $5,376     $5,212
Mean PBP (years).......................       19.2       19.6       26.6
Increase in Total Installed Cost ($)...     $3,897     $6,325    $10,185
------------------------------------------------------------------------


    Table VI.6--Summary LCC and PBP Results for Small Oil-Fired Steam
                   Boilers, 800 kBtu/h Output Capacity
------------------------------------------------------------------------
                                                 Efficiency level
       Small oil-fired hot water        --------------------------------
                                             1          2          3
------------------------------------------------------------------------
Thermal Efficiency (ET)................        82%        83%        85%
Equipment with Net LCC Increase (%)....         29         46         54
Equipment with No Change in LCC (%)....         58         24          6
Equipment with Net LCC Savings (%).....         13         30         40
Mean LCC Savings ($)...................     ($732)        $88       $864
Mean PBP (years).......................       35.1       33.7       35.0
Increase in Total Installed Cost ($)...     $3,524     $5,142     $8,670
------------------------------------------------------------------------
Note: Numbers in parentheses indicate negative savings.


   Table VI.7--Summary LCC and PBP Results for Large Gas-Fired Hot Water Boilers, 3,000 kBtu/h Output Capacity
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
                    Large gas-fired hot water                    -----------------------------------------------
                                                                       1           2           3           4
----------------------------------------------------------------------------------------------------------------
Combustion Efficiency (EC)......................................         83%         84%         85%         95%
Equipment with Net LCC Increase (%).............................           9          20          34          49
Equipment with No Change in LCC (%).............................          51          23          17           6

[[Page 12039]]

 
Equipment with Net LCC Savings (%)..............................          40          58          49          46
Mean LCC Savings ($)............................................      $5,254      $9,421      $8,678      $7,637
Mean PBP (years)................................................        16.0        19.3        27.8        37.1
Increase in Total Installed Cost ($)............................      $4,489      $8,172     $14,043     $37,821
----------------------------------------------------------------------------------------------------------------


Table VI.8--Summary LCC and PBP Results for Large Gas-Fired Steam, All Except Natural Draft Boilers, 3,000 kBtu/
                                                h Output Capacity
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
         Large gas-fired steam all except natural draft          -----------------------------------------------
                                                                       1           2           3           4
----------------------------------------------------------------------------------------------------------------
Thermal Efficiency (ET).........................................         80%         81%         82%         83%
Equipment with Net LCC Increase (%).............................           6           5           4           4
Equipment with No Change in LCC (%).............................          61          26          23          20
Equipment with Net LCC Savings (%)..............................          33          69          73          77
Mean LCC Savings ($)............................................      $6,711     $16,291     $25,415     $34,087
Mean Payback Period (years).....................................        12.5         9.1         8.1         7.7
Increase in Total Installed Cost ($)............................      $4,364      $6,048      $7,824      $9,697
----------------------------------------------------------------------------------------------------------------


  Table VI.9--Summary LCC and PBP Results for Large Gas-Fired Steam Natural Draft Boilers, 3,000 kBtu/h Output
                                                    Capacity
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
               Large gas-fired steam natural draft               -----------------------------------------------
                                                                       1           2           3           4
----------------------------------------------------------------------------------------------------------------
Thermal Efficiency (ET).........................................         78%         79%         80%         81%
Equipment with Net LCC Increase (%).............................           1           3           6          10
Equipment with No Change in LCC (%).............................          88          42          24           7
Equipment with Net LCC Savings (%)..............................          11          55          71          82
Mean LCC Savings ($)............................................      $8,339     $17,917     $25,371     $30,669
Mean Payback Period (years).....................................         9.8         8.2         9.1        10.8
Increase in Total Installed Cost ($)............................      $3,800      $5,893      $9,073     $13,367
----------------------------------------------------------------------------------------------------------------


 Table VI.10--Summary LCC and PBP Results for Large Oil-Fired Hot Water
                  Boilers, 3,000 kBtu/h Output Capacity
------------------------------------------------------------------------
                                               Efficiency level
      Large oil-fired hot water      -----------------------------------
                                           1           2           3
------------------------------------------------------------------------
Combustion Efficiency (EC)..........         86%         87%         88%
Equipment with Net LCC Increase (%).           5          11          15
Equipment with No Change in LCC (%).          52          24          24
Equipment with Net LCC Savings (%)..          43          65          61
Mean LCC Savings ($)................     $18,874     $23,498     $27,342
Mean PBP (years)....................         9.3        12.9        15.4
Increase in Total Installed Cost ($)      $7,063     $12,536     $18,256
------------------------------------------------------------------------


    Table VI.11--Summary LCC and PBP Results for Large Oil-Fired Steam Boilers, 3,000 kBtu/h Output Capacity
----------------------------------------------------------------------------------------------------------------
                                                                                 Efficiency level
                      Large oil-fired steam                      -----------------------------------------------
                                                                       1           2           3           4
----------------------------------------------------------------------------------------------------------------
Thermal Efficiency (ET).........................................         82%         83%         84%         86%
Equipment with Net LCC Increase (%).............................           4           7          11          12
Equipment with No Change in LCC (%).............................          66          41          16          11
Equipment with Net LCC Savings (%)..............................          30          53          73          77
Mean LCC Savings ($)............................................      $9,613     $19,472     $26,117     $40,322
Mean Payback Period (years).....................................         9.7         9.3        11.2        12.3
Increase in Total Installed Cost ($)............................      $4,280      $7,392     $12,189     $20,635
----------------------------------------------------------------------------------------------------------------


[[Page 12040]]

2. National Impact Analysis
a. Amount and Significance of Energy Savings
    To estimate the energy savings through 2042 due to amended energy 
conservation standards, DOE compared the energy consumption of 
commercial boilers under the base case (i.e., the ASHRAE 90.1-2007 
efficiency levels) to energy consumption of boilers under higher 
efficiency standards. DOE examined up to four efficiency levels higher 
than those of ASHRAE Standard 90.1-2007. The amount of energy savings 
depends not only on the potential increase in energy efficiency due to 
a standard, but also on the rate at which the stock of existing, less-
efficient commercial boilers will be replaced over time after 
implementation of the amended energy conservation standard. Table VI.12 
shows the forecasted national energy savings at each of the standard 
levels. DOE reports both undiscounted and discounted estimates of 
energy savings. Table VI.13 and Table VI.14 show the magnitude of the 
energy savings if they are discounted at rates of 7 percent and 3 
percent, respectively. Each standard level considered in this 
rulemaking would result in significant energy savings, and the amount 
of savings increases with higher energy conservation standards. (See 
chapter 7 of the NOPR TSD.)

Table VI.12--Summary of Cumulative National Energy Savings for Commercial Boilers (Energy Savings for Units Sold
                                        From 2012 to 2042, Undiscounted)
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings (quads) *
                                                            ----------------------------------------------------
                      Equipment class                         Efficiency    Efficiency   Efficiency   Efficiency
                                                                level 1      level 2      level 3      level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water..................................        0.022         0.072        0.140        0.212
Small gas-fired steam, all except natural draft............       (0.000)        0.014        0.030        0.045
Small gas-fired steam natural draft........................       (0.006)        0.016        0.042  ...........
Small oil-fired hot water..................................        0.015         0.034        0.057  ...........
Small oil-fired steam......................................        0.009         0.027        0.068  ...........
Large gas-fired hot water..................................        0.014         0.037        0.061        0.176
Large gas-fired steam, all except natural draft............        0.022         0.063        0.105        0.148
Large gas-fired, steam natural draft.......................       (0.022)        0.002        0.032        0.067
Large oil-fired hot water..................................        0.014         0.024        0.034  ...........
Large oil-fired steam......................................        0.039         0.106        0.198        0.410
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative potential energy savings due to the delayed implementation of more-
  stringent efficiency levels compared to the efficiency levels specified in ASHRAE Standard 90.1-2007.


Table VI.13--Summary of Cumulative National Energy Savings for Commercial Boilers (Energy Savings for Units Sold
                                 From 2012 to 2042, Discounted at Seven Percent)
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings (quads) *
                                                            ----------------------------------------------------
                      Equipment class                         Efficiency    Efficiency   Efficiency   Efficiency
                                                                level 1      level 2      level 3      level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water..................................        0.004         0.015        0.029        0.043
Small gas-fired steam, all except natural draft............       (0.000)        0.003        0.006        0.009
Small gas-fired steam natural draft........................       (0.000)        0.004        0.009  ...........
Small oil-fired hot water..................................        0.003         0.007        0.012  ...........
Small oil-fired steam......................................        0.002         0.005        0.014  ...........
Large gas-fired hot water..................................        0.003         0.008        0.012        0.036
Large gas-fired steam, all except natural draft............        0.004         0.013        0.021        0.030
Large gas-fired, steam natural draft.......................       (0.003)        0.002        0.008        0.015
Large oil-fired hot water..................................        0.003         0.005        0.007  ...........
Large oil-fired steam......................................        0.008         0.022        0.041        0.084
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative potential energy savings due to the delayed implementation of more-
  stringent efficiency levels compared to the efficiency levels specified in ASHRAE Standard 90.1-2007.


Table VI.14--Summary of Cumulative National Energy Savings for Commercial Boilers (Energy Savings for Units Sold
                                 from 2012 to 2042, Discounted at Three Percent)
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings (quads) *
                                                            ----------------------------------------------------
                      Equipment class                         Efficiency    Efficiency   Efficiency   Efficiency
                                                                level 1      level 2      level 3      level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water..................................        0.010         0.035        0.068        0.103
Small gas-fired steam, all except natural draft............       (0.000)        0.007        0.014        0.022
Small gas-fired, steam natural draft.......................       (0.002)        0.008        0.021  ...........
Small oil-fired hot water..................................        0.007         0.016        0.027  ...........
Small oil-fired steam......................................        0.004         0.013        0.033  ...........
Large gas-fired hot water..................................        0.007         0.018        0.030        0.085
Large gas-fired steam, all except natural draft............        0.010         0.031        0.051        0.072
Large gas-fired steam, natural draft.......................       (0.009)        0.002        0.017        0.034
Large oil-fired hot water..................................        0.007         0.012        0.016  ...........

[[Page 12041]]

 
Large oil-fired steam......................................        0.019         0.051        0.096        0.199
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative potential energy savings due to the delayed implementation of more-
  stringent efficiency levels compared to the efficiency levels specified in ASHRAE Standard 90.1-2007.

b. Net Present Value
    The NPV analysis is a measure of the cumulative benefit or cost of 
standards to the Nation. In accordance with OMB's guidelines on 
regulatory analysis (OMB Circular A-4, section E (Sept. 17, 2003)), 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, and reflects the 
returns to real estate and small business capital as well as corporate 
capital. DOE used this discount rate to approximate the opportunity 
cost of capital in the private sector, because recent OMB analysis has 
found the average rate of return on capital to be near this rate. DOE 
also used the 3-percent rate to capture the potential effects of 
standards on private customers' consumption (e.g., reduced purchasing 
of equipment due to higher prices for equipment and purchase of reduced 
amounts of energy). This rate represents the rate at which society 
discounts future consumption flows to their present value. This rate 
can be approximated by the real rate of return on long-term government 
debt (e.g., yield on 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 last 30 years. Table VI.15 and Table VI.16 provide an 
overview of the NPV results. (See chapter 7 of the NOPR TSD.)

                        Table VI.15--Summary of Cumulative Net Present Value for Boilers
                                          [Discounted at seven percent]
----------------------------------------------------------------------------------------------------------------
                                                                     Net present value (billion 2008)
                                                         -------------------------------------------------------
                     Equipment class                       Efficiency    Efficiency    Efficiency    Efficiency
                                                             level 1       level 2       level 3       level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water...............................      ($0.014)      ($0.010)      ($0.166)      ($0.543)
Small gas-fired steam, all except natural draft.........      ($0.038)      ($0.041)      ($0.081)      ($0.114)
Small gas-fired, steam natural draft....................      ($0.037)      ($0.016)      ($0.028)  ............
Small oil-fired hot water...............................      ($0.008)      ($0.000)      ($0.041)  ............
Small oil-fired steam...................................      ($0.031)      ($0.040)      ($0.085)  ............
Large gas-fired hot water...............................       $0.011        $0.028        $0.003       ($0.093)
Large gas-fired steam, all except natural draft.........       $0.027        $0.127        $0.226        $0.322
Large gas-fired steam, natural draft....................      ($0.054)      ($0.021)      ($0.013)      ($0.045)
Large oil-fired hot water...............................       $0.042        $0.071        $0.063   ............
Large oil-fired steam...................................       $0.062        $0.184        $0.248        $0.504
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.


                        Table VI.16--Summary of Cumulative Net Present Value for Boilers
                                          [Discounted at three percent]
----------------------------------------------------------------------------------------------------------------
                                                                     Net present value (billion 2008$)
                                                         -------------------------------------------------------
                     Equipment class                       Efficiency    Efficiency    Efficiency    Efficiency
                                                             level 1       level 2       level 3       level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water...............................       $0.077        $0.274        $0.146       ($0.510)
Small gas-fired steam, all except natural draft.........       (0.076)       (0.014)       (0.034)       (0.050)
Small gas-fired steam, natural draft....................       (0.100)        0.041         0.125   ............
Small oil-fired hot water...............................        0.053         0.137         0.121   ............
Small oil-fired steam...................................       (0.023)        0.014         0.049   ............
Large gas-fired hot water...............................        0.093         0.222         0.259         0.483
Large gas-fired steam, all except natural draft.........        0.166         0.576         0.984         1.391
Large gas-fired steam, natural draft....................       (0.257)       (0.081)        0.077         0.174
Large oil-fired hot water...............................        0.146         0.243         0.262   ............
Large oil-fired steam...................................        0.302         0.830         1.328        2.702
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.


[[Page 12042]]

C. Proposed Standards for Commercial Packaged Boilers

    EPCA specifies that, for any commercial and industrial equipment 
addressed in section 342(a)(6)(A)(i) of EPCA, DOE may prescribe an 
energy conservation standard more stringent than the level for such 
equipment in ASHRAE/IESNA Standard 90.1, as amended, only if ``clear 
and convincing evidence'' shows that a more-stringent standard ``would 
result in significant additional conservation of energy and is 
technologically feasible and economically justified.'' (42 U.S.C. 
6313(a)(6)(A)(ii)(II))
    In evaluating more-stringent efficiency levels for commercial 
packaged boilers than those specified by ASHRAE Standard 90.1-2007, DOE 
reviewed the results in terms of their technological feasibility, 
economic justification, and significance of energy savings.
    DOE first examined the potential energy savings that would result 
from the efficiency levels specified in ASHRAE Standard 90.1-2007 and 
compared that to the potential energy savings that would result from 
proposing efficiency levels more stringent than those in ASHRAE 
Standard 90.1-2007 as Federal energy conservation standards. All of the 
efficiency levels examined by DOE resulted in cumulative energy 
savings, including the efficiency levels in ASHRAE Standard 90.1-2007. 
DOE estimates that a total of 0.10 quads of energy will be saved if DOE 
adopts the efficiency levels for each commercial boiler equipment class 
specified in ASHRAE Standard 90.1-2007. If DOE were to propose 
efficiency levels more stringent than those specified by ASHRAE 
Standard 90.1-2007 as Federal minimum standards, the potential 
additional energy savings ranges from 0.14 quads to 1.26 quads. 
Associated with proposing more-stringent efficiency levels is a two-
year delay in implementation compared to the adoption of energy 
conservation standards at the level specified in ASHRAE Standard 90.1-
2007 (see section V.H.1). This two-year delay in implementation of 
amended energy conservation standards would result in a small amount of 
energy savings being lost in the first two years (2012 and 2013) 
compared to the savings from adopting the levels in ASHRAE Standard 
90.1-2007; however, this energy savings may be compensated for by 
increased savings from higher standards in later years.
    In addition to energy savings, DOE also examined the economic 
justification of proposing efficiency levels more stringent than those 
specified in ASHRAE Standard 90.1-2007. As shown in section VI.B.1.a, 
higher efficiency levels result in a positive mean LCC savings for some 
commercial packaged boiler equipment classes. For example, in the 
largest commercial packaged boiler equipment class (i.e., small, gas-
fired hot water boilers), the mean LCC savings ranges from $860 to a 
mean LCC cost of $6,649 for efficiency level 1 through efficiency level 
4. The total installed cost increases from $3,754 to $14,642 for 
efficiency level 1 through efficiency level 4 when compared to the 
baseline. Overall, there would be a wide range of commercial customer 
LCC impacts based on climate, hydronic system operating temperature, 
and installation costs, which might place a significant burden on some 
commercial customers.
    In general, there is a large range in the total installed cost of 
different types of commercial boiler equipment, leading to a high 
variance and uncertainty in the economic analyses. Many factors affect 
the cost of a commercial boiler, including the type of commercial 
packaged boilers, the material of the heat exchanger being used, and 
the overall design. In addition, the installation costs of boilers vary 
greatly depending on the efficiency, the location of the boiler, and 
the venting system. In more-efficient boilers, the flue must be made 
out of corrosion resistant materials to prevent the possibility of 
corrosion caused due to condensing flue gases. Because the mean LCC 
savings can be considered small in comparison to the total installed 
cost of the equipment, a relatively minor change in the differential 
installed cost estimate could negate the mean LCC savings realized by 
proposing more-stringent efficiency levels as Federal minimum standards 
for commercial packaged boilers.
    After examining the potential energy savings and the economic 
justification of proposing efficiency levels more stringent than those 
specified in ASHRAE Standard 90.1-2007, DOE believes there are several 
other factors it should consider before proposing amended energy 
conservation standards for commercial packaged boilers.
    First, DOE reexamined the certainty in its analysis of commercial 
packaged boilers. As noted in section IV.C.4.a, due to current test 
procedure requirements, not all manufacturers test for the thermal 
efficiency of their commercial boiler models, nor do they all report it 
to the I=B=R Directory or in manufacturers' catalogs. Some 
manufacturers simply do not report thermal efficiency, and of those 
manufacturers that do report thermal efficiency, some may estimate the 
thermal efficiency ratings of their equipment, rather than actually 
test for the thermal efficiency of their equipment. DOE has no way to 
determine which thermal efficiency ratings are the result of estimation 
and which are the result of actual testing. Further, in the case of 
manufacturers that do test for thermal efficiency, variances in testing 
facilities and equipment can lead to inconsistent results in the 
thermal efficiency testing among the manufacturers. The combination of 
these factors leads to concerns about the viability of using the data 
from the I=B=R Directory and manufacturers' catalogs as the source for 
thermal efficiency ratings for the basis of this analysis. Such 
concerns are heightened the further one moves away from the consensus 
efficiency levels in ASHRAE Standard 90.1-2007 in the context of this 
standard-setting rulemaking.
    Because ASHRAE Standard 90.1-2007 has switched to a thermal 
efficiency metric for certain commercial packaged boiler equipment 
classes, a one-time conversion in the DOE efficiency metric will be 
required at some point. The transition to a thermal efficiency metric 
will require manufacturers to test for and report thermal efficiency 
for 8 out of 10 commercial boiler equipment classes. This would 
mitigate the problem of uncertainty in the thermal efficiency ratings 
for those equipment classes, allowing DOE to be able to make more 
definitive comparisons with future versions of ASHRAE Standard 90.1. 
DOE believes that an earlier transition to a rated thermal efficiency 
across the industry will provide additional, near-term benefits 
covering the entire industry that are not captured in the DOE analysis 
presented. These benefits may include more rapid exposure of purchasers 
to the rated thermal efficiency of competing products, which lays the 
groundwork for assessing the benefits of one boiler against another in 
the marketplace and will create greater competition among manufacturers 
to provide customers with additional purchasing choices. DOE has no 
information with which to calculate this benefit.
    Second, DOE notes the efficiency levels in ASHRAE Standard 90.1-
2007 are part of a consensus agreement between the trade association 
representing the manufacturers and several energy-efficiency advocacy 
groups. DOE strongly encourages stakeholders to work together to 
propose agreements to DOE. When DOE receives

[[Page 12043]]

a consensus agreement, DOE takes careful consideration to review the 
agreement resulting from groups that commonly have conflicting goals. 
DOE also points out that the Joint Letter submitted by AHRI, ACEEE, 
ASAP, ASE, and NRDC strongly urged DOE to adopt as Federal minimum 
energy conservation standards the efficiency levels in ASHRAE Standard 
90.1-2007 for commercial packaged boilers. (The Joint Letter, No. 5 at 
p. 1) DOE believes this negotiated agreement was made in good faith, 
and DOE is hesitant to second guess the outcome based on a limited 
analysis with many uncertainties. In light of those considerations, DOE 
is presenting the results for all the efficiency levels analyzed for 
commercial packaged boilers for stakeholder feedback.
    Third, DOE has not assessed any likely change in the efficiencies 
of models currently on the boiler market in the absence of setting 
more-stringent standards. DOE recognizes that manufacturers would 
continue to make future improvements in the boiler efficiencies even in 
the absence of mandated energy conservation standards. Such ongoing 
technological developments could have a disproportionately larger 
impact on the analytical results for the more-stringent efficiency 
levels analyzed in terms of reduced energy benefits as compared to the 
ASHRAE Standard 90.1-2007 efficiency level scenario. When manufacturers 
introduce a new product line, they typically introduce higher-
efficiency models, while maintaining their baseline product offering 
(i.e., equipment at the ASHRAE Standard 90.1-2007 efficiency levels). 
Any introduction of higher-efficiency equipment and subsequent purchase 
by commercial customers, which usually buy higher-efficiency equipment, 
could reduce the energy savings benefits of more-stringent efficiency 
levels.
    Fourth, DOE believes there could be a possible difference in life 
expectancy between the commercial packaged boilers at the ASHRAE 
Standard 90.1-2007 efficiency levels and those at more-stringent 
efficiency levels, including condensing boilers. DOE did not have any 
information to quantify these differences and is seeking comments from 
interested parties regarding these potential differences in expected 
lifetime.
    Finally, DOE also recognizes that commercial packaged boilers are 
one component in a hydronic system. Unlike most of the other 
residential appliances and commercial equipment for which DOE mandates 
energy conservation standards, the design and operation of that 
hydronic system (i.e., the hot-water distribution system) can result in 
significant variances in the annual field efficiencies of the 
commercial packaged boilers compared to the rated efficiency levels of 
these units. DOE recognizes that as a result, a critical piece of 
information needed to ensure that the benefits of high nominal 
efficiency commercial packaged boilers are actually achieved in the 
field is not captured in the DOE analysis.
    After weighing the benefits and burdens of proposing the ASHRAE 
Standard 90.1-2007 efficiency levels as Federal standards for 
commercial packaged boilers as compared to those for proposing more-
stringent efficiency levels, DOE has tentatively concluded to propose 
the efficiency levels in ASHRAE 90.1-2007 as amended energy 
conservation standards for all ten commercial packaged boilers 
equipment classes. DOE must have ``clear and convincing'' evidence in 
order to propose efficiency levels more stringent than those specified 
in ASHRAE 90.1-2007, and for the reasons explained in this notice, the 
totality of information does not meet the level necessary to support 
these more-stringent efficiency levels. Given the relatively small mean 
LCC savings (in comparison to the total installed cost), even a slight 
alteration in DOE's installation estimates could result in the 
potential for negative mean LCC savings. In addition, the uncertainty 
of the thermal efficiency values reported may have resulted in the 
overstatement or understatement of the efficiency of some equipment, 
leading to even greater uncertainty in the economic benefits of more-
stringent standards.
    DOE recognizes that the thermal efficiency metric is superior to 
the combustion efficiency metric because thermal efficiency is a more 
complete measure of boiler efficiency than the combustion efficiency 
metric (thermal efficiency accounts for jacket losses and combustion 
efficiency does not). DOE believes that once commercial packaged 
boilers are transitioned from the combustion efficiency metric to the 
thermal efficiency metric, the thermal efficiency ratings of certified 
equipment will be more accurate and consistent. The efficiency levels 
in ASHRAE Standard 90.1-2007 are an acceptable foundation that will 
allow the commercial boiler industry to begin the transition from using 
combustion efficiency to a thermal efficiency metric. DOE also takes 
into account the consensus nature of the efficiency levels in ASHRAE 
Standard 90.1-2007 for commercial packaged boilers.
    Therefore, based on the discussion above, DOE has tentatively 
concluded that the efficiency levels beyond those in ASHRAE Standard 
90.1-2007 for commercial packaged boilers are not economically 
justified and is proposing as Federal minimum standards the efficiency 
levels in ASHRAE Standard 90.1-2007 for all ten equipment classes of 
commercial packaged boilers. DOE seeks comments from interested parties 
on its proposed amended energy conservation standards for commercial 
packaged boilers as well as the other efficiency levels considered. 
Although DOE currently believes that it would be appropriate to adopt 
the efficiency levels in ASHRAE Standard 90.1-2007 for commercial 
packaged boilers, DOE would consider the possibility of setting 
standards at more-stringent efficiency levels if public comments and 
additional data supply clear and convincing evidence in support of such 
an approach. Table VI.17 shows the proposed energy conservation 
standards for commercial packaged boilers.

               Table VI.17--Proposed Energy Conservation Standards for Commercial Packaged Boilers
----------------------------------------------------------------------------------------------------------------
                                                                                           Efficiency level *
                                                                                       -------------------------
          Equipment type                  Subcategory           Size category (input)    Effective    Effective
                                                                                        date: March  date: March
                                                                                          2, 2012      2, 2022
----------------------------------------------------------------------------------------------------------------
Hot Water Commercial Packaged      Gas-fired................  >= 300,000 Btu/h and <=        80% ET       80% ET
 Boilers.                                                      2,500,000 Btu/h.
Hot Water Commercial Packaged      Gas-fired................  > 2,500,000 Btu/h.......       82% EC       82% EC
 Boilers.
Hot Water Commercial Packaged      Oil-fired................  >=300,000 Btu/h and <=         82% ET       82% ET
 Boilers.                                                      2,500,000 Btu/h.

[[Page 12044]]

 
Hot Water Commercial Packaged      Oil-fired................  > 2,500,000 Btu/h.......       84% EC       84% EC
 Boilers.
Steam Commercial Packaged Boilers  Gas-fired--all, except     >= 300,000 Btu/h and <=        79% ET       79% ET
                                    natural draft.             2,500,000 Btu/h.
Steam Commercial Packaged Boilers  Gas-fired--all, except     > 2,500,000 Btu/h.......       79% ET       79% ET
                                    natural draft.
Steam Commercial Packaged Boilers  Gas-fired--natural draft.  >= 300,000 Btu/h and <=        77% ET       79% ET
                                                               2,500,000 Btu/h.
Steam Commercial Packaged Boilers  Gas-fired--natural draft.  > 2,500,000 Btu/h.......       77% ET       79% ET
Steam Commercial Packaged Boilers  Oil-fired................  >= 300,000 Btu/h and <=        81% ET       81% ET
                                                               2,500,000 Btu/h.
Steam Commercial Packaged Boilers  Oil-fired................  > 2,500,000 Btu/h.......       81% ET      81% ET
----------------------------------------------------------------------------------------------------------------
* ET is the thermal efficiency and EC is the combustion efficiency.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Today's proposed rule has been determined not to be a ``significant 
regulatory action'' under section 3(f)(1) of Executive Order 12866, 
``Regulatory Planning and Review.'' 58 FR 51735 (Oct. 4, 1993). 
Accordingly, this action was not subject to review under that Executive 
Order by the Office of Information and Regulatory Affairs (OIRA) of the 
Office of Management and Budget.

B. Review Under the National Environmental Policy Act

    DOE plans to prepare an environmental assessment (EA) of the 
impacts of the proposed rule pursuant to the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.), the regulations of the 
Council on Environmental Quality (40 CFR parts 1500-1508), and DOE's 
regulations for compliance with the National Environmental Policy Act 
(10 CFR part 1021). This assessment would include a concise examination 
of the impacts of emission reductions likely to result from the rule. 
Most of these impacts are likely to be positive. The EA will be 
incorporated into the final rule TSD. DOE requests that interested 
members of the public, Tribes, and States submit any relevant data or 
other information for DOE to consider when preparing the EA.

C. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis for any rule 
that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE published 
procedures and policies on February 19, 2003, to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the DOE rulemaking process. 68 FR 7990. DOE has made 
its procedures and policies available on the Office of the General 
Counsel's Web site: http://www.gc.doe.gov.
    DOE has reviewed today's proposed rule under the provisions of the 
Regulatory Flexibility Act and the policies and procedures published on 
February 19, 2003. 68 FR 7990. As part of this rulemaking, DOE examined 
the existing compliance costs manufacturers already bear and compared 
them to the revised compliance costs, based on the proposed revisions 
to the test procedure. Since DOE is proposing to adopt the efficiency 
levels in ASHRAE Standard 90.1-2007, which are part of the prevailing 
industry standard and were a result of a consensus agreement, DOE 
believes that commercial packaged boiler manufacturers are already 
producing equipment at these efficiency levels. For water-cooled and 
evaporatively-cooled commercial package air conditioners and heat pumps 
with a cooling capacity at or above 240,000 Btu/h and less than 760,000 
Btu/h, DOE believes the efficiency levels being proposed in today's 
NOPR are also part of the prevailing industry standard and that 
manufacturers would experience no impacts, because no such equipment is 
currently manufactured. Furthermore, DOE believes the industry standard 
was developed through a process which would attempt to mitigate the 
impacts on manufacturers, including any small commercial packaged 
boiler manufacturers, while increasing the efficiency of this 
equipment. In addition, DOE does not find that the costs imposed by the 
revisions proposed to the test procedure for commercial packaged 
boilers in this document would result in any significant increase in 
testing or compliance costs. DOE requests public comment on the impact 
of this proposed rule on small entities.
    For the reasons stated above, DOE certifies that the proposed rule, 
if promulgated, would not have a significant economic impact on a 
substantial number of small entities. Therefore, DOE did not prepare an 
initial regulatory flexibility analysis for the proposed rule. DOE 
transmitted its certification and a supporting statement of factual 
basis to the Chief Counsel for Advocacy of the SBA for review pursuant 
to 5 U.S.C. 605(b).

D. Review Under the Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
(PRA), a person is not required to respond to a collection of 
information by a Federal agency, including a requirement to maintain 
records, unless the collection displays a valid OMB control number. (44 
U.S.C. 3506(c)(1)(B)(iii)(V)) This NOPR would not impose any new 
information or recordkeeping requirements. Accordingly, OMB clearance 
is not required under the PRA.

[[Page 12045]]

E. Review Under the Unfunded Mandates Reform Act of 1995

    DOE reviewed this regulatory action under Title II of the Unfunded 
Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4), which requires each 
Federal agency to assess the effects of Federal regulatory actions on 
State, local, and Tribal governments and the private sector. For 
proposed regulatory actions likely to result in a rule that may cause 
expenditures 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 assessing the resulting 
costs, benefits, and other effects of the rule on the national economy 
(2 U.S.C. 1532(a) and (b)). Section 204 of UMRA 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.'' (2 U.S.C. 1534) Section 203 
of UMRA requires an agency plan for giving notice and opportunity for 
timely input to potentially affected small governments that may be 
affected before establishing any requirements that might significantly 
or uniquely affect small governments. (2 U.S.C. 1533) On March 18, 
1997, DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA (62 FR 12820) (also available 
at: http://www.gc.doe.gov).
    Today's proposed rule contains neither an intergovernmental mandate 
nor a mandate that may result in the expenditure by State, local, and 
Tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any year. Accordingly, no assessment or analysis is 
required under UMRA.

F. 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 proposed rule that may affect family 
well-being. This rule would not have any impact on the autonomy or 
integrity of the family as an institution. Accordingly, DOE has 
concluded that it is unnecessary to prepare a Family Policymaking 
Assessment.

G. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' 64 FR 43255 (August 4, 1999) 
imposes certain requirements on agencies formulating and implementing 
policies or regulations that preempt State law or that have Federalism 
implications. Agencies are required 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. DOE has examined this proposed rule and has determined that it 
would not have a substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. EPCA governs and prescribes Federal preemption of State 
regulations as to energy conservation for the equipment 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, as set forth 
in EPCA. (42 U.S.C. 6297(d) and 6316(b)(2)(D)) No further action is 
required by Executive Order 13132.

H. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform'' (61 FR 4729 (Feb. 7, 1996)) imposes on Federal 
agencies the general duty to adhere to the following requirements: (1) 
Eliminate drafting errors and ambiguity; (2) write regulations to 
minimize litigation; (3) provide a clear legal standard for affected 
conduct rather than a general standard and promote simplification and 
burden reduction. With regard to the review required by section 3(a), 
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 sections 3(a) and 3(b) to determine 
whether they are met or it is unreasonable to meet one or more of them. 
DOE has completed the required review and determined that, to the 
extent permitted by law, the proposed rule meets the relevant standards 
of Executive Order 12988.

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

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

J. 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 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 promulgated 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.
    Today's regulatory action would not have a significant adverse 
effect on the supply, distribution, or use of energy, and, therefore, 
is not a significant energy action. Furthermore, this regulatory action 
has not been designated as a significant energy action

[[Page 12046]]

by the Administrator of OIRA. Accordingly, DOE has not prepared a 
Statement of Energy Effects.

K. Review Under Executive Order 12630

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference With Constitutionally Protected Property Rights,'' 53 FR 
8859 (March 15, 1988), DOE has determined that this rule would not 
result in any takings that might require compensation under the Fifth 
Amendment to the United States Constitution.

L. Review Under Section 32 of the Federal Energy Administration Act of 
1974

    Under section 301 of the Department of Energy Organization Act 
(Pub. L. 95-91), DOE must comply with all laws applicable to the former 
Federal Energy Administration, including section 32 of the Federal 
Energy Administration Act of 1974 (Pub. L. 93-275), as amended by the 
Federal Energy Administration Authorization Act of 1977 (Pub. L. 95-
70). 15 U.S.C. 788. Section 32 provides that where a proposed rule 
authorizes or requires use of commercial standards, the notice of 
proposed rulemaking must inform the public of the use and background of 
such standards. In addition, section 32(c) requires DOE to consult with 
the Department of Justice (DOJ) and the FTC concerning the impact of 
the commercial or industry standards on competition.
    The amendments and revisions to the test procedure for commercial 
packaged boilers proposed in this notice incorporate updates to 
commercial standards already codified in the CFR. DOE has evaluated 
these revised standards and is unable to conclude whether they fully 
comply with the requirements of section 32(b) of the Federal Energy 
Administration Act, (i.e., that they were developed in a manner that 
fully provides for public participation, comment, and review). DOE will 
consult with the Attorney General and the Chairman of the FTC 
concerning the impact of these test procedures on competition before 
prescribing a final rule.

M. 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'' (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 rulemakings analyses are ``influential 
scientific information.'' The Bulletin defines ``influential scientific 
information'' 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 2664, 
2667 (Jan. 14, 2005).
    In response to OMB's Bulletin, DOE conducted formal peer reviews of 
the energy conservation standards development process and analyses, and 
then prepared a Peer Review Report pertaining to the energy 
conservation standards rulemaking analyses. Generation of this report 
involved a rigorous, formal, and documented evaluation process 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 http://www.eere.energy.gov/buildings/appliance_standards/peer_review.html.

VIII. Public Participation

A. Attendance at Public Meeting

    DOE will hold a public meeting on April 7, 2009, from 9 a.m. to 4 
p.m. in Washington, DC. The meeting will be held at the U.S. Department 
of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue, 
SW., Washington, DC. To attend the public meeting, please notify Ms. 
Brenda Edwards at (202) 586-2945. As explained in the ADDRESSES 
section, foreign nationals visiting DOE Headquarters are subject to 
advance security screening procedures. Any foreign national wishing to 
participate in the meeting should advise DOE of this fact as soon as 
possible by contacting Ms. Brenda Edwards to initiate the necessary 
procedures.

B. Procedure for Submitting Requests to Speak

    Any person who has an interest in today's notice, or who is a 
representative of a group or class of persons that has an interest in 
these issues, may request an opportunity to make an oral presentation. 
Such persons may hand-deliver requests to speak to the address shown in 
the ADDRESSES section at the beginning of this notice of proposed 
rulemaking between the hours of 9 a.m. and 4 p.m., Monday through 
Friday, except Federal holidays. Requests may also be sent e-mail to: 
<a href="/cdn-cgi/l/email-protection#e3a191868d8782cda6879482918790a38686cd878c86cd848c95"><span class="__cf_email__" data-cfemail="743606111a10155a311003150610073411115a101b115a131b02">[email protected]</span></a>.
    Persons requesting to speak should briefly describe the nature of 
their interest in this rulemaking and provide a telephone number for 
contact. DOE requests persons scheduled to make a presentation submit 
an advance copy of their statements at least two weeks before the 
public meeting. At its discretion, DOE may permit any person who cannot 
supply an advance copy of their statement to participate, if that 
person has made advance alternative arrangements with the Building 
Technologies Program. The request to give an oral presentation should 
ask for such alternative arrangements.

C. Conduct of Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may 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 5 U.S.C. 553 and 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 presentations by participants, and 
encourage all interested parties to share their views on issues 
affecting this rulemaking. Each participant will be allowed to make a 
prepared general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will permit 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

[[Page 12047]]

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.
    DOE will make the entire record of this proposed rulemaking, 
including the transcript from the public meeting, available for 
inspection at the U.S. Department of Energy, Forrestal Building, 
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, 
SW., 6th Floor, Washington, DC 20024, (202) 586-9127, between 9 a.m. 
and 4 p.m., Monday through Friday, except Federal holidays. 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 the 
proposed rule before or after the public meeting, but no later than the 
date provided at the beginning of this notice of proposed rulemaking. 
Information submitted should be identified by docket number EERE-2008-
BT-STD-0013 and/or RIN 1904-AB83. Please submit comments, data, and 
information electronically, to the following e-mail address: <a href="/cdn-cgi/l/email-protection#5f1e0c170d1e1a00666f716e002d2a333a323e343631381f3a3a713b303a71383029"><span class="__cf_email__" data-cfemail="5a1b0912081b1f05636a746b05282f363f373b3133343d1a3f3f743e353f743d352c">[email protected]</span></a>. Stakeholders should submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or text (ASCII) file 
format and avoid the use of special characters or any form of 
encryption, and whenever possible carry the electronic signature of the 
author. Comments, data, and information submitted to DOE via mail or 
hand delivery/courier should include one signed paper original. No 
telefacsimiles (faxes) will be accepted.
    Pursuant to 10 CFR 1004.11, DOE requires any person submitting 
information that he or she believes to be confidential and exempt by 
law from public disclosure to submit two copies: one copy of the 
document including all the information believed to be confidential, and 
one copy of the document with the information believed to be 
confidential deleted. 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.

E. Issues on Which DOE Seeks Comment

    DOE is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE's proposed definitions for ``thermal efficiency'' and 
``combustion efficiency'' for commercial packaged boilers.
    2. The efficiency of dual output boilers in both steam mode and 
water mode. Specifically, DOE is interested in receiving data or 
comments, which would allow DOE to convert the steam ratings in the 
I=B=R Directory and manufacturers' catalogs to hot water ratings.
    3. DOE's assumption of fixed installation cost for each equipment 
class independent of equipment efficiency. DOE seeks data or comment on 
how installation costs could potentially increase with higher-
efficiency commercial boilers due primarily to venting concerns.
    4. The potential for a rebound effect to occur in the commercial 
packaged boiler industry.
    5. DOE's assumption and the potential significance of any 
overestimation of savings. In particular, DOE requests data that would 
allow it to better characterize the likely increases in packaged boiler 
efficiencies that would occur over the 30-year analysis period absent 
amended energy conservation standards.
    6. The NES-forecasted base-case distribution of efficiencies and 
DOE's prediction of how amended energy conservation standards affect 
the distribution of efficiencies in the standards case.

IX. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of today's Notice 
of Proposed Rulemaking.

List of Subjects in 10 CFR Part 431

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

    Issued in Washington, DC, on March 10, 2009.
Steven G. Chalk,
Principal Deputy Assistant Secretary, Energy Efficiency and Renewable 
Energy.

    For the reasons set forth in the preamble, DOE proposes to amend 
Chapter II of Title 10, Code of Federal Regulations, Part 431 to read 
as set forth below:

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

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

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

    2. In Sec.  431.82, revise the definition ``combustion efficiency'' 
and add the definition ``thermal efficiency,'' in alphabetical order to 
read as follows:


Sec.  431.82  Definitions concerning commercial packaged boilers.

* * * * *
    Combustion Efficiency for a commercial packaged boiler is 
determined using test procedures prescribed under Sec.  431.86 and 
equals to 100 percent minus percent flue loss (percent flue loss is 
based on input fuel energy).
* * * * *
    Thermal Efficiency for a commercial packaged boiler is determined 
using test procedures prescribed under Sec.  431.86 and is the ratio of 
the heat absorbed by the water or the water and steam to the higher 
heating value in the fuel burned.
    3. Revise Sec.  431.85 to read as follows:


Sec.  431.85  Materials incorporated by reference.

    (a) General. We incorporate by reference the following standards 
into Subpart E of Part 431. The material listed has been approved for 
incorporation by reference by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR 51. Any subsequent amendment 
to a standard by the standard-setting organization will not affect the 
DOE regulations unless and until amended by DOE. Material is 
incorporated as it exists on the date of the approval and a notice of 
any change in the material will be published in the Federal Register. 
All approved material is available for inspection at the National 
Archives and Records Administration (NARA). For information on the 
availability of this material at NARA, call 202-741-6030 or go to 
http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html. Also, this material is

[[Page 12048]]

available for inspection at the U.S. Department of Energy, Office of 
Energy Efficiency and Renewable Energy, Building Technologies Program, 
6th Floor, 950 L'Enfant Plaza, SW., Washington, DC 20024, 202-586-2945, 
or go to: http://www1.eere.energy.gov/buildings/appliance_standards/. 
Standards can be obtained from the sources listed below. (b) HI. 
Hydronics Institute Division of GAMA, P.O. Box 218, Berkeley Heights, 
NJ 07922, or http://www.gamanet.org/publist/hydroordr.htm.
    (1) HI BTS-2000 (Rev06.07), Method to Determine Efficiency of 
Commercial Space Heating Boilers, June 2007, IBR approved for Sec.  
431.86.
    (2) [Reserved]
    4. Revise Sec.  431.86 to read as follows:


Sec.  431.86  Uniform test method for the measurement of energy 
efficiency of commercial packaged boilers.

    (a) Scope. This section provides test procedures that must be 
followed for measuring, pursuant to EPCA, the steady state combustion 
efficiency and thermal efficiency of a gas-fired or oil-fired 
commercial packaged boiler. These test procedures apply to packaged low 
pressure boilers that have rated input capacities of 300,000 Btu/hr or 
more and are ``commercial packaged boilers,'' but do not apply under 
EPCA to ``packaged high pressure boilers.''
    (b) Definitions. For purposes of this section, the Department 
incorporates by reference the definitions specified in Section 3.0 of 
the HI BTS-2000 (Rev06.07) (incorporated by reference, see Sec.  
431.85), with the exception of the definition for the terms ``packaged 
boiler,'' ``condensing boilers,'' and ``packaged low pressure steam'' 
and ``hot water boiler.''
    (c) Test Method for Commercial Packaged Boilers--General. Follow 
the provisions in this paragraph (c) for all testing of packaged low 
pressure boilers that are commercial packaged boilers.
    (1) Test Setup--(i) Classifications. If employing boiler 
classification, you must classify boilers as given in Section 4.0 of 
the HI BTS-2000 (Rev06.07) (incorporated by reference, see Sec.  
431.85).
    (ii) Requirements. (A) Before March 2, 2012, conduct the combustion 
efficiency test as given in Section 5.2 (Combustion Efficiency Test) of 
the HI BTS-2000 (Rev06.07) (incorporated by reference, see Sec.  
431.85) for all commercial packaged boiler equipment classes.
    (B) On or after March 2, 2012, conduct the thermal efficiency test 
as given in Section 5.1 (Thermal Efficiency Test) of the HI BTS-2000 
(Rev06.07) for the following commercial packaged boiler equipment 
classes: small, gas, hot water; small, gas, steam, all except natural 
draft; small, gas, steam, natural draft; small, oil, hot water; small, 
oil, steam; large, gas, steam, all except natural draft; large, gas, 
steam, natural draft; and large, oil, steam. On or after March 2, 2012, 
conduct the combustion efficiency test as given in Section 5.2 
(Combustion Efficiency Test) of the HI BTS-2000 (Rev06.07) 
(incorporated by reference, see Sec.  431.85) for the following 
commercial packaged boiler equipment classes: large, gas-fired, hot 
water and large, oil-fired, hot water.
    (iii) Instruments and Apparatus. (A) Follow the requirements for 
instruments and apparatus in sections 6 (Instruments) and 7 
(Apparatus), of the HI BTS-2000 (Rev06.07) (incorporated by reference, 
see Sec.  431.85), with the exception of section 7.2.5 (flue connection 
for outdoor boilers) which is replaced with paragraph (c)(1)(iii)(B) of 
this section.
    (B) Flue Connection for Outdoor Boilers. For oil-fired and power 
gas outdoor boilers, the integral venting means may have to be revised 
to permit connecting the test flue apparatus described in section 7.2.1 
of HI BTS-2000 (Rev06.07). A gas-fired boiler for outdoor installation 
with a venting system provided as part of the boiler must be tested 
with the venting system in place.
    (iv) Test Conditions. Use test conditions from Section 8.0 
(excluding 8.6.2) of HI BTS-2000 (Rev06.07) (incorporated by reference, 
see Sec.  431.85) for combustion efficiency testing. Use all of the 
test conditions from Section 8.0 of HI BTS-2000 (Rev06.07) for thermal 
efficiency testing.
    (2) Test Measurements--(i) Non-Condensing Boilers. (A) Combustion 
Efficiency. Measure for combustion efficiency according to sections 9.1 
(excluding sections 9.1.1.2.3 and 9.1.2.2.3), 9.2 and 10.2 of the HI 
BTS-2000 (Rev06.07) (incorporated by reference, see Sec.  431.85).
    (B) Thermal Efficiency. Measure for thermal efficiency according to 
sections 9.1 and 10.1 of the HI BTS-2000 (Rev06.07) (incorporated by 
reference, see Sec.  431.85).
    (ii) Procedure for the Measurement of Condensate for a Condensing 
Boiler. For the combustion efficiency test, collect flue condensate as 
specified in Section 9.2.2 of HI BTS-2000 (Rev06.07) (incorporated by 
reference, see Sec.  431.85). Measure the condensate from the flue gas 
under steady state operation for the 30 minute collection period during 
the 30 minute steady state combustion efficiency test. Flue condensate 
mass shall be measured immediately at the end of the 30 minute 
collection period to prevent evaporation loss from the sample. The 
humidity of the room shall at no time exceed 80 percent. Determine the 
mass of flue condensate for the steady state period by subtracting the 
tare container weight from the total container and flue condensate 
weight measured at the end of the test period. For the thermal 
efficiency test, collect and measure the condensate from the flue gas 
as specified in Section 9.1.1 and 9.1.2 of HI BTS-2000 (Rev06.07).
    (iii) A Boiler That is Capable of Supplying Either Steam or Hot 
Water--(A) Testing. For purposes of EPCA, before March 2, 2012, measure 
the combustion efficiency of any size commercial packaged boiler 
capable of supplying either steam or hot water either by testing the 
boiler in the steam mode or by testing it in both the steam and hot 
water modes. On or after March 2, 2012, measure the combustion 
efficiency and thermal efficiency of a large (fuel input greater than 
2500 kBtu/h) commercial packaged boiler capable of supplying either 
steam or hot water either by testing the boiler for both efficiencies 
in steam mode, or by testing the boiler in both steam and hot water 
modes measuring the thermal efficiency of the boiler in steam mode and 
the combustion efficiency of the boiler in hot water mode. Measure only 
the thermal efficiency of a small (fuel input of greater than or equal 
to 300 kBtu/h and less than or equal to 2500 kBtu/h) commercial 
packaged boiler capable of supplying either steam or hot water either 
by testing the boiler for thermal efficiency only in steam mode or by 
testing the boiler for thermal efficiency in both steam and hot water 
modes.
    (B) Rating. If testing a large boiler only in the steam mode, use 
the efficiencies determined from such testing to rate the thermal 
efficiency for the steam mode and the combustion efficiency for the hot 
water mode. If testing a large boiler in both modes, rate the boiler's 
efficiency for each mode based on the testing in that mode. If testing 
a small boiler only in the steam mode, use the efficiencies determined 
from such testing to rate the thermal efficiency for the steam mode and 
the hot water mode. If testing a small boiler in both modes, rate the 
boiler's efficiency for each mode based on the testing in that mode.
    (3) Calculation of Efficiency. (i) Combustion Efficiency. Use the 
calculation procedure for the combustion efficiency test specified in 
Section 11.2 (including the specified subsections of 11.1) of the HI 
BTS-2000 (Rev06.07) (incorporated by reference, see Sec.  431.85).

[[Page 12049]]

    (ii) Thermal Efficiency. Use the calculation procedure for the 
thermal efficiency test specified in Section 11.1 of the HI BTS-2000 
(Rev06.07) (incorporated by reference, see Sec.  431.85).
    5. Revise Sec.  431.87 to read as follows:


Sec.  431.87  Energy conservation standards and their effective dates.

    (a) Each commercial packaged boiler manufactured on or after 
January 1, 1994, and before March 2, 2012, must meet the following 
energy efficiency standard levels.
    (1) For a gas-fired packaged boiler with a capacity (rated maximum 
input) of 300,000 Btu/hr or more, the combustion efficiency at the 
maximum rated capacity must be not less than 80 percent.
    (2) For an oil-fired packaged boiler with a capacity (rated maximum 
input) of 300,000 Btu/hr or more, the combustion efficiency at the 
maximum rated capacity must be not less than 83 percent.
    (b) Each commercial packaged boiler manufactured on or after the 
effective date listed in Table 1 to Sec.  431.87, must meet the 
applicable energy conservation standard in Table 1.

                  Table 1 to Sec.   431.87--Commercial Packaged Boiler Energy Efficiency Levels
 
----------------------------------------------------------------------------------------------------------------
                                                                                            Efficiency level
                                                                                       -------------------------
          Equipment type                  Subcategory           Size category (input)    Effective    Effective
                                                                                        date: March  date: March
                                                                                          2, 2012*     2, 2022*
----------------------------------------------------------------------------------------------------------------
Hot Water Commercial Packaged      Gas-fired................  >= 300,000 Btu/h and <=      80.0% ET     80.0% ET
 Boilers.                                                      2,500,000 Btu/h.
Hot Water Commercial Packaged      Gas-fired................  > 2,500,000 Btu/h.......     82.0% EC     82.0% EC
 Boilers.
Hot Water Commercial Packaged      Oil-fired................  >= 300,000 Btu/h and <=      82.0% ET     82.0% ET
 Boilers.                                                      2,500,000 Btu/h.
Hot Water Commercial Packaged      Oil-fired................  > 2,500,000 Btu/h.......     84.0% EC     84.0% EC
 Boilers.
Steam Commercial Packaged Boilers  Gas-fired--all, except     >= 300,000 Btu/h and <=      79.0% ET     79.0% ET
                                    natural draft.             2,500,000 Btu/h.
Steam Commercial Packaged Boilers  Gas-fired--all, except     > 2,500,000 Btu/h.......     79.0% ET     79.0% ET
                                    natural draft.
Steam Commercial Packaged Boilers  Gas-fired--natural draft.  >= 300,000 Btu/h and <=      77.0% ET     79.0% ET
                                                               2,500,000 Btu/h.
Steam Commercial Packaged Boilers  Gas-fired--natural draft.  > 2,500,000 Btu/h.......     77.0% ET     79.0% ET
Steam Commercial Packaged Boilers  Oil-fired................  >= 300,000 Btu/h and <=      81.0% ET     81.0% ET
                                                               2,500,000 Btu/h.
Steam Commercial Packaged Boilers  Oil-fired................  > 2,500,000 Btu/h.......     81.0% ET    81.0% ET
----------------------------------------------------------------------------------------------------------------
* Where EC is combustion efficiency and ET is thermal efficiency as defined in Sec.   431.82.

    6. In Sec.  431.97, add paragraph (d) to read as follows:


Sec.  431.97  Energy conservation standards and their effective dates.

* * * * *
    (d) Each water-cooled and evaporatively-cooled commercial package 
air conditioning and heating equipment with a cooling capacity at or 
above 240,000 Btu/h and less than 760,000 Btu/h manufactured on or 
after January 10, 2011, shall meet the following standard levels:
    (1) For equipment that utilizes electric resistance heat or without 
heating, the energy efficiency ratio must be not less than 11.0.
    (2) For equipment that utilizes all other types of heating, the 
energy efficiency ratio must be not less than 10.8.

[FR Doc. E9-5818 Filed 3-19-09; 8:45 am]
BILLING CODE 6450-01-P


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