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GAO reviewed the Department of Energy's (DoE) new rule entitled "Energy Conservation Program: Energy Conservation Standards for Air Compressors." GAO found that the final rule establishes new energy conservation standards for air compressors. DOE determined that the energy conservation standards for these products will result in significant conservation of energy and are technologically feasible and economically justified.

Enclosed is our assessment of DOE’s compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Janet Temko-Blinder, Assistant General Counsel, at (202) 512-7104.

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B-331763

January 29, 2020

The Honorable Lisa Murkowski
Chairman
The Honorable Joe Manchin
Ranking Member
Committee on Energy and Natural Resources
United States Senate

The Honorable Frank Pallone, Jr.
Chairman
The Honorable Greg Walden
Ranking Member
Committee on Energy and Commerce
House of Representatives

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

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Department of Energy (DOE) entitled “Energy Conservation Program: Energy Conservation Standards for Air Compressors” (RIN: 1904-AC83).  We received the rule on January 14, 2020.  It was published in the Federal Register as a final rule on January 10, 2020.  85 Fed. Reg. 1504.  The effective date of the rule is March 10, 2020.

The final rule establishes new energy conservation standards for air compressors.  DOE determined that the energy conservation standards for these products will result in significant conservation of energy and are technologically feasible and economically justified.  The standards are expressed in package isentropic efficiency, i.e., the ratio of the theoretical isentropic power required for a compression process to the actual power required for the same process.  These standards apply to all compressors listed in a table in the rule and manufactured in, or imported into, the United States starting January 10, 2025.

The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a major rule from the date of publication in the Federal Register or receipt of the rule by Congress, whichever is later.  5 U.S.C. § 801(a)(3)(A).  This rule was published on January 10, 2020, but not received by Congress until January 14, 2020.  It has a stated effective date of March 10, 2020, but compliance with the new energy standard is not required until January 10, 2025.  To the extent that the rule purports to be effective on March 10, 2020, it does not have the required 60-day delay in effective date.

Enclosed is our assessment of DOE’s compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Janet Temko-Blinder, Assistant General Counsel, at (202) 512-7104.

  signed

Shirley A. Jones
Managing Associate General Counsel

Enclosure

cc: Daniel Cohen
Assistant General Counsel for Legislation,
  Regulation and Energy Efficiency
Department of Energy

 

ENCLOSURE

REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A MAJOR RULE
ISSUED BY THE
Department of ENERGY
ENTITLED
“Energy Conservation Program:
Energy Conservation Standards
for Air Compressors”
(RIN: 1904-AC83)

(i) Cost-benefit analysis

The Department of Energy (DOE) expressed the benefits and costs of the standards adopted by this final rule in terms of annualized values, among other ways.  DOE calculated the annualized net benefit as (1) the annualized national economic value (expressed in 2015 dollars) of the benefits from operating products that meet the adopted standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase costs), and (2) the annualized monetary value of the benefits of greenhouse gas (GHG) and nitrogen oxide (NOX) emission reductions. 

Using a 7-percent discount rate for benefits and costs other than GHG reductions (for which DOE used average social costs with a 3-percent discount rate), DOE estimated the cost of the adopted standards for air compressors to be $9.9 million per year in increased equipment costs.  DOE estimated the annual benefits to be $28.1 million in reduced equipment operating costs, $17.2 million in GHG reductions, and $0.7 million in reduced NOX emissions.  At this discount rate, DOE found the net benefit would amount to $36 million per year.

Using a 3-percent discount rate for all benefits and costs, DOE estimated the cost of the adopted standards is $10.4 million per year in increased equipment costs, and the estimated annual benefits to be $36.8 million in reduced operating costs, $17.2 million in GHG reductions, and $1 million in reduced NOX emissions.  At this discount rate, DOE found the net benefit amounts to be $45 million per year.

(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§ 603–605, 607, and 609

DOE prepared a regulatory flexibility analysis.  The analysis included (1) a statement of the need for and objectives of the rule, (2) a description of the significant issues raised in response to the initial regulatory flexibility analysis, (3) a description of the estimated number of small entities affected by the rule, (4) a description and estimate of compliance requirements including differences in cost, if any, for different groups of small entities, and (5) a description of significant alternatives to the rule. 

(iii) Agency actions relevant to sections 202-205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. §§ 1532–1535

DOE determined that this final rule does not contain a federal intergovernmental mandate because it does not require expenditures of $100 million or more in any one year by the private sector.

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

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

On May 19, 2016, DOE published a notice of proposed rulemaking (NOPR).  81 Fed. Reg. 31680.  On June 20, 2016, DOE held a public meeting to discuss the issues detailed in the NOPR.  DOE received 24 comments in response to the NOPR, in addition to the verbal comments received during the June NOPR public meeting.  DOE responded to comments in the final rule.

Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501–3520

According to DOE, manufacturers will need to certify to DOE that their products comply with the energy conservation standards established in this final rule.  In certifying compliance, manufacturers must test their products according to DOE test procedures, including any amendments adopted for those test procedures.  DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including compressors.  76 Fed. Reg. 12422 (Mar. 7, 2011); 80 Fed. Reg. 5099 (Jan. 30, 2015).  The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by the Office of Management and Budget (OMB) under the Act.  This requirement has been approved by OMB under OMB Control Number 1910-1400.  DOE estimates that public reporting burden for the certification averages 30 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Statutory authorization for the rule

DOE promulgated this final rule pursuant to sections 6291–6317 of title 42 and section 2461 note of title 28, United States Code.

Executive Order No. 12,866 (Regulatory Planning and Review)

The Administrator of the Office of Information and Regulatory Affairs (OIRA) in OMB determined that this final rule is not a significant regulatory action under the Order.

Executive Order No. 13,132 (Federalism)

DOE determined that this final rule will 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.

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