[Federal Register Volume 74, Number 139 (Wednesday, July 22, 2009)]
[Rules and Regulations]
[Pages 36312-36356]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-16774]



[[Page 36311]]

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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; Final Rule

Federal Register / Vol. 74 , No. 139 / Wednesday, July 22, 2009 / 
Rules and Regulations

[[Page 36312]]


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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: Final rule.

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SUMMARY: The U.S. Department of Energy (DOE) is adopting amended energy 
conservation standards for commercial packaged boilers and adopting 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 in the American Society of Heating, 
Refrigerating and Air-Conditioning Engineers, Inc. (ASHRAE)/
Illuminating Engineering Society of North America (IESNA) Standard 
90.1-2007. DOE has determined that the ASHRAE Standard 90.1-2007 
efficiency levels for commercial packaged boilers are more stringent 
than the existing Federal energy conservation standards and will result 
in economic and energy savings compared to existing energy conservation 
standards. Furthermore, DOE has 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. In 
addition, DOE is adopting related amendments to its test procedures for 
commercial packaged boilers.

DATES: This rule is effective September 21, 2009. The standards for 
commercial packaged boilers established in this final rule will apply 
starting on March 2, 2012. The 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 established in this final rule will apply starting on January 10, 
2011. The incorporation by reference of certain publications listed in 
this final rule was approved by the Director of the Federal Register on 
September 21, 2009.

ADDRESSES: 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. You may also obtain copies of the 
final rule in this proceeding, related documents (e.g., the notice of 
proposed rulemaking and technical support document DOE used to reassess 
whether to adopt certain efficiency levels in ASHRAE Standard 90.1), 
draft analyses, public meeting materials, and related test procedure 
documents from the Office of Energy Efficiency and Renewable Energy's 
Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/ashrae_products_docs_meeting.html.

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#b8f5d7d0d9d5d5dddc96f3d0d9d6f8dddd96dcd7dd96dfd7ce"><span class="__cf_email__" data-cfemail="fcb193949d91919998d2b7949d92bc9999d2989399d29b938a">[email protected]</span></a>.
    Mr. Michael Kido or 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) 
586-8145 or (202) 586-5827. E-mail: <a href="/cdn-cgi/l/email-protection#d39ebab0bbb2b6bffd98bab7bc93bba2fdb7bcb6fdb4bca5"><span class="__cf_email__" data-cfemail="733e1a101b12161f5d381a171c331b025d171c165d141c05">[email protected]</span></a> or 
<a href="/cdn-cgi/l/email-protection#d297a0bbb1fc81a6b3a192baa3fcb6bdb7fcb5bda4"><span class="__cf_email__" data-cfemail="d491a6bdb7fa87a0b5a794bca5fab0bbb1fab3bba2">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:
    This final rule incorporates by reference into subpart E of Title 
10, Code of Federal Regulations, part 431 (10 CFR part 431), the 
following standard:
    <bullet> The Hydronics Institute Division of GAMA BTS-2000 Testing 
Standard, (``HI BTS-2000, Rev06.07''), Method to Determine Efficiency 
of Commercial Space Heating Boilers, Second Edition (Rev 06.07), 2007.
    The Gas Appliance Manufacturers Association (GAMA) merged in 2008 
with the Air-Conditioning and Refrigeration Institute to become the 
Air-Conditioning, Heating, and Refrigeration Institute (AHRI). The 
Hydronics Institute BTS-2000 Testing Standard can be obtained from 
AHRI. Copies of HI BTS-2000 can be obtained from the Hydronics 
Institute Section of AHRI, P.O. Box 218, Berkeley Heights, NJ 07922-
0218, (866) 408-3831, or go to: http://www.ahrinet.org/Content/OrderaStandard_573.aspx.

Table of Contents

I. Summary of Final Rule
II. Introduction
    A. Authority
    B. Background
    1. ASHRAE Standard 90.1-2007
    2. Notice of Data Availability and Request for Public Comment
    3. Notice of Proposed Rulemaking
    4. Notice of Data Availability and Request for Public Comment--
Environmental Assessment and Emissions Monetization
III. General Discussion of Comments Regarding the March 2009 NOPR, 
the ASHRAE Process, and DOE's Interpretation of EPCA's Requirements 
With Respect to ASHRAE Equipment
    A. Equipment Classes With a Two-Tier Efficiency Level Specified 
in ASHRAE Standard 90.1-2007
    B. The Definition of Amendment With Respect to the Efficiency 
Levels in an ASHRAE Standard
    C. DOE's Review of ASHRAE Equipment Independent of the ASHRAE 
Standards Process
    D. Combination Efficiency Level and Design Requirements in 
ASHRAE Standard 90.1-2007
    E. The Proposed Energy Conservation Standards for Commercial 
Packaged Boilers
    F. Commercial Electric Instantaneous Water Heaters
IV. General Discussion of the Changes in ASHRAE Standard 90.1-2007 
and Determination of Scope for Further Rulemaking Analyses
V. Methodology and Discussion of Comments for Commercial Packaged 
Boilers
    A. Test Procedures
    B. Market Assessment
    C. Engineering Analysis
    1. Approach and Assumptions
    2. Results
    D. Markups To Determine Equipment Price
    E. Energy Use Characterization
    F. Life-Cycle Cost and Payback Period Analyses
    G. Shipments Analysis
    H. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    I. Environmental Assessment
    1. Sulfur Dioxide
    2. Nitrogen Oxides
    J. Monetizing Carbon Dioxide and Other Emissions Impacts
    K. Other Issues
    1. Impact of Standards on Natural Gas Prices
    2. Effective Date of the Amended Energy Conservation Standards 
for Commercial Packaged Boilers
VI. Analytical Results for Commercial Packaged Boilers
    A. Efficiency Levels Analyzed
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Commercial Customers
    2. National Impact Analysis
    3. Need of the Nation To Conserve Energy
    C. Amended Energy Conservation Standards for Commercial Packaged 
Boilers

[[Page 36313]]

    D. Amended Energy Conservation 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
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
    N. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Summary of Final Rule

    The Energy Policy and Conservation Act (42 U.S.C. 6291 et seq.), as 
amended (EPCA), 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 (ASHRAE Standard 90.1 or, in context, 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,\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 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 explained that the statutory trigger requiring DOE 
to adopt uniform national standards based on ASHRAE action is the 
amending of an efficiency level by ASHRAE 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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    DOE published a notice of proposed rulemaking on March 20, 2009 
(March 2009 NOPR), in the Federal Register describing DOE's 
determination of scope for considering amended energy conservation 
standards with respect to certain heating, ventilating, air-
conditioning, and water-heating equipment addressed in ASHRAE Standard 
90.1-2007. 74 FR 12000; 12008-20. ASHRAE Standard 90.1-2007, which was 
formally adopted by the group's Board of Directors in early January 
2008, generally retained the energy efficiency levels already in place, 
except with respect to commercial packaged boilers and one class of 
commercial package air conditioners and heat pumps--water cooled and 
evaporatively cooled air conditioners and heat pumps with a cooling 
capacity at or above 240,000 Btu/h and less than 760,000 Btu/h. See 74 
FR 12004.
    For the commercial package air conditioning and heating equipment 
covered in this rulemaking, ASHRAE assigned an effective date of 
January 10, 2008. For eight equipment classes of commercial packaged 
boilers, ASHRAE assigned an effective date of March 2, 2010. For the 
remaining two equipment classes of commercial packaged boilers covered 
by this rulemaking, ASHRAE created two-tiered effective dates--March 2, 
2010, for an initial increase in the efficiency level and March 2, 
2020, for the next required level.
    In determining the scope of the rulemaking, DOE is statutorily 
required 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) in the March 2009 NOPR. 74 FR 12037-41.
    The energy conservation standards in today's final rule, which 
apply to all 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, satisfy all applicable requirements of EPCA and will achieve the 
maximum improvements in energy efficiency that are technologically 
feasible and economically justified. (See 42 U.S.C. 6316(a); 42 U.S.C. 
6295(o)(2)(A)) DOE has concluded that, based on the information 
presented and its analyses, there is not clear and convincing evidence 
justifying adoption of more-stringent efficiency levels for this 
equipment.
    Thus, in accordance with the criteria discussed in this notice, DOE 
is adopting amended energy conservation standards for ten equipment 
classes of commercial packaged boilers and adopting 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. 
Pursuant to EPCA, the compliance date for amended energy conservation 
standards based upon the levels in ASHRAE Standard 90.1 is either two 
or three years after the effective date of the requirement in the 
amended ASHRAE standard, depending on the type and size of the 
equipment. (See 42 U.S.C. 6313(a)(6)(D)) In the present case, the 
amended standards for commercial packaged boilers 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 amended 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 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)) Table I.1 
shows the energy conservation standards that DOE

[[Page 36314]]

is adopting today and their respective effective dates.
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[GRAPHIC] [TIFF OMITTED] TR22JY09.000

BILLING CODE 6450-01-C

    In addition, DOE is adopting 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. See 42 U.S.C. 6314(a)(4) and 10 CFR part 431.86. Specifically, 
these amendments, which were proposed in the March 2009 NOPR, update 
the citations and references to the most recent version of the industry 
standards already referenced in DOE's test procedures. 74 FR 12020-22. 
In addition, these amendments specify a definition and methodology to 
test the thermal efficiency of these boilers, which is the metric DOE 
is adopting 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 make a 
small number of technical modifications to DOE's existing test 
procedure for commercial packaged boilers, including deleting obsolete 
references and renumbering appropriate sections of the CFR.

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 \2\ 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

[[Page 36315]]

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), labeling 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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    \2\ For editorial reasons, Parts B (consumer products) and C 
(commercial equipment) of Title III of EPCA were redesignated as 
Parts A and A-1, respectively, in the United States Code.
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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 packaged 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).
    Congress further directed DOE to consider amending the existing 
Federal energy conservation standard for each type of equipment listed 
whenever ASHRAE amends the efficiency levels in Standard 90.1. (42 
U.S.C. 6313(a)(6)(A)) For each type of listed equipment, EPCA directs 
that if ASHRAE amends Standard 90.1, DOE must adopt amended standards 
at the new ASHRAE efficiency level unless clear and convincing evidence 
supports a determination that adoption of a more stringent level would 
produce significant additional energy savings and would 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 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, DOE must evaluate the amended efficiency levels to 
ensure that the adoption of the revised Standard 90.1 levels does not 
result in the promulgation of 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)) This ``anti-backsliding'' provision acts as a 
statutory backstop to help preserve the stringency of established DOE 
energy efficiency standards. See Natural Resources Defense Council v. 
Abraham, 355 F.3d 179 (2d Cir. 2004).
    When considering the possibility of a more-stringent standard, EPCA 
requires DOE to consider a variety of factors, with the primary ones 
being whether a more-stringent standard would be technologically 
feasible, economically justified, and be likely to produce significant 
additional 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)-(b)) 
However, DOE can grant waivers of preemption for particular State laws 
or regulations, in accordance with 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, in relevant part, 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 life cycle cost (LCC) and payback period (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. ASHRAE Standard 90.1 addresses efficiency levels for many types 
of commercial heating, ventilating, air-conditioning (HVAC), and water-
heating equipment covered by EPCA; it revised the efficiency levels for 
certain commercial equipment, while leaving in

[[Page 36316]]

place the preexisting efficiency levels for the remaining equipment. 
For the equipment classes where ASHRAE left the preexisting efficiency 
in place, the efficiency levels specified in ASHRAE Standard 90.1-1999 
were carried forward and continue to apply.\3\
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    \3\ 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 current Federal energy conservation 
standards and the new efficiency levels for equipment affected by the 
changes made by ASHRAE Standard 90.1-2007. In section IV of the March 
2009 NOPR, DOE assessed these equipment types to determine whether the 
ASHRAE amendments constitute increased energy conservation levels that 
would necessitate further analysis. 74 FR 12008-20. 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 
these changes to the energy efficiency levels would make the equipment 
more or less efficient, when 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. However, it is 
not immediately clear whether this modified level will result in 
increased or reduced efficiency. Therefore, DOE undertook this 
additional threshold analysis to thoroughly evaluate the amendments in 
ASHRAE Standard 90.1-2007 in a manner consistent with its statutory 
mandate.
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[GRAPHIC] [TIFF OMITTED] TR22JY09.002

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[[Page 36319]]

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. 73 FR 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 discussed the changes introduced by Standard 90.1-
2007 and presented 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 result in increased 
efficiency levels when compared with the current Federal standards. 74 
FR 40776-86. Regarding equipment for which ASHRAE increased efficiency 
levels through Standard 90.1-2007, DOE subjected these equipment 
efficiency levels to the potential energy savings analysis discussed 
above and presented the results for public comment. Id.
    As a result of the preliminary determination of scope set forth in 
the July 2008 NODA, DOE found that the ten equipment classes of 
commercial packaged boilers described by ASHRAE were the only equipment 
type available on the market for which ASHRAE increased the efficiency 
levels. Id. 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. 72 FR 40786-91.
3. Notice of Proposed Rulemaking
    On March 20, 2009, DOE published a NOPR in the Federal Register 
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 packaged 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. 
74 FR 12000.
    The March 2009 NOPR also contained 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 and shown in Table 
II.1, above. 74 FR 12008-20. For 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). See generally 
74 FR 12020-41. DOE also explained in the March 2009 NOPR that it did 
not analyze the economic and energy savings potential of amended 
national energy conservation standards for water-cooled and 
evaporatively cooled commercial packaged air conditioners and heat 
pumps with a cooling capacity at or above 240,000 Btu/h and less than 
760,000 Btu/h because there is no equipment currently being 
manufactured in this equipment class. 74 FR 12013.
    In addition, DOE proposed amendments to its test procedures for 
commercial packaged boilers to update the citations and references to 
the most recent version of the industry standards already referenced in 
DOE's test procedures. 74 FR 12020-22. DOE also proposed to add a 
definition and methodology to test the thermal efficiency for eight of 
the ten equipment classes of commercial packaged boilers, which was the 
metric DOE had proposed. Id.
4. Notice of Data Availability and Request for Public Comment--
Environmental Assessment and Emissions Monetization
    On June 3, 2009, DOE published a NODA and request for public 
comment on the environmental assessment (EA) for the March 2009 NOPR 
proposing amended energy conservation standards 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. 74 FR 26596. The EA included 
a concise examination of the impacts of emission reductions likely to 
result from the proposed standards for these two equipment types, as 
presented in Chapter 8 of the NOPR TSD. DOE also performed an emissions 
monetization analysis of those potential emission reductions and 
described the results of the monetization analysis in Chapter 9 of the 
NOPR TSD. Id. See http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/ch_8_ashrae_nopr_tsd.pdf for the EA and 
http://www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/ch_9_ashrae_nopr_tsd.pdf for the monetization analysis. DOE 
received no comments on the EA or the emissions monetization analysis 
described by the June 2009 NODA. 74 FR 26596.

III. General Discussion of Comments Regarding the March 2009 NOPR, the 
ASHRAE Process, and DOE's Interpretation of EPCA's Requirements With 
Respect to ASHRAE Equipment

    In response to the March 2009 NOPR, DOE received three comments 
from manufacturers, trade associations, and energy efficiency 
advocates. In addition, DOE received a comment from the U.S. Department 
of Justice (DOJ) regarding the potential impact on competition of 
proposed amended energy conservation standards for commercial packaged 
boilers and certain commercial package air-conditions and heat pumps. 
The issues raised in these comments, along with DOE's responses, are 
set forth below.

A. 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 categories. For two of the ten categories 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 categories 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 response to DOE's proposal for small gas-fired steam natural 
draft and large gas-fired steam natural draft commercial packaged 
boilers, several parties commented during the public meeting regarding 
the adoption of two-tiered efficiency levels. The American Council for 
an Energy-Efficient Economy (ACEEE) asserted that for a rulemaking with 
an effective date of March 2, 2012, it is inappropriate for

[[Page 36320]]

DOE to pre-ordain any standards with an effective date of March 2, 
2022. (ACEEE, Public Meeting Transcript, No. 12 at pp. 100-102) \4\ 
ACEEE further stated that it could not see any reason why DOE would 
choose to bind itself today to any standards in 2022 and that in doing 
so, the dynamic at ASHRAE would likely be influenced by DOE's actions. 
(ACEEE, Public Meeting Transcript, No. 12 at p. 104) Lastly, ACEEE 
stated it did not believe the second-tier efficiency level was the 
subject of any ASHRAE discussions. (ACEEE, Public Meeting Transcript, 
No. 12 at pp. 100-102)
---------------------------------------------------------------------------

    \4\ ``ACEEE, Public Meeting Transcript, No. 12 at pp. 100-102'' 
refers to (1) to a statement that was submitted by the American 
Council for an Energy-Efficient Economy during the March 2009 NOPR 
Public Meeting. It was 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 12; and (2) a passage that appears on pages 100 through 102 
of that statement.
---------------------------------------------------------------------------

    The Air-Conditioning, Heating, and Refrigeration Institute (AHRI) 
asserted that for steam natural draft commercial packaged boilers, it 
is worth having a second standard level with an effective date of March 
2, 2022. (AHRI, Public Meeting Transcript, No. 12 at pp. 102-103) 
Contrary to ACEEE's assertion, AHRI stated that the delayed effective 
date (i.e., the second tier) was a part of the ASHRAE discussions and 
the purpose of this two-tiered approach was to make an initial 
incremental efficiency change while allowing for a longer lead time for 
a larger improvement in efficiency for this very small segment of the 
market. According to AHRI, the delayed date was to put manufacturers of 
these products on notice that in 10 years the steam natural draft 
equipment must be as efficient as non-natural draft equipment. (AHRI, 
Public Meeting Transcript, No. 12 at pp. 102-103)
    Burnham Hydronics Institute (Burnham) asserted that the proposed 
levels for these two equipment classes are going to result in energy 
savings through boilers being modified or taken off the market. 
(Burnham, Public Meeting Transcript, No. 12 at pp. 103-104) Burnham 
also predicted that natural gas steam natural draft products will be 
essentially eliminated in 2022 due to the second-tier requirements in 
ASHRAE Standard 90.1-2007. Burnham stated that manufacturers of these 
products received additional time because some applications (e.g., 
boiler rooms with low head room) have no currently available 
alternatives. Burnham stated that the extra 10 years affords 
manufacturers and owners of buildings time to decide how to handle 
those potential issues and to develop an alternative. (Burnham, Public 
Meeting Transcript, No. 12 at pp. 103-104)
    DOE is adopting the two-tier efficiency levels in ASHRAE Standard 
90.1-2007 in today's final rule for small gas-fired steam natural draft 
and large gas-fired steam natural draft commercial packaged boilers. 
EPCA requires DOE to adopt energy efficiency standards for this 
equipment at the minimum level specified in any amended ASHRAE standard 
unless more-stringent standards are supported by clear and convincing 
evidence. (42 U.S.C. 6313(a)(6)(A)) Unless more-stringent standards are 
appropriate (in which case DOE can use its judgment to tailor the 
relevant standard level(s)), the statute does not provide DOE latitude 
to alter or disregard the ASHRAE Standard 90.1 levels in whole or part. 
Because ASHRAE adopted a tiered standard, DOE cannot adopt one 
efficiency level without adopting the latter efficiency level. 
Accordingly, in its economic and energy savings analysis, DOE analyzed 
these two equipment classes as if both the 2010 and 2020 levels will be 
adopted on their respective effective dates. In addition, DOE is 
adopting the two-tier efficiency levels in ASHRAE Standard 90.1-2007 as 
a ``package'' in today's final rule for small gas-fired steam natural 
draft and large gas-fired steam natural draft commercial packaged 
boilers.

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

    As DOE noted in the July 2008 NODA (73 FR 40771) and the March 2009 
NOPR (74 FR 12006), EPCA does not explicitly define the term 
``amended'' in the context of ASHRAE Standard 90.1. DOE had previously 
interpreted what would constitute an ``amended standard'' in the 
context of ASHRAE equipment in a final rule published in the Federal 
Register on March 7, 2007 (72 FR 10038). In that final rule, DOE 
explained that when ASHRAE increases the efficiency level for any of 
the equipment specified in EPCA section 342(a)(6)(A)(i) vis-[aacute]-
vis the current DOE standards, that action triggers the requirement for 
DOE to consider adoption of uniform national standards based on these 
changes. 72 FR 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). 73 FR 40771.
    In response to DOE's interpretation of the definition of 
``amendment,'' the Appliance Standards Awareness Project (ASAP), ACEEE, 
the Alliance to Save Energy (ASE), the Natural Resources Defense 
Council (NRDC), the Northeast Energy Efficiency Partnership (NEEP), and 
the Northwest Power and Conservation Council (NPCC) submitted a joint 
comment, referred to as ``the Joint Comment,'' disagreeing with DOE's 
position in the March 2009 NOPR. (The Joint Comment, No. 19 at p. 1) 
Specifically, the Joint Comment argued that DOE acknowledges that the 
ASHRAE standards for several products have been revised relative to 
earlier versions. However, the Joint Comment pointed out that DOE takes 
an improperly constrained view of the meaning of ``amended,'' 
arbitrarily ruling out changes such as addition of prescriptive 
requirements, changes in metric and decreases in the standard. The 
Joint Comment referred to its earlier comments in response to the July 
2008 NODA (i.e., the Advocacy Joint Comment, No. 4) for additional 
detail and asserted that any of these changes fit within the meaning of 
``amended'' and should be considered as changes requiring DOE review. 
The Joint Comment stated its belief that DOE has applied an unlawfully 
narrow definition to the word ``amendment.'' (The Joint Comment, No. 19 
at p. 1)
    DOE continues to view the statute's trigger as tied to an increased 
energy efficiency level for the affected equipment type. As described 
in the March 2007 final rule and the March 2009 NOPR, section 342 of 
EPCA requires DOE to establish energy conservation standards for the 
commercial equipment contained in this rulemaking at the minimum 
efficiency level specified in any amended ASHRAE standard unless more 
stringent standards are supported by clear and convincing evidence--in 
other words, to maintain uniform national standards consistent with 
those set in ASHRAE Standard 90.1 unless more stringent standards are 
justified. 72 FR 10042 and 74 FR 12006. Therefore, if ASHRAE has not 
amended a standard for a product subject to section 342, there is no 
change that 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 
requirement that DOE adopt ASHRAE's amended

[[Page 36321]]

standards is not triggered with respect to this equipment. Id. The 
statutory language specifically links ASHRAE's action to amend 
efficiency levels for specific equipment to DOE's action affecting the 
same equipment. Id. Given this statutory scheme, DOE does not agree 
with the Joint Comment's suggestion that amendment of the level for any 
ASHRAE product opens up the national standards for all ASHRAE products 
to potential amendment.

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

    The Joint Comment asserted that the routine review of efficiency 
standards required by the Energy Independence and Security Act of 2007 
(EISA 2007), Public Law 110-140, (i.e., section 305(b) of EISA 2007) 
clearly intends to establish a structure to review each DOE standard 
for ASHRAE covered equipment at least every six years. (The Joint 
Comment, No. 19 at pp. 1-2) The Joint Comment pointed out that several 
ASHRAE standards were last reviewed in 2001, including commercial water 
heaters and commercial furnaces. In the March 2009 NOPR, DOE maintained 
that reviews are not due for products for which the six-year clock has 
expired prior to enactment of EISA 2007. However, the commenters view 
such an interpretation as sheltering these products from further review 
by ASHRAE on an indefinite basis. According to the commenters, the 
intent of EISA 2007 was to subject all standards to regular reviews, 
not to create a haphazard special class with a potentially permanent 
exception from periodic DOE review. The Joint Comment took the position 
that DOE can rectify this situation by initiating a review of all 
ASHRAE standards that have not been changed in more than six years 
(e.g., commercial furnaces, commercial water heaters). The Joint 
Comment argued that DOE must do so under the EISA 2007 provision. At a 
minimum, the Joint Comment asserted that DOE should conduct an initial 
analysis to assess potential energy savings from a full-fledged review 
of product standards, which have not been updated since the January 
2001 final rule (66 FR 3336). (The Joint Comment, No. 19 at pp. 1-2)
    In response, DOE acknowledges that section 305(b) of EISA 2007 
amended section 342(a)(6) of EPCA by directing 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. The section 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 
amended 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. 
As stated previously, 74 FR 12007, DOE does not believe Congress 
intended to apply these requirements retroactively, which would cause 
DOE to be in immediate violation of its legal obligations upon passage 
of the statute, thereby failing from its inception. DOE does not agree 
with the assertion that DOE is late and should initiate an immediate 
review of certain commercial equipment cited by the commenters above.

D. Combination Efficiency Level and Design Requirements in ASHRAE 
Standard 90.1-2007

    For several classes of equipment, ASHRAE added design requirements 
in addition to the efficiency level requirements in ASHRAE Standard 
90.1. For example, 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.\5\ DOE stated in the 
March 2009 NOPR that the language of EPCA authorizes DOE to establish a 
performance standard or a single design standard for certain types of 
commercial equipment, including oil-fired furnaces. 74 FR 12008-09.
---------------------------------------------------------------------------

    \5\ ``Jacket losses'' refer generally to the heat loss to the 
surroundings from the furnace, excluding flue losses.
---------------------------------------------------------------------------

    The Joint Comment argued that rejecting multi-metric standards 
reversed a prior position adopted by DOE in the central air conditioner 
rulemaking. (The Joint Comment, No. 19 at p. 2) The Joint Comment 
strongly urged the new Administration to reconsider this policy because 
multi-metric standards are increasingly important for capturing cost-
effective energy savings. It argued that ASHRAE found that such 
standards made sense for commercial furnaces and criticized DOE for not 
considering the ASHRAE changes. The Joint Comment stated that energy 
use for many products can be moderated through controls strategies, 
which are often not represented in a product's test method. (The Joint 
Comment, No. 19 at p. 2)
    On that point, ASHRAE recommended that DOE consider the role of 
prescriptive requirements in the setting of national efficiency levels 
for commercial furnaces. (ASHRAE, No. FDMS DRAFT 5.1 at p. 2) ASHRAE 
commented that these prescriptive requirements provide critical 
characterizations of overall equipment efficiency and total energy use. 
According to ASHRAE, these requirements are designed to work in 
cooperation with the numerical efficiency metric to achieve greater 
levels of energy efficiency than possible through the use of the 
numerical metric alone. ASHRAE asserted that as it continues to develop 
Standard 90.1 and to decrease the total energy use associated with that 
standard, such additional prescriptive requirements likely will become 
even more prevalent. It argued that increasing the stringency of 
Standard 90.1 will require greater focus on systems as a whole and 
consideration of all factors and attributes that contribute to the 
energy use associated with that system. In order to achieve the maximum 
energy efficiency envisioned by the standard, ASHRAE strongly 
encouraged DOE to reconsider its policy of not including accompanying 
prescriptive requirements in its energy conservation analysis. (ASHRAE, 
No. FDMS DRAFT 5.1 at p. 2)
    DOE notes that its response to this issue is grounded in the 
requirements of EPCA, not DOE policy, and that the commenters offered 
no other plausible alternative reading of this statutory provision. In 
this rulemaking, DOE only reviewed the combination efficiency

[[Page 36322]]

level and design requirements for gas-fired and oil-fired commercial 
warm air furnaces because these were the only equipment classes where 
DOE's initial review of the efficiency levels in ASHRAE Standard 90.1-
2007 for this equipment revealed a perceived change when compared to 
the Federal energy conservation standards for this equipment. As 
described in the March 2009 NOPR, DOE has determined that the design 
requirements in ASHRAE Standard 90.1-2007 for gas-fired and oil-fired 
commercial warm air furnaces are beyond the scope of its legal 
authority. 74 FR 12008-10. More specifically, the language of EPCA 
authorizes DOE to establish ``energy conservation standards'' that set 
either a single performance standard or a single design requirement--
not both. See 42 U.S.C. 6311(18). 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. Thus, if DOE were to replace 
its existing, performance-based standard with a design requirement, the 
statute would not permit adoption of all three design requirements in 
ASHRAE Standard 90.1-2007. Furthermore, such a change would also 
necessitate an initial DOE determination that the new requirement would 
not result in backsliding when compared to the current standards.

E. The Proposed Energy Conservation Standards for Commercial Packaged 
Boilers

    In the March 2009 NOPR, DOE proposed the efficiency levels in 
ASHRAE Standard 90.1-2007 for the ten classes of commercial packaged 
boilers. 74 FR 12002. DOE received four comments in response to its 
proposal for commercial packaged boilers. Specifically, the Joint 
Comment stated its support for DOE's proposal on commercial packaged 
boilers. (The Joint Comment, No. 19 at p. 1) Burnham also stated its 
support for DOE's direction in the NOPR and urged DOE to issue a final 
rule as soon as possible. (Burnham, Public Meeting Transcript, No. 12 
at p. 96) AHRI stated that it agrees with DOE's direction in the NOPR 
and pointed out that there is a ``residual value'' in transitioning 
from the combustion efficiency metric to the thermal efficiency metric 
for commercial packaged boilers. (AHRI, Public Meeting Transcript, No. 
12 at pp. 97-98) ASHRAE commended DOE for its proposed handling of 
commercial packaged boilers in the March 2009 NOPR. ASHRAE pointed out 
consensus agreements between manufacturers and energy-efficiency 
advocates provide a valuable means of improving energy efficiency with 
necessary consideration for technological and economic feasibility, as 
DOE has acknowledged. (ASHRAE, No. FDMS DRAFT 5.1 at p. 1)
    Lastly, DOJ concluded that the proposed standards for commercial 
packaged boilers are not likely to have an adverse effect on 
competition. (DOJ, No. 15 at p. 2) In reaching this conclusion, DOJ 
noted the absence of any competitive concerns raised by industry 
participants at the public meeting. In addition, DOJ noted the 
efficiency levels in the proposed standards are based on a consensus 
recommendation submitted to ASHRAE by efficiency advocacy groups and 
the trade association for manufacturers of commercial packaged boilers. 
Based on these facts, DOJ stated its belief that the new standard would 
not likely reduce competition. Id.

F. Commercial Electric Instantaneous Water Heaters

    SEISCO INTERNATIONAL (SEISCO) commented that it has been (and would 
continue to be) significantly adversely affected by DOE's decisions not 
to create a product class for electric tankless water heaters having an 
output rated greater than 12 kilowatts, as well as to exclude the 
advanced electric tankless and electric resistance storage tank from 
the ENERGY STAR program. (SEISCO, No. 17 at p. 1) SEISCO's comments 
asserted that this type of equipment would provide energy savings 
benefits when compared to traditional storage-type water heaters. 
(SEISCO, No. 17 at p. 8)
    While DOE acknowledges SEISCO's concerns with regard to the product 
classes for electric tankless water heaters, these concerns are beyond 
the scope of this rulemaking. Currently, ASHRAE Standard 90.1 does not 
include an efficiency level or a prescriptive requirement for 
commercial electric tankless water heaters. In order for DOE to 
consider amendments, ASHRAE must amend Standard 90.1 to add test 
procedures and efficiency levels for these equipment types. In 
addition, DOE notes that it is not addressing SEISCO's concerns 
regarding the ENERGY STAR program for electric tankless and electric 
resistance storage water heaters because it is not part of the ASHRAE 
rulemaking process.

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 the 
amended Standard 90.1 efficiency levels represented an increase in 
efficiency above the current Federal standard levels. DOE discussed 
each equipment class where these levels differ from the current Federal 
standard level, along with DOE's preliminary conclusion as to the 
action DOE would take with respect to that equipment in the March 2009 
NOPR. See 74 FR 12008-20. DOE tentatively concluded from this analysis 
that the only efficiency levels that represented an increase in 
efficiency above the current Federal standards were those for certain 
classes of 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. For a more detailed discussion of this approach, readers should 
refer to the preamble to the March 2009 NOPR. See Id. DOE received no 
additional comments on this topic in response to the March 2009 NOPR, 
so DOE is using the same approach in this final rule.

V. Methodology and Discussion of Comments for Commercial Packaged 
Boilers

    This section provides a brief overview of the analyses DOE has 
performed for this rulemaking with respect to commercial packaged 
boilers and the comments received in response to the March 2009 NOPR. A 
separate subsection addresses each analysis and its respective 
comments. DOE used a spreadsheet to calculate the LCCs and 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 briefly describes the 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. DOE described all of the test procedure 
changes it is adopting in

[[Page 36323]]

today's final rule in the March 2009 NOPR. See 74 FR 12020-22.

A. Test Procedures

    Section 343(a) of EPCA (42 U.S.C. 6314(a)) requires the Secretary 
to amend the test procedures for packaged boilers to be the latest 
version generally accepted by industry or the rating procedures 
developed or recognized by the Air-Conditioning and Refrigeration 
Institute (ARI) \6\ or by ASHRAE, as referenced by ASHRAE/IESNA 
Standard 90.1, unless the Secretary determines by clear and convincing 
evidence that the latest version of the industry test procedure: (1) Is 
not reasonably designed to produce results reflecting energy 
efficiency, energy use, and estimated operating costs and (2) would be 
unduly burdensome to conduct. Additionally, if the procedure is one 
used for determining estimated annual operating costs, the procedure 
must provide that the costs are calculated from energy use measurements 
in a representative average use cycle and from representative average 
unit costs of the energy needed to operate the equipment during the 
cycle. (42 U.S.C. 6314(a)(4)(B) and 42 U.S.C. 6314(a)(3)) 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.
---------------------------------------------------------------------------

    \6\ 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 (Testing Standard 
for Commercial Space Heating Boilers) and reaffirmed the continued use 
of BTS-2000 (Rev 06.07) as the recommended testing standard. As noted 
in the NOPR, DOE believes the revised BTS-2000 (Rev 06.07) is 
reasonably designed to produce results reflecting energy efficiency, 
energy use, and estimated operating costs, and is not unduly burdensome 
to conduct. 74 FR 12020. Therefore, DOE is amending the uniform test 
procedure for commercial packaged boilers to incorporate by reference 
HI BTS-2000 (Rev 06.07). In addition, for the reasons described in the 
NOPR, DOE is removing the incorporation by reference of, and any 
references to, 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.\7\ 74 FR 12020. DOE is making this change because 
this particular test method is no longer an approved method of rating 
the efficiency of steel commercial packaged boilers under DOE's 
regulations. 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 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.
---------------------------------------------------------------------------

    \7\ 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.
---------------------------------------------------------------------------

    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 final rule, DOE is 
adopting as Federal energy conservation standards several thermal 
efficiency levels described in ASHRAE Standard 90.1-2007 that were 
proposed in the NOPR. For this reason, DOE is amending 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 (Rev 06.07) 
test procedure and proposed in the NOPR. 74 FR 12021. Thus, DOE is 
adding the definition of ``thermal efficiency'' to 10 CFR 431.82 to 
read 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 amending the definition of ``combustion 
efficiency,'' as proposed and described in the NOPR, to remove the 
language defining the term as ``the efficiency descriptor for packaged 
boilers.'' 74 FR 12021. Thus, DOE is amending the definition of 
``combustion efficiency'' in 10 CFR 431.82 to read as follows: 
``Combustion efficiency for a commercial packaged boiler is determined 
using the test procedures prescribed under Sec.  431.86 and equals 100 
percent minus percent flue loss (percent flue loss is based on input 
fuel energy).''
    DOE is amending 10 CFR 431.86 (Uniform test method for measurement 
of energy efficiency of commercial packaged boilers) to include 
requirements for the measurement and rating of thermal efficiency for 
those commercial packaged boiler equipment classes where the thermal 
efficiency metric is being used in today's final rule, after the 
effective date of this rulemaking (i.e., March 2, 2012). DOE is also 
amending 10 CFR 431.86 to specify that combustion efficiency should be 
measured and rated for the two commercial packaged boiler equipment 
classes where the combustion efficiency metric is being used in today's 
final rule (i.e., large gas hot water and large oil hot water 
commercial packaged boilers). These changes are described in detail in 
the NOPR and can be found in the regulatory text at the end of this 
notice. 74 FR 12021, 12048-49. DOE did not receive any comments in 
response to its test procedure proposals in the NOPR; thus, DOE is 
adopting them as proposed. These test procedure changes will become 
effective concurrently with the amended standard levels being adopted 
in today's final rule.
    DOE proposed several test procedure updates responding to the 
changes made to HI BTS-2000 (Rev 06.07), 74 FR 12021-22, and is now 
amending the test procedure to adopt those changes, which are described 
in detail in the NOPR and are contained in the regulatory text at the 
end of this notice. See id. These changes do not introduce any changes 
to the methods in the test procedure. Manufacturers should use

[[Page 36324]]

the revised version of the test procedure (i.e., HI BTS-2000 (Rev 
06.07)) to represent their model's energy efficiency and compliance 
with the current Federal energy conservation standards effective 
September 21, 2009.
    DOE is also adopting the proposed amendments for 10 CFR 
431.86(c)(2)(iii), ``Test Measurements for a Boiler Capable of 
Supplying Either Steam or Water.'' As explained in the NOPR, DOE 
proposed to require manufacturers of large dual output commercial 
packaged boilers (i.e., boilers capable of producing both steam and hot 
water) to test for both the combustion and thermal efficiencies of 
these boilers. DOE is requiring both the combustion and thermal 
efficiency test be conducted by manufacturers because the ASHRAE-
amended efficiency levels for large dual output commercial packaged 
boilers would require this equipment to meet an efficiency level using 
both metrics (i.e., combustion efficiency for a large boiler operated 
in hot water mode, and thermal efficiency for operation in steam mode). 
74 FR 12022. Consistent with this approach, DOE is amending 10 CFR 
431.86(c)(2)(iii) to require the testing and measurement of both 
thermal and combustion efficiency for any boiler capable of producing 
steam and hot water (i.e., a dual output boiler) that is being tested 
only as a steam boiler for equipment manufactured on and after March 2, 
2012. For equipment manufactured prior to that date, manufacturers will 
need to continue testing only for the combustion efficiency of dual 
output boilers. Manufacturers could also choose to perform both tests 
separately on large dual output boilers, including the combustion 
efficiency test in hot water mode and the thermal efficiency test in 
steam mode. Consequently, DOE is also amending the test procedure to 
permit manufacturers to test large dual output boilers separately for 
combustion efficiency in hot water mode and for thermal efficiency in 
steam mode, as proposed in the NOPR, if they choose to do so. 74 FR 
12022.
    In addition, DOE is adopting provisions in this final rule allowing 
commercial packaged boilers capable of supplying either steam or water 
(i.e., dual output boilers) to test in steam mode only. In other words, 
DOE is allowing manufacturers to test dual output boilers only in steam 
mode, although large dual output boiler manufacturers must test for 
both thermal and combustion efficiency. This approach 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. DOE believes that giving manufacturers the option of 
testing dual output commercial packaged boilers only in steam mode 
would suffice for compliance purposes, and will avoid an unnecessary 
burden on manufacturers of dual output boilers.
    The regulatory text following the preamble to today's notice 
contains 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

    For the NOPR phase of DOE's review of the ASHRAE Standard 90.1-2007 
efficiency levels, DOE developed a market assessment that provides an 
overall picture of the market for the equipment concerned, including 
the purpose of the equipment, the industry structure, and market 
characteristics. 74 FR 12022-24. The subjects addressed in the market 
assessment for this rulemaking included equipment definitions, 
equipment classes, manufacturers, quantities, and types of equipment 
sold and offered for sale. In response to the March 2009 NOPR, DOE did 
not receive any written or oral comments pertaining to the market 
assessment. Consequently, DOE did not revise the market analysis that 
was performed for the March 2009 NOPR. DOE summarized the key findings. 
74 FR 12022-24. For additional detail, see chapter 2 of the final rule 
TSD.

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 possible energy-efficiency improvements. 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 and Assumptions
    As explained in the March 2009 NOPR, DOE used an efficiency-level 
approach to evaluate the cost of commercial packaged boilers at the 
baseline efficiency level, and those above it. 74 FR 12024-27. DOE used 
the efficiency level approach because of the wide variety of designs 
available on the market and because the efficiency level approach does 
not examine a specific design 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 commercial boiler equipment distributors 
to develop its cost-efficiency relationship for commercial packaged 
boilers. DOE chose to collect contractor costs at three representative 
capacities for each ``small'' equipment class (400, 800, and 1500 kBtu/
h) and then normalize the contractor costs by capacity to create a 
single cost-efficiency curve with 800 kBtu/h as the representative 
capacity for each equipment class, as described in the NOPR. 74 FR 
12024. 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.
    To extend the analysis to oil-fired commercial packaged boilers, 
DOE estimated that they are, on average, 3 percent more efficient than 
gas-fired boilers of identical construction because of the similar 
design characteristics. Also, since 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

[[Page 36325]]

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.
    In addition, DOE analyzed dual output boilers by classifying them 
as ``steam only'' boilers and assuming efficiency ratings for dual 
output boilers were representative of the efficiency of the boiler 
tested in ``steam mode.'' DOE assumed that the efficiency ratings for 
dual output boilers were representative of the efficiency of the boiler 
when tested in steam-only mode because the current procedure 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). 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). 74 FR 12026-27. This approach had the effect of 
analyzing the most energy-intensive mode of dual output boilers.
    DOE only received one comment in response to the engineering 
analysis presentation described in the March 2009 NOPR. ACEEE stated 
that it would like DOE to review its estimates of increased cost versus 
the historical record. (ACEEE, Public Meeting Transcript, No. 12 at p. 
47) ACEEE stated that DOE is using a methodology asserted to be true 
without an effort to verify it, which is unfair to the entire 
community, including manufacturers.
    DOE does not find merit to ACEEE's claims that the price change of 
meeting an amended standard declines after the standards' adoption. DOE 
recognizes that every change in minimum energy conservation standards 
is an opportunity for manufacturers to make investments beyond what 
would be required to meet the new standards in order to minimize the 
costs or to respond to other factors. DOE's manufacturing cost 
estimates seek to gauge the most likely industry response to the 
proposed energy conservation standards. DOE's analysis of responses 
must be based on currently available technology that will be 
nonproprietary when a rulemaking becomes effective, and thus cannot 
speculate on future product and market innovation.
    DOE did not receive any other comments suggesting revisions to its 
approach to the engineering analysis or to the assumptions included in 
the engineering analysis in response to the March 2009 NOPR. Therefore, 
DOE did not revise its engineering analysis. Chapter 3 of the final 
rule TSD provides further detail on the methods used for the 
engineering analysis.
2. 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 
correlated the contractor cost as a function of each commercial 
packaged boiler's rated efficiency. DOE also normalized the data by 
adjusting 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. This was done to show the average incremental cost 
of increasing efficiency above the ASHRAE Standard 90.1-2007 levels for 
each equipment class. DOE only presents the incremental costs of 
increasing the efficiency of a commercial packaged boiler in the final 
rule TSD to avoid the possibility of revealing sensitive information 
about individual manufacturers' equipment. While most manufacturers 
publish the rated thermal and/or combustion efficiencies of their 
commercial packaged boilers according to AHRI specifications, some do 
not and different manufacturers might have substantially different 
absolute costs for their equipment at the same efficiency level due to 
design modifications and manufacturing practices.
    The cost-efficiency 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. For 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. 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 to meet higher efficiency levels. Chapter 3 of 
the final rule 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. In 
the March 2009 NOPR, DOE explained how it developed the distribution 
channel markups for commercial packaged boilers. 74 FR 12027-28. DOE 
did not receive comments on the distribution channel markups or on 
their development in response to the March 2009 NOPR. Consequently, DOE 
used the same distribution channels and methodology to calculate 
markups for the final rule analysis as was used in the March 2009 NOPR.
    Because DOE had developed costs for mechanical contractors directly 
in the engineering analysis, DOE estimated customer costs 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. DOE estimated most sales of commercial 
packaged boilers involved mechanical contractors because of 
installation complexity and the relatively few shipments made to 
mercantile/retail building types where national accounts are more 
common. Consequently, it was unnecessary to develop separate markups 
for costs through a national account distribution chain or directly 
from wholesalers.
    DOE developed distributional channel 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. Sales 
taxes and installation costs were added to arrive at the final 
installed equipment prices for baseline and higher-efficiency 
equipment. DOE used two distribution channels for commercial boilers to 
describe how the equipment passes from the mechanical contractor to the 
customer (Table V.1). All sales for replacement applications are 
assumed to flow through channel 1. The analysis assumes that sales for 
New Construction flow through channel 2 depicted below.

[[Page 36326]]



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

    DOE estimated shipment weights of approximately 33% for new 
construction and 67% for the replacement markets based on data 
developed for the shipments model and based on growth in new 
construction and replacement equipment in the existing stock. DOE 
received no comment on the new construction and replacement shipment 
fractions and did not modify these values for the final rule.
    For each step in the distribution channels presented above, DOE 
estimated a baseline markup and an incremental markup. Both baseline 
and incremental markups depend only on the particular distribution 
channel and are independent of the boiler efficiency levels. DOE based 
the mechanical contractor markups on data from the Air Conditioning 
Contractors of America (ACCA) \8\ and on the 2002 U.S. Census Bureau 
financial data \9\ 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.
---------------------------------------------------------------------------

    \8\ Air Conditioning Contractors of America. Financial Analysis 
for the HVACR Contracting Industry, 2005. Available at: http://www.acca.org.
    \9\ 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. 
Chapter 5 of the final rule 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. In the March 2009 NOPR, DOE explained how it 
developed the energy use analysis for commercial packaged boilers. 74 
FR 12028-29. 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'' \10\ (hereafter, 2000 Screening Analysis). 
(66 FR 3336 (Jan. 12, 2001)) and incorporated seven different building 
types and 11 different U.S. climates. DOE received no comments on the 
FLEOH assumptions forming the basis of the energy use characterization.
---------------------------------------------------------------------------

    \10\ 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 boiler to reflect 
the equipment thermal efficiency level DOE considered.
    For condensing hot water boilers, DOE 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.\11\ For DOE's 
analysis, the rated thermal efficiencies for fully condensing equipment 
were further adjusted to reflect return-water conditions 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 throughout the 
year.
---------------------------------------------------------------------------

    \11\ A hydronic system is the distribution system for hot or 
cold water in a closed loop throughout a building or other type of 
space for the purposes of heating or cooling. The description of 
such a system would include the piping, the heating and cooling 
coils, and radiators, as well as the controls used to operate the 
system.
---------------------------------------------------------------------------

    DOE received several specific comments on the energy use analysis 
with regard to the development and use of seasonal efficiencies for 
condensing boilers. During the public meeting, ACEEE commented that it 
was concerned that the most typical application, particularly in the 
replacement market, for a commercial packaged boiler is providing 
hydronic heat, not supplemental heat in a variable air volume (VAV) 
system. ACEEE asserted that the supply temperature modulation is highly 
applicable as long as the user maintains the necessary return 
temperature. (ACEEE, Public Meeting Transcript, No. 12 at p. 58) ACEEE 
further commented that the discussion and treatment of supply 
temperature reset controls, which influence the seasonal efficiency 
parallels discussions used in the negotiated consensus agreement for 
residential boilers that DOE rejected. (ACEEE, Public Meeting 
Transcript, No. 12 at p. 61)
    In response to the comments from ACEEE, DOE notes that the actual 
calculations for the development of the seasonal efficiency, as 
outlined in the TSD, assume a hydronic heating load that is a function 
of outdoor temperature, the calculations were also not reflective of a 
VAV-type reheat application. DOE's estimate of the average thermal 
efficiency impact for condensing boilers reflects the load-weighted 
thermal efficiency for a system serving hydronic air-heating coils in 
that type of space heating application. This is discussed in chapter 4 
of the final rule TSD.
    EarthJustice asked a clarifying question regarding the magnitude of 
the impact that reset temperature controls had on efficiency, 
suggesting it was roughly 3 percent for condensing boilers and less 
than 1 percent for non condensing boilers. (EarthJustice, Public 
Meeting Transcript, No. 12 at p. 60).

[[Page 36327]]

    In response to the comment from EarthJustice, DOE generally agrees 
that this is a correct interpretation. Literature on the impact of 
supply water temperature reset (i.e., resetting the supply water 
temperature from the boiler in response to building heating load or a 
suitable other sensed condition like outdoor temperature serving as a 
proxy for load) on boiler efficiency generally shows that for return 
water temperatures from 140 [deg]F to 180 [deg]F (i.e., above the 
temperatures required for condensing), the change in boiler efficiency 
is typically less than 1 percent, with the actual value dependent upon 
the fraction of full load input, whether the boiler is a condensing 
boiler or not. For condensing boilers, which can operate at lower 
return temperatures, reducing the return water temperature below 140 
[deg]F results in significant increases in the boiler's thermal 
efficiency, with the magnitude of the impact being a function of the 
fraction of full load input at these temperatures. Very low return 
water temperatures (e.g., 60 [deg]F) can result in thermal efficiencies 
of 99% in some condensing boiler equipment designs, but few hydronic 
systems have such low return water temperatures. In a primarily space-
heating application (as opposed to a VAV reheat application), where hot 
water supply temperature reset is used, both the temperature of water 
delivered by the boiler and the thermal load met by the boiler both 
increase with colder outside temperatures. During the period when the 
majority of the load is met, the boiler is operating closer to its 
design delivery point (i.e., at a higher temperature). DOE's 
calculation of seasonal efficiency reflected the boiler's operating 
conditions.
    In responding to ACEEE's point on the joint proposal regarding 
prescriptive requirements for resetting the water supply temperature 
for residential boilers, DOE notes that there are many benefits to the 
application of supply water reset controls on commercial boilers as 
well. However, many of these benefits impact reduction in the total 
heating load served by the boiler (through reduction of losses in the 
distribution system, simultaneous heating and cooling in the building 
HVAC hydronic and supply air reheat systems) rather than a change in 
the boiler efficiency. Other benefits from supply water reset controls 
include reducing both cycling losses in non-modulating boilers and, to 
a lesser extent, shell and standby losses, which would accrue to both 
condensing and non-condensing boilers similarly, but are most 
significant at low load conditions.
    Burnham asked whether the simulations used in the analysis included 
supply temperature reset in condensing boilers and did not include 
supply temperature reset for non-condensing boilers. (Burnham, Public 
Meeting Transcript, No. 12 at p. 63) Burnham also wanted to know if 
these simulations included distribution losses. Id. DOE clarified at 
the public meeting that the original FLEOH simulation analysis did not 
directly account for the impact of supply temperature reset on boiler 
efficiency. DOE further clarifies here that hydronic system 
distribution losses were not part of the original building simulations 
used to develop the FLEOH metrics, but that the FLEOH development did 
include estimates of heat used internally in the boiler to offset 
standby loss impacts. As with residential boilers, DOE recognizes that 
there are significant benefits to hot water supply temperature reset in 
buildings. However, DOE does not have authority to mandate supply 
temperature reset controls as part of a federal efficiency standard.
    Commenting on the discussion on the impact of water temperature 
reset, AHRI stated that they were in the process of developing rules 
for commercial boiler manufacturers to provide additional information 
on how boiler models will operate at different inlet water 
temperatures. AHRI indicated that the professional designers of 
commercial hydronic systems want that type of information because there 
may be a broad range of ``design conditions'' depending on commercial 
application. AHRI commented that they have an internal group working on 
this issue within the certification program to help ensure 
certification to the federal requirements and uniformity between other 
information [regarding performance at varying conditions] manufacturers 
provide to their customers. (AHRI, Public Meeting Transcript, No. 12 at 
pp. 61-63)
    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. The estimated allocation of national boiler 
shipments to market segments was based on information from the 2003 
Commercial Buildings Energy Consumption Survey (CBECS) \12\ and the 
relative fraction of respondents reporting the use of boilers in 
commercial building floor space within each market segment.
---------------------------------------------------------------------------

    \12\ Energy Information Administration (2003). Available at: 
http://www.eia.doe.gov/emeu/cbecs/contents.html.
---------------------------------------------------------------------------

    DOE developed the annual energy consumption estimates for 
commercial boilers for each of seven key commercial building types in 
11 geographic regions and at each efficiency level. Chapter 4 of the 
final rule 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. In the March 2009 NOPR, DOE explained the development 
of these analyses for commercial packaged boilers. 74 FR 12029-32 DOE 
used the same spreadsheet models to evaluate the LCC and PBP for the 
final rule as it used for the NOPR; however, DOE updated certain 
specific inputs to the models. Details of the spreadsheet model and of 
all the inputs to the LCC and PBP analyses are in chapter 5 of the 
final rule TSD. DOE conducted the LCC and PBP analyses using a 
spreadsheet model developed in Microsoft Excel for Windows 2003.
    The LCC is the sum of the total installed cost (taking into account 
contractor cost, sales taxes, distribution chain markups, and 
installation cost) and operating expenses (energy, repair, and 
maintenance costs) over the equipment lifetime, with all costs 
discounted back to the purchase date. Because DOE is considering both 
the efficiency levels in ASHRAE Standard 90.1-2007 and more-stringent 
efficiency levels, the date on which an amended energy conservation 
standard would become effective depends on the efficiency level 
ultimately adopted. To fairly compare the LCC and PBP for both the 
ASHRAE Standard 90.1-2007 levels and higher efficiency levels, DOE 
presumed 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 Standard 
90.1-2007 efficiency level. For each efficiency level analyzed, the LCC 
analysis required input data for the total installed cost of the 
equipment, the operating costs, including energy, repair

[[Page 36328]]

and maintenance costs, and the discount rate. To compute each LCC, DOE 
discounted all future operating costs to the time of purchase and 
summed them over the lifetime of the equipment.
    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. 
However, unlike the LCC, which uses a stream of operating expenses, 
including energy expenses, the PBP is defined using a single year's 
annual expenses. By convention, DOE uses the first year's operating 
expenses in the PBP calculation.
    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 discount rates appropriate for 
the customers in each building type and 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 and building usage, DOE's analysis included 
variation by State and building type. Aside from energy use, other 
important factors influencing the LCC and PBP analyses are energy 
prices, installation costs, equipment distribution markups, and sales 
tax. DOE used weighting factors representing fractional boiler sales by 
state and building type to generate national average LCC savings and 
PBP for each efficiency level.
    DOE conducted the LCC and PBP analyses using a commercially-
available spreadsheet model. This spreadsheet accounts for variability 
in energy use, installation costs, maintenance costs and energy costs, 
and uses weighting factors for shipments to different building types 
and to States to generate national LCC savings and PBP statistics by 
efficiency level. The results of DOE's LCC and PBP analyses are 
summarized in section VI and described in detail in chapter 5 of the 
final rule TSD.
    Table V.2 summarizes the inputs and key assumptions DOE used in the 
LCC and PBP analysis and shows how DOE modified these inputs and key 
assumptions for the final rule. The changes in the input data and the 
discussion of the overall approach to the LCC analysis are provided in 
more detail in chapter 5 of the final rule TSD.

Table V.2--Summary of Inputs and Key Assumptions Used in the LCC and PBP
                                Analyses
------------------------------------------------------------------------
                                                      Changes for final
           Inputs               NOPR description            rule
------------------------------------------------------------------------
                        Affecting Installed Costs
------------------------------------------------------------------------
Equipment Price.............  Equipment price was   None.
                               derived by
                               multiplying
                               contractor cost
                               (from the
                               engineering
                               analysis) by
                               mechanical and
                               general contractor
                               markups as needed
                               plus sales tax from
                               the markups
                               analysis.
Installation Cost...........  Installation cost     Modified
                               includes              installation costs
                               installation labor,   to reduce
                               installer overhead,   incremental control
                               and any               costs charged at
                               miscellaneous         condensing
                               materials and         equipment levels.
                               parts, derived from   Also removed costs
                               RS Means CostWorks    for condensate pump
                               2007.\13\ DOE added   below condensing
                               additional costs to   levels, but
                               reflect the           retained condensate
                               installation of       drain costs for
                               near condensing and   near condensing
                               condensing boilers    levels (where
                               at efficiency         corrosion resistant
                               levels more           flues are
                               stringent than        required).
                               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    None.
                               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         Updated State Energy
                               average commercial    Database Data for
                               natural gas and       natural gas and
                               fuel oil prices for   fuel oil prices to
                               each State using      2007 data (most
                               EIA's State Energy    recent available).
                               Database Data for     Used AEO2009 energy
                               2006 for natural      price forecasts
                               gas and oil price     (April 2009
                               data.\14\ DOE used    Reference Case
                               AEO2008 energy        incorporating
                               price forecasts to    AARA).
                               project oil and
                               natural gas prices
                               into the future.
Maintenance Cost............  DOE estimated annual  None.
                               maintenance costs
                               for commercial
                               boilers based on
                               MARS 8 Facility
                               Cost Forecast
                               System Database
                               \15\ for commercial
                               boilers. Annual
                               maintenance cost
                               did not vary as a
                               function of
                               efficiency.

[[Page 36329]]

 
Repair Cost.................  DOE estimated the     None.
                               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         None.
                               equipment lifetime
                               assuming a 30-year
                               lifespan for all
                               commercial boilers
                               based on data
                               published by ASHRAE.
Discount Rate...............  Mean real discount    None.
                               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    None.
                               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      None.
                               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.
------------------------------------------------------------------------

    In response to the methodology presented in the March 2009 NOPR, 
DOE received comments on the installation cost assumptions used in the 
LCC analysis. Regarding the installation costs assumptions, ACEEE asked 
whether DOE assumed that commercial customers did not replace the 
control package for the lowest efficiency boilers with one specific to 
that boiler. ACEEE further stated since one-third of the commercial 
packaged boiler shipments went to new construction, it would seem that 
these boilers would have to be installed with a controls package. In 
addition, ACEEE asked whether the costs of controls should exist for a 
replacement market given the fraction of boilers that would be shipped 
there even without controls. ACEEE questioned an assumption that there 
are no control costs for the lowest-efficiency boilers. (ACEEE, Public 
Meeting Transcript, No. 12 at p. 72)
---------------------------------------------------------------------------

    \13\ RS Means CostWorks 2007, R.S. Means Company, Inc. 2007. 
Kingston, Massachusetts (2007). Available at: http://www.meanscostworks.com/.
    \14\ Natural Gas Price and Expenditure Estimates by Sector, EIA, 
2007. Available at: http://www.eia.doe.gov/emeu/states/sep_fuel/html/fuel_pr_ng.html. 2007 Distillate Fuel Price and Expenditure 
Estimates by Sector, EIA, 2007. Available at: http://www.eia.doe.gov/emeu/states/hf.jsp?incfile=sep_fuel/html/fuel_pr_df.html.
    \15\ MARS 8 Facility Cost Forecast System Database, Whitestone 
Research, 2008. Washington, DC. Available at: http://www.whitestoneresearch.com/mars/index.htm.
---------------------------------------------------------------------------

    DOE responded to ACEEE at the public meeting that it did not 
necessarily assume explicitly that there were no controls shipped with 
the boiler, but that the analysis did include a differential control 
cost for the higher-efficiency boilers.
    AHRI commented that they were not aware of any data to indicate 
what the differences in control costs might be for higher efficiency 
boilers, but commented that there probably is going to be some type of 
control to monitor and signal the boiler that it is getting rid of the 
condensate and that this would be a control you wouldn't have 
otherwise. (AHRI, Public Meeting Transcript, No. 12 at pp. 73-74) AHRI 
also asked if DOE included any factor to account for possible 
requirements to treat the boiler condensate.
    For the final rule analysis, DOE reviewed and modified the 
assumptions for control costs resulting in a reduction in the control 
cost differential for the condensing boiler to $250. In addition, DOE 
reviewed the assumptions for costs of condensate pumps generally. For 
the March 2009 NOPR, condensate pumps were incorporated for both 
condensing and near condensing boiler efficiency levels. Review of data 
on options for boiler installations indicated that condensate pumps 
would be common for many fully condensing boilers where condensate is 
generated in the boiler itself, but other means could be incorporated 
to help alleviate condensation directly in the flue that occurs with 
near condensing efficiency levels. DOE included the cost for condensate 
drainage for all near condensing and condensing efficiency levels 
(levels for which a corrosion resistant flue was also incorporated).
    With regard to the possible costs for condensate treatment, DOE is 
aware that some jurisdictions may have requirements for condensate 
treatment and that there are commercial products designed to provide 
this treatment, but did not have sufficient information on the extent 
that such requirements exist across the U.S. to estimate typical 
installation costs and ongoing maintenance costs for such treatment. 
Consequently, DOE did not adjust the maintenance (or repair) costs from 
those used in the March 2009 NOPR. DOE acknowledges that to the extent 
that condensate treatment is required, these would be an additional 
installation and maintenance cost for the condensing efficiency levels.
    Other modifications made to the LCC analysis were to update the 
fuel prices and fuel price forecast data. 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 
updated the average commercial natural gas and

[[Page 36330]]

commercial fuel oil prices at the State level using the latest 
available Energy Information Administration (EIA) data (2007). These 
data were converted to 2008$ using a Gross Domestic Product (GDP) price 
inflator. The effective 2007 prices (in 2008$) range from approximately 
$7.71 per million Btu to approximately $27.96 per million Btu for 
natural gas, and from approximately $15.21 per million Btu to 
approximately $18.04 per million Btu for commercial fuel oil. To 
account for variation in fuel costs occurring in different kinds of 
businesses, DOE followed the same procedure used in the NOPR to adjust 
the state average fuel price to business-type specific fuel prices, 
which was to use the ratio of the average fuel costs for that business 
type to the commercial sectors as a whole, as provided in EIA's 2003 
CBECS \16\ data set.
---------------------------------------------------------------------------

    \16\ 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.
---------------------------------------------------------------------------

    DOE also updated the fuel price forecast data to use the most 
recent EIA/AEO forecasts. EIA updated the AEO forecasts in April 2009 
to reflect the provisions of the American Recovery and Reinvestment Act 
(ARRA) enacted in mid-February 2009. The reference case in the recently 
published AEO2009, which reflected laws and regulations in effect as of 
November 2008, does not include ARRA. The need to develop an updated 
reference case following the passage of ARRA also provided the EIA with 
an opportunity to update the macroeconomic outlook for the United 
States and global economies, which have been changing at an unusually 
rapid rate in recent months.
    A very significant spike in oil prices in 2008, in conjunction with 
a change in assumptions in the April AEO2009 reference case meant it 
was not possible to use both the 2007 state oil cost data and the 
future oil fuel price index to directly generate future national 
commercial average fuel-oil prices that reasonably match those in the 
AEO2009 forecast. To provide a more closely matched estimate, DOE 
applied an adjustment factor to the fuel prices to both starting point 
gas and oil prices such that the national average commercial prices 
from 2012-2030 would match the AEO forecasts in constant years dollars, 
but retain the state-by-state variation reflected in state pricing 
data. As was done for the NOPR, DOE extrapolated the trend in fuel 
prices between 2020 and 2030 of the forecast to establish prices for 
the years from 2031 to 2042 for the LCC analysis.
    See chapter 5 of the final rule TSD for further details on the LCC 
and PBP analysis and assumptions.

G. Shipments Analysis

    The shipments analysis develops future shipments for each class of 
commercial packaged boiler based on current shipments and equipment 
life assumptions, and takes into account the existing stock and 
expected growth of buildings using commercial packaged boilers. DOE 
assumed the relative distribution of shipments by size and boiler 
equipment class would resemble that of current shipments. In the March 
2009 NOPR, DOE explained the development of the shipment analysis for 
commercial packaged boilers 74 FR 12033.
    DOE received several comments on the assumptions used in the 
shipments analysis for the NOPR. On the distribution of equipment 
lifetimes, AHRI commented that in some regions of the country, 
emissions regulations may promote early replacements of boilers, but 
did not provide data on the frequency that this may occur or the impact 
that this may have on the distribution for boiler lifetimes. (AHRI, 
Public Meeting Transcript, No. 12 at p. 86) ACEEE commented that there 
is a trend toward replacements of larger boilers with trains of smaller 
boilers, but admitted to not having quantitative numbers to describe 
the trend. (ACEEE, Public Meeting Transcript, No. 12 at p. 80) ACEEE 
also commented that boilers are rated on input capacity, but since the 
relationship between input and output capacity changes with 
efficiencies, for a fixed output, the input capacities required for the 
market will have a downward trend based on a change in efficiency 
considered alone. In addition, ACEEE asserted that reductions in the 
degree of historical [unnecessary] oversizing might be reduced in the 
future, which would further result in a reduction in typical boiler 
size. (ACEEE, Public Meeting Transcript, No. 12 at p. 81)
    In responding to ACEEE at the public meeting, AHRI agreed that in 
fact there are replacement situations where the use of trains of 
modular or stage boilers makes sense today. AHRI also pointed out that 
a target of ASHRAE 90.1 has been to achieve better sizing and better 
system design as part of the overall goal to reduce energy consumption 
in commercial buildings. AHRI did not have an idea of how much effect 
these replacement situations would really have on shipments. (AHRI, 
Public Meeting Transcript, No. 12 at p. 83)
    In response to ACEEE regarding the natural reduction in input 
capacity as a function of higher efficiency equipment, DOE notes that 
the shipments model starting point, as well as the output of the model, 
is the number of boilers shipped, not the total input capacity of all 
shipments. Furthermore, the cost calculations developed in the 
engineering analysis and subsequently used in the analysis are based on 
the output capacity of the boiler. The sum total of output capacity and 
shipments is not affected by the change in efficiency brought about by 
standards. With regard to the other comments, given the lack of 
sufficient quantitative data on the impact that these trends may have 
on shipments by equipment size or class that would be needed to 
calibrate a revised model, DOE did not revise the shipments model 
methodology from that of the March 2009 NOPR.
    DOE did update the model to reflect new estimates of future 
building new construction and resulting building stock in each year 
based on the April 2009 AEO2009 reference case. DOE reports the revised 
shipment forecasts for the boiler market for selected years from 2012 
to 2042 for the base case in Table V.3 below.

[[Page 36331]]

[GRAPHIC] [TIFF OMITTED] TR22JY09.003

H. 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 national energy savings (NES) and national net present 
value (NPV) of the commercial customer costs and savings that are 
expected to result from amended standards at the analyzed efficiency 
levels. For the final rule analysis, DOE used the same spreadsheet 
model used in the March 2009 NOPR to calculate the energy savings and 
the national economic costs and savings from new standards, but with 
updates to specific input data.
    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 to include 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 for higher standards in each year relative to the base 
case as the total operating cost savings minus the 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.
    Table V.4 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 and described in 
detail in chapter 7 of the final rule TSD.

                                 Table V.4--Summary of NES and NPV Model Inputs
----------------------------------------------------------------------------------------------------------------
           Inputs                       Description                         Changes for final rule
----------------------------------------------------------------------------------------------------------------
Shipments...................  Annual shipments from           Used updated shipment estimates based on AEO2009
                               shipments model (see chapter    reference case building stock forecasts.
                               6 of the final rule TSD).

[[Page 36332]]

 
Effective Date of Standard..  2014 for adoption of a more-    No change.
                               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       No change.
                               shipments by efficiency level.
Standard Case Efficiencies..  Distribution of shipments by    No change.
                               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-       No change.
                               average values are a function
                               of efficiency level. (See
                               chapter 4 of the final rule
                               TSD.).
Total Installed Cost per      Annual weighted-average values  Modified to reflect changes in installation costs
 Unit.                         are a function of efficiency    from LCC analysis.
                               level. (See chapter 5 of the
                               final rule TSD.).
Repair Cost per Unit........  Annual weighted-average values  No change.
                               increase with manufacturer's
                               cost level. (See chapter 5 of
                               the final rule TSD.).
Maintenance Cost per Unit...  See chapter 5 of the final      No change.
                               rule TSD.
Escalation of Fuel Prices...  AEO2008 forecasts (to 2030)     Modified to reflect April 2009 AEO2009 reference
                               and extrapolation for beyond    case forecasts.
                               2030. (See chapter 5 of the
                               final rule TSD.).
Site-Source Conversion......  Based on average annual site-   Based on average annual site-to-source conversion
                               to-source conversion factor     factor for natural gas from AEO2009 reference
                               for natural gas from AEO2008.   case.
Discount Rate...............  3 percent and 7 percent real..  No change.
Present Year................  Future costs are discounted to  No change.
                               2008.
----------------------------------------------------------------------------------------------------------------

    DOE received no comments on the general methodology and the results 
for the NES and NPV analysis. As a result, DOE retained the same 
methodology as was used in the NOPR for the final rule. Changes to 
these results from the NOPR are due to changes in the development of 
national average inputs to the NES and NPV analysis as a result of the 
revisions to the LCC and shipments calculations.

I. Environmental Assessment

    DOE prepared an environmental assessment (EA) which assesses the 
impacts of the proposed rule pursuant to the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.) (NEPA), 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 EA includes a concise examination of the 
impacts of emission reductions likely to result from the proposed 
standards for commercial packaged boilers and water-cooled and 
evaporatively cooled commercial packaged air conditioners and heat 
pumps with a cooling capacity at or above 240,000 Btu/h and less than 
760,000 Btu/h. The EA has been incorporated as chapter 8 in the final 
rule TSD.
    Specifically, DOE estimated the reduction in total emissions of 
carbon dioxide (CO<INF>2</INF>), nitrogen oxides (NO<INF>X</INF>) and 
sulfur dioxide (SO<INF>2</INF>). A fourth pollutant, mercury (Hg), is 
emitted in only trace amounts by the equipment covered in this analysis 
that further analysis of Hg in this EA would be uninformative; as such, 
DOE does not discuss Hg emissions in this EA.
1. Sulfur Dioxide
    Sulfur dioxide is a chemical compound that is produced by various 
natural and industrial processes and is a key contributor to acid rain. 
The Clean Air Act Amendments of 1990 set an SO<INF>2</INF> emissions 
cap on all power generation, but permitted flexibility among generators 
through the use of emissions allowances and tradable permits. This 
SO<INF>2</INF> trading process (sometimes called ``cap and trade'') 
does not, however, cover commercial packaged boilers. The EPA's New 
Source Performance Standards (NSPS) limit, among other things, 
SO<INF>2</INF> emissions from boilers built after a certain date. In 
particular, 40 CFR part 60 subpart Dc, Standards of Performance for 
Small Industrial-Commercial-Institutional Steam Generating Units, 
requires that small industrial-commercial-institutional steam 
generating units constructed, modified, or reconstructed after June 9, 
1989, must limit the allowable sulfur content in fuel oil to 0.5 weight 
percent for any steam-generating unit that has a maximum design heat 
input capacity of 100 million British thermal units (Btu) per hour. (40 
CFR 60.40c-60.48c) Commercial packaged boilers that have a maximum 
design heat input capacity of 100 million Btu per hour would be an 
extremely small subset of all boilers being considered in this rule. 
Consequently, there is a direct SO<INF>2</INF> environmental benefit 
from a reduction in fuel consumption resulting from the higher 
efficiency standards for commercial packaged boilers being adopted in 
today's final rule.
2. Nitrogen Oxides
    Nitrogen oxides, or NO<INF>X</INF>, are the generic term for a 
group of highly reactive gases, all of which contain nitrogen and 
oxygen in varying amounts. Nitrogen oxides form when fossil fuel is 
burned at high temperatures, as in a combustion process, and are 
considered a criteria pollutant under the Clean Air Act. The primary 
man-made sources of NO<INF>X</INF> emissions are motor vehicles, 
electric utilities, and other industrial, commercial, and residential 
sources that burn fossil fuels. NO<INF>X</INF> emissions from 28 
eastern States and the District of Columbia (DC) are limited under the 
Clean Air Interstate Rule, published in the Federal Register on May 12, 
2005. Although the rule has been remanded to the EPA by the D.C. 
Circuit Court, it will remain in effect until it is replaced by a rule 
consistent with the Court's opinion in North Carolina v. EPA.\17\

[[Page 36333]]

Under CAIR, States must achieve the required emission reductions using 
one of two compliance options: (1) Meet an emissions budget for each 
regulated State by requiring power plants to participate in an EPA-
administered interstate cap-and-trade system that caps emissions in two 
stages; or (2) meet an individual State emissions budget through 
measures of the State's choosing. In general, however, CAIR basically 
covers two general classes of NO<INF>X</INF> emitters: (1) Stationary, 
fossil-fuel-fired boilers or stationary, fossil-fuel-fired combustion 
turbines serving generators with nameplate capacity of more than 25 MW 
of electricity and producing that electricity for sale; and (2) any 
unit that has a maximum design heat input rate of greater than 250 
million Btu/h (40 CFR 96.4). Commercial packaged boilers have a maximum 
design heat input rate of less than 250 million Btu/h and are not used 
for commercial power production. Hence, requirements of the CAIR do not 
apply to commercial packaged boilers. Consequently, there is a direct 
NO<INF>X</INF> environmental benefit from a reduction in fuel 
consumption resulting from the higher efficiency standards for 
commercial packaged boilers.
---------------------------------------------------------------------------

    \17\ On July 11, 2008, the U.S. Court of Appeals for the 
District of Columbia Circuit (D.C. Circuit) issued its decision in 
North Carolina v. Environmental Protection Agency, in which the 
Court vacated the CAIR rule. 531 F.3d 896 (D.C. Cir. 2008). However, 
in a December 23, 2008 opinion, the same panel of the D.C. Circuit 
reinstated the CAIR rule pending EPA's compliance with its July 11, 
2008 ruling. 550 F.3d 1176 (D.C. Cir. 2008) (remand of vacatur). As 
such, CAIR's trading programs and target deadlines remain in place 
at present; however, the long term prospects for and shape of those 
trading programs are unknown.
---------------------------------------------------------------------------

    The EA assesses environmental impacts from alternate standard 
levels analyzed for commercial packaged boilers based on the results of 
the national energy savings analysis (see chapter 7). 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 were also considered in this rule. 
However, since no products could be identified on the market in this 
class, no subsequent energy or environmental impacts were considered in 
this EA. For commercial packaged boilers, DOE calculated emission 
reductions using emission factors appropriate to commercial boilers 
that use natural gas or fuel oil as fuel sources. The emissions factors 
provide typical ratios of emissions for SO<INF>2,</INF> NO<INF>X,</INF> 
and CO<INF>2</INF> per unit of natural gas or fuel oil energy consumed. 
DOE multiplied each emission factor, respectively, by the annual energy 
savings for each class of commercial packaged boiler as developed in 
the NES for the final rule. The annual emission reductions were then 
summed over the period from 2012-2042 separately for each class. The 
resulting emission reductions are shown in section VI.

J. Monetizing Carbon Dioxide and Other Emissions Impacts

    DOE also calculated the possible monetary benefit of 
CO<INF>2</INF>, NO<INF>X</INF>, and SO<INF>2</INF> emissions 
reductions. Cumulative monetary benefits were determined using discount 
rates of 3 and 7 percent. DOE monetized reductions in CO<INF>2</INF> 
emissions stemming from the standards adopted in this final rule using 
a range of monetary values drawn from studies that attempt to estimate 
the present value of the marginal economic benefits (based on the 
avoided marginal social costs of carbon) likely to result from reducing 
greenhouse gas emissions. The marginal social cost of carbon is an 
estimate of the monetary value to society of the environmental damages 
of CO<INF>2</INF> emissions.
    DOE monetized reductions in SO<INF>2</INF> emissions using a ranges 
estimates of monetized benefits that could be attributed to the 
reduction of SO<INF>2</INF> emissions from commercial packaged boilers. 
At one end, DOE used the annual estimates of an SO<INF>2</INF> trading 
price as developed in the National Energy Modeling System (NEMS) 
electricity market model for the western and eastern U.S. This model 
estimates a trading price for SO<INF>2</INF> in the utility markets, 
and, while not directly applicable to commercial packaged boilers, it 
reflects a market value for the cost of reducing SO<INF>2</INF> 
emissions into the atmosphere. As DOE is interested in a national 
estimate, it used a simple average of the trading prices from the 
eastern and western electricity market models for the period from 2012-
2030, and extrapolated the prices out through 2042. The range in 
SO<INF>2</INF> costs from this source varied both by year and region 
from $86 to $1,012 (2007$). At the higher end, DOE used an estimate of 
environmental damage costs of $7,300 per ton of SO<INF>2</INF> from 
stationary sources, measured in 2001$ or $8,542 per ton in 2007$. These 
low and high values were in turn multiplied by the reduction in 
emissions of SO<INF>2</INF> estimated for the period from 2012-2042.
    DOE estimated the national monetized benefits of NO<INF>X</INF> 
reductions associated with this rulemaking based on environmental 
damage estimates from the literature. Available estimates suggest a 
very wide range of monetary values for NO<INF>X</INF> emissions, 
ranging from $370 per ton to $3,800 per ton of NO<INF>X</INF> from 
stationary sources, measured in 2001$, or a range of $432 per ton to 
$4,441 per ton in 2007$.
    The resulting estimates of the present value of monetary benefits 
associated with the national reduction of CO<INF>2</INF>, 
NO<INF>X</INF>, and SO<INF>2</INF> emissions resulting from adoption of 
standards for commercial packaged boilers at the ASHRAE 90.1-2007 
efficiency levels are shown in section VI. In addition, estimates of 
the additional benefits for adopting standards higher than the ASHRAE 
90.1-2007 efficiency levels are also provided in section VI.
    DOE notes that neither EPCA nor NEPA requires that the economic 
value of emissions reduction be incorporated in the LCC or NPV analysis 
of energy savings. DOE has chosen to report these benefits separately 
from the net benefits of energy savings, but considered these benefits 
when weighing the benefits and burdens of standards.

K. Other Issues

1. Impact of Standards on Natural Gas Prices
    In the March 2009 NOPR public meeting, EarthJustice pointed out 
that DOE had, in certain residential rulemakings, begun to calculate 
the potential impact of energy efficiency standards on natural gas 
prices and encouraged DOE to do something similar in the ASHRAE 
products rulemaking analysis. (EarthJustice, Public Meeting Transcript, 
No. 13 at p. 61)
    In response to these comments, DOE undertook a further review of 
the potential impact of commercial packaged boiler energy efficiency 
standards on natural gas prices. A review of the economic literature 
indicates that there is support for the idea that an impact will occur 
and that that impact would result in a reduction in overall natural gas 
prices. DOE examined two preliminary analyses of the effect that a 
reduction in natural gas usage due to efficiency standards would have 
on natural gas prices. These were analyses and results published in the 
2007 furnace and boiler final rule (72 FR 65136, 65152-54 (Nov. 19, 
2007)) and in the preliminary analysis documented in the preliminary 
TSD for standards for residential water heaters. The natural gas price 
analysis for the furnaces and boilers rulemaking was conducted using a 
version of the 2007 NEMS-BT that was modified to account for energy 
savings associated with possible standards for residential gas 
furnaces, and the price analysis for the residential water heaters 
standards rulemaking was conducted using the 2008 NEMS-BT.
    The preliminary analyses in both cases estimated that gas demand 
reductions resulting from more stringent minimum energy conservation 
standards would reduce the U.S.

[[Page 36334]]

average wellhead natural gas price. An inverse elasticity was 
calculated in both studies, relating a percentage change in the average 
wellhead natural gas price to a percentage reduction in total annual 
natural gas consumption. In the furnace and boiler rule, DOE estimated 
that this inverse elasticity was approximately 0.9 percent. In the 
residential water heater preliminary analysis, DOE estimated an inverse 
elasticity of approximately 0.8 percent. Given the closeness of these 
two figures, and the corresponding similarity in energy end-use profile 
expected for space heating equipment, DOE chose to estimate the impact 
for commercial packaged boilers based on the elasticity estimated for 
residential furnaces. DOE's analysis was based on the impact calculated 
from adopting the highest efficiency level analyzed for the class of 
small gas fired hot water boilers.
    The condensing efficiency level for small gas fired hot water 
boilers showed an estimated savings of 0.223 quads over the period from 
2012-2042. DOE estimated the impact that the stream of energy savings 
would have on natural gas prices over the same period. Using this time 
period, DOE estimated that the average price changes amounted to a 
decrease in the wellhead price for natural gas of 0.25 cents per 
million Btu. Analysis done for the furnace and boiler rule showed that 
while changes in price were both positive and negative depending on 
sector, the effect on the wellhead price for natural gas was a 
decrease.
    In previous studies, the projected change in the natural gas price 
varies among the end use sectors. For example, in the analysis for 
residential furnaces, DOE estimated that natural gas prices would 
decrease for the industrial and electric power sectors, and increase 
for residential consumers. The increase in the residential price is 
believed to occur because the fixed charges (e.g., transmission 
infrastructure costs) are spread over fewer million Btu of gas sales in 
the standards case, thus placing upward pressure on the average price 
per million Btu. A similar pattern could be expected to occur in the 
commercial sector.
    Although the estimated reduction in average natural gas prices is 
small, the estimated economy-wide savings in natural gas expenditures 
over the 2012-2042 forecast period have an estimated net present value 
of $0.29 billion at a seven-percent discount rate.
    In addition to conducting its own analysis using NEMS, DOE reviewed 
the results of: (1) Studies that used NEMS to investigate the price 
impact of reductions in natural gas demand, and (2) studies that used 
other energy-economic models to investigate the price impact of 
substantial change in natural gas demand. While the results vary 
considerably among the different studies, they generally show a price 
response similar to or larger than that shown by DOE's NEMS analysis.
    In the short run, DOE's preliminary analysis indicates that 
consumer savings from lower natural gas prices would be offset by 
declines in gas producer revenue. In the long run, the previous 
analyses indicate that the reduction in natural gas prices mainly 
results from changes in gas extraction costs. Since there is only a 
limited supply of low-cost, conventional natural gas sources, natural 
gas extraction costs rise over time as these low-cost sources are 
depleted. Reduced gas demand puts downward pressure on extraction costs 
and prices by delaying the depletion of the low-cost reserves and the 
shift toward higher-cost sources. However, as changes in extraction 
costs are projected to occur in 2030 and beyond, the uncertainty of the 
actual savings that would be realized is increased.
    Based on the discussed analysis, DOE recognizes that there is 
uncertainty about the magnitude, distribution, and timing of the costs, 
benefits, and net benefits within the economy. DOE's previous analyses 
indicated that the prices of natural gas to the end use consumers 
(residential) would increase slightly, due to fixed costs in the 
distribution of natural gas to the consumer becoming a higher fraction 
of the total cost. A similar effect is possible in the commercial 
sector with commercial boilers. While DOE has not been able to estimate 
these potential effects, DOE anticipates the effect will be small since 
the magnitude of the gas price change is small (but likely to vary as 
the natural gas savings increases).
    Similarly, DOE is uncertain of the effects of the drop in natural 
gas on producers and distributors of natural gas. While their revenues 
and costs are expected to drop, it is uncertain whether they will drop 
in proportion over time. The supply side will likely experience revenue 
loss due to both the price changes and the reduction in gas sales that 
they will experience.
    DOE considered the potential impact on natural gas prices in the 
establishment of the final standards, but because of the uncertainty of 
these impacts, and because DOE's analysis has not been subjected to 
public review, this factor had little impact on DOE's conclusion.
2. Effective Date of the Amended Energy Conservation Standards for 
Commercial Packaged Boilers
    Generally, covered equipment must comply with the applicable 
standard if such equipment is manufactured or imported on or after a 
specified date. As explained in the March 2009 NOPR, DOE evaluated 
whether more-stringent efficiency levels than those in ASHRAE Standard 
90.1-2007 would be technologically feasible and economically justified 
and result in a significant amount of additional energy savings. 74 FR 
12003. Because DOE found that more stringent standards did not meet 
these requirements and is adopting energy conservation standards at the 
efficiency levels contained in ASHRAE Standard 90.1-2007, EPCA requires 
the standards to 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[NA] standard * * *''. 
(42 U.S.C. 6313(a)(6)(D)) Thus, for the equipment classes where a two-
tier standard is set-forth, the effective date of the rulemaking 
depends on the effective date specified in ASHRAE Standard 90.1-2007. 
The effective date in ASHRAE Standard 90.1-2007 for commercial packaged 
boilers is March 2, 2010, for the initial efficiency level (which would 
require an effective date of March 2, 2012), and the effective date in 
ASHRAE Standard 90.1-2007 for the two commercial packaged boiler 
equipment classes with a tiered efficiency level is March 2, 2020 for 
the second tier efficiency level (which would require an effective date 
of March 2, 2022).
    For analysis purposes, if DOE were to adopt 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 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

[[Page 36335]]

from the date of publication of the final rule.\18\
---------------------------------------------------------------------------

    \18\ Since ASHRAE published Standard 90.1-2007 on January 10, 
2008, EPCA requires that DOE publish a final rule adopting more-
stringent standards than those adopted in 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.5 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.5--Anticipated Effective Date of an Amended Energy Conservation Standard for Each Equipment Class of
                                           Commercial Packaged Boilers
----------------------------------------------------------------------------------------------------------------
                                                                                         Anticipated effective
                                                                                         date for adopting more
                                             Anticipated effective date for adopting      stringent efficiency
             Equipment class                the  efficiency levels in ASHRAE standard     levels than those in
                                                            90.1-2007                    ASHRAE standard  90.1-
                                                                                                  2007
----------------------------------------------------------------------------------------------------------------
Small Gas-Fired Hot Water Commercial       2012......................................                       2014
 Packaged Boilers.
Small Gas-Fired Steam, All Except Natural  2012......................................                       2014
 Draft Commercial Packaged Boilers.
Small Gas-Fired Steam Natural Draft        Tier 1: 2012..............................                       2014
 Commercial Packaged Boilers.              Tier 2: 2022..............................
Small Oil-Fired Hot Water Commercial       2012......................................                       2014
 Packaged Boilers.
Small Oil-Fired Steam Commercial Packaged  2012......................................                       2014
 Boilers.
Large Gas-Fired Hot Water Commercial       2012......................................                       2014
 Packaged Boilers.
Large Gas-Fired Steam, All Except Natural  2012......................................                       2014
 Draft Commercial Packaged Boilers.
Large Gas-Fired Steam Natural Draft        Tier 1: 2012..............................                       2014
 Commercial Packaged Boilers.              Tier 2: 2022..............................
Large Oil-Fired Hot Water Commercial       2012......................................                       2014
 Packaged Boilers.
Large Oil-Fired Steam Commercial Packaged  2012......................................                       2014
 Boilers.
----------------------------------------------------------------------------------------------------------------

VI. Analytical Results for Commercial Packaged Boilers

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 final rule. The baseline efficiency 
levels correspond to the efficiency levels specified by ASHRAE Standard 
90.1-2007 for commercial packaged boilers. 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
               Equipment class                  capacity (kBtu/             Efficiency levels analyzed
                                                      h)
----------------------------------------------------------------------------------------------------------------
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                   800  Baseline--79% ET
 draft.                                                          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 36336]]

 
Large gas-fired steam, all except natural                 3,000  Baseline--79% ET
 draft.                                                          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
    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 also 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 final rule 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. The sixth 
output is the increase in total installed cost from 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 (%).............               9              21              42              64
Equipment with No Change in LCC (%).............              77              48              25              18
Equipment with Net LCC Savings (%)..............              14              31              33              19
Mean LCC Savings ($)............................          $1,700          $3,239          $1,329        ($4,760)
Mean PBP (years)................................            25.4            30.6            42.7            56.7
Increase in Total Installed Cost ($)............          $3,364          $5,526          $9,045         $14,323
----------------------------------------------------------------------------------------------------------------
*Numbers in parentheses indicate negative LCC savings.


[[Page 36337]]


 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 (%).............              27              58              71              73
Equipment with No Change in LCC (%).............              64              19              10               7
Equipment with Net LCC Savings (%)..............               9              23              19              20
Mean LCC Savings ($)............................          ($870)          ($674)        ($2,423)        ($3,064)
Mean Payback Period (years).....................            41.6            41.8            50.7            50.8
Increase in Total Installed Cost ($)............          $3,204          $4,946          $7,674          $9,831
----------------------------------------------------------------------------------------------------------------
* 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 (%).............................              44              35              43
Equipment with No Change in LCC (%).............................              32              22               3
Equipment with Net LCC Savings (%)..............................              25              43              54
Mean LCC Savings * ($)..........................................           ($50)          $1,657          $2,184
Mean PBP (years)................................................            30.9            25.4            28.7
Increase in Total Installed Cost ($)............................          $2,875          $3,926          $5,562
----------------------------------------------------------------------------------------------------------------
* 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 (%).............................              10              10              28
Equipment with No Change in LCC (%).............................              39              27               7
Equipment with Net LCC Savings (%)..............................              51              63              65
Mean LCC Savings ($)............................................          $4,902          $9,770         $11,482
Mean PBP (years)................................................            16.5            17.5            24.0
Increase in Total Installed Cost ($)............................          $3,506          $5,912          $9,737
----------------------------------------------------------------------------------------------------------------


      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            $864
Mean PBP (years)................................................            35.1            33.7            35.0
Increase in Total Installed Cost ($)............................          $3,136          $4,739          $8,236
----------------------------------------------------------------------------------------------------------------
* 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 (%).............               8              15              31              45
Equipment with No Change in LCC (%).............              51              23              17               6

[[Page 36338]]

 
Equipment with Net LCC Savings (%)..............              41              62              52              50
Mean LCC Savings ($)............................          $6,411         $11,303         $11,324         $13,271
Mean PBP (years)................................            15.3            19.3            28.7            38.3
Increase in Total Installed Cost ($)............          $4,093          $7,742         $13,560         $37,293
----------------------------------------------------------------------------------------------------------------


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 (%).............               4               4               3               3
Equipment with No Change in LCC (%).............              61              26              23              20
Equipment with Net LCC Savings (%)..............              34              70              74              77
Mean LCC Savings ($)............................          $7,876         $18,144         $27,941         $37,065
Mean Payback Period (years).....................            11.8             8.8             8.0             7.8
Increase in Total Installed Cost ($)............          $3,969          $5,638          $7,398          $9,423
----------------------------------------------------------------------------------------------------------------


  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               2               4              10
Equipment with No Change in LCC (%).............              88              42              24               7
Equipment with Net LCC Savings (%)..............              12              55              72              83
Mean LCC Savings ($)............................          $9,531         $19,836         $28,016         $33,835
Mean Payback Period (years).....................             9.1             8.0             9.0            11.0
Increase in Total Installed Cost ($)............          $3,410          $5,484          $8,635         $13,060
----------------------------------------------------------------------------------------------------------------


  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 (%).............................               2               7              10
Equipment with No Change in LCC (%).............................              52              24              24
Equipment with Net LCC Savings (%)..............................              46              69              66
Mean LCC Savings ($)............................................         $26,820         $35,114         $42,551
Mean PBP (years)................................................             8.4            11.8            14.3
Increase in Total Installed Cost ($)............................          $6,644         $12,067         $17,736
----------------------------------------------------------------------------------------------------------------


    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 (%).............               1               2               8               9
Equipment with No Change in LCC (%).............              66              41              16              11
Equipment with Net LCC Savings (%)..............              33              57              77              81
Mean LCC Savings ($)............................         $13,940         $27,598         $37,978         $59,175
Mean Payback Period (years).....................               1               2               8               9
Increase in Total Installed Cost ($)............          $3,885          $6,970         $11,724         $20,263
----------------------------------------------------------------------------------------------------------------


[[Page 36339]]

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 
resulting from the adoption of 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 final rule 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..................................        0.023         0.076        0.147        0.223
Small gas-fired steam, all except natural draft............        0.000         0.015        0.031        0.048
Small gas-fired steam natural draft........................       (0.006)        0.017        0.044          n/a
Small oil-fired hot water..................................        0.016         0.036        0.060          n/a
Small oil-fired steam......................................        0.010         0.028        0.071          n/a
Large gas-fired hot water..................................        0.015         0.039        0.064        0.185
Large gas-fired steam, all except natural draft............        0.023         0.066        0.110        0.155
Large gas-fired, steam natural draft.......................       (0.023)        0.004        0.039        0.079
Large oil-fired hot water..................................        0.014         0.025        0.036          n/a
Large oil-fired steam......................................        0.041         0.112        0.209        0.431
----------------------------------------------------------------------------------------------------------------
* 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..................................        0.005         0.015        0.030        0.045
Small gas-fired steam, all except natural draft............       (0.000)        0.003        0.006        0.010
Small gas-fired steam natural draft........................       (0.000)        0.004        0.010          n/a
Small oil-fired hot water..................................        0.003         0.007        0.012          n/a
Small oil-fired steam......................................        0.002         0.006        0.015          n/a
Large gas-fired hot water..................................        0.003         0.008        0.013        0.038
Large gas-fired steam, all except natural draft............        0.005         0.014        0.023        0.032
Large gas-fired steam natural draft........................       (0.003)        0.002        0.009        0.018
Large oil-fired hot water..................................        0.003         0.005        0.007          n/a
Large oil-fired steam......................................        0.008         0.023        0.043        0.088
----------------------------------------------------------------------------------------------------------------
* 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..................................        0.011         0.037        0.071        0.108
Small gas-fired steam, all except natural draft............       (0.000)        0.007        0.015        0.023
Small gas-fired, steam natural draft.......................       (0.002)        0.009        0.022          n/a
Small oil-fired hot water..................................        0.008         0.017        0.029          n/a
Small oil-fired steam......................................        0.005         0.013        0.035          n/a
Large gas-fired hot water..................................        0.007         0.019        0.031        0.090
Large gas-fired steam, all except natural draft............        0.011         0.032        0.054        0.075
Large gas-fired steam, natural draft.......................       (0.010)        0.003        0.020        0.040
Large oil-fired hot water..................................        0.007         0.012        0.017          n/a

[[Page 36340]]

 
Large oil-fired steam......................................        0.020         0.054        0.101        0.209
----------------------------------------------------------------------------------------------------------------
* 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 final rule 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...............................      ($0.007)      ($0.003)      ($0.167)      ($0.576)
Small gas-fired steam, all except natural draft.........       (0.036)       (0.039)       (0.082)       (0.120)
Small gas-fired steam natural draft.....................       (0.033)       (0.011)       (0.023)          n/a
Small oil-fired hot water...............................        0.020         0.057         0.048           n/a
Small oil-fired steam...................................       (0.012)        0.004         0.019           n/a
Large gas-fired hot water...............................        0.015         0.031         0.006        (0.098)
Large gas-fired steam, all except natural draft.........        0.032         0.137         0.240         0.338
Large gas-fired steam natural draft.....................       (0.055)       (0.014)        0.004        (0.024)
Large oil-fired hot water...............................        0.064         0.111         0.120           n/a
Large oil-fired steam...................................        0.132         0.361         0.569         1.151
----------------------------------------------------------------------------------------------------------------
* 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...............................       $0.092        $0.288        $0.139       ($0.592)
Small gas-fired steam, all except natural draft.........       (0.072)       (0.010)       (0.035)       (0.065)
Small gas-fired, steam natural draft....................       (0.094)        0.049         0.132           n/a
Small oil-fired hot water...............................        0.131         0.297         0.376           n/a
Small oil-fired steam...................................        0.027         0.138         0.347           n/a
Large gas-fired hot water...............................        0.100         0.231         0.264         0.470
Large gas-fired steam, all except natural draft.........        0.178         0.599         1.020         1.431
Large gas-fired steam natural draft.....................       (0.264)       (0.057)        0.133         0.253
Large oil-fired hot water...............................        0.210         0.356         0.422           n/a
Large oil-fired steam...................................        0.496         1.330         2.240         4.552
----------------------------------------------------------------------------------------------------------------
* Numbers in parentheses indicate negative NPV.


[[Page 36341]]

3. Need of the Nation To Conserve Energy
    Improving the energy efficiency of commercial packaged boilers 
would likely improve the security of the Nation's energy system by 
reducing overall demand for energy, thus reducing the Nation's reliance 
on foreign sources of energy. Energy savings for new energy 
conservation standards for equipment covered under this rule would also 
produce environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with energy production. 
Table VI.17 provides DOE's estimate of cumulative CO<INF>2</INF>, 
NO<INF>X</INF>, and SO<INF>2</INF> emissions reductions that would 
result from the adoption of new standards for commercial packaged 
boilers at the ASHRAE 90.1-2007 efficiency levels. Table VI.18 through 
Table VI.20 provide estimates of additional cumulative CO<INF>2</INF>, 
NO<INF>X</INF>, and SO<INF>2</INF> emissions reductions that would 
result from the adoption of new standards for commercial packaged 
boilers that exceed the ASHRAE 90.1-2007 efficiency levels. The 
expected energy savings from the amended standards for commercial 
packaged boilers may also reduce the cost of maintaining nationwide 
emissions standards and constraints. In the Environmental Impact 
Analysis (chapter 8 of the final rule TSD), DOE reports estimated 
annual changes in CO<INF>2</INF>, NO<INF>X</INF>, and SO<INF>2</INF> 
emissions attributable to each efficiency level analyzed.

   Table VI.17--Summary of Cumulative National Emissions Impacts for Commercial Boilers From 2012 to 2042 for
                                       Adopting ASHRAE Standard 90.1-2007
----------------------------------------------------------------------------------------------------------------
                                                        Cumulative national emissions impacts from 2012 to 2042
                                                     -----------------------------------------------------------
                   Equipment class                        CO2 (metric
                                                           kilotons)       NOX (short tons)    SO2 (short tons)
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water...........................               (674)             (1,177)                  0
Small gas-fired steam, all except natural draft.....                (31)                (54)                  0
Small gas-fired steam natural draft.................             (1,937)             (3,382)                  0
Small oil-fired hot water...........................               (677)               (837)             (2,628)
Small oil-fired steam...............................               (327)               (404)             (1,267)
Large gas-fired hot water...........................               (296)               (516)                  0
Large gas-fired steam, all except natural draft.....               (177)               (308)                  0
Large gas-fired steam natural draft.................             (1,525)             (2,662)                  0
Large oil-fired hot water...........................                  0                   0                   0
Large oil-fired steam...............................                  0                   0                   0
----------------------------------------------------------------------------------------------------------------


 Table VI.18--Summary of Cumulative CO2 Emissions Impacts for Commercial Boilers From 2012 to 2042 for Adoption
                     of Analyzed Higher Standards Over the ASHRAE Standard 90.1-2007 Levels
----------------------------------------------------------------------------------------------------------------
                                                          Cumulative national CO2 emissions impacts from 2012 to
                                                                           2042, metric kilotons
                     Equipment class                     -------------------------------------------------------
                                                           Efficiency    Efficiency    Efficiency    Efficiency
                                                             level 1       level 2       level 3       level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water...............................       (1,227)       (4,039)       (7,858)      (11,880)
Small gas-fired steam, all except natural draft.........            4          (797)       (1,666)       (2,541)
Small gas-fired steam natural draft.....................          332          (879)       (2,355)          n/a
Small oil-fired hot water...............................       (1,171)       (2,596)       (4,342)          n/a
Small oil-fired steam...................................         (704)       (2,026)       (5,189)          n/a
Large gas-fired hot water...............................         (799)       (2,082)       (3,425)       (9,866)
Large gas-fired steam, all except natural draft.........       (1,217)       (3,533)       (5,889)       (8,281)
Large gas-fired steam natural draft.....................        1,226          (206)       (2,054)       (4,240)
Large oil-fired hot water...............................       (1,032)       (1,820)       (2,590)          n/a
Large oil-fired steam...................................       (3,007)       (8,110)      (15,167)      (31,354)
----------------------------------------------------------------------------------------------------------------


 Table VI.19--Summary of Cumulative NOX Emissions Impacts for Commercial Boilers From 2012 to 2042 for Adoption
                     of Analyzed Higher Standards Over the ASHRAE Standard 90.1-2007 Levels
----------------------------------------------------------------------------------------------------------------
                                                           Cumulative national NOX emissions impact from 2012 to
                                                                             2042, short tons*
                     Equipment class                     -------------------------------------------------------
                                                           Efficiency    Efficiency    Efficiency    Efficiency
                                                             level 1       level 2       level 3       level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water...............................       (2,141)       (7,049)      (13,715)      (20,734)
Small gas-fired steam, all except natural draft.........            6        (1,392)       (2,907)       (4,434)
Small gas-fired steam natural draft.....................          579        (1,534)       (4,110)          n/a
Small oil-fired hot water...............................       (1,447)       (3,208)       (5,365)          n/a
Small oil-fired steam...................................         (870)       (2,504)       (6,413)          n/a
Large gas-fired hot water...............................       (1,395)       (3,634)       (5,978)      (17,219)
Large gas-fired steam, all except natural draft.........       (2,124)       (6,167)      (10,278)      (14,452)
Large gas-fired steam natural draft.....................        2,140          (359)       (3,585)       (7,401)
Large oil-fired hot water...............................       (1,276)       (2,250)       (3,201)          n/a
Large oil-fired steam...................................       (3,716)      (10,022)      (18,743)      (38,746)
----------------------------------------------------------------------------------------------------------------


[[Page 36342]]


 Table VI.20--Summary of Cumulative SO2 Emissions Impacts for Commercial Boilers From 2012 to 2042 for Adoption
                     of Analyzed Higher Standards Over the ASHRAE Standard 90.1-2007 Levels
----------------------------------------------------------------------------------------------------------------
                                                          Cumulative national SO2 emissions impacts from 2012 to
                                                                             2042, short tons*
                     Equipment class                     -------------------------------------------------------
                                                           Efficiency    Efficiency    Efficiency    Efficiency
                                                             level 1       level 2       level 3       level 4
----------------------------------------------------------------------------------------------------------------
Small gas-fired hot water...............................            0             0             0             0
Small gas-fired steam, all except natural draft.........            0             0             0             0
Small gas-fired steam natural draft.....................            0             0             0           n/a
Small oil-fired hot water...............................       (4,543)      (10,072)      (16,847)          n/a
Small oil-fired steam...................................       (2,731)       (7,863)      (20,136)          n/a
Large gas-fired hot water...............................            0             0             0             0
Large gas-fired steam, all except natural draft.........            0             0             0             0
Large gas-fired steam natural draft.....................            0             0             0             0
Large oil-fired hot water...............................       (4,005)       (7,064)      (10,051)          n/a
Large oil-fired steam...................................      (11,667)      (31,469)      (58,854)     (121,663)
----------------------------------------------------------------------------------------------------------------

    To put the potential monetary benefits from reduced CO<INF>2</INF> 
emissions into a form that would likely be most useful to decision 
makers and interested parties, DOE used the same methods it used to 
calculate the net present value of consumer cost savings. DOE converted 
the estimated yearly reductions in CO<INF>2</INF> emissions into 
monetary values that represented the present value, in that year, of 
future benefits resulting from that reduction in emissions, which were 
then discounted from that year to the present using both 3-percent and 
7-percent discount rates.
    In chapter 9 of the TSD, which accompanied the June 2009 NODA, DOE 
proposed to use the range $0 to $20 per ton for the year 2007 in 2007$. 
74 FR 26596. These estimates were originally derived to represent the 
lower and upper bounds of the costs and benefits likely to be 
experienced in the United States and were also used in chapter 9 of the 
draft TSD for this rulemaking. 74 FR 26596-7 (June 3, 2009). The lower 
bound was based on an assumption of no benefit and the upper bound was 
based on an estimate of the mean value of worldwide impacts due to 
climate change that was reported by the Intergovernmental Panel on 
Climate Change (IPCC).\19\ DOE expected that such domestic values would 
be 10% or less of comparable global values; however, there were no 
consensus estimates for the U.S. benefits likely to result from 
CO<INF>2</INF> emission reductions. Because U.S.-specific estimates 
were unavailable, DOE used the global mean value as an upper bound U.S. 
value.
---------------------------------------------------------------------------

    \19\ During the preparation of its review of the state of 
climate science, the IPCC identified various estimates of the 
present value of reducing CO<INF>2</INF> emissions by 1 ton over the 
life that these emissions would remain in the atmosphere. The 
estimates reviewed by the IPCC spanned a range of values. Absent a 
consensus on any single estimate of the monetary value of 
CO<INF>2</INF> emissions, DOE used the estimates identified by the 
study cited in ``Summary for Policymakers,'' prepared by Working 
Group II of the IPCC's ``Fourth Assessment Report,'' to estimate the 
potential monetary value of CO<INF>2</INF> reductions likely to 
result from standards considered in this rulemaking. According to 
IPCC, the mean social cost of carbon (SCC) reported in studies 
published in peer-reviewed journals was $43 per ton of carbon. This 
translates into about $12 per ton of CO<INF>2</INF>. The literature 
review (Tol 2005) from which this mean was derived did not report 
the year in which these dollars were denominated. However, DOE 
understands this estimate was for the year 1995 denominated in 
1995$. Updating that estimate to 2007$ yields a SCC for the year 
1995 of $15 per ton of CO<INF>2</INF>.
---------------------------------------------------------------------------

    Given the uncertainty surrounding estimates of the social cost of 
carbon, DOE previously concluded that relying on any single estimate 
may be inadvisable because that estimate will depend on many 
assumptions. Working Group II's contribution to the ``Fourth Assessment 
Report'' of the IPCC notes the following:

    The large ranges of SCC are due in the large part to differences 
in assumptions regarding climate sensitivity, response lags, the 
treatment of risk and equity, economic and non-economic impacts, the 
inclusion of potentially catastrophic losses, and discount 
rates.\20\

    \20\ ``Climate Change 2007--Impacts, Adaptation and 
Vulnerability.'' Contribution of Working Group II to the ``Fourth 
Assessment Report'' of the IPCC, 17. Available at http://www.ipcc.ch/ipccreports/ar4-wg2.htm (last accessed Aug. 7, 2008).

    Because of this uncertainty, DOE used the SCC value from Tol 
(2005), which was presented in the IPCC's ``Fourth Assessment Report'' 
and provided a comprehensive meta-analysis of estimates for the value 
of SCC. 74 FR 16920, 17012 (April 13, 2009).
    For today's final rule, DOE is relying on an updated range of 
values consistent with that presented in the Model Year 2011 fuel 
economy standard final rule issued by the National Highway Traffic 
Safety Administration (NHTSA): $2, $33 and $80 per metric ton (2007$). 
In the MY 2011 fuel economy standard final rule, NHTSA relied on a 
range of estimates representing the uncertainty surrounding global 
values of the SCC, while also encompassing, at the low end, possible 
domestic values. These three values encompass much of the variability 
in the estimates of the global value of the SCC. The lower end of this 
range, $2, also approximates possible mean value for domestic benefits. 
The middle of the range, $33, is equal to the mean value in Tol (2008) 
and the high end of the range, $80, represents one standard deviation 
above the mean global value. 74 FR 14196, 14346 (March 30, 2009). The 
global value of $33 is based on Tol's (2008) expanded and updated 
survey of 211 estimates of the global SCC.\21\ Tol's 2008 survey 
encompasses a larger number of estimates for the global value of 
reducing carbon emissions than its previously-published counterpart, 
Tol (2005), and continues to represent the only recent, publicly-
available compendium of peer-reviewed estimates of the SCC that has 
itself been peer-reviewed and published.
---------------------------------------------------------------------------

    \21\ Richard S.J. Tol (2008), The social cost of carbon: Trends, 
outliers, and catastrophes, Economics--the Open-Access, Open-
Assessment E-Journal, 2 (25), 1-24.
---------------------------------------------------------------------------

    The domestic value ($2) was developed by NHTSA by using the mean 
estimate of the global value of reduced economic damages from climate 
change resulting from reducing CO<INF>2</INF> emissions as a starting 
point; estimating the fraction of the reduction in global damages that 
is likely to be experienced within the U.S.; and applying this fraction 
to the mean estimate of global benefits from reducing emissions to 
obtain an estimate of the U.S. domestic benefits from lower GHG 
emissions. NHTSA constructed the estimate of the U.S. domestic benefits 
from reducing CO<INF>2</INF>

[[Page 36343]]

emissions using estimates of U.S. domestic and global benefits from 
reducing greenhouse gas emissions developed by EPA and reported in 
EPA's Technical Support Document accompanying its advance notice of 
proposed rulemaking on motor vehicle CO<INF>2</INF> emissions.\22\
---------------------------------------------------------------------------

    \22\ U.S. EPA, Technical Support Document on Benefits of 
Reducing GHG Emissions, June 12, 2008.
---------------------------------------------------------------------------

    A complete discussion of NHTSA's analysis is available in Chapter 
VIII of the Final Regulatory Analysis of the Corporate Average Fuel 
Economy for MY 2011 Passenger Cars and Light Trucks (NHTSA, March 
2009).
    After considering comments and the currently available information 
and analysis, which was reflected in the approach employed by NHTSA, 
DOE concluded that it was appropriate to consider the global benefits 
of reducing CO<INF>2</INF> emissions, as well as the domestic benefits. 
Consequently, DOE considered in its decision-process for this final 
rule the potential benefits resulting from reduced CO<INF>2</INF> 
emissions valued at $2, $33 and $80. The resulting range is based on 
current peer-reviewed estimates of the value of SCC and, DOE believes, 
fairly represents the uncertainty surrounding the global benefits 
resulting from reduced CO<INF>2</INF> emissions and, at the $2 level, 
also encompasses the likely domestic benefits, DOE also concluded, 
based on the most recent Tol analysis, that it was appropriate to 
escalate these values at 3% per year to represent the expected 
increases, over time, of the benefits associated with reducing 
CO<INF>2</INF> and other greenhouse gas emissions.
    DOE also investigated the potential monetary benefit of reduced 
NO<INF>X</INF>, and SO<INF>2</INF>, emissions from the TSLs it 
considered. As previously stated DOE estimated the monetized value of 
NO<INF>X</INF> emissions reductions resulting from each of the TSLs 
considered for today's final rule based on environmental damage 
estimates from the literature. Available estimates suggest a very wide 
range of monetary values for NO<INF>X</INF> emissions, ranging from 
$370 per ton to $3,800 per ton of NO<INF>X</INF> from stationary 
sources, measured in 2001$ (equivalent to a range of $432 to $4,441 per 
ton in 2007$ ($443 to $4,546 in 2008$). DOE estimated a low end 
monetary value for SO<INF>2</INF> emissions based on an SO<INF>2</INF> 
trading price as developed in the National Energy Modeling System 
(NEMS) electricity market model for the western and eastern U.S. DOE 
used a simple average of the trading prices from the eastern and 
western electricity market models for the period from 2012-2030, and 
extrapolated the prices out through 2042. These range in SO<INF>2</INF> 
costs from this source varied both by year and region from $86 to 
$1,012 per ton in 2007$ ($89 to $1,037 in 2008$). For an upper range 
estimated DOE used an estimate of environmental damage costs of $7,300 
per ton of SO<INF>2</INF> from stationary sources, measured in 2001$ or 
$8,542 per ton in 2007$ ($8,733 in 2008$). These low and high values 
for the value of emissions for CO<INF>2</INF>, NO<INF>X</INF>, and 
SO<INF>2</INF> were in turn multiplied by the annual emissions of each 
pollutant for the period from 2012-2042, and the monetary values were 
converted to present value using three and seven percent discount 
rates.
    Table VI.21 through Table VI.22 shows the resulting estimates of 
the potential range of present value benefits associated with the 
reduced CO<INF>2</INF>, NOx, and SO<INF>2</INF> emissions for each 
class of commercial boiler for adoption of the ASHRAE 90.1-2007 
efficiency levels.
BILLING CODE 6450-01-P

[[Page 36344]]

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[GRAPHIC] [TIFF OMITTED] TR22JY09.005

    Table VI.23 through Table VI.26 show the potential range of present 
value benefits associated with the reduction of each emission for 
adoption of efficiency levels higher than the ASHRAE 90.1-2007 levels.

[[Page 36345]]

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[[Page 36346]]


[GRAPHIC] [TIFF OMITTED] TR22JY09.007


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BILLING CODE 6450-01-C

[[Page 36349]]

C. Amended Energy Conservation 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 0.11 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 0.11 quads to 1.12 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, 
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 impact ranges from $1,700 LCC 
savings to a mean LCC cost of $4,760 for efficiency level 1 through 
efficiency level 4 respectively. The total installed cost increases 
range from $3,364 to $14,323 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. Due to current test procedure requirements, which are 
based on combustion, rather than thermal efficiency, 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

[[Page 36350]]

several energy-efficiency advocacy groups. DOE strongly encourages 
stakeholders to work together to propose agreements to DOE. When DOE 
receives 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 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. DOE presented these 
efficiency levels for public comment and, as discussed earlier, 
commenters supported the adoption of these levels.
    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, who 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 did not receive any 
additional comments from interested parties regarding these potential 
differences in expected lifetime in response to the March 2009 NOPR.
    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 adopting 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 is adopting 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 to adopt 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 ``clear 
and convincing'' standard that would justify 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 an imprecise estimate 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 concluded that 
the efficiency levels beyond those in ASHRAE Standard 90.1-2007 for 
commercial packaged boilers are not economically justified and is 
adopting as Federal minimum standards the efficiency levels in ASHRAE 
Standard 90.1-2007 for all ten equipment classes of commercial packaged 
boilers. Table VI.27 shows the amended energy conservation standards 
for commercial packaged boilers.

              Table VI.27--Amended Energy Conservation Standards for Commercial Packaged Boilers *
----------------------------------------------------------------------------------------------------------------
           Equipment type                    Subcategory            Size category (input)    Efficiency level **
----------------------------------------------------------------------------------------------------------------
Hot Water Commercial Packaged        Gas-fired.................  >=300,000 Btu/h and         80% ET
 Boilers.                                                         <=2,500,000 Btu/h.
Hot Water Commercial Packaged        Gas-fired.................  >2,500,000 Btu/h..........  82% EC
 Boilers.
Hot Water Commercial Packaged        Oil-fired.................  >=300,000 Btu/h and         82% ET
 Boilers.                                                         <=2,500,000 Btu/h.
Hot Water Commercial Packaged        Oil-fired.................  >2,500,000 Btu/h..........  84% EC
 Boilers.
Steam Commercial Packaged Boilers..  Gas-fired--all, except      >=300,000 Btu/h and         79% ET
                                      natural draft.              <=2,500,000 Btu/h.
Steam Commercial Packaged Boilers..  Gas-fired--all, except      >2,500,000 Btu/h..........  79% ET
                                      natural draft.
Steam Commercial Packaged Boilers..  Gas-fired--natural draft..  >=300,000 Btu/h and         77% ET
                                                                  <=2,500,000 Btu/h.         79% ET
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
                                                                  <=2,500,000 Btu/h.

[[Page 36351]]

 
Steam Commercial Packaged Boilers..  Oil-fired.................  >2,500,000 Btu/h..........  81% ET
----------------------------------------------------------------------------------------------------------------
* ET is the thermal efficiency and EC is the combustion efficiency.
** The effective date for the amended energy conservation standards is March 2, 2012. Where the table indicates
  a two-tier efficiency level, the second efficiency level is effective March 2, 2022.

D. Amended Energy Conservation 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

    DOE is adopting new energy conservation 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 by adopting the efficiency levels specified by ASHRAE 
Standard 90.1-2007. DOE did not analyze the economic and energy savings 
potential of amended national energy conservation 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 for the efficiency levels in ASHRAE Standard 90.1-
2007 or efficiency levels beyond those specified in ASHRAE Standard 
90.1, because there is no equipment currently being manufactured in 
this equipment class.\23\ 74 FR 12013. Table VI.28 shows the amended 
energy conservation standards for this equipment. The 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 established in this final rule will 
apply starting on January 10, 2011.
---------------------------------------------------------------------------

    \23\ ASHRAE Standard 90.1-2007 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 and less than 760,000 Btu/h even though equipment does 
not exist in the current marketplace in this category. ASHRAE's 
actions for this equipment triggered DOE action regardless of 
whether equipment is currently offered for sale.
[GRAPHIC] [TIFF OMITTED] TR22JY09.010

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Today's final 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 prepared an environmental assessment (EA) of the impacts of the 
proposed standards in the March 2009 NOPR 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). 74 FR 26596. This 
assessment included a concise examination of the impacts of emission 
reductions likely to result from the rule. DOE found the environmental 
effects associated with today's various standard levels 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 to be not significant, 
and therefore it is issuing a Finding of No Significant Impact (FONSI) 
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

[[Page 36352]]

1021). The FONSI is available in the docket for this rulemaking.

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 reviewed the March 2009 NOPR under the provisions of the 
Regulatory Flexibility Act and the policies and procedures published on 
February 19, 2003 (68 FR 7990). 74 FR 12044. 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 adopting 
the efficiency levels in ASHRAE Standard 90.1-2007, which are part of 
the prevailing industry standard and the 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 adopted 
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 received no comments in response to the NOPR. For the reasons 
stated above, DOE certifies that the final rule 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.

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)) DOE stated in the March 2009 NOPR that 
this rulemaking would impose no new information and recordkeeping 
requirements, and that OMB clearance is not required under the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.). 74 FR 12044. DOE 
received no comments on this in response to the NOPR and, as with the 
proposed rule, today's final rule imposes no information and 
recordkeeping requirements. DOE takes no further action in this 
rulemaking with respect to the Paperwork Reduction Act.

E. Review Under the Unfunded Mandates Reform Act of 1995

    As described in the March 2009 NOPR, 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).
    DOE concluded that the March 2009 NOPR contained 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. 74 FR 
12045. Accordingly, no assessment or analysis was required under UMRA. 
Id. DOE received no comments concerning the UMRA in response to the 
NOPR, and its conclusions on this issue are the same for the final rule 
as for the March 2009 NOPR. DOE takes no further action in today's 
final rule with respect to the 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. As stated in the March 2009 NOPR, DOE decided this rule 
would not have any impact on the autonomy or integrity of the family as 
an institution. 74 FR 12045. Accordingly, DOE concluded that it was 
unnecessary to prepare a Family Policymaking Assessment. Id. DOE 
received no comments concerning Section 654 in response to the NOPR, 
and thus takes no further action in today's final rule with respect to 
this provision.

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

[[Page 36353]]

intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. As explained in the March 
2009 NOPR, DOE examined this proposed rule and 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. 
74 FR 12045. EPCA governs and prescribes Federal preemption of State 
regulations as to energy conservation for the equipment that are the 
subject of today's final 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 final 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.
    DOE determined the proposed rule would not have a significant 
adverse effect on the supply, distribution, or use of energy, and, 
therefore, is not a significant energy action. 74 FR 12045. 
Furthermore, this regulatory action has not been designated as a 
significant energy action by the Administrator or of OIRA. Accordingly, 
DOE has not prepared a Statement of Energy Effects. Id. DOE received no 
comments on this issue in response to the March 2009 NOPR. As with the 
proposed rule, DOE has concluded that today's final rule is not a 
significant energy action within the meaning of Executive Order 13211, 
and has not prepared a Statement of Energy Effects on the rule.

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), the Department of Energy must comply with 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 and the Federal Trade 
Commission (FTC) concerning the impact of the commercial or industry 
standards on competition.
    Certain amendments and revisions in this final rule incorporate 
updates to commercial standards already codified in DOE's test 
procedure regulations in the CFR. As stated in the March 2009 NOPR, DOE 
has evaluated these updated 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., determine that they were developed in 
a manner that fully provides for public participation, comment, and 
review). 74 FR 12046. DOE has consulted with the Attorney General and 
the Chairman of the FTC concerning the impact of these standards on 
competition, and neither recommended against their incorporation.

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

[[Page 36354]]

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.

N. Congressional Notification

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

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final 
rule.

List of Subjects in 10 CFR Part 431

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

    Issued in Washington, DC, on July 8, 2009.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

0
For the reasons set forth in the preamble, DOE is amending 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

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

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


0
2. In Sec.  431.82, revise the definition ``combustion efficiency'' and 
add definitions for ``Btu/h or Btu/hr'' and ``thermal efficiency,'' in 
alphabetical order to read as follows:


Sec.  431.82  Definitions concerning commercial packaged boilers.

* * * * *
    Btu/h or Btu/hr means British thermal units per hour.
    Combustion efficiency for a commercial packaged boiler is 
determined using test procedures prescribed under Sec.  431.86 and is 
equal 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.

0
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 part 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 available for 
inspection at 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. The Gas Appliance Manufacturers Association (GAMA) merged 
in 2008 with the Air-Conditioning and Refrigeration Institute to become 
the Air-Conditioning, Heating, and Refrigeration Institute (AHRI). The 
Hydronics Institute BTS-2000 Testing Standard can be obtained from 
AHRI. For information on how to obtain this material, contact the 
Hydronics Institute Section of AHRI, P.O. Box 218, Berkeley Heights, NJ 
07922-0218, (866) 408-3831, or go to: http://www.ahrinet.org/Content/OrderaStandard_573.aspx.
    (1) The Hydronics Institute Division of GAMA BTS-2000 Testing 
Standard, (``HI BTS-2000, Rev 06.07''), Method to Determine Efficiency 
of Commercial Space Heating Boilers, Second Edition (Rev 06.07), 2007, 
IBR approved for Sec.  431.86.
    (2) [Reserved].

0
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/h 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, Rev 06.07 (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.

[[Page 36355]]

    (1) Test Setup--(i) Classifications: If employing boiler 
classification, you must classify boilers as given in Section 4.0 of 
the HI BTS-2000, Rev 06.07 (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, Rev 06.07 (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, 
Rev 06.07 (incorporated by reference, see Sec.  431.85) 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, Rev 06.07 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, Rev 06.07 (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: Consistent with the 
procedure specified in section 7.2.1 of HI BTS-2000, Rev 06.07 
(incorporated by reference, see Sec.  431.85), the integral venting 
used in oil-fired and power gas outdoor boilers may be modified only to 
the extent necessary to permit the boiler's connection to the test flue 
apparatus for testing.
    (iv) Test Conditions: Use test conditions from Section 8.0 
(excluding 8.6.2) of HI BTS-2000, Rev 06.07 (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, Rev 06.07 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, Rev 06.07 (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, Rev 06.07 (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, Rev 06.07 (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, Rev 06.07.
    (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 
2,500 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 2,500 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, Rev 06.07 (incorporated by reference, see Sec.  431.85).
    (ii) Thermal Efficiency. Use the calculation procedure for the 
thermal efficiency test specified in Section 11.1 of the HI BTS-2000, 
Rev 06.07 (incorporated by reference, see Sec.  431.85).

0
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/h 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/h or more, the combustion efficiency at the 
maximum rated capacity must be not less than 83 percent.
    (b) Each commercial packaged boiler listed in Table 1 to Sec.  
431.87 and manufactured on or after the effective date listed in Table 
1 of this section, must meet the applicable energy conservation 
standard in Table 1.

[[Page 36356]]



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

    (c) Each commercial packaged boiler listed in Table 2 to Sec.  
431.87 and manufactured on or after the effective date listed in Table 
2 of this section, must meet the applicable energy conservation 
standard in Table 2.

               Table 2 to Sec.   431.87--Commercial Packaged Boiler Energy Conservation Standards
----------------------------------------------------------------------------------------------------------------
                                                                                          Efficiency level--
         Equipment type                  Subcategory          Size category (input)    Effective date: March 2,
                                                                                                2022 *
----------------------------------------------------------------------------------------------------------------
Steam Commercial Packaged         Gas-fired--natural draft  >=300,000 Btu/h and       79.0% ET
 Boilers.                                                    <=2,500,000 Btu/h.
Steam Commercial Packaged         Gas-fired--natural draft  >2,500,000 Btu/h........  79.0% ET
 Boilers.
----------------------------------------------------------------------------------------------------------------
* Where EC is combustion efficiency and ET is thermal efficiency as defined in Sec.   431.82.


0
6. Add a new paragraph (d) to Sec.  431.97 to read as follows:


Sec.  431.97  Energy efficiency 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.

    Note:  The following appendix will not appear in the Code of 
Federal Regulations.


Department of Justice, Antitrust Division, Christine A. Varney, 
Assistant Attorney General, Main Justice Building, 950 Pennsylvania 
Avenue, NW., Washington, DC 20530-0001, (202) 514-2401/(202) 616-
2645(f), <a href="/cdn-cgi/l/email-protection#4e2f203a273a3c3b3d3a602f3a3c0e3b3d2a212460292138"><span class="__cf_email__" data-cfemail="04656a706d70767177702a657076447177606b6e2a636b72">[email protected]</span></a>, http://www.usdoj.gov/atr.

May 8, 2009.

Eric J. Fygi, Acting General Counsel, Department of Energy, 
Washington, DC 20585.

    Dear Acting General Counsel Fygi: I am responding to your March 
30, 2009 letter seeking the views of the Attorney General about the 
potential impact on competition of proposed amended energy 
conservation standards for commercial packaged boilers and certain 
commercial packaged air-conditions and heat pumps. Your request was 
submitted pursuant to Section 325(0)(2)(B)(i)(V) of the Energy 
Policy and Conservation Act, as amended, 42 U.S.C. 
6295(0)(2)(B)(i)(V), which requires the Attorney General to make a 
determination of the impact of any lessening of competition that is 
likely to result from the imposition of proposed energy conservation 
standards. The Attorney General's responsibility for responding to 
requests from other departments about the effect of a program on 
competition has been delegated to the Assistant Attorney General for 
the Antitrust Division in 28 CFR 0.40(g).
    In conducting its analysis, the Antitrust Division examines 
whether a proposed standard may lessen competition, for example, by 
substantially limiting consumer choice leaving consumers with fewer 
competitive alternatives, placing certain manufacturers of a product 
at an unjustified competitive disadvantage compared to other 
manufacturers; or by inducing avoidable inefficiencies in production 
or distribution of particular products.
    We have reviewed the proposed standards and the supplementary 
information submitted to the Attorney General, and attended the 
April 7, 2009 public hearing on the proposed standards.
    We have concluded that the proposed standards are not likely to 
have an adverse effect on competition. In reaching this conclusion, 
we note the absence of any competitive concerns raised by industry 
participants at the hearing. Indeed, the efficiency levels in the 
proposed standards are based on a consensus recommendation submitted 
by efficiency advocacy groups and the trade association for 
manufacturers of commercial packaged boilers. Based on these facts, 
we believe the new standard would not likely reduce competition.

    Sincerely,

Christine A. Varney,
Assistant Attorney General.

[FR Doc. E9-16774 Filed 7-21-09; 8:45 am]
BILLING CODE 6450-01-P


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